Final Results
30 March 2009
Talent Group plc
("Talent" or the "Company")
Final results for the year ended 30 September 2008
Chairman's Statement
I am pleased to report your Company's results for the year ended 30th September
2008.
This has been another difficult year for the television industry and your
company has not been immune from these difficulties. Turnover for the period
has fallen to £1,841,000 against £3,333,000 last year. With continuing tight
control of administrative expenses, (down by 15 per cent. compared with the
same period last year, even after including the costs of moving office and the
acquisition of a regional production company) the loss before taxation for the
period was £449,000 against £320,000 last year. Cash at the year end was £
178,000, which appears to be a substantial reduction when compared to last
year's figure. However, the cash balance as at 30 September 2007 included
substantial sums paid to us by broadcasters to provide funding for their
productions. There was only one production in progress at the end of the
financial year under review and, at that date, we were financing all the
production costs ourselves and did not receive a contribution from the
broadcaster until after the year end. Cash continues to be managed carefully
and cash flow was assisted by loans to the company earlier in the year, which
are more fully detailed in note 6 to the accounts.
Since my interim statement, the television industry has continued to go through
a period of budget cuts and personnel changes particularly at senior and
commissioning level. This has been compounded by the uncertain economic
conditions worldwide and the consequent effect on broadcasters and advertisers.
We are therefore cautious for the immediate future, hence our recent office
move and personnel changes which will further reduce our annual overheads
considerably. Notwithstanding the difficult market, we still believe that these
conditions will offer unexpected business and production opportunities which we
will seek out and exploit.
Following the departure of John Kaye Cooper (to take up a major commissioning
role at ITV) in April, our new Director of Entertainment, Jonathan Glazier has
quickly built up an extensive development slate across a wide range of genres.
In August he executive produced `Everybody Dance Now' for primetime Saturday
night ITV 1 which performed very well (the format is now being distributed
worldwide by Digital Rights distribution) and we currently have a new series of
ten one hour programmes entitled `How Clean is Your Crime Scene?' in production
with US co-producer Steel Spyda. This series is being shot entirely in
California and reflects our continuing efforts to widen our market in the USA.
Jonathan's arrival has also enabled our Managing Director Tony Humphreys to
focus on diversifying our development slate to include the more high value area
of scripted comedy both here and in the US. We currently have scripts in
development and are making steady progress in this area. We hope to report
further on these activities in the near future.
In September 2008 we acquired kmb Productions Ltd., a regional production
company and re-named the company Talent Television South Ltd. I am pleased to
report that since the acquisition the new division is making good progress.
Since the acquisition, Talent Television South Ltd has been named as one of the
BBC's `special' regional companies under its XM25 scheme, set up to promote and
nurture regional production and already has a number of projects under
consideration with broadcasters. I would like to take this opportunity to
welcome Talent Television South Ltd's Managing Director Kate Beal and her team
to the group.
With our new staff we remain confident in our ability to become a major force
in television production both in the UK and internationally. I would like to
thank the entire team at Talent, and our advisers and shareholders who have
supported us through these difficult market conditions.
The current year will undoubtedly be challenging but we believe we have the
personnel, the expertise and the development slate to make us well placed to
benefit from any opportunity that arises.
Terry Bate
Chairman
30 March 2009
Business Review and Principle Activities
As the Chairman has reported, the television industry continues to go through
difficult times and broadcasters and advertisers have clearly not been immune
to the uncertain economic conditions worldwide. This has resulted in fewer
commissions generally and lower budgets, the impact of which has been to slow
down the progress of your company.
Mindful of these continuing difficulties, your Board maintained its focus on
operational efficiencies and also took the opportunity of a break in the
company's property lease to find more suitable accommodation at a lower rent in
order to further reduce annual overheads in future years. We also invested in
our own editing facilities which will enable us to produce promotional tapes
for our new projects at a reduced cost. It offers the opportunity for us to be
more competitive in our pricing of productions going forward.
Reviewing our main production activity over the last year, we delivered our
fourth and fifth series of Best of Friends for CBBC, which has continued to
perform well for the broadcaster. We further developed our relationship with
ITV with two productions, An Audience Without Jeremy Beadle, a tribute to the
deceased entertainer and presenter and Everybody Dance Now, a one hour prime
time Saturday night special. The latter performed very well against The Last
Night of the Proms on BBC One and options over the show's format have recently
been taken in several overseas territories. At the moment, we are currently in
production for a new ten part series entitled How Clean is Your Crime Scene?
which is being co-produced with US based Steel Spyda and shot entirely on
location in and around San Francisco Bay.
How Clean is Your Crime Scene? reflects our continued efforts to produce shows
in and for the US and international markets. We have made progress in the US in
our diversification into scripted comedy, where we have developed a comedy
project with an established US producer based in Los Angeles and also have a
comedy drama series in development with a New Zealand co-producer and a
scripted kid's animation with an established French animation house. We have
recently acquired the rights on a novel which we are developing as our first
"theatrical" film project under Talent Films. We hope to be able to give
further information on these projects in the near future.
Continuing on the international front, we anticipate a sixth Test the Nation in
Japan in May 2009. The Environment Test that the Japanese produced in 2008
performed very well and pleased both the broadcaster, TV Asahi and programme
sponsors.
The digital media project we announced at this time last year is also still
very much alive. After vigorous development we now have an exciting proposition
which we are about to pitch to potentially interested parties and broadcasters.
Finally, I am pleased to report that Talent Television South has integrated
into the Talent Group with speed and efficiency. We are confident that the
company's acceptance on to the BBC's exclusive regional production initiative
XM25 will result in opportunities that in turn will help your company return to
profitability.
Tony Humphreys
Managing Director
30 March 2009
Further Enquiries
Talent Group plc
Tony Humphreys Tel: 020 7822 3900
John East & Partners Limited
John East Tel: 020 7628 2200
Audited consolidated income statement for the year ended 30 September 2008
2008 2007
Notes £'000 £'000
Revenue 1,841 3,333
Cost of sales (1,271) (2,312)
Gross profit 570 1,021
Administrative expenses (1,008) (1,200)
Finance income 7 21
Finance costs (10) -
Loss before taxation and exceptional costs (441) (158)
Exceptional costs - (162)
Loss before taxation (441) (320)
Income tax expense
- Prior year 2 13 (10)
- Current tax - 7
Loss for the year (428) (323)
Loss per share (pence) 3 (2.63p) (1.99p)
Diluted loss per share (pence) 3 (2.53p) (1.94p)
The income statement has been prepared on the basis that all operations are
continuing operations.
The accounting policies and the notes, which are set out in the Company's
report and accounts, form an integral part of these financial statements.
There are no recognised gains or losses other than those passing through the
income statement.
Audited consolidated balance sheet as at 30 September 2008
2008 2007
Notes £'000 £'000 £'000 £'000
Assets
Non-current assets
Goodwill 1,082 987
Other intangible assets 37 43
Property, plant & equipment 49 62
1,168 1,092
Current assets
Inventories 68 54
Trade receivables 548 411
Cash & cash equivalents 5 178 943
794 1,408
Total assets 1,962 2,500
Equity and liabilities
Equity
Share capital 6,315 6,310
Share premium 11,675 11,634
Share option reserve 120 117
Retained earnings (17,162) (16,734)
Total equity 948 1,327
Current liabilities
Borrowings 6 600 -
Trade & other payables 7 414 1,173
Total Liabilities 1,014 1,173
Total equity & liabilities 1,962 2,500
Audited consolidated cash flow statement from the year ended 30 September 2008
2008 2007
Notes £'000 £'000 £'000 £'000
Cash flows from operating
activities
Loss before taxation (441) (320)
Adjustments for:
Depreciation of tangible assets 20 19
Amortisation of intangible assets 6 6
Loss on disposal of tangible 3 -
assets
Interest received (7) (21)
Interest paid 10 -
(409) (316)
Increase in trade and other (140) (42)
receivables
Increase in inventories (14) (15)
(Decrease)/increase in other (777) 139
payables
(1,340) (234)
Tax refund received 21 -
Tax paid (1) (45)
Net cash from operating activities (1,320) (279)
Cash flows from investing
activities
Purchase of property, plant and (8) (15)
equipment
Interest received 7 21
Acquisition of subsidiary net of 2 -
cash acquired
Net cash used in investing 1 6
activities
Cash flows from financing a
ctivities
Proceeds from borrowing 600 -
Repayments of borrowings (36) -
Interest paid (10) -
Net cash used in financing 554 -
Net decrease in cash and cash 8 (765) (273)
equivalents
Cash and cash equivalents at the
beginning
of the year 8 943 1,216
Cash and cash equivalents at the 8 178 943
end of the year
Audited consolidated statement of changes in equity from the year ended 30
September 2008
At 1 October 20066,31011,634112(16,411)1,645
Share Share Share Retained Total
Option
Capital Premium Earnings £'000
Reserve
£'000 £'000 £'000
£'000
Changes in equity
Loss for the year - - - (323) (323)
Equity share option - - 5 - 5
recognised
At 1 October 2007 6,310 11,634 117 (16,734) 1,327
Changes in equity
Loss for the year - - - (428) (428)
Equity share option - - 3 - 3
recognised
New shares issued 5 41 - - 46
At 30 September 2008 6,315 11,675 120 (17,162) 948
Notes to the preliminary results for the year ended 30 September 2008
1. Basis of preparation
These financial statements have been prepared in accordance with International
Financial Reporting Standards, International Accounting Standards and
Interpretations (collectively IFRS) issued by the International Accounting
Standards Board (IASB) as adopted by European Union ("adopted IFRSs"), and are
in accordance with IFRS as issued by the IASB.
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 30 September 2007 and 2008, but is
derived from those accounts. Statutory accounts for 2007 have been delivered to
the Registrar of Companies and those for 2008 will be delivered following the
Company's Annual General Meeting. The Auditors have reported on those accounts;
their reports were unqualified and did not contain statements under the
Companies Act 1985, sections 237(2) or (3).
2. Taxation
2008 2007
£'000 £'000
Domestic current year tax
UK corporation tax - (7)
Domestic prior year tax
UK corporation tax (13) 10
(13) 3
Factors affecting the tax charge for the period:
Loss on ordinary activities before taxation (449) (320)
Loss on ordinary activities multiplied by the
standard rate of
Corporation tax in the UK of 21 per cent. (2007: 20 (94) (64)
per cent.)
Expenses not deductible for tax purposes 5 2
Depreciation in excess of capital allowances for the 5 (1)
year
Unutilised tax losses 84 56
Prior year tax (13) 10
Current tax charge for the year (13) 3
3. Loss per share
2008 2007
£'000 £'000
Numerator
Basic/Diluted: Net loss (428) (323)
Denominator
Basic: Weighted average shares 16,241,791 16,210,284
Effect of diluted securities: stock options 643,439 454,667
Diluted: Adjusted weighted average shares 16,885,230 16,664,951
Basic loss per share is calculated by dividing the net loss for the period
attributable to ordinary shareholders by the weighted average number of
ordinary shares outstanding during the period.
Diluted loss per share is computed using the weighted average number of shares
outstanding during the period adjusted for the dilutive effect of stock options
outstanding for the period.
4. Business combinations
On 1 September 2008, Talent Group Plc acquired 100 per cent. of the voting
equity share capital of KMB Productions Limited for a cash consideration of £
1,100. Goodwill arising on acquisition amounted to £95,197.
The net assets of the business acquired during the year, as extracted from the
acquiree's accounting records, and the fair value adjustments ascribed thereto,
are set out below:
Book Fair value Accounting Fair
values alignments policy values
acquired £'000 alignments acquired
£'000 £'000 £'000
Property, plant and equipment 1 - - 1
Trade and other receivables 1 - - 1
Cash and cash equivalents - - - -
Long-term borrowings (82) - - (82)
Short-term borrowings (9) - - (9)
Trade and other payables (5) - - (5)
Total fair value of net assets (94)
acquired
Goodwill (95)
Total consideration 1
Total consideration comprised of cash only.
The net cash inflow arising from this business combination is £873, which
comprises of the cash and cash equivalents acquired of £227 less the cash
consideration paid of £1,100.
The goodwill arising on acquisition is attributable to future operating
synergies from the combination and cross-selling opportunities.
On 12 September 2008, the company's name was changed to Talent Television South
Ltd.
In the period following acquisition, Talent Television South Ltd. has
contributed £10,220 to the Group's loss.
If the acquisition of Talent Television South Ltd. had been completed on the
first day of the period, the revenue of the Group would have been £1,882,000
and the loss of the Group would have been £475,000.
5. Cash and cash equivalents
2008 2007
£'000 £'000
General office 178 918
Controlled productions - 25
178 943
6. Borrowings
2008 2007
£'000 £'000
Borrowings 600 -
The above borrowings are a loan from Terry Bate, Non-Executive Chairman.
Interest is payable monthly at the rate of a minimum of 1.5 per cent. above
base rate. The loan is unsecured and no guarantees were given.
a) Ageing
The loan is due on demand.
b) Fair values
Cash and cash equivalents
The carrying value approximates to fair value.
Other assets and liabilities
No disclosure of fair value has been made as the carrying value is a reasonable
approximation of the fair value.
7. Trade and other payables: amounts falling due within one year
2008 2007
£'000 £'000
Social security and other taxes 25 147
Other payables 293 553
Controlled productions 35 392
Accruals and deferred income 61 81
414 1,173
8. Reconciliation of net cash flow to movement in cash and cash equivalents
2008 2007
£'000 £'000
Net decrease in cash and cash equivalents (765) (273)
Cash and cash equivalents at beginning of year 943 1,216
Cash and cash equivalents at end of year 178 943
9. Financial commitments
Office Office Land and Land and
equipment equipment buildings buildings
2008 2007 2008 2007
£'000 £'000 £'000 £'000
At 30 September 2008, the Group had
commitments under non - cancellable
operating leases as follows:
Expiry date:
Between two and five years 6 8 160 92
At 30 September 2008 there are no terms of renewal or purchase options and
escalation clauses. There are also no restrictions imposed by lease
arrangements concerning dividends, additional debt and further leasing.
10. Dividend
The Directors do not proposed a dividend payment.
11. Copies of report and accounts
Copies of the Report and Accounts will be posted to shareholders shortly, will
be available from the Company's registered office Lion House, Red Lion Street,
London WC1R 4GB and will be available from the Company's website
www.talenttv.com.
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