TIDMDMG
DORI MEDIA GROUP LTD.
FOR IMMEDIATE RELEASE
February 25, 2010
FINAL RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2009
Dori Media Group ("Dori Media", "DMG", the "Company" or the "Group"), the international media company active in the field of television, with a focus on production, distribution, broadcasting and merchandising of Telenovela and Drama, today announces its final results in accordance with International Financial Reporting Standards (IFRS) for the year ended 31 December 2009.
Full Year 2009
-- Group Revenue down 3% to US$48.7 million (2008: US$50.4 million)
-- Gross Profit of US$15.4 million (2008: US$22.6 million)
-- EBITDA of US$12.2 million (2008: US$14.3 million)
-- Operating Profit of US$1.6 million (2008: US$6.6 million)
-- Profit before tax of US$1 million (2008: US$5.8 million)
-- Operating Cash flow of US$5.6 million (2008: US$8.25 million)
-- Total Equity up 8.6% to US$46.4 million
Second Half 2009
-- Group Revenue up 2% to US$23.4 million (2008: US$22.9 million)
-- Gross Profit of US$7.2 million (2008: US$9.7 million)
-- EBITDA of US$5.8 million (2008: US$5.9 million)
-- Loss before tax of US$0.5 million (2008: Profit before tax US$1.7
million)
Operating Highlights
-- 16% increase in revenues from TV channels to US$34.4 million (US$29.7
million) due to Dori Media Spike's (DMS) movie and entertainment TV
channels with Israeli cable platform 'HOT', the success of Dori
Media's operations in Indonesia and the impact of the Viva and Viva
Platina TV channels in Israel;
-- Lower revenues from Telenovela broadcasting and format rights, US$13.1
million (US$18.4 million), and from video, music CD and ancillary
merchandizing business, US$0.7 million (US$1.9 million), due to
continued caution by programme buyers in an uncertain economic climate;
-- Sales of new Telenovela and Drama content including the sale of cross
platform Telenovela 'Amanda O' to 36 countries in just 12
months; sales of 'Split' to 35 countries in just 7 months;
sales of popular new cross platform 24/7 reality show 'uMan' to
7 countries including 6 territories in Western Europe following its
instant success in Israel;
-- Novebox.com (www.novebox.com),
the world's first commercial community website dedicated to Latin
content and Telenovela has reached 5.8 million unique visitors since
its debut in November 2008 out of total visits of 9 million that
contributed to 18.2 million page views. Dori Media's YouTube Channel
views have now reached over 160 million since their launch in August
2007;
-- In July, DMG extended the carriage of its two dedicated Telenovela TV
channels VIVA and VIVA Platina on Israel's leading DBS television
provider 'YES' until the end of 2013. DMG also has an agreement in
place with the leading Israeli cable network 'HOT' to carry both VIVA
channels until the end of 2011;
-- In July, DMG raised total gross proceeds of GBP3.4 million
(approximately US$5.4 million net of issuance expenses) through
Private and Open Placements totaling 4,246,345 shares and 959,526
5-year warrants placed privately with Catalyst Private Equity Partners
(Israel) II, L.P and Zabludowicz Trust, an affiliate of The Tamares
Group at a significant premium to DMG's stock market valuation.1
Recent Developments
-- In January 2010, Dori Media announced the sale of its 50% stake in
Dori Media Central Studios ("DMCS"), its TV production studios in
Argentina for US$850,000 to Mrs. Celina Amadeo, the owner of the
remaining 50% of DMCS and to Mr. Marcelo Octavio Amadeo. The sale has
been agreed between the parties and approved by the Labor Ministry of
Argentina. The sale does not affect DMG's current nor future
production plans in Latin America and Argentina and DMG is exploring
new ventures in Latin America and specifically in Argentina to
reinforce its strategic focus of producing high quality titles with
international appeal in the region.
Outlook
-- The global economic outlook for 2010 is improved but remains fairly
uncertain.
-- The Board expects DMG to remain profitable and soundly funded during
2010. Dori Media generates revenues from a number of operational
streams and territories which position the Company well to pursue its
strategy.
-- Demand for Telenovela and Drama programming remains substantial both
in new and existing markets around the world, as it presents
broadcasters and producers with cost effective yet highly popular
content. Demand for such content is expected to grow, particularly for
new media platforms, such as the internet and mobile phones. As a
result of this, DMG, together with Dori Media Darset, formed a new
subsidiary called Dori New Media during 2009. Dori New Media is
successfully closing deals with global cellular and internet
platforms, such as Cellcom, the biggest cellular operator in Israel,
for content from Dori Media's existing library and new productions.
-- DMG expects shows including 'Lalola', and new shows, such as 'Amanda
O', 'Champs 12', 'Cupido: El Negocio Del Amor', 'Date
Blind', 'La Maga', 'Split' and the new reality show 'uMan'
to contribute strong sales revenue during 2010.
1 Further information on the above mentioned transactions are available in DMG's 2009 Half Year Results statement or on separate press releases dated June 4, 2009 and June 30, 2009 and are available on www.dorimedia.com
Chief Executive Officer's comments
Nadav Palti, President and CEO of Dori Media Group, commented: "Although the last quarter of 2009 showed a significant increase in activity and interest in Dori Media's programming and content, 2009 was a challenging year. Continued caution by programme buyers in an uncertain economic climate meant that contract negotiations tended to be much more prolonged than they normally would have been. We expect to book some revenue during the first half of 2010 for deals we were expecting to close in 2009.
"Our revenue stream is diversified and our productions are attracting a great deal of interest across numerous territories. Substantial investments made in Dori New Media, on projects such as Novebox.com, cross platform Telenovelas such as 'Amanda O', 'Split' and 'uMan' are paying off. 'Amanda O' is more than meeting the growing demand for quality programming within the new media segment and 'uMan' has been an enormous success in Israel, to the extent that it boosted our mobile telephone partner Cellcom's video viewings by 20% while it was on-air. Furthermore, our TV Channel revenues remain very strong and continue to grow, thanks to multi-year agreements for the carriage of TV channels in Israel and Indonesia, with the latter proving to be a particularly strong growth market for the Company.
"Despite the investments mentioned above, our cost base did not grow during 2009, and like many other companies, we have introduced several cost cutting measures, including at senior management level, to ensure we protect our bottom line and maintain high margins. Members of Dori Media's Board and Management also continue to purchase Dori Media stock, signaling their confidence in the Company. This confidence has also been reciprocated by the equity capital markets through successful completion of two rounds of financing through the markets during 2009, in the form of two private placements, both of which were priced at a significant premium to the Company's market valuation.
"We are therefore confident that 2010 will be a strong year for the Company and Dori Media is fully focused on generating maximized returns for all our shareholders."
Chief Executive Officer's Review
Operating Update
Excluding the impact of the 'HOT' movie and general entertainment channels agreement on local revenues in Israel, international sales accounted for 48.1% of total sales in 2009, compared to the 72% contribution towards total revenues recorded during 2008. Although sales of TV series were lower than the previous period, there has been a continuing increase in sales to new territories in Africa and Asia and the breakdown of international sales for the period is as follows:
-- 26.8% (38% in 2008) generated in Europe, representing 12.9% of global
sales excluding 'HOT' movie and general entertainment channels;
-- 26.6% (34% in 2008) generated in Central and South America,
representing 12.8% of global sales excluding 'HOT' movie and general
entertainment channels;
-- 46.6% generated in other territories mainly Asia (28% in 2008 - mainly
from the Far East and North America) representing 22.4% of global
sales excluding 'HOT' movie and general entertainment channels;
A growing library of quality programming
Dori Media continued to invest in new TV series during 2009 and the Company now has a library of approximately 5,000 TV hours, 120 - 9 minute webisodes and around 230 1-5 minute cellular episodes of Telenovelas and daily series.
Dori Media's new show 'Amanda O', the first global cross platform Telenovela available for Internet, TV and mobile, has proven very successful. The unique show allows fans to view the series simultaneously across three different platforms. Figures released by Novebox.com, the world's first social community website dedicated to Telenovelas, indicate that the internet version of 'Amanda O' has been viewed over 800,000 times by users from Argentina, Uruguay and Paraguay alone since its launch.
Since its launch at the end of 2008, 'Amanda O' has been sold to 36 countries from Latin America to the Far East, and the comedy show has also received an Accolade award and was nominated for two awards at the 2009 Martin Fierro Awards in Argentina.
The quality of Dori Media's programs was recognized at several events including the MipTV 2009 market convention in Cannes and the LA Screenings in May. DMG's major new hits featured at the industry conventions included teen-vampire daily drama 'Split', 'Champs 12', 'La Maga' and 'Cupid: The Business of Love' among many.
'Split', a teenage show that revolves around the lives of humans and vampires, has been sold to 35 countries in only 7 months. Recently, the show was sold to Turner Broadcasting System Latin America Inc. for its Boomerang channel in Latin America. Turner Broadcasting System, Inc. (TBS, Inc.), a Time Warner company, creates and programs branded news, entertainment, animation and young adult media on multiple platforms around the world.
'Split' was originally produced for Israeli cable platform HOT's VOD (Video on Demand) service. After only 3 months on-air, 'Split' episodes on HOT VOD generated a total of approximately 7,000,000 viewings. Approximately 90% of viewers watched all available episodes, reaching a record loyalty level. Furthermore, over 30% of households with VOD services watched 'Split'. Following 'Split's' success on HOT VOD, the first season of 45 episodes (30 minutes each) is now being aired on Israel's leading channel for children and teenage audiences, 'The Children Channel'. The Channel's young viewers also voted 'Split' as their favorite programme in the recently held 'Children Channel Awards 2009'. 'Split' was shown on www.ynet.co.il, Israel's leading internet portal and achieved an unprecedented number of viewings in Israel. Following the show's huge success on HOT VOD and on-line, both HOT and "The Children Channel" have decided to invest in producing a second season of 'Split', which will also contain 45 episodes, each 30 minutes in length. The 2nd season, produced by Dori Media Darset, will go on air during Q2 of 2010.
Following the successful Israeli launch of Dori Media and Cellcom's new cross platform 24/7 reality show 'uMan' in July 2009, the show has now been sold to a total of 8 countries and was nominated for a GSM Award. 'uMan' is a reality show where every move of 8 contestants is filmed 24 hours a day for 21 days and all decisions regarding the lives of the contestants are voted for by viewers. 'uMan' became an instant success in Israel, as it received more than 7 million votes in 21 days. During this period, out of Israel's total population of 7 million people (600,000 of whom are teenagers), the show had 700,000 unique users.
As well as a recent sale to 'Buongiorno' in Spain (the world's top mobile entertainment company) and to Greece, 'uMan' has also been sold to international production group 'Banijay Entertainment' for 6 territories in Europe: France, Germany, Sweden, Norway, The Netherlands and Denmark. The show also won 3 Accolade Awards in 2009: the Award of Excellence for reality programming, the Award of Merit for creativity / originality and the Award of Merit for viewer impact and entertainment value.
'La Maga', a colorful adaptation of 'The Wizard of Oz', has been sold to 3 countries since its launch while 'Champs 12', which was sold to Caracol Television S.A. in Colombia even before its debut on Canal America in Argentina, has been sold to 21 countries in total, including Spain, Portugal, Italy, Greece and Turkey.
Dori Media's hit comedy show 'Lalola', continues to perform well and has now been sold to
83 countries since its debut and is also locally produced in India, Turkey, Greece, Belgium, Spain, Portugal, Philippines, Chile, Vietnam, and Russia. 'Lalola' was also nominated for the first telenovela award at the prestigious 30th annual Banff World Television Awards in June 2009.
Strong long-term partnerships
Dori Media has entered into several strong long-term partnerships with leading global media companies over the past 12 months, which will continue to contribute to DMG's revenue in the future. A summary of the main partnership agreements is provided below.
In 2007, Israeli cable platform 'HOT', boasting subscriptions with the majority of Israeli households, granted Dori Media Spike (DMS) rights to produce and operate the existing 'HOT' premium movie and series channels and services for 3 years as of January 1st 2008. In January 2009, DMS gained responsibility for two extra channels and handed a channel back to HOT.
In parallel, DMG signed an extension agreement with 'HOT' to continue to carry its two dedicated Telenovela TV channels VIVA and VIVA Platina until the end of 2011. DMG also announced in July 2009 that it has extended its agreement with 'YES, the leading Direct Broadcast Satellite (DBS) television provider in Israel, to carry the two TV channels until the end of 2013. VIVA is DMG's main channel in Israel and VIVA Platina is DMG's premium pay channel broadcasting exclusively on weekends.
In May 2008, DMG struck a deal with Televisa for a 5-year output deal to sell various titles to Televisa. Televisa is the largest media company in the Spanish world and a major player in the international entertainment business. The deal was signed for a consideration of approximately US$7.2 million with contractual options of US$2.3 million expected to increase the value of the deal to approximately US$9.5 million. The deal included immediate licensing of broadcasting and format rights in Latin America and Europe for various Telenovelas worth US$3.45 million with contractual options expected to increase the value of the deal to US$5.75 million. In addition to this, both parties have committed to an output deal for 5 years worth US$3.75 million. As part of the 5-year output deal, Televisa will purchase five Dori Media titles, with a title being delivered to Televisa each year between 2009 and 2013.
Financial Performance
Revenue
Dori Media recorded sales of US$48.7 million for the twelve months ended 31 December 2010, down 3% from US$50.4 million for the same period last year.
The Group's results were supported by the strong revenue coming from DMG's TV channel businesses which generated US$34.4 million for the full year of 2009, up 16% from US$29.7 million in the same period last year. This increase is attributable to the rise in the number of TV channels managed by Dori Media Spike to HOT from 9 to 10, success of Indonesian channels run by Dori Media International ("DMI"), and to the strength of Viva and Viva Platina TV channels in Israel.
As expected, Telenovela broadcasting and format rights sales for the full year of 2009 were down significantly to US$13.1 million, compared to US$18.4 million in the same period last year with revenues from broadcasting rights down to US$11.9 million from US$13.3 million in 2008. This is mainly due to increased caution by buyers in view of general economic conditions. Broadcasting and format rights sales represented 26% of total revenues in the period, compared with 36% in 2008, due to the continuous diversification of DMG's revenue streams and the impact of the TV channels revenue growth on total sales.
Revenues from the ancillary business (merchandising & publishing, music, DVDs, CDs, videos and Live shows) also decreased from US$1.9 million for the full year of 2008 to US$0.7 million in 2009. This decrease is in-line with expectations as some major localizations of Dori Media content no longer generate royalties after a decrease in the number of exhibition appearances for certain shows. Exhibitions of new formats have however begun and include exhibitions and Licensing of shows including 'Champs 12' in Europe and Split in Europe and Latin America.
Other income contributed 1% of total sales at US$0.5 million for the full year of 2009, which is broadly comparable to the same period of 2008.
Gross Margin
The Company recorded a gross profit of US$15.4 million for the full year of 2009, down from US$22.6 million in 2008, after an increase in amortization, expenses relating to Novebox.com and investments relating to the development and acquisition of more content.
Gross margin for the current reporting period was 32% decreasing from 45% in 2008 as anticipated as a result of lower revenues from broadcasting and format rights, increase in amortization and setting-up the operations of Novebox.com.
The cost of goods sold for the twelve months of 2009 increased to US$33.3 million compared to US$27.9 million in 2008. This increase can be mainly attributed to amortization charges relating to DMG's Library as well as charges relating to the set-up and operation of Novebox.com.
Operating Expenses
Total operating expenses amounted to US$13.7 million for the full year of 2009, down from US$16 million a year earlier. Total sales and marketing expenses were lower than expected having decreased 31% from US$4.8 million in 2008 to US$3.3 million for 2009 due to significantly lower sales and merchandising commissions and decreased advertising and marketing expenses. While the overall cost of advertising and marketing decreased, Dori Media did not decrease its overall advertising and marketing activity during the period, though there was a small increase in website marketing relating to the promotion of Novebox.com from US$0.08 million in 2008 to US$ 0.29 million for the full year of 2009.
Sales commissions together with salaries of sales personnel were reduced by 33% from US$1.8 million in 2008 to US$1.2 million in 2009. PR expenses remained stable year-on-year at around US$0.1 million to support further revenue generation.
Administration & general expenses and salaries were reduced by 7% from US$11.2 million for the full year of 2008 to US$10.4 million in 2009 as part of a general effort to closely control expenses relating to salaries and professional fees in particular. Salaries and management fees were down by 9% from US$6.6 million in 2008 to US$6.0 million in 2009, and professional expenses including lawyers, auditors and other consultants were reduced by 24% from US$1.7 million in 2008 to US$1.3 million in 2009.
EBITDA
For the full year of 2009, the Company recorded EBITDA of US$12.2 million, down from US$14.3 million in 2008, representing EBITDA margin of 25%, which is in line with expectations.
Income Tax
Total tax expenses of US$1.7 million is reported for the period. This represents a tax rate of 166% from DMG's Profit Before Tax (41% in 2008). This significant increase in tax rate is due to a unique situation that has caused DMG's tax expenses to be disproportionately high compared to the profit generated by the Group. This is because consolidated Group profit cannot be used as a base for calculating tax liabilities as tax charges for each of DMG's subsidiaries are calculated individually. Consequently, a loss result by one subsidiary cannot be offset by a profit from another for tax purposes. The Company is addressing this issue and does not expect the current tax rate level to continue to be charged. DMG will provide the market with an update on this issue at a later date. During 2009, as a result of decrease in sales of Telenovela broadcasting rights and formats, a large proportion of Dori Media's profits were derived from Israel, where the profitable companies accrued tax expenses at the rate of 26%. At the same time, DMG's worldwide sales operations suffered a loss for the period with a tax credit of only 10%.
Discontinuing Operation
As a result of the sale of Dori Media Central Studios (DMCS), DMG's TV production studios in Argentina for US$850,000, as announced in January, 2010, the net result generated by the operation has been stated in a new "discontinuing operation" line in Dori Media's 2009 Financial Statements and figures for previous periods are being reclassified to reflect this. In 2009, DMG recorded a net loss of US$0.8 million out of the operations of DMCS versus a net profit of US$0.45 million in 2008.
Cash Flow
In spite of the predicted slowdown in activity during 2009, Dori Media's cash flow remained positive, facilitating strong cash generation and the financing of new productions and ventures. Operating cash inflow was US$5.6 million in the reporting period compared to US$8.3 million in 2008. The operating cash flow is a result of DMG's healthy growth and is also due to cash profits earned on historical investments. This cash flow combined with bank facilities available to it enables the Group to continue to invest in new productions often with other partners and thus to grow its inventory of new content.
Report and Accounts
The Company's Financial Report and Accounts are available on the Company's website www.dorimedia.com.
***
For further information on Dori Media Group, please visit our website on www.dorimedia.com or contact:
Dori Media Group Ltd. Shared Value Limited
Nadav Palti, CEO & President Nicolas Duperrier/Mark Walter
Tel: +972 3 7684000 Investor & Media relations
info@dorimedia.com Tel. +44 (0) 20 7321 5010
dmg@sharedvalue.net
Daniel Stewart & Company
Paul Shackleton/Oliver Rigby
Tel. +44 (0) 20 7776 6550
Dori Media Group is an international media group that produces, distributes and broadcasts telenovelas. The group owns approximately 5,000 television hours that it sells to a wide variety of audiences in more than 70 countries. In Israel, Dori Media is the owner of Dori Media Paran and Dori Media Darset, which produce daily series and telenovelas for the Israeli market. It also owns and operates two telenovela channels, Viva and Viva Platinum. In the Israeli market, Dori Media also packages, produces and operates all of the movie channels on HOT cable television and the series channel on HOT Extra. In Indonesia, the company operates the Televiva Vision 2 channel that is devoted to telenovelas and Baby TV Vision 3 for toddlers. The Dori Media Group in controlled by Mapal Communications Ltd. one of the largest media companies in the Israel. The group is traded on the London Stock Exchange where its symbol is DMG. For more information on Dori Media, visit our corporate website at http://www.dorimedia.com/.
***
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Year ended 31 December
2007 2008 2009
Note US$ '000*) US$ '000*) US$ '000*)
Revenues 5a 29,941 50,427 48,716
Cost of revenues 5b 7,903 27,868 33,348
Gross profit 22,038 22,559 15,368
Selling and marketing expenses 5c 6,154 4,826 3,323
General and administrative 5d 7,606 11,163 10,401
expenses
Total operating expenses 13,760 15,989 13,724
Operating profit 8,278 6,570 1,644
Financial expenses, net 5e 230 822 638
Other expenses (income), net 5f (29) (7) -
Profit before tax 8,077 5,755 1,006
Taxes on income 3c 1,501 2,365 1,669
Profit (loss) for the year 6,576 3,390 (663)
from continuing operations
Profit (loss) for 47 449 (784)
the year from
discontinued operations
Profit (loss) for the year 6,623 3,839 (1,447)
Other comprehensive
income (loss):
Asset revaluation surplus 455 - -
Currency translation 498 (87) (466)
adjustments
of foreign operations
Total comprehensive 7,576 3,752 (1,913)
income (loss)
Profit (loss) attributable to:
Equity holders of the parent 6,573 3,203 (2,593)
Non-controlling interests 50 636 1,146
6,623 3,839 (1,447)
Total comprehensive income
(loss) attributable to:
Equity holders of the parent 7,526 3,116 (3,173)
Non-controlling interests 50 636 1,260
7,576 3,752 (1,913)
Basic profit (loss) per share 7 0.32 0.12 (0.07)
from continuing operations
attributable to equity
holders of the parent
Basic profit (loss) per share 0.00 0.02 (0.03)
from discounted operations
attributable to equity
holders of the parent
Diluted profit (loss) 7 0.31 0.12 (0.07)
per share
from continuing operations
attributable to equity
holders of the parent
Diluted profit (loss) 0.00 0.02 (0.03)
per share
from discounted operations
attributable to equity
holders of the parent
*) Except per share amounts.
CONSOLIDATED BALANCE SHEETS
As of 31 December
2007 2008 2009
Note US$ '000 US$ '000 US$ '000
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 2,307 2,382 635
Trade receivables 15,494 15,919 16,670
Other accounts receivable 3,409 3,394 2,826
Broadcasting rights 1,729 4,413 6,725
22,939 26,108 26,856
Assets classified as held for sale 6 - - 2,630
22,939 26,108 29,486
NON-CURRENT ASSETS:
Investments in rights 20,255 28,877 35,079
of TV series, net
Intangible assets, net 8,407 9,718 8,584
Property and equipment, net 5,762 5,793 2,857
Other long-term assets 1,020 1,081 128
Deferred tax assets 3d 1,467 1,994 2,608
36,911 47,463 49,256
Total assets 59,850 73,571 78,742
The accompanying notes are an integral part of the consolidated financial statements.
CONSOLIDATED BALANCE SHEETS
As of 31 December
2007 2008 2009
Note US$ '000 US$ '000 US$ '000
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Credit from banks and 4,631 14,789 10,084
current maturities
of long-term loans
Trade payables 5,612 5,540 4,938
Current tax liability 1,023 441 305
Other current liabilities 5,850 5,636 3,538
17,116 26,406 18,865
Liabilities associated with 6 - - 1,780
assets held for sale
17,116 26,406 20,645
LONG-TERM LIABILITIES:
Bank loans 301 99 5,348
Other long-term liabilities 3,366 1,773 2,297
Deferred tax liabilities 3d 1,061 2,581 4,053
4,728 4,453 11,698
EQUITY: 4
Equity attributable to equity
holders of the parent:
Issued capital 535 539 648
Share premium 21,927 22,877 28,094
Warrants - - 427
Foreign currency translation 360 273 (307)
reserve
Asset revaluation surplus 695 695 695
Retained earnings 14,409 17,612 15,019
37,926 41,996 44,576
Non-controlling interests 80 716 1,823
Total equity 38,006 42,712 46,399
Total liabilities and equity 59,850 73,571 78,742
The accompanying notes are an integral part of the consolidated financial statements.
February 24, 2010
=--------------------------------------------------------------------------
Date of approval Tamar Mozes-Borovitz Nadav Palti Moshe Pinto
of the
=--------------------------------------------------------------------------
financial Chairman of the Board Director and Chief Financial
statements Officer
=--------------------------------------------------------------------------
of Directors Chief Executive
Officer
=--------------------------------------------------------------------------
DORI MEDIA GROUP LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Attributable to equity holders of the parent
Foreign
currency Asset Non-
Issued Share translation revaluation Retained controlling Total
capital premium Warrants reserve surplus earnings Total interests equity
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Balance 448 11,329 - (138) 240 7,836 19,715 30 19,745
as
of 31
January
2007
Total - - - 498 455 6,573 7,526 50 7,576
comprehensive
income
Issuance 85 10,166 - - - - 10,251 - 10,251
of
shares
Exercise 2 82 - - - - 84 - 84
of
options
Cost - 350 - - - - 350 - 350
of
share-based
payments
Balance 535 21,927 - 360 695 14,409 37,926 80 38,006
as
of 31
December
2007
Total - - - (87) - 3,203 3,116 636 3,752
comprehensive
income
Exercise 4 126 - - - - 130 - 130
of
options
Cost - 796 - - - - 796 - 796
of
share-based
payments
Tax - 28 - - - - 28 - 28
effect
of
share-based
payments
Balance 539 22,877 - 273 695 17,612 41,996 716 42,712
as
of 31
December
2008
Total - - - (580) - (2,593) (3,173) 1,260 (1,913)
comprehensive
loss
Dividend - - - - - - - (153) (153)
paid
to
minority
shareholders
Issuance 109 4,860 427 - - - 5,396 - 5,396
of
shares
and
warrants
Cost - 357 - - - - 357 - 357
of
share-based
payments
Balance 648 28,094 427 (307) 695 15,019 44,576 1,823 46,399
as
of 31
December
2009
The accompanying notes are an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended 31 December
2007 2008 2009
Note US$ '000 US$ '000 US$ '000
Cash flows from operating
activities:
Profit (loss) for the year 6,623 3,839 (1,447)
Adjustments to reconcile (a) (2,477) 4,410 7,026
profit (loss) to net
cash provided by operating
activities
Net cash provided by 4,146 8,249 5,579
operating activities
Cash flows from investing
activities:
Additions to intangible assets (673) (1,985) (28)
Acquisition of newly consolidated (c) (801) - -
subsidiaries
and jointly controlled
entity and businesses
Additional consideration for - (1,350) -
acquisition of subsidiaries
and jointly controlled entity
Investments in rights of TV series (7,196) (13,269) (13,468)
Proceeds from sale of 108 19 -
property, equipment
and investment properties
Purchase of property and equipment (1,302) (923) (324)
Repayment of loans to jointly (1,020) - -
controlled entity and other
- - 956
Net cash used in investing (10,884) (17,508) (12,864)
activities
Cash flows from financing
activities:
Dividend paid to minority - - (153)
shareholders
Receipt of long-term loans - - 4,977
Proceeds from issuance of shares and 10,335 130 5,396
warrants, net of issuance costs
Repayment of loans from (331) (552) -
banks and others
Receipt of long-term 932 - -
production financing
Repayment of long-term (1,384) (1,075) (136)
production financing
Short-term bank credit, net (1,204) 10,809 (4,560)
Net cash provided by 8,348 9,312 5,524
financing activities
Effect of exchange rate changes 76 22 22
on cash and cash equivalents
Increase (decrease) in cash 1,686 75 (1,739)
and cash equivalents
Cash and cash equivalents as 621 2,307 2,382
of the beginning of the year
Cash and cash equivalents as 2,307 2,382 643
of the end of the year
The accompanying notes are an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended 31 December
2007 2008 2009
US$ '000 US$ '000 US$ '000
(a) Adjustments to reconcile profit
to net cash provided
by (used in) operating activities:
Income and expenses not
involving cash flows:
Cost of share-based payments 350 796 357
Depreciation and amortization 4,576 22,692 25,542
Increase in liability for - 411 59
production financing
Deferred income taxes 356 503 1,126
Gain on disposal of property (31) (7) -
and equipment
Other (4) (44) -
Severance pay, net 127 (136) 97
Changes in operating assets
and liabilities:
Increase in trade receivables (5,294) (374) (1,151)
Decrease (increase) in other (1,786) 233 393
accounts receivable
Increase in broadcasting rights (2,076) (18,217) (18,805)
Increase (decrease) in trade payables 1,249 (1,591) 373
Increase (decrease) in other 56 144 (965)
current liabilities
(2,477) 4,410 7,026
(b) Supplemental disclosure of cash flows:
Cash paid during the year for:
Interest 304 684 548
Income taxes 581 1,316 862
The accompanying notes are an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended 31 December
2007 2008 2009
US$ '000 US$ '000 US$ '000
(c) Acquisition of newly consolidated
subsidiaries
and jointly controlled
entity and businesses:
The fair values of the
assets and liabilities
at the date of acquisition
were as follows:
Working capital deficiency 2,819 - -
(excluding cash)
Property and equipment (3,011) - -
Investments in rights of TV series (335) - -
Goodwill arising on acquisition (2,682) - -
Other intangible assets (845) - -
Deferred tax liabilities 638 - -
Long-term liabilities 1,265 - -
Total consideration (2,151) - -
Less: acquisition on credit 1,350 - -
Net cash outflow (801) - -
(d) Significant non-cash transactions:
Acquisition of rights in 940 721 547
TV series on credit
Acquisition of broadcasting rights - 1,624 512
Liability for acquisition of minority 397
interest in subsidiary
Liability for dividend distribution 723
The accompanying notes are an integral part of the consolidated financial statements.
DORI MEDIA GROUP LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1:-GENERAL
a. Company description:
The Company was incorporated on 14 February 1996 under the laws of Israel. The Company and its subsidiaries are engaged in the rights for purchase, production, license and distribution of Drama and Telenovela TV series ("Telenovelas"), broadcasting of dedicated TV channels for Drama and Telenovela, entertainment movie and series TV channels ("TV channels"), distribution of TV series sourced from third parties and operating Drama and Telenovela community website. In December 2009, the Company signed an agreement to sell its investment in Dori Media Central Studios S.A (see Note 6).
b. Definitions:
In these financial statements:
The Company - Dori Media Group Ltd. ("DMG")
The Group - Dori Media Group Ltd. and its investees.
Subsidiary - entity controlled by the Company.
Jointly controlled entity - entity owned by various parties that
have a contractual arrangement
that establishes joint control over
the activities of the entity.
Investee - Subsidiary or jointly controlled entity.
Related parties - As defined in IAS 24.
NOTE 1:-GENERAL (Cont.)
c. The following are investees of the Company as of 31 December 2009:
Country of incorporation Ownership interest (%)
Subsidiaries:
Yair Dori International Israel 100
2002 Ltd. ("YDI 2002")
Dori Media International Switzerland 100
GmbH ("DMI GmbH") (1)
Dori Media Distribution Switzerland 100
GmbH ("DMD") (2)
Dori Media Web Switzerland 100
AG ("DMW") (2)
Dori Media America U.S.A 100
Inc. ("DMA") (2)
Dori Media Contenidos Argentina 100
S.A. ("DMC") (2)
Dori Media Distribution Argentina 100
Argentina
S.A. ("DMDA") (7)
Dori-Mapal Holdings B.V.I. (6) 100
Inc. ("Dori
Mapal Holdings") (5)
Dori-Mapal Inc. B.V.I. (6) 100
("Dori-Mapal")
(3) (5)
Yair Dori International B.V.I. (6) 100
Inc.
("YDI Inc.") (4) (5)
Yair Dori International B.V.I. (6) 100
B Inc. ("YDI B") (5)
Dori Media Darset Ltd. Israel 87.5
("Darset") (8)
Dori New Media Ltd. (9) Israel 87.5
Dori Media Spike Israel 75
Ltd. ("DMS")
Dori Media Paran Israel 75
Ltd. ("Paran")
Dori Media Ot Israel 51
Ltd. ("DMO")
Dori-Aram Productions Israel 50
Ltd. ("Dori-Aram")
Jointly controlled
entities:
Dar Multimedia Ltd. Israel 50
("Dar") (10)
Dori Media Central Argentina 50
Studios
S.A ("DMCS") (11)
(1) Subsidiary of YDI 2002.
(2) Subsidiary of DMI GmbH.
(3) 90% held by Dori-Mapal Holdings and 10% held by the Company.
(4) Subsidiary of Dori-Mapal.
(5) Inactive.
(6) British Virgin Islands.
(7) 80% held by DMD and 20% held by DMI GmbH.
(8) 50% held by Paran.
(9) 100% held by Darset.
(10) 50% held by the Company.
(11) 50% held by DMI GmbH (see Note 6.)
NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES
Statement of compliance:
The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards ("IFRS").
Further details of the accounting policies are available in the full annual accounts on Dori Media's website at www.dorimedia.com.
NOTE 3:-TAXES ON INCOME
a. Tax laws applicable to the Company:
In February 2008, the "Knesset" (Israeli parliament) passed an amendment to the Income Tax (Inflationary Adjustments) Law, 1985, which limits the scope of the law starting 2008 and thereafter. Starting 2008, the results for tax purposes will be measured in nominal values, excluding certain adjustments for changes in the Israeli CPI carried out in the period up to 31 December 2007. The amended law includes, inter alia, the elimination of the inflationary additions and deductions and the additional deduction for depreciation starting 2008.
b. As part of the Group's reorganization, and in light of the Amendment of the Israeli Income Tax Ordinance in 2002, the Company reached an agreement with the Israeli Tax Authorities, with respect to profits derived by YDI Inc. In principle, the agreement provided for reduced taxation on the assessed assets of YDI Inc. In accordance with this agreement (dated 17 August 2003), YDI Inc.'s business assets were valued at approximately US$ 15 million ("the Revaluated Assets"). Furthermore, it was agreed that the Company will pay tax at the rate of 7.5% of its share in the Revaluated Assets, amounting to approximately US$ 1 million which was charged to expenses in 2003. In addition, the agreement laid down the transfer price to be applied by the Company on payments abroad with respect to the merchandising and the distribution of television series.
With respect to the taxation of profits derived by DMI GmbH, DMI GmbH obtained a ruling from the cantonal tax authorities in Zurich. Based on this ruling, income generated from foreign sources is subject to a preferred tax rate of approximately 10.1% (overall tax burden including federal, cantonal and communal corporate income tax rate, calculated on net profit before taxes). Domestic income would be subject to ordinary and full taxation for cantonal and communal tax purposes, as well as for federal income tax purposes.
c. Taxes on income (tax benefit) included in the statements of comprehensive income:
Year ended 31 December
2007 2008 2009
US$ '000 US$ '000 US$ '000
Continuing operations:
Current taxes 1,104 1,264 543
Deferred taxes 419 1,254 930
Taxes in respect of previous years (22 ) (153 ) 196
1,501 2,365 1,669
Discontinued operations:
Current taxes 28 - -
Deferred taxes - (199 ) (38 )
28 (199 ) (38 )
Total 1,529 2,166 1,631
DORI MEDIA GROUP LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3:-TAXES ON INCOME (Cont.)
d. Deferred taxes:
Significant components of the Group's deferred tax assets (liabilities) are as follows:
Investments
in
production Tax loss Intangible Property and
of carry
TV series forward assets equipment Others Total
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Balance 907 458 - - 165 1,530
as
of 1
January
2007
Amounts - 101 (350) (550) - (799)
included
upon
acquisition
of
business
Amounts (121) (22) 60 (116) (220) (419)
included
in
statement
of
comprehensive
income
Currency - 27 8 20 39 94
translation
differences
Balance 786 564 (282) (646) (16) 406
as
of 31
December
2007
Amounts - - - - 28 28
included
in
the
statement
of
changes
in
equity
Amounts (113) 1,283 42 16 *) (2,283) (1,055)
included
in
statement
of
comprehensive
income
Currency - 41 (9) 2 26 60
translation
differences
Balance 673 1,888 (249) (628) (2,245) (561)
as
of 31
December
2008
Amounts (26) 1,298 30 (13) *) (2,219) (930)
included
in
statement
of
comprehensive
income
Deferred - (363) - 561 - 198
taxes
related
to
discontinued
operations
**)
Currency - 8 10 (4) (166) (152)
translation
differences
Balance 647 2,831 (209) (84) (4,630) (1,445)
as
of 31
December
2009
*) Mainly due to temporary differences arising on recognition of certain revenues and expenses for tax purposes on cash basis.
**) See Note 6.
DORI MEDIA GROUP LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3:-TAXES ON INCOME (Cont.)
e. A reconciliation of theoretical tax expense assuming all income is taxed at the statutory rate applicable to the income of companies in Israel, and the actual tax expense is as follows:
Year ended 31 December
2007 2008 2009
US$ '000 US$ '000 US$ '000
Profit before taxes on income 8,077 5,755 1,006
Provision at statutory 2,342 1,554 261
rate - 29% (2007),
27% (2008) and 26% (2009)
Increase (decrease) in
taxes resulting from:
Losses and other items 39 - -
for which deferred
taxes were not provided, net
Decrease in taxes resulting (19 ) (50 ) (195 )
from recording
of deferred taxes in respect of carry
forward tax losses for
which deferred taxes
were not recorded in prior years
Non-deductible expenses 131 244 252
Different tax rates and (849 ) 628 1,203
changes in tax rates
Taxes in respect of previous years (28 ) (153 ) 196
Other (115 ) 142 (48 )
1,501 2,365 1,669
f. Carry forward losses for tax purposes:
The carry forward losses for tax purposes for the year ended 31 December 2009 amount to approximately US$ 18,530 thousand (year ended 31 December 2008 - US$ 7,514 thousand, 2007 - US$ 2,120 thousand) mainly in Switzerland and in Israel. A deferred tax asset in respect of these losses is included in the balance sheet.
g. Tax rates in Israel:
In July 2009, the Israeli Parliament (the Knesset) passed the Economic Efficiency Law (Amended Legislation for Implementing the Economic Plan for 2009 and 2010), 2009, which prescribes, among other things, an additional gradual reduction in the Israeli corporate tax rate starting from 2011 to the following tax rates: 2011 - 24%, 2012 - 23%, 2013 - 22%, 2014 - 21%, 2015 - 20%, 2016 and thereafter - 18%.
NOTE 3:-TAXES ON INCOME (Cont.)
h. Tax assessments:
The Company and the investees have received final assessments or assessments considered as final as detailed below:
Through
the tax year
The Company 2004
Davka *) 2004
Dar 2004
Darset 2007
Paran 2004
The other investees have not yet been assessed since their inception.
*) In December 2005, the Company signed a merger agreement with Davka, pursuant to which Davka merged into the Company. In December 2006, an approval for the merger was received from the Israeli Tax Authorities. As part of the approval, certain limitations were imposed on utilizing the carry forward losses, ownership and operating Davka's assets.
NOTE 4:-EQUITY
a. The share capital is composed as follows:
As of 31 December
2007 2008 2009
Number of shares
Authorized:
Ordinary shares of NIS 40,000,000 40,000,000 40,000,000
0.1 par value each
Issued and fully paid:
Ordinary shares of NIS 23,000,727 23,141,727 27,388,072
0.1 par value each
b. In March 2007, the Company issued 971,129 Ordinary shares to institutional investors in consideration of US$ 2,176 thousand (net of issuance expenses in the amount of US$ 157 thousand).
On 7 June 2007 and on 12 November 2007, the Company issued 10,000 and 15,000 Ordinary shares, respectively upon the exercise of options by a former employee in accordance with the Dori Media Group Ltd. 2004 Share Option Plan for a total consideration of US$ 27 thousand and US $ 43 thousand, respectively.
In November 2007, the Company issued 2,567,000 Ordinary shares to institutional investors in consideration of US$ 8,075 thousand (net of issuance expenses in the amount of US$ 485 thousand).
NOTE 4:-EQUITY (Cont.)
On 27 December 2007, the Company issued 15,000 Ordinary shares upon the exercise of options by a director in accordance with the Dori Media Group Ltd. 2004 Share Option Plan for a total consideration of US$ 12 thousand.
During 2008, the Company issued 141,000 Ordinary shares, upon the exercise of options by directors, in accordance with the Dori Media Group Ltd. 2004 Share Option Plan, for a total consideration of US$ 130 thousand.
On 6 June 2009, the Company issued to an institutional investor 670,323 Ordinary shares and warrants to purchase up to 479,763 Ordinary shares at an exercise price of NIS 7 ($ 1.85) per share in consideration of GBP 670 thousand (approximately US $ 1,100 thousand). The warrants are exercisable until June 2014.
On 9 July 2009, the Company issued 1,757,840 Ordinary shares at price of 0.52 pound per share through an open offer in consideration of GBP 914 thousand (approximately US $ 1,350 thousand) (net of issuance expenses in the amount of US $ 150 thousand).
On 27 July 2009, the Company issued to an institutional investor 1,818,182 Ordinary shares and warrants to purchase up to 479,763 Ordinary shares at an exercise price of NIS 7 ($ 1.85) per share in consideration of GBP 1,818 thousand (approximately US $ 3,000 thousand) (net of issuance expenses in the amount of US $ 33 thousand). The warrants are exercisable until June 2014.
c. Stock Option Plan:
In September 2004, the Company authorized a Stock Option Plan for the issuance of options to purchase up to 2,000,000 Ordinary shares of the Company. The options granted under this Plan to employees and directors vest over periods of four and three years, respectively. The options are granted with an exercise price denominated in NIS and GBP and expire 10 years after the date of grant. The options to employees and directors in Israel are granted under sections 102 and 3(i) of Israel's Income Tax Ordinance.
The weighted average fair value of options granted by the Company in September 2004 under the 2004's share option plan was US$ 1.46 per share and was estimated based on the following data and assumptions: share price - US$ 2; exercise price - US$ 0.65; expected volatility - 25.6%; risk-free interest rate 4.9%; expected dividends - 0%, and expected average life of options - 3 years.
In 2005, the Company agreed to grant to the former CEO of DMI GmbH options to purchase 50,000 Ordinary shares of the Company. The options were subject to the achievement of certain profit targets.
50% of the options were granted after the publication of the 2006 annual audited financial statements, and vested (see also b). The remaining options were forfeited in 2007 due to the termination of employment of the CEO.
On 15 March 2007, the Company granted share options for the purchase of 411,500 Ordinary shares to directors, officers and employees under the Company's 2004 Share Option Plan.
NOTE 4:-EQUITY (Cont.)
The weighted average fair value of options granted by the Company in March 2007 was US$ 1.74 per share and was estimated based on a pricing model ("Binomial Model") and on the following data and assumptions: share price - GBP 1.62 (US$3.3); exercise price - GBP 1.3933 (US$ 2.7); expected volatility - 47%; risk-free interest rate 4.9%; expected dividends - 0%, and expected average life of options - 4 years.
On 22 August 2007, the Company granted to the CEO of DMA Inc options to purchase 120,000 Ordinary shares of the Company. The options vest in three tranches, with each tranche (amounting to 40,000 shares) becoming exercisable provided that the sales targets for 2008, 2009 and 2010, as determined by the Company, are achieved. The options are exercisable for a period of 10 years from the grant date. The options were forfeited in 2009 due to the termination of the CEO of DMA.
The weighted average fair value of options granted by the Company in August 2007 was US$ 1.737 per share and was estimated based on a pricing model ("Binomial Model") and on the following data and assumptions: share price - GBP 1.6975 (US$ 3.38); exercise price - GBP 1.615 (US$ 3.216); expected volatility - 33%; risk-free interest rate 5.03%; expected dividends - 0%, and expected average life of options - 3 years.
Upon the acquisition of Paran in 2007, the Company granted share options for the purchase of 75,000 Ordinary shares to employees of Paran under the Company's 2004 Share Option Plan.
On 24 February 2008, the Company granted share options for the purchase of 447,375 Ordinary shares to directors, officers, employees and others under the Company's 2004 Share Option Plan.
The weighted average fair value of options granted by the Company in February 2008 was US$ 1.91 per share and was estimated based on a pricing model ("Binomial Model") and on the following data and assumptions: share price - GBP 1.755 (US$3.45); exercise price - GBP 1.755 (US$ 3.45); expected volatility - 43.48%; risk-free interest rate 4.7%; expected dividends - 0%, and expected average life of options - 3 years.
In August 2008, the Company authorized an increase in the option pool of 1,000,000 Ordinary shares of the Company. The Stock Option Plan was further amended to include Restricted Share Unit (RSUS).
On 21 August 2008, the Company granted to the CEO of DMW options to purchase 40,000 Ordinary shares of the Company in the exercise price of GBP 1.035 (US$ 1.92). The options granted vest in 4 tranches, with each tranche (amounting to 10,000 shares) under the Company's 2004 Share Option Plan. The weighted average fair value of the options granted was US$ 1.2 per share. The options are exercisable for a period of 10 years from the grant date.
NOTE 4:-EQUITY (Cont.)
The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, share options during the year:
Year ended 31 December
2007 2008 2009
WAEP WAEP WAEP
Number (US$) Number (US$) Number (US$)
Outstanding at 950,500 0.71 1,503,250 1.59 1,849,625 1.66
beginning
of year
Granted during 606,500 2.86 487,375 3.27 - -
the year
Exercised during (40,000) 2.07 (141,000) 0.84 - -
the year *)
Forfeited during (13,750) 2.83 - - (133,750) 2.6
the year
Outstanding at 1,503,250 1.59 1,849,625 1.66 1,715,875 1.75
end of year
Exercisable at 993,000 0.78 1,389,499 1.41 1,226,021 1.38
end of year
*) The weighted average share price at the date of exercise in 2007 and 2008 was GBP 1.641 and GBP 1.584, respectively.
d. Nature and purpose of other reserves:
1. Asset revaluation surplus -
The asset revaluation surplus reflects the increase in the fair value of the identifiable net assets of the Company's interests in entities prior to the acquisition of the controlling interest.
2. Foreign currency translation reserve -
The foreign currency translation reserve is used to record exchange rate differences arising from the translation to the U.S. dollar of the financial statements of those companies in the Group whose functional currency is not the U.S. dollar.
NOTE 5:-SUPPLEMENTARY INFORMATION TO THE STATEMENTS OF COMPREHENSIVE INCOME
Year ended 31 December
2007 2008 2009
US$ '000 US$ '000 US$ '000
a. Revenues:
Rights in TV series *) 24,687 20,355 ***) 13,795
Broadcasting TV channels 4,800 **) 29,726 **) 34,402
Other 454 346 519
29,941 50,427 48,716
*) Includes royalty revenues from licensing ancillary rights of TV series.
**) Mainly revenues from DMS's agreement with HOT.
***) Includes contracts revenues from TV series in the amount of US$ 6,155 thousand.
NOTE 5:-SUPPLEMENTARY INFORMATION TO THE STATEMENTS OF COMPREHENSIVE INCOME (Cont.)
Year ended 31 December
2007 2008 2009
US$ '000 US$ '000 US$ '000
b. Cost of revenues:
Rights in TV series 4,814 5,658 7,839
Broadcasting TV channels 2,750 21,411 23,078
Other 339 799 2,431
7,903 27,868 33,348
*) Included in cost of revenues:
Amortization 4,333 22,203 24,108
c. Selling and marketing expenses:
Advertising and marketing 2,280 3,765 2,693
expenses
Commissions 3,874 1,061 630
6,154 4,826 3,323
d. General and administrative
expenses:
Salaries and related benefits 2,796 4,492 4,061
Management fees 1,432 2,100 1,925
Rental fees and maintenance 1,044 1,453 1,513
of offices
Professional fees 1,347 1,692 1,291
Depreciation and amortization 243 399 508
Doubtful accounts and bad debts 22 - 203
Travel expenses 466 457 339
Others 256 570 561
7,606 11,163 10,401
e. Financial expenses, net:
Bank loans and overdrafts 329 682 673
Income from deposits (57 ) (3 ) -
Other (42 ) 143 (35 )
230 822 638
f. Other expenses (income), net:
Loss (gain) on disposal of (31 ) (7 ) -
property and equipment
Rental income (2 ) - -
Other 4 - -
(29 ) (7 ) -
NOTE 6:-DISCONTINUED OPERATIONS
On December 29, 2009, the Company signed an agreement to sell its 50% interest in DMCS, which operate TV production studios in Argentina, for US$ 850 thousand to the other 50% shareholder of DMCS and to another party. The sale was subject to approval by the Labor Ministry of Argentina, which approval was received in January 2010.
In accordance with IFRS 5, the assets and liabilities of DMCS are presented as assets and liabilities held for sale in the consolidated balance sheet.
The operating results of DMCS are presented as discontinued operations in the consolidated statement of comprehensive income. Comparative figures have been reclassified accordingly.
Composition of income and expenses related to discontinued operations:
Year ended 31 December
2007 2008 2009
US$'000 US$'000 US$'000
Revenues 82 599 176
Cost of revenues (4 ) (128 ) (17 )
Operating expenses (10 ) *) (211) *) (123)
Financial income (expenses), net 7 (10 ) -
Profit before tax 75 250 36
Tax benefit (expense) (28 ) 199 -
Profit from discontinued operations 47 449 36
Impairment of goodwill recognized - - (836 )
on remeasurement to fair value
Selling expenses - - (22 )
Tax benefit - - 38
Total profit (loss) from 47 449 (784 )
discontinued operations
*) includes depreciation in the amount of US $ 90 thousand.
Composition of main groups of assets and liabilities held for sale as of 31 December 2009:
December 31,
2009
US$'000
Cash and cash equivalents 8
Trade and other current receivables 230
Property and equipment, net 2,392
Total assets 2,630
Trade and other payables 1,048
Other long-term liabilities 371
Deferred tax 361
Total liabilities 1,780
NOTE 6:-DISCONTINUED OPERATIONS (Cont.)
Composition of the net cash flows related to discontinued operations:
Year ended 31 December
2007 2008 2009
US$'000 US$'000 US$'000
Net cash flows from operating (306 ) (54 ) 923
activities
Net cash flows from financing 257 39 (956 )
activities
Net cash flows from discontinued (49 ) (15 ) (33 )
operations
NOTE 7:-EARNINGS PER SHARE
The following reflects the income and share data used in the basic and diluted earnings per share computations:
Year ended 31 December
2007 2008 2009
US$ '000 US$ '000 US$ '000
Profit (loss) for the 6,526 2,754 (1,809 )
year from continuing
operations attributable to
equity holders of the
parent for basic
and diluted earnings per share
Profit (loss) for the year 47 449 (784 )
from discontinuing
operations attributable to
equity holders of the
parent for basic
and diluted earnings per share
Weighted average number 20,544,929 23,099,928 25,154,096
of Ordinary shares
for basic earnings per share
Effect of dilution:
Share options 785,439 467,201 117,379
Adjusted weighted average 21,330,368 23,567,129 25,271,475
number of Ordinary
shares for diluted
earnings per share
NOTE 8:-SEGMENT INFORMATION
a. General:
1. The Group companies operate in two principal business segments: production, sale and distribution of TV series and broadcasting of TV channels.
2. The segment's assets include all the operating assets which are used by the segment and are composed mainly of cash and cash equivalents, trade and other receivables, equipment and other assets. Most of the assets are attributed to a specific segment.
3. The segment's liabilities include all the operating liabilities that derive from the operating activities of the segment and are composed mainly of trade payables and other accounts payable. The segment's assets and liabilities do not include taxes on income.
4. As described in Note 6, in 2009 the Company signed an agreement to sell its 50% interest in DMCS. The results of DMCS for all periods presented, are included in the segment disclosures.
NOTE 8:-SEGMENT INFORMATION (Cont.)
Year ended 31 December 2007
Broadcasting
Rights of of TV Total
TV series channels Other Adjustments consolidated
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Revenues:
Sales to 24,687 4,800 536 (82) 29,941
external
customers
Inter-segment 27 - 2,322 (2,349) -
sales
Total 24,714 4,800 2,858 (2,431) 29,941
revenues
Segment 9,344 782 481 (1,137) 9,470
results
Unallocated (1,192)
expenses
Operating 8,278
profit
Financial 230
expenses,
net
Other (29)
income,
net
Taxes on 1,501
income
Profit 6,576
for
the
year
from
continuing
operations
Assets
and
liabilities:
Segment 42,404 10,339 2,801 55,544
assets
Unallocated 4,306
assets
Total 59,850
assets
Segment 10,200 1,925 1,049 13,174
liabilities
Unallocated 8,670
liabilities
Total 21,844
liabilities
Other
segment
information:
Capital
expenditure:
Tangible 3,157 720 345 4,222
fixed
assets
Intangible 11,411 - 615 12,026
assets
Depreciation 222 154 - 376
Amortization 3,571 629 - 4,200
NOTE 8:-SEGMENT INFORMATION (Cont.)
Year ended 31 December 2008
Broadcasting
Rights of of TV Total
TV series channels Other Adjustments consolidated
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Revenues:
Sales to 20,355 29,726 945 (599) 50,427
external
customers
Inter-segment 513 - 3,168 (3,681) -
sales
Total 20,868 29,726 4,113 (4,280) 50,427
revenues
Segment 5,354 4,583 198 (2,058) 8,077
results
Unallocated (1,507)
expenses
Operating 6,570
profit
Financial 822
expenses,
net
Other (7)
income,
net
Taxes on 2,365
income
Profit 3,390
for
the
year
from
continuing
operations
Assets
and
liabilities:
Segment 44,886 16,827 6,659 68,372
assets
Unallocated 5,199
assets
Total 73,571
assets
Segment 14,542 9,104 1,378 25,024
liabilities
Unallocated 5,835
liabilities
Total 30,859
liabilities
Other
segment
information:
Capital
expenditure:
Tangible 418 335 170 923
fixed
assets
Intangible 13,051 20,485 1,340 34,876
assets
Depreciation 321 305 168 794
Amortization 4,251 17,580 67 21,898
NOTE 8:-SEGMENT INFORMATION (Cont.)
Year ended 31 December 2009
Broadcasting
Rights of of TV Total
TV series channels Other Adjustments consolidated
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Revenues:
Sales to 13,795 34,402 695 (176) 48,716
external
customers
Inter-segment 94 - 3,036 (3,130) -
sales
Total 13,889 34,402 3,731 (3,306) 48,716
revenues
Segment 145 4,343 (1,942) (58) 2,488
results
Unallocated (844)
expenses
Operating 1,644
profit
Financial 638
expenses,
net
Other -
income,
net
Taxes on 1,669
income
Profit (663)
(loss)
for the
year
from
continuing
operation
Assets
and
liabilities:
Segment 47,049 20,937 5,322 73,308
assets
Unallocated 5,434
assets
Total 78,742
assets
Segment 8,235 12,151 3,297 23,683
liabilities
Unallocated 8,660
liabilities
Total 32,343
liabilities
Other
segment
information:
Capital
expenditure:
Tangible 147 118 59 324
fixed
assets
Intangible 13,221 18,321 - 31,542
assets
Depreciation 304 282 166 752
Amortization 7,368 16,186 1,236 24,790
NOTE 8:-SEGMENT INFORMATION (Cont.)
c. Geographic information:
The following tables present revenues from external customers and non-current assets, based on geographical areas, for the years ended 31 December 2007, 2008 and 2009.
Israel Europe Central Asia Other 2007
and Total
South
America
Year ended US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
31
December
2007
Sales to 8,110 10,026 9,541 1,738 526 29,941
external
customers
Israel Switzerland Argentina Other 2007
Total
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Non-current assets 12,218 17,413 5,793 20 35,444
Israel Europe Central Asia Other 2008
and Total
South
America
Year ended US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
31
December
2008
Sales to 31,099 7,390 6,632 4,470 836 50,427
external
customers
Israel Switzerland Argentina Other 2008
Total
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Non-current assets 13,993 23,818 7,400 258 45,469
Israel Europe Central Asia Other 2009
and Total
South
America
Year ended US$ '000 US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
31
December
2009
Sales to 38,468 2,747 2,725 4,446 330 48,716
external
customers
NOTE 8:-SEGMENT INFORMATION (Cont.)
Israel Switzerland Argentina Other 2009
Total
US$ '000 US$ '000 US$ '000 US$ '000 US$ '000
Non-current assets 16,767 29,109 541 231 46,648
Non-current assets include net investments in rights of television series, intangible assets, property and equipment and other long-term assets
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