RNS Number:0737B
Music Choice Europe PLC
12 September 2002
Music Choice Europe plc
Interim Results for the six months ended 30 June 2002
12 September 2002
Music Choice Europe plc ("Music Choice" or "the Company"), Europe's leading
digital audio broadcaster, is pleased to announce interim results for the six
months ended 30 June 2002.
Interim Interim
2002 2001
Turnover #4.4m #3.8m
Operating loss #4.7m #6.8m
Loss before tax #4.3m #5.3m
Loss per share - basic and diluted 3.6p 4.4p
* Strong revenue growth with turnover up 17% (June to June)
* Well placed to develop a profitable, growing business with #23.5
million in cash and cash equivalents
* Subscriber numbers up by 21% to 12.1 million (June 2001: 10 million)
and doubled since IPO in October 2000
* Acquisition of Multimusic in July 2002 for Euro1.1 million bringing
annual revenues of #600,000 and 1.8 million subscribers
in Italy and in Poland, as well as opening up a new market for the
Group in Taiwan
* Launched interactive application on Canal Satelite Digital in Spain in
March 2002
* New revenues being developed through advertising sponsorship;
advertisers include Durex, United International Pictures and O2
Mike Thomas, Chairman, commented:
"Despite ongoing difficult market conditions, Music Choice is still growing as a
business. With the number of digital homes expected to continue growing over
the coming years and tight controls over the cash reserves and spending plans
within Music Choice, the Board looks forward to the future with confidence."
- Ends -
For further information, please contact:
Music Choice Europe plc 020 7014 8700
Simon Bazalgette, Chief Executive
Jonathan Apps, Chief Financial Officer
Weber Shandwick Square Mile 020 7950 2800
Louise Robson or Stephanie Smart
Interim Results for the six months ended 30 June 2002
12 September 2002
CHAIRMAN'S STATEMENT
The first six months of the year have again seen steady and sustained growth in
line with our financial and commercial objectives, despite an increasingly
volatile economic climate in key media sectors.
Revenues have grown by 17%, and 12.1 million subscribers, across Europe and the
Middle East, now receive the Music Choice service. We are continuing to develop
our interactive capabilities and plan to launch the second generation of our
interactive TV service in the coming months.
European digital TV platforms, including Music Choice distributors Premiere in
Germany and Stream in Italy, have been beset by serious financial difficulties.
At the same time, the dramatic worldwide advertising slump has meant that, like
many companies, we have not generated the revenues we would have hoped through
sponsorship and interactive advertising.
Turnover for the half year rose 17% to #4.4 million (2001: #3.8 million), as a
result of our increased subscriber base. In the same period, operating losses
reduced from #6.8 million to #4.7 million.
With the number of digital homes expected to increase steadily over the next few
years, and #23.5 million in cash and cash equivalents, we are still well placed
to develop a profitable growing business.
To ensure that the company can continue to develop during this current period of
worldwide economic uncertainty, we have taken action to cut costs in areas of
the business which do not impact our ability to grow our revenue base. This
included the decision in June to reduce the headcount in the UK by 24.
Nevertheless, we continue to manage our cost base very carefully, to ensure that
our service and our structure fit the needs of consumers and clients as well as
the economic realities of the time. This should leave us ideally positioned to
take advantage of the market recovery when it comes and strengthen our position
as the leading digital audio broadcaster in Europe.
Advertising sales
Trying to establish a new advertising medium during the worst advertising
recession in recent memory has not been easy, with advertisers unwilling to
experiment with new technology during difficult times. However, we remain firmly
committed to selling advertising on the interactive service and anticipate that
our streamlined media sales operation will build on initial successes in
offering branded content to advertisers. Companies, including IPC and
Darkerthanblue, have taken trial sponsorships of some of our channels, while
advertisers such as Durex, United International Pictures and telecoms giant O2
have all bought advertising campaigns on the service.
Multimusic
On July 26, 2002, we completed the acquisition of our biggest European
competitor Multimusic. The purchase, for a price of up to Euro1.1 million
(#697,000), increases our distribution by 1.8 million households, or 15%,
including almost one million homes on the Telepiu platform in Italy and 600,000
on Canal+ in Poland. The distribution on Telepiu is of particular importance, at
a time when Telepiu and our existing Italian distributor Stream are in
protracted negotiations regarding their future relationship. With deals now
signed with both companies, Music Choice should be well-placed to secure
distribution with a possible single platform. The acquisition also sees us
secure our first entry into Asia, with distribution in Taiwan, and we are
reviewing the possibility to use this as a platform for expansion to other
digital TV platforms in Asia.
Product Development
New screen designs, within our existing brand identity, have been developed to
make the service more stimulating and appealing to the consumer, while at the
same time providing advertisers with a more ownable and distinctive proposition.
This new look will be introduced on Sky Digital in the UK and Canal Satelite
Digital in Spain in October and we are already looking at further enhancements
to the service for the first half of 2003.
Distribution
Our distribution increased by one million homes over the first half of the year
and we continue to sign and renew key deals across Europe, but there is
uncertainty in the market, with two of our three biggest distributors going
through merger or financial restructuring. However, we did successfully launch
the interactive application on Canal Satelite Digital in Spain earlier this
year. As platforms across Europe develop their interactive capabilities, we will
be looking aggressively to roll out the full service, while at the same time
developing the application to allow greater interactivity with the audience.
Changes to the Board
On May 3, Dr Kenji Kitatani and Philippe-Olivier Rousseau were appointed to the
Board as Non-Executive Directors. Dr. Kitatani becomes the new representative
from Sony Corporation of America, one of Music Choice's founding corporate
shareholders. Mr Rousseau is an Executive Director and Senior Advisor at BNP
Paribas Structured Finance, a division of the leading French bank. He has held a
series of senior posts in broadcast and telecommunications companies, and his
advice will be helpful to us as we expand our business across Europe, most
notably in France, one of the largest digital television markets. I would like
to thank Gary Podorowsky who left the Board earlier this year, for his valuable
contribution to the business since its inception in 1993.
Outlook
Despite ongoing difficult market conditions, Music Choice is still growing as a
business. With the number of digital homes expected to continue growing over the
coming years, and tight controls over the cash reserves and spending plans
within Music Choice, the Board looks forward to the future with confidence.
For further information, please contact:
Music Choice Europe plc 020 7014 8700
Simon Bazalgette, Chief Executive
Jonathan Apps, Chief Financial Officer
Weber Shandwick Square Mile 020 7950 2800
Louise Robson or Stephanie Smart
Group Profit and Loss Account
For the six months ending 30 June 2002
6 months to 6 months to 12 months to
30 June 30 June 31 December
Notes 2002 2001 2001
#'000 #'000 #'000
Turnover 4,424 3,778 8,019
Cost of sales (3,312) (2,825) (6,449)
---------- ---------- ----------
Gross profit 1,112 953 1,570
========== ========== ==========
Distribution costs (2,900) (2,735) (7,214)
Impairment of intangible fixed assets - (1,211) (1,211)
Depreciation and impairment of
tangible fixed assets (614) (1,120) (2,701)
Other administrative expenses (2,316) (2,722) (5,752)
Administrative expenses (2,930) (5,053) (9,664)
---------- ---------- ----------
(5,830) (7,788) (16,878)
---------- ---------- ----------
Operating loss (4,718) (6,835) (15,308)
========== ========== ==========
Bank interest receivable 430 1,518 2,257
Loss on disposal of fixed assets - - (11)
---------- ---------- ----------
430 1,518 2,246
========== ========== ==========
Loss on ordinary activities
before taxation (4,288) (5,317) (13,062)
Taxation on loss on ordinary
activities (72) (94) (158)
---------- ---------- ----------
Loss for the period/year (4,360) (5,411) (13,220)
========== ========== ==========
Loss per share
Basic - pence per share 3 (3.6) (4.4) (10.9)
Diluted - pence per share 3 (3.6) (4.4) (10.9)
========== ========== ==========
Statement of Total Recognised Gains and Losses
6 months to 6 months to 12 months to
30 June 30 June 31 December
2002 2001 2001
#'000 #'000 #'000
Loss for the financial period/year (4,360) (5,411) (13,220)
Exchange difference on translation of net
assets of subsidiary undertakings 23 (14) 2
---------- ---------- ----------
Total recognised gains and losses relating
to the financial period/year (4,337) (5,425) (13,218)
========== ========== ==========
Group Balance Sheet
As at 30 June 2002
30 June 30 June 31 December
2002 2001 2001
#'000 #'000 #'000
Fixed assets
Tangible assets 283 725 752
---------- ---------- ----------
283 725 752
---------- ---------- ----------
Current assets
Debtors 4,596 5,013 4,514
Investments 23,736 35,357 29,268
Cash 69 107 135
---------- ---------- ----------
28,401 40,477 33,917
---------- ---------- ----------
Creditors: amounts falling due within one year (6,482) (6,919) (8,130)
---------- ---------- ----------
Net current assets 21,919 33,558 25,787
---------- ---------- ----------
Total assets less current liabilities 22,202 34,283 26,539
========== ========== ==========
Capital and reserves
Equity share capital 1,227 1,223 1,224
Share premium account 46,160 46,460 46,137
Other reserve 22,922 22,550 22,922
Profit and loss account (48,107) (35,950) (43,744)
---------- ---------- ----------
Equity shareholders' funds 22,202 34,283 26,539
========== ========== ==========
Group Statement of Cashflows
For the six months ending 30 June 2002
30 June 30 June 31 December
Notes 2002 2001 2001
#'000 #'000 #'000
Net cash outflow from
operating activities 4 (6,214) (5,304) (9,224)
---------- ---------- ----------
Returns on investment and
servicing of finance
Interest received 430 1,518 2,257
---------- ---------- ----------
430 1,518 2,257
---------- ---------- ----------
Taxation
Tax paid (23) (25) (135)
Consortium relief received 54 53 137
---------- ---------- ----------
31 28 2
---------- ---------- ----------
Capital expenditure and
financial investment
Payments to aquire tangible
fixed assets (145) (1,238) (2,853)
---------- ---------- ----------
(145) (1,238) (2,853)
---------- ---------- ----------
Acquisitions and disposals
Payment to acquire subsidiary
undertaking - (680) (828)
---------- ---------- ----------
- (680) (828)
---------- ---------- ----------
Net cash outflow before management
of liquid resources and financing (5,898) (5,676) (10,646)
Management of liquid resources
Purchase of interest bearing
investments - - (5,085)
Sale of interest bearing investments 5,532 4,032 15,206
---------- ---------- ----------
5,532 4,032 10,121
---------- ---------- ----------
Decrease in cash in the period/year (366) (1,644) (525)
========== ========== ==========
Reconciliation of Net Cashflows to Movement in Net Funds
30 June 30 June 31 December
2002 2001 2001
#'000 #'000 #'000
Decrease in cash in the period/year (366) (1,644) (525)
Purchase of interest bearing investments - - 5,085
Sale of interest bearing investments (5,532) (4,032) (15,206)
---------- ---------- ----------
Movement in net funds in the period/year (5,898) (5,676) (10,646)
Net funds at 1 January 2002 29,403 40,049 40,049
---------- ---------- ----------
Net funds at 30 June 2002 23,505 34,373 29,403
---------- ---------- ----------
Notes to the Interim Statement
1 Status of Interim Report
The unaudited Interim Statement was approved by the Board on 11 September 2002.
2 Basis of preparation
The unaudited Interim Accounts for the 6 months to 30 June 2002 have been
prepared in accordance with accounting policies adopted in the preparation of
the accounts for the year to 31 December 2001 and which are set out in the
Company's Annual Report, other than in respect of Financial Reporting Standard
(FRS) 19, Deferred Tax. The adoption of FRS19 has resulted in a change of
accounting policy for deferred tax, which is now recognised on a full provision
basis. Previously, deferred tax was provided for on a partial provision basis.
This change in accounting policy has had no impact on the current or prior
period results or balance sheets. Due to the loss making present position, there
is no net effect.
The abridged results for the 12 months to 31 December 2001 do not constitute
statutory accounts within the meaning of the Companies Act 1985. The auditor's
report on the Statutory Accounts for the 12 months to 31 December 2001 was
unqualified and did not contain any statement under Section 237 of that Act.
These accounts have been delivered to the Registrar of Companies.
3 Loss per share
The calculation of loss per share is in accordance with FRS 14 and is based on
the loss for the period of #4,360,000 (6 months to 30 June 2001: #5,411,000) and
the average number of shares in issue during the period 122,129,860 (6 months to
30 June 2001: 121,937,859).
4 Reconciliation of operating loss to net cash flow from operating activities
6 months to 6 months to 12 months to
30 June 30 June 31 December
2002 2001 2001
#'000 #'000 #'000
Operating loss (4,718) (6,835) (15,308)
---------- ---------- ----------
Depreciation of tangible fixed assets 400 802 799
Impairment of tangible fixed assets 214 318 1,902
Impairment of intangible fixed assets - 1,211 1,211
(Increase)/decrease in debtors (136) 113 504
(Decrease)/increase in creditors (1,974) (913) 1,668
---------- ---------- ----------
Net cash outflow from operating activities (6,214) (5,304) (9,224)
========== ========== ==========
Further copies are available from the registered office of Music Choice Europe
plc, Fleet House, 57-61 Clerkenwell Road, London EC1M 5LA.
Report of the Auditors
Introduction
We have been instructed by the Company to review the financial information for
the 6 months ended 30 June 2002 which comprises the Group Profit and Loss
Account, Group Balance Sheet, Group Statement of Cashflows, Statement of Total
Recognised Gains and Losses and the related notes 1 to 4. We have read the other
information contained in the interim report and considered whether it contains
any apparent misstatements or material inconsistencies with the financial
information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the Directors. The Listing Rules
of the Financial Services Authority require that the accounting policies and
presentation applied to the interim figures should be consistent with those
applied in preparing the preceding annual accounts except where any changes, and
the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices board for the United Kingdom. A review consists
principally of making enquiries of Group management and applying analytical
procedures to the financial information and underlying financial data and based
thereon, assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review excludes audit
procedures such as tests of controls and verification of assets, liabilities and
transactions. It is substantially less in scope than an audit performed in
accordance with United Kingdom Auditing Standards and therefore provides a lower
level of assurance than an audit. Accordingly we do not express an audit opinion
on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the 6 months ended
30 June 2002.
Ernst & Young LLP, London, 11 September 2002
This information is provided by RNS
The company news service from the London Stock Exchange
END
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