Interim Results
Ten Alps PLC
14 December 2007
14 December 2007
Ten Alps Plc
('Ten Alps' or the 'Group')
Interim Results
Ten Alps Plc, the factual media company, announces its IFRS interim results for
the period ended September 30, 2007.
Half-year results are on track, current trading is strong and the full year is
set to meet expectations.
The Group was founded by Alex Connock and Bob Geldof in 1999 and has since
developed into one of the first integrated media businesses - offering
specialist factual content across Online, TV, B2B Print and Events.
Ten Alps now has 650 staff, 61,000 clients and annualized revenues above £75m. A
year of internal development spending has concluded with successful delivery of
fast-growing ventures in online TV.
Financial highlights
• Turnover £37.6m, up 11.9% (2006: £33.6m)
• EBITDA £2.33m, up 3.1% (2006: £2.26m)
• EBITA at £1.97m, up 3.1% (2006: £1.91m)
• Adjusted basic EPS up 30.1% at 2.55p (2006: 1.95p) and adjusted diluted EPS
up 31% to 2.49p (2006: 1.90p)
• Online and development expenditure of £700,000
• Pre-tax profit £1.5m (2006: £1.61m) following reassessment of intangibles
• Cash £10.8m (2006: £13.2m) reflecting three acquisitions, and later payment
of September public sector client invoices.
• Trade receivables increased 52.3% from £10.7m in 2006 to £16.3m in 2007.
Operational highlights
2007 2006 % Change 2007 Gross 2006 % Change
Income Income Profit Gross Profit
Communications £24.7m £18.7m 32.1% £7.7m £6.0m 28.3%
Broadcast £12.9m £14.9m (13.4)% £2.9m £3.6m (19.4)%
Communications Division
• Consolidated position within UK Trade Print Media, increasing
publications to 630 across all sectors, including new work for The British
Chamber of Commerce, Mercedes Benz and the PGA.
• Now producing 65 events annually, including new owned events in the legal,
transport and public sector markets.
• Good progress in commercial online TV, and contribution is now generated
across 100 websites and 270 online publications.
• Completed three acquisitions since announcement of last results: DBDA
(corporate responsibility content - mostly web), Mongoose Media (specialist
advertising sales) and MMA (online video advertising production.)
Broadcast Division
• Financial performance weighted towards second half, with robust UK and Irish
slates in place
• Market leader in public sector Online TV with successfully-launched Kent TV,
a pioneering online TV channel funded by Kent County Council, and Ten Alps
currently in discussion with a number of other local authorities
• Continued audience growth and online expansion of Teachers TV
• Ten Alps production Companies produced leading programmes including the '
The Last Days of Tony Blair', 'Gordon Brown - Fit for Office?' and a number
of investigative 'Dispatches' for Channel 4
Commenting on the Results, Alex Connock, Chief Executive of Ten Alps, said:
'Our financial performance in the first half was on track, given that our
earnings are now second half weighted.
Our investment added an online video advertising production capacity which is
attractive to existing commercial clients, alongside further expansion in our
Print and Event portfolios.
Our current trading is strong and we are on track to meet market expectations
for the full year.'
For further information, please contact:
Ten Alps plc
Alex Connock, CEO Tel: +44 (0) 20 7878 2311
Nitil Patel FD c/o Moira McManus
www.tenalps.com
Collins Stewart, Nominated Adviser
Chris Wells / Mark Connelly Tel: +44 (0) 20 7523 8350
www.collins-stewart.com
Media enquiries:
Pelham, Financial PR
Alex Walters/ Hugh Barker Tel: +44 (0) 20 7743 6670
www.pelhampr.com
Chief Executive's Statement
After our successful first half, the growth strategy is to build our two
divisions - Communications and Broadcast - organically, through cross-selling
and by acquisition.
The Communications division offers integrated, commercially-funded B2B content -
Online, Print and Events - enabling us to cross-sell to our 61,000 existing
clients and market a 'one stop shop' to potential customers.
Our specialist titles become trade events and then online video on our Public TV
channels, producing online advertising and production revenues. Meanwhile our
online video advertising production unit, Ten Alps DFD, launched in November
2007 and is already generating revenue from our current client base.
The Broadcast division covers the production of publicly and broadcaster-funded
Online TV and TV output.
Kent TV and Teachers TV (in which the group has a management and independent
programme making role) have proven the case for publicly-funded specialist
online and digital TV channels on a contract publishing model, formerly known
only in print. And in terrestrial TV our companies continue to produce
cutting-edge factual TV, from Dispatches investigations on Channel 4, to
documentaries and factual entertainment for the BBC, BSkyB and Discovery.
We have grown fast, and our model of production, sale and distribution in
factual output remains scaleable. We are now one of the UK's largest contract
publishing businesses, and one of the UK's top factual TV producers, but our
core offer is in the fast-growing space between the two.
Second half of the 2007-8 financial year
We are on target to achieve full-year market expectations
Our publishing businesses are now more second half-weighted, due to the four
most recent acquisitions publishing the bulk of their annual titles in period
October to March. (This was highlighted in February 2007 when we bought
Atalink.) Their sales remain on target.
TV projects have occurred principally in the second half this year. Our
multi-platform approach in building a factual media company paid the obvious
dividend of insulating Ten Alps from an extremely unsettled commissioning period
in the TV production sector.
Operational review
The group was this period operationally reorganised into two divisions:
Communications, headed by Adrian Dunleavy; and Broadcast headed by Nitil Patel
(who is also Group Finance Director.) Both divisions are heavily engaged in
online production.
Communications Division
Revenues from this division for the first half were £24.7m (2006: £18.7m), up
32.1% and accounting for 67% of group sales. Gross profit increased to £7.7m
(2006: £6.0m).
Print and events
Acquisitions and new business drove growth in print publishing by 24% in the
period. Output grew to an annualised 630 print titles, with new publishing
clients including British Chamber of Commerce, The Association Of Independent
Financial Advisers, the Society Of Chemical Industries, Axa and NatMags and new
advertising sales contracts with the Professional Golf Association and Mercedes
Magazine.
Events revenues grew by 29% on the back of client wins including BP, BWEA, ITV
and Dr Martens and the continued roll out of owned trade events including
Innovation In Public Services, Criminal Justice 2007, Integrated Transport 2007
and Public Sector Project Management.
Commercial online TV and websites
The above growth from traditional markets provides a strong platform from which
to drive web business and entry into the commercial online TV market. Revenues
increased by 259% in the period.
Online activities are now trading profitably with web production for the likes
of the Road Haulage Association, BP and the British Veterinary Association and
commercial web sales for client sites such as Private Eye, Visit London, the
British Computer Society and the Royal Aeronautical Society. So far 270
publications have been brought on line resulting in high margin sales revenues.
The push into online TV revenue generation saw traditional advertising sales on
Ten Alps 14 Public TV channels bolstered by the launch of the Ten Alps DFD unit
to take on the expanding market for online video production.
Corporate social responsibility and communications content
This is an exciting growth area - encompassing websites, print, video content
and even a year-long theatrical road-show to primary schools across London.
Production increased 42.8% in the period, driven by the acquisition of DBDA -
the specialist corporate social responsibility communications business, with
clients such as BMW, Nationwide, Transport for London and the Scottish
Executive.
Broadcast Division
Whilst the first half was weak we are now expecting a significant upturn for the
latter part of the financial year. Revenues to September 30 from this division
were £12.9m (2006: £14.9m), down 13.4% with a corresponding drop in gross profit
to £2.9m (2006: £3.6m).
We have seen such fluctuations every year, and continue to invest in
development, focussing on high margin factual formats business and new producer
appointments.
TV and Radio
Through its Broadcast Division, Ten Alps produces factual TV and Radio
programmes for broadcast and digital markets in the UK, Europe and US.
In the period, as well as substantial radio programming and Teachers' TV
content, Ten Alps' production companies Blakeway and Brook Lapping produced
Golden Girls, several investigative ' Dispatches for Channel 4', 'The Last Days
of Tony Blair, 'Gordon Brown: Fit For Office?' East Midlands Politics Show,
Visionaries and Top Dog.
Publicly-funded Online TV
This period saw the successful launch of Kent TV (www.kenttv.com), a pioneering
innovation fully funded by Kent County Council. Ten Alps is already in
discussion about possible rollout of similar services with some of its existing
216 local authority clients. Funded development of on online TV projects such
as the Peace Channel, continues.
Growth prospects in 2008-9
The current Teachers TV contract runs to August 2008. The follow-on contract is
in a tender process. Ten Alps has, via its subsidiary Brook Lapping, submitted
what we believe to be a high quality bid, in partnership with ITN, Espresso and
4Learning. Based on the schedule attached to the tender, we believe the result
of the tender process should be known around the middle of February 2008.
Ten Alps has structured its recent acquisitions to facilitate year-on-year
growth in 2008-9 regardless of market conditions. The full-year effects of the
most recent deals will only be seen next year.
Both the Communication and Broadcast Divisions are well placed to achieve strong
organic growth. The success of Kent TV offers a number of opportunities in this
area and within the Communications Division we will focus on developing our
online video and web services. We have launched our online video advertising
unit through the acquisition of MMA. This opens a large, untapped B2B market,
and we aim to build our own national brand in the field. This is the single
biggest growth opportunity available to Ten Alps at present.
Our current acquisition focus is in the developing UK online video market and
the consolidation of specialist factual media businesses.
Financial Review - Finance Director, Nitil Patel
The six month period to 30 September 2007 was again a period of investment and
profitable stability.
Group turnover grew by 11.9% to £37.6m (2006: £33.6m) and the gross profit
increased by 10.5% to £10.6m (2006: £9.6m) signifying that we were able to
continue delivering profitable growth.
Gross margin has remained constant at 28.2% compared to 28.4% in same period
last year. Administrative expenses have also remained constant as a percentage
and now represent 23.1% of turnover (2006: 23.1%). This year's addition of the
acquisitions has meant that the Group's revenues and gross margin are now more
weighted towards the second half of the year.
EBITDA or headline profit, a key measure used by the board, increased by 3.1% to
£2.33m (2006: £2.26m) even after continued high level of investment, relating in
particular to the Ten Alps Digital, Public TV and Ten Alps Drama. These
development costs were written off directly to the profit and loss account. EBIT
was down to £1.8m (2006: £1.9m) reflecting the major change arising from the
adoption of IFRS as described below.
As we converted from UK GAAP to IFRS, the Group recognised various categories of
intangibles from goodwill to customer relationships to publishing titles, which
are subject to impairment reviews for goodwill and amortisation for other
intangibles.
The Group has adopted the following amortisation rates:
Customer Relations - 8 years
Publishing Titles - 3 years
The charge for the period under IFRS was £168,000 (2006: £Nil) whilst under UK
GAAP the charge would have been £283,000 (2006: £283,000).
Profit before tax was marginally down at £1.5m (2006: £1.6m), reflecting a net
interest charge of £(305,000) (2006: £300,000) on the £12.05m debt outstanding
as at 30 September 2007.
The retained distributable profit and loss account reserves are now at £4.2m
(2006: £2.2m).
The tax charge for the period is £202,000 (2006: £500,000) reflecting over
accrual in the previous year and the impact of deferred tax under IFRS. We
expect to pay the statutory rate of 28% in future periods.
The Group continues to maintain a healthy cash balance and held £10.8m as at
September 2007(2006: £13.2m). The balance is £3.6m lower than as at the last
financial year end, reflecting cash outflows on acquisitions and an increase in
trade receivables from £11.2m in March 2007 to £16.3m in September 2007 arising
from a late payment of September public sector invoices.
The Group has provided for deferred consideration of £2.4m (2006: £1.9m) on the
balance sheet which relates to earnout payments due to be made in relation to
Mongoose Media, DBDA and McMillan Scott within the next year.
As at the period end the Group had outstanding bank loans of £12.05m (2006:
£9.35m) of which £8.8m (2006: £7.35m) is due after more than one year. The Group
also had outstanding media loans of £274,000 at the period end (2006: £346,000)
Earnings per share
Basic earnings per share in the six months were 2.20p (2006: 1.93p) and was
calculated on the profits after taxation of £1.15m (2006: £999,000) divided by
the weighted average number of shares in issue during the period being
52,157,080 (2006: 51,830,413). The number of shares has increased due to
employees enacting share options during the period.
Diluted basic earnings per share in the year was 2.16p (2006: 1.88p) and is
based on the basic earnings per share calculation above, except that the
weighted average number of shares includes all dilutive share options granted as
if those options had been exercised on the first day of the accounting year or
the date of the grant, if later.
This gives a weighted average number of shares in issue of 53,247,229 (2006:
53,201,551) reflecting the impact of the outstanding share options as at 30
September 2007.
International Financial Reporting Standards ('IFRS')
As mentioned previously the Group is reporting for the first time under IFRS and
full reconciliations between UK GAAP and IFRS are provided for in the notes to
the condensed financial statements. The Group alone reports under IFRS and has
elected for all its subsidiaries to report under UK GAAP.
Ten Alps Plc
Condensed Consolidated Interim Financial statements for the period ended 30
September 2007
Condensed consolidated interim income statement
6 months to 6 months Year to
30 September 30 September 31 March
2007 2006 2007
(Unaudited) (Unaudited) (Unaudited)
Notes £'000's £'000's £'000's
Revenue
37,566 33,578 69,045
Operating costs before amortisation of (65,875)
intangible assets (35,599) (31,667)
Earnings before interest, tax and
amortisation (EBITA) 1,967 1,911 3,170
Amortisation of intangible assets
(168) - (17)
Total operating costs
(35,767) (31,667) (65,892)
Operating profit
1,799 1,911 3,153
Finance costs 5
(410) (300) (684)
Finance income 5
105 - 281
Profit before tax
1,494 1,611 2,750
Taxation 6
(202) (500) (740)
Profit for the period
1,292 1,111 2,010
Attributable to:
Equity holders of the parent
1,150 999 1,801
Minority interest
142 112 209
Retained profit for the year
1,292 1,111 2,010
Basic earnings per share 11 3.47
2.20 p 1.93 p p
Diluted earnings per share 11 3.40
2.16 p 1.88 p p
Ten Alps Plc
Condensed Consolidated Interim Financial statements for the period ended 30
September 2007
Condensed consolidated interim balance sheet
30 September 30 September 31 March
2007 2006 2007
(Unaudited) (Unaudited) (Unaudited)
Note £ '000 £ '000 £ '000
Assets
Non-current
Goodwill 8
18,766 15,455 16,210
Other intangible assets 8
3,903 - 1,444
Property, plant and equipment
1,744 1,583 1,650
Deferred tax
- 958 255
24,413 17,996 19,559
Current assets
Inventories
3,586 2,190 2,762
Trade and other receivables
16,300 10,698 11,194
Cash and cash equivalents
10,812 13,183 14,368
30,698 26,071 28,324
Liabilities
Current liabilities
Trade and other payables
(23,337) (17,690) (21,908)
Current tax liabilities
(622) (695) (414)
Borrowings 9
(3,524) (2,076) (1,028)
Financial liabilities
(85) (16) (59)
Provisions 10
(2,362) (1,870) (395)
(29,930) (22,347) (23,804)
Net current assets
768 3,724 4,520
Non-current liabilities
Borrowings 9
(8,800) (7,620) (9,420)
Financial liabilities
- (57) (52)
Deferred tax
(463) - -
Other non-current liabilities
(235) (319) (235)
(9,498) (7,996) (9,707)
Net assets
15,683 13,724 14,372
Capital and reserves
Called up share capital
1,042 1,037 1,041
Share premium account
7,198 7,154 7,190
Merger reserve
2,930 2,930 2,930
Retained earnings
4,161 2,190 3,001
Total attributable to equity shareholders
of parent 15,331 13,311 14,162
Minority interest
352 413 210
Total equity
15,683 13,724 14,372
Ten Alps Plc
Condensed Consolidated Interim Financial statements for the period ended 30
September 2007
Condensed consolidated interim cash flow statement
6 months to 6 months to Year to
30 September 30 September 31 March
2007 2006 2007
(Unaudited) (Unaudited) (Unaudited)
£ '000 £ '000 £ '000
Operating activities
Reconciliation of profit to operating cash flows
Profit for the period 2,010
1,292 1,111
Add back:
Taxation
202 500 740
Depreciation
360 354 685
Amortisation
168 - 17
Finance costs
410 300 684
Finance income
(105) - (281)
FRS 20 share based payment charge
10 14 23
(Loss)/profit on sale of fixed assets
(4) (2) 2
Foreign exchange loss on media loans
10 (11) 5
2,343 2,266 3,885
(Increase)/decrease in work in progress
(373) 472 590
(Increase)/decrease in trade and other receivables
(4,166) 1,623 2,632
Decrease in trade and other creditors
(428) (2,324) (2,168)
Cash (used in)/generated from operations
(2,624) 2,037 4,939
Interest received
105 - 281
Interest paid
(410) (300) (684)
Tax paid
(137) (390) (712)
Net cash flows (used in)/from operations
activities (3,066) 1,347 3,824
Investing activities
Acquisition of subsidiary undertakings, net of
cash and overdrafts acquired (1,943) (38) (1,430)
Payment of deferred consideration
- (1,075) (1,075)
Purchase of property, plant and equipment
(460) (326) (746)
Proceeds of sale of property, plant and equipment
64 - 21
Net cash flows used in investing activities
(2,339) (1,439) (3,230)
Financing activities
Issue of ordinary share capital
9 27 67
Increase/(decrease) in borrowings
1,866 (1,200) (463)
Capital element of finance lease payments
(26) (67) (45)
Dividends paid to minority interests
- - (300)
Net cash flows from financing activities
1,849 (1,240) (741)
Net decrease in cash and cash equivalents
(3,556) (1,332) (147)
Cash and cash equivalents at 1 April 14,515
14,368 14,515
Cash and cash equivalents at
10,812 13,183 14,368
Ten Alps Plc
Condensed Consolidated Interim Financial statements for the period ended 30
September 2007
Condensed consolidated interim statement of changes in equity
Share Share Merger Retained Minority Total
capital premium reserve earnings Total interest equity
£000 £000 £000 £000 £000 £000 £000
Balance at 1 April 2006 1,035 7,129 2,930 1,177 12,271 301 12,572
Profit for the Period - - - 999 999 112 1,111
Total recognised income and expense - - - 999 999 112 1,111
Equity-settled share-based payments - - - 14 14 - 14
Dividends paid - - - - - - -
Shares issued 2 25 - - 27 - 27
Balance at 30 September 2006 1,037 7,154 2,930 2,190 13,311 413 13,724
Balance at 1 April 2006 1,035 7,129 2,930 1,177 12,271 301 12,572
Profit for the Period - - - 1,801 1,801 209 2,010
Total recognised income and expense - - - 1,801 1,801 209 2,010
Equity-settled share-based payments - - - 23 23 - 23
Dividends paid - - - - - (300) (300)
Shares issued 6 61 - - 67 - 67
Balance at 31 March 2007 1,041 7,190 2,930 3,001 14,162 210 14,372
Balance at 1 April 2007 1,041 7,190 2,930 3,001 14,162 210 14,372
Profit for the Period - - - 1,150 1,150 142 1,292
Total recognised income and expense - - - 1,150 1,150 142 1,292
Equity-settled share-based payments - - - 10 10 - 10
Dividends paid - - - - - - -
Shares issued 1 8 - - 9 - 9
Balance at 30 September 2007 1,042 7,198 2,930 4,161 15,331 352 15,683
Notes to the condensed consolidated interim financial statements
1) General Information
Ten Alps Plc and its subsidiaries (the Group) is a factual media company which
provides and manages content on TV, radio, online TV and print.
Ten Alps Plc is the Group's ultimate parent and is a public listed company
incorporated in Scotland. The address of its registered office is 100 Union
Street, Aberdeen, AB10 1QR. Its shares are listed on the Alternative Investment
Market of the London Stock Exchange.
These condensed consolidated interim financial statements have been approved for
issue by the Board of Directors on 13 December 2007.
The financial information set out in this interim report does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985. The
Group's statutory financial statements for the year ended 31 March 2007,
prepared under UK GAAP, have been filed with the Registrar of Companies. The
auditor's report on those financial statements was unqualified and did not
contain a statement under Section 237 (2) of the Companies Act 1985.
2) Basis of Preparation
These condensed consolidated interim financial statements of Ten Alps Plc are
for the six months ended 30 September 2007. These condensed consolidated
interim financial statements have been prepared in accordance with the
requirements of IFRS 1 'First time adoption of International Financial Reporting
Standards' with the accounting policies set out below. These are based on the
recognition and measurement principles of IFRS in issue and are effective at 30
September 2007 or expected to be adopted and effective at 31 March 2008 our
first annual reporting date at which it is required to use IFRS accounting
standards.
Ten Alps plc's consolidated financial statements have been previously prepared
in accordance with UK GAAP until 31 March 2007. The transition date to IFRS was
1 April 2006. The comparative figures in respect of the periods to 30 September
2006 and 31 March 2007 have been restated to reflect changes in accounting
policies as a result of adoption of IFRS. The disclosures required by IFRS
concerning the transition from UK GAAP to IFRS are given in the reconciliation
schedules, presented and explained in note 12.
The accounting policies have been applied consistently throughout the Group for
the purposes of preparation of these statements.
3) Summary of Significant Accounting Policies
Basis of Consolidation
The Group financial statements consolidate those of the company and of its
subsidiary undertakings drawn up to 30 September 2007. Subsidiaries are entities
over which the Group has the power to control the financial and operating
policies so as to obtain benefits from its activities. The Group obtains and
exercises control through voting rights. Amounts reported in the financial
statements of subsidiaries have been adjusted where necessary to ensure
consistency with the accounting policies adopted by the Group.
Acquisitions of subsidiaries are dealt with by the acquisition method. The
acquisition method involves the recognition at fair value of all identifiable
assets and liabilities, including contingent liabilities of the subsidiary, at
the acquisition date, regardless of whether or not they were recorded in the
financial statements of the subsidiary prior to acquisition. On initial
recognition, the assets and liabilities of the subsidiary are included in the
consolidated balance sheet at their fair values, which are also used as the
bases for subsequent measurement in accordance with the Group's accounting
policies.
Goodwill is stated after separating out identifiable intangible assets. Goodwill
represents the excess of acquisition cost over the fair value of the Group's
share of the identifiable net assets of the acquired subsidiary at the date of
acquisition.
Business Combinations completed prior to date of transition to IFRS
The Group has elected not to apply IFRS 3 Business Combinations retrospectively
to business combinations prior to 1 April 2006.
Assets and liabilities are recognised at date of transition and are measured
using their UK GAAP carrying amount immediately post-acquisition as deemed cost
under IFRS. Deferred tax and minority interest are adjusted for the impact of
any consequential adjustments after taking advantage of the transitional
provisions.
Revenue
Revenue is recognised when it is probable that the economic benefits will flow
to the group and the revenue can be reliably measured. Revenue is measured at
the fair value of the consideration received or receivable for the sale of goods
and services, net of trade discounts, VAT, other sales related taxes, and after
eliminating sales within the Group. Revenue is recognised as follows:
Broadcast
Production revenue comprises broadcaster licence fees and other pre-sales
receivable for work carried out in producing television programmes. Production
revenue is recognised over the period of the production. Gross profit on
production activity is recognised over the period of the production and in
accordance with the underlying contract. Overspends on productions are
recognised as they arise and underspends are recognised on completion of the
productions.
Included in production turnover is accrued income in relation to Key Performance
Indicators (KPIs) being achieved with respect to the Teachers' TV operation with
the range being between 0% to 10%. As the full assessment will not be known
until January 2008, the Directors have recognised a best estimate accrual.
Turnover also includes sums receivable from the exploitation of programmes in
which the company owns rights and is recognised when all of the following
criteria have been met:
i) an agreement has been executed by both parties;
ii) the programme is available for delivery; and
iii) the arrangements are fixed and determinable.
Gross profit from the exploitation of programme rights is recognised when
receivable.
Communications
Revenue is recognised in the accounting period in which the services are
rendered by reference to stage of completion of the specific transaction
assessed on the basis of the actual service provided as a proportion of the
total services to be provided.
Publishing: advertising revenue is recognised on date publications are
dispatched to customers.
Exhibitions: revenue is recognised when the show has been completed. Deposits
received in advance are recorded as deferred income on the balance sheet.
Online: revenue is recognised at the point of delivery or fulfilment for single/
discrete services.
Production Costs
When the Group is commissioned to make a programme by a broadcaster, the
broadcaster pays a licence fee for the programme in their own territory and the
Group retains the right to exploit the programme elsewhere.
Where the licence fee exceeds the cost of production, then, due to the uncertain
nature of other future revenues, the Group writes off 100% of the production
cost against the licence fee income.
Where the estimated production costs are greater than the licence fee from the
broadcaster, production will only take place if estimates of future income from
all sources exceed the excess production costs. Under these circumstances, the
excess production cost is included in 'Intangible Assets'. The net book value of
the production is reduced at the year end by the income received in the year and
the amount held on the balance sheet will be the lesser of the amount of
anticipated future ancillary revenues and the amortised cost of investment.
Property, plant and equipment
Property, plant and equipment are stated at cost net of depreciation and any
provision for impairment.
Depreciation is calculated to write down the cost less estimated residual value
of all property, plant and equipment by equal annual instalments over their
expected useful lives. The rates generally applicable are:
Leasehold premises over the term of the lease
Motor vehicles 20% on cost
Office equipment 10% on cost
Computer Equipment 20% on cost
Websites 20% on cost
Goodwill and business combinations
Goodwill arising from business combinations is capitalised and subject to an
annual impairment review in accordance with IAS36.
The fair value of intangible assets acquired as a result of business
combinations are capitalised and amortised on a straight line basis through the
profit and loss account. The rates applicable, which represent directors' best
estimate of the useful economic life, are:
Customer Relations 8 years
Magazine Titles 3 years
Leased assets
In accordance with IAS 17, the economic ownership of a leased asset is
transferred to the lessee if the lessee bears substantially all the risks and
rewards related to the ownership of the leased asset. The related asset is
recognised at the time of inception of the lease at the fair value of the leased
asset or, if lower, the present value of the minimum lease payments plus
incidental payments, if any, to be borne by the lessee.
A corresponding amount is recognised as a finance leasing liability. The
interest element of leasing payments represents a constant proportion of the
capital balance outstanding and is charged to the income statement over the
period of the lease.
All other leases are regarded as operating leases and the payments made under
them are charged to the profit and loss account on a straight line basis over
the lease term.
Inventories
Broadcast
Inventories comprise of costs on productions that are incomplete at the year-end
less any amounts recognised as cost of sales.
Communications
Inventories comprise cumulative costs incurred in relation to unpublished titles
or events, less provision for future losses and are valued on the basis of
direct costs plus attributable overheads based on normal level of activity. No
element of profit is included in the valuation of inventories.
Programmes in progress at period end
Where productions are in progress at the period end and where the sales invoiced
exceed the value of work done the excess is shown as deferred income; where the
costs incurred exceed sales invoiced the amounts are classified as accrued
income. Where it is anticipated that a production will make a loss, the
anticipated loss is provided for in full.
Impairment of assets
For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash flows (cash-generating
units). As a result, some assets are tested individually for impairment and some
are tested at the cash-generating unit level.
Goodwill is allocated to those cash generating units that are expected to
benefit from the synergies of the related business combination and represent the
lowest level within the Group at which management monitors the related cash
flows. Goodwill, other individual assets or cash-generating units that include
goodwill, other intangible assets with an indefinite useful life, and those
intangible assets not yet available for use are tested for impairment at least
annually. All other individual assets or cash-generating units are tested for
impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset's or
cash-generating unit's carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of fair value, reflecting market conditions
less costs to sell, and value in use based on an internal discounted cash flow
evaluation. Impairment losses recognised for cash-generating units, to which
goodwill has been allocated, are credited initially to the carrying amount of
goodwill. Any remaining impairment loss is charged pro rata to the other assets
in the cash generating unit. With the exception of goodwill, all assets are
subsequently reassessed for indications that an impairment loss previously
recognised may no longer exist.
Cash and cash equivalents
Cash and cash equivalents, which are measured at cost, comprise cash on hand and
demand deposits.
Equity
Equity comprises the following:
• Share capital represents the nominal value of equity shares.
• Share premium represents the excess over nominal value of the fair value of
consideration received for equity shares, net of expenses of the share issue.
• Merger Reserve represents the excess over nominal value of the fair value of
consideration received for equity shares, where ordinary shares are issued as
consideration for the purchase of subsidiaries in which the group hold a 90%
interest or above.
• Retained earnings represents retained profits.
Current and Deferred taxation
Current tax is the tax currently payable based on taxable profit for the year.
Deferred income taxes are calculated using the liability method on temporary
differences. Deferred tax is generally provided on the difference between the
carrying amounts of assets and liabilities and their tax bases. However,
deferred tax is not provided on the initial recognition of an asset or liability
unless the related transaction is a business combination or affects tax or
accounting profit. In addition, tax losses available to be carried forward as
well as other income tax credits to the Group are assessed for recognition as
deferred tax assets.
Deferred tax liabilities are provided in full, with no discounting. Deferred tax
assets are recognised to the extent that it is probable that the underlying
deductible temporary differences will be able to be offset against future
taxable income. Current and deferred tax assets and liabilities are calculated
at tax rates that are expected to apply to their respective period of
realisation, provided they are enacted or substantively enacted at the balance
sheet date.
Changes in deferred tax assets or liabilities are recognised as a component of
tax expense in the income statement, except where they relate to items that are
charged or credited directly to equity in which case the related deferred tax is
also charged or credited directly to equity.
Trade Receivables
Trade receivables are recorded at their fair value and measured subsequently at
amortised cost.
Bank Borrowings
Interest bearing bank loans and overdrafts are recorded at the proceeds
received, net of direct issue costs.
Finance charges, including premiums payable on settlement or redemption and
direct issue costs, are accounted for on an effective interest method and are
added to the carrying amount of the instrument to the extent that they are not
settled in the period in which they arise.
Trade Payables
Trade Payables are stated at their fair value and measured subsequently at
amortised cost.
Share options
Under IFRS 2, all share-based payment arrangements granted after 7 November 2002
that had not vested prior to 1 April 2006 are recognised in the financial
statements.
Where employees are rewarded using share-based payments, the fair values of
employees' services are determined indirectly by reference to the fair value of
the instrument granted to the employee. This fair value is appraised at the
grant date and excludes the impact of non-market vesting conditions.
All equity-settled share-based payments are ultimately recognised as an expense
in the profit and loss account with a corresponding credit to reserves.
If vesting periods apply, the expense is allocated over the vesting period,
based on the best available estimate of the number of share options expected to
vest. Estimates are revised subsequently if there is any indication that the
number of share options expected to vest differs from previous estimates. Any
cumulative adjustment prior to vesting is recognised in the current period. No
adjustment is made to any expense recognised in prior periods if share options
that have vested are not exercised.
Upon exercise of share options, the proceeds received net of attributable
transaction costs are credited to share capital, and where appropriate share
premium.
Retirement benefits
The Group operates a stakeholder pension scheme. The Company made no
contributions to the scheme during the period.
Significant judgements and estimates
The preparation of consolidated financial statements under IFRS requires the
Group to make estimates and assumptions that affect the application of policies
and reported amounts. Estimates and judgements are continually evaluated and are
based on historical experience and other factors including expectations of
future events that are believed to be reasonable under the circumstances. Actual
results may differ from these estimates. The estimates and assumptions which
have a significant risk of causing a material adjustment to the carrying amount
of assets and liabilities are discussed below.
Impairment of goodwill
The Group is required to test, at least annually, whether goodwill has suffered
any impairment. The recoverable amount is determined based on value in use
calculations. The use of this method requires the estimation of future cash
flows and the choice of a suitable discount rate in order to calculate the
present value of these cash flows. Actual outcomes could vary.
Intangible assets
The Group recognises intangible assets acquired as part of business combinations
at fair value at the date of acquisition. The determination of these fair values
is based upon management's judgement and includes assumptions on the timing and
amount of future incremental cash flows generated by the assets and selection of
an appropriate cost of capital. Furthermore, management must estimate the
expected useful lives of intangible assets and charge amortisation on these
assets accordingly.
Impairment of property, plant and equipment
Property, plant and equipment are reviewed for impairment if events or changes
in circumstances indicate that the carrying amount may not be recoverable. When
a review for impairment is conducted, the recoverable amount is determined based
on value in use calculations prepared on the basis of management's assumptions
and estimates.
Depreciation of property, plant and equipment
Depreciation is provided so as to write down the assets to their residual values
over their estimated useful lives as set out above. The selection of these
estimated lives requires the exercise of management judgement.
Seasonal Fluctuations
The business of Ten Alps plc is subject to seasonal fluctuations with stronger
demand for services in the second half of the year.
4) Segmental Analysis
The operations of the group are managed in two principle business divisions,
broadcast and communications. These divisions are the basis upon which the
management reports its primary segment information.
Revenues by Business Division
6 months to 6 months to Year to
30 September 2007 30 September 2006 31 March 2007
£ '000 £ '000 £ '000
Communications 24,645 18,692 39,623
Broadcast 12,921 14,886 29,422
Total 37,566 33,578 69,045
5) Finance Income and Costs
6 months to 6 months to Year to
30 September 2007 30 September 2006 31 March 2007
£'000 £'000 £'000
Bank interest receivable 105 - 281
Interest payable on:
Finance leases and hire purchase (28) - (10)
contracts
Bank loans (382) (300) (674)
(410) (300) (684)
6) Tax on Profit on Ordinary Activities
Tax charge for the period represents:
6 months to 6 months to Year to
30 September 2007 30 September 2006 31 March 2007
£'000 £'000 £'000
UK corporation tax 363 447 449
Over provision in prior period (95) - (9)
Deferred tax movement (66) 53 300
202 500 740
7) Business Combinations
On 15 June 2007 the group acquired the trade and assets of DBDA for
consideration (including expenses) of £956,000. The acquisition was made by
DBDA Ltd, a wholly owned subsidiary created for the purpose of the transaction.
The assets and liabilities arising from the acquisition are as follows:
Book Value Fair Value Adjustments Provisional Fair Value
£'000 £'000 £'000
Property, plant and equipment 41 - 41
Inventories 382 - 382
Trade and other receivables 282 - 282
Cash and cash equivalents 232 - 232
Trade and other payables (210) - (210)
Provisions (625) - (625)
Deferred tax - (387) (387)
Net assets/(liabilities) acquired 102 (387) (285)
Intangible fixed assets acquired 1,291
Goodwill capitalised 717
Consideration given 1,723
Satisfied by:
Cash 900
Acquisition expenses 56
Deferred contingent consideration 767
1,723
The fair value adjustments made to book value relate to deferred tax relating to
the intangible assets identified on the acquisition.
The DBDA purchase is subject to three additional payments of up to a maximum
£766,667 each. These payments are dependant on DBDA Limited achieving
annualised EBIT between £400,000 and £800,000 for the period from acquisition to
31 March 2008 and achieving between £400,000 and £800,000 for the years ending
31 March 2009 and 31 March 2010. At 30 September 2007, £766,666 had been
provided for.
On 22 June 2007 Ten Alps Plc purchased the whole of the issued share capital of
Mongoose Media Limited (Mongoose) for consideration (including expenses) of
£1,736,000. The assets and liabilities arising from the acquisition are as
follows:
Book Value Fair Value Adjustments Provisional Fair Value
£'000 £'000 £'000
Property, plant and equipment 22 - 22
Inventories 69 - 69
Trade and other receivables 657 - 657
Cash and cash equivalents 517 - 517
Trade and other payables (229) - (229)
Current tax liabilities (77) - (77)
Provisions (793) - (793)
Deferred tax - (399) (399)
Net assets/(liabilities) acquired 166 (399) (233)
Intangible fixed assets acquired 1,330
Goodwill capitalised 1,839
Consideration given 2,936
Satisfied by:
Cash 1,650
Acquisition expenses 86
Deferred contingent consideration 1,200
2,936
The fair value adjustments made to book value relate to deferred tax relating to
the intangible assets identified on the acquisition.
At 30 September 2007 the Mongoose purchase is subject to three additional
payments. £50,000 was payable subject to the agreement of completion accounts
with net assets greater than £150,000. This amount was paid on 10 October 2007.
A further payment of up to a maximum £1,450,000 is payable subject to Mongoose
achieving EBIT of up to £725,000 for the period from the date of acquisition to
31 March 2008. A final payment of up to a maximum £300,000 is payable subject
to Mongoose achieving certain new client profit targets. At 30 September 2007,
a total £1,200,000 of deferred consideration had been provided for.
8) Intangible Assets
Customer Magazine Websites Goodwill Total
relationships Titles
£000's £000's £000's £000's £000's
Carrying amount at 1 April 2007 1,183 157 104 16,210 17,654
Additions 2,621 - 6 2,556 5,183
Amortisation (157) (11) - - (168)
Carrying amount at 30 September 2007 3,647 146 110 18,766 22,669
Customer Magazine Websites Goodwill Total
relationships Titles
£000's £000's £000's £000's £000's
Carrying amount at 1 April 2006 - - - 15,718 15,718
Revaluation of deferred consideration - - - (263) (263)
Carrying amount at 30 September 2006 - - - 15,455 15,455
Customer Magazine Websites Goodwill Total
relationships Titles
£000's £000's £000's £000's £000's
Carrying amount at 1 April 2006 - - - 15,718 15,718
Additions 1,197 167 104 2,342 3,810
Revaluation of deferred consideration - - - (1,850) (1,850)
Amortisation (14) (10) - - (24)
Carrying amount at 31 March 2007 1,183 157 104 16,210 17,654
9) Borrowings
30 September 2007 30 September 2006 31 March 2007
£'000 £'000 £'000
Bank Loans - current 3,250 2,000 1,000
Bank Loans - non current 8,800 7,350 9,150
Media Loans - current 274 76 28
Media Loans - non current - 270 270
12,324 9,696 10,448
10) Provisions
30 September 2007 30 September 2006 31 March 2007
£'000 £'000 £'000
Deferred contingent consideration 2,362 1,870 395
2,362 1,870 395
11) Earnings Per Share
30 September 2007 30 September 2006 31 March 2007
Weighted average number of shares used in basic
earnings per share calculation 52,157,080 51,830,413 51,943,330
Dilutive effect of share options 1,090,149 1,371,138 1,088,555
Weighted average number of shares used in diluted
earnings per share calculation 53,247,229 53,201,551 53,031,885
Profit for period attributable to shareholders 1,150 999 1,801
Amortisation of intangible assets and goodwill 168 - 17
Share-based payments 10 14 23
Adjusted profit for period attributable to 1,328 1,013 1,841
shareholders
Basic Earnings per Share 2.20 p 1.93 p 3.47 p
Diluted Earnings per Share 2.16 p 1.88 p 3.40 p
Adjusted Basic Earnings per Share 2.55 p 1.95 p 3.54 p
Adjusted Diluted Earnings per Share 2.49 p 1.90 p 3.47 p
12) Transition to IFRS
Reconciliation of equity at 31 March 2006
UK GAAP Effect of IFRS
31 March transition 31 March
2006 to IFRS 2006
Note £ '000 £ '000 £ '000
Assets
Non-current
Goodwill a 15,718 - 15,718
Other intangible assets - - -
Property, plant and equipment 1,611 - 1,611
Deferred tax e,f - 957 957
17,329 957 18,286
Current assets
Inventories 2,662 - 2,662
Trade and other receivables d 12,978 (659) 12,319
Cash and cash equivalents 14,515 - 14,515
30,155 (659) 29,496
Liabilities
Current liabilities
Trade and other payables g (25,005) 5,079 (19,926)
Current tax liabilities g - (583) (583)
Borrowings g - (1,277) (1,277)
Financial liabilities g - (101) (101)
Provisions g,j - (3,245) (3,245)
(25,005) (127) (25,132)
Net current assets
5,150 (786) 4,364
Non-current liabilities
Borrowings h - (9,630) (9,630)
Financial liabilities h - (39) (39)
Deferred tax - - -
Other non-current liabilities h - (409) (409)
Provisions h (10,078) 10,078 -
(10,078) - (10,078)
Net assets 12,401 171 12,572
Capital and reserves
Called up share capital 1,035 - 1,035
Share premium account 7,129 - 7,129
Merger reserve 2,930 - 2,930
Retained earnings e,j 1,006 171 1,177
Total shareholders' equity 12,100 171 12,271
Minority interest 301 - 301
Total equity 12,401 171 12,572
Reconciliation of equity at 30 September 2006
UK GAAP Effect of IFRS
30 September transition 30 September
2006 to IFRS 2006
Note £ '000 £ '000 £ '000
Assets
Non-current
Goodwill a,b 15,172 283 15,455
Other intangible assets - - -
Property, plant and equipment 1,583 - 1,583
Deferred tax e,f - 958 958
16,755 1,241 17,996
Current assets
Inventories 2,190 - 2,190
Trade and other receivables d 11,411 (713) 10,698
Cash and cash equivalents
13,183 - 13,183
26,784 (713) 26,071
Liabilities
Current liabilities
Trade and other payables g (22,317) 4,627 (17,690)
Current tax liabilities g - (695) (695)
Borrowings (current) g - (2,076) (2,076)
Financial liabilities (current) g - (16) (16)
Provisions (current) g,j - (1,870) (1,870)
(22,317) (30) (22,347)
Net current assets 4,467 (743) 3,724
Non-current liabilities
Borrowings (non-current) h - (7,620) (7,620)
Financial liabilities h
(non-current) - (57) (57)
Deferred tax - - -
Other non-current liabilities h - (319) (319)
Provisions (non-current) h (7,996) 7,996 -
(7,996) - (7,996)
Net assets 13,226 498 13,724
Capital and reserves
Called up share capital 1,037 - 1,037
Share premium account 7,154 - 7,154
Merger reserve 2,930 - 2,930
Retained earnings e,j 1,692 498 2,190
Total shareholders' equity 12,813 498 13,311
Minority interest 413 - 413
Total equity 13,226 498 13,724
Reconciliation of equity at 31 March 2007
UK GAAP Effect of IFRS
31 March transition 31 March
2007 to IFRS 2007
Note £ '000 £ '000 £ '000
Assets
Non-current
Goodwill a,b,c,e 16,577 (367) 16,210
Other intangible assets c,d - 1,444 1,444
Property, plant and equipment d 1,754 (104) 1,650
Deferred tax e,f - 255 255
18,331 1,228 19,559
Current assets
Inventories 2,762 - 2,762
Trade and other receivables d 11,666 (472) 11,194
Cash and cash equivalents
14,368 - 14,368
28,796 (472) 28,324
Liabilities
Current liabilities
Trade and other payables g (23,593) 1,685 (21,908)
Current tax liabilities g - (414) (414)
Borrowings g - (1,028) (1,028)
Financial liabilities g - (59) (59)
Provisions g,j - (395) (395)
(23,593) (211) (23,804)
Net current assets 5,203 (683) 4,520
Non-current liabilities
Borrowings h - (9,420) (9,420)
Financial liabilities h - (52) (52)
Deferred tax - - -
Other non-current liabilities - (235) (235)
Provisions h (9,707) 9,707 -
(9,707) - (9,707)
Net assets 13,827 545 14,372
Capital and reserves
Called up share capital 1,041 - 1,041
Share premium account 7,190 - 7,190
Merger reserve 2,930 - 2,930
Retained earnings e,j 2,456 545 3,001
Total shareholders' equity 13,617 545 14,162
Minority interest 210 - 210
Total equity 13,827 545 14,372
Reconciliation of profit for the 6 months to 30 September 2006
Effect of
UK GAAP transition IFRS
Notes £'000's £'000's £'000's
Revenue 33,578 - 33,578
Operating costs before amortisation j
of intangible assets (31,764) 97 (31,667)
Earnings before interest, tax and
amortisation (EBITA) 1,814 97 1,911
Amortisation and impairment of c
intangible assets (283) 283 -
Total operating costs (32,047) 380 (31,667)
Operating profit 1,531 380 1,911
Finance costs (300) - (300)
Finance income - - -
Profit before tax 1,231 380 1,611
Taxation e (447) (53) (500)
Profit for the period 784 327 1,111
Attributable to:
Equity holders 672 327 999
Minority interest 112 - 112
Retained profit for the year 784 327 1,111
Reconciliation of profit for the year ended 31 March 2007
Effect of
UK GAAP transition IFRS
Notes £'000's £'000's £'000's
Revenue 69,045 - 69,045
Operating costs before amortisation j
of intangible assets (65,791) (84) (65,875)
Earnings before interest, tax and
amortisation (EBITA) 3,254 (84) 3,170
Amortisation and impairment of c
intangible assets (588) 571 (17)
Total operating costs (66,379) 487 (65,892)
Operating profit 2,666 487 3,153
Finance costs (684) - (684)
Finance income 281 - 281
Profit before tax 2,263 487 2,750
Taxation e (627) (113) (740)
Profit for the period 1,636 374 2,010
Attributable to:
Equity holders 1,427 374 1,801
Minority interest 209 - 209
Retained profit for the year 1,636 374 2,010
Notes to the Reconciliations
a) IFRS 1 permits companies adopting IFRS for the first time to apply
certain exemptions from the full requirements of IFRS in the transition period.
These interim financial statements have been prepared on the basis of taking the
exemption whereby business combinations prior the Group's date of transition to
IFRS have not been restated to comply with IFRS 3 Business Combinations.
Goodwill of £15,718,000 on business combinations prior to this date has been
frozen at their UK GAAP carrying value as at 1 April 2006.
b) Under IFRS goodwill is not amortised, but tested annually for
impairment. The effect of the above is to add back the amortisation charge by
£283,000 at 30 September 2006 and £588,000 at 31 March 2007.
c) The Group acquired Cameron Publishing Ltd on 6 November 2006 and
Atalink Limited on 30 March 2006. Application of IFRS 3 to these business
combinations resulted in identification of intangible assets (customer
relationships and magazine titles). Under IFRS these have been recognised
separately in the balance sheet at their fair value at the date of the
combination. Under UK GAAP these intangible assets were subsumed within
goodwill. The result of this adjustment is to decrease goodwill and increase
intangible assets at the dates of the combinations. At 31 March 2007 the value
of intangible assets was increased by £1,340k (this has also impacted on the
deferred tax liability recognised, see note e below). The value of goodwill at
31 March 2007 was reduced by £1,365k.
d) IAS38 requires that certain intangible assets are shown separately on
the Balance Sheet. Intangible assets, other than those acquired through
business combinations, have been identified and consist of items such as
software and certain websites generated in-house. They have been disclosed as
Intangible Assets, and the carrying value of Tangible Assets has been reduced by
the same amount.
e) Under FRS 19 deferred tax was recognised only on timing differences; in
contrast IAS 12 'Income Taxes' requires the recognition of deferred tax on all
temporary differences. The recognition of intangible assets on the acquisitions
resulted in a number of temporary differences. Under UK GAAP deferred tax was
not provided in such cases. The effect of this adjustment is to create a
combined deferred tax liability of £409,000 at the date of the combinations.
Goodwill is increased at those dates of combination by the same amounts. In
addition, a deferred tax asset or liability arises on the share options in
issue. This has resulted in an adjustment to opening reserves at 1 April 2006
of £298,000, a deferred tax charge for the 6 months ended 30 September 2006 and
the year ended 31 March 2007 of £53,000 and £113,000 respectively.
f) Deferred tax assets are disclosed separately, whilst they were
previously included within Current Assets.
g) Short term tax creditors, borrowings, financial liabilities and
provisions are disclosed separately, whilst they were previously included within
general creditors.
h) Long term loans and finance liabilities are now shown separately from
provisions.
i) Deferred income has been reclassified from Trade and other payables
to Short term provisions.
j) IAS 19 'Employee Benefits' requires that an accrual is made for
outstanding Holiday Balances due but not taken at the balance sheet date.
ENDS
This information is provided by RNS
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Wednesday, 15th May 2024
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