West 175 Media Group Inc
6 September 2001
WEST 175 MEDIA GROUP, INC
Preliminary Results Announcement 2001
West 175 Media Group, Inc., the international multimedia group listed on AIM,
announces Preliminary Results for the year to 31 March 2001.
* Defining transitional period for the Group.
* Build up of assets and brands into a significant international multimedia
player in the UK and Europe, the United States and New Zealand.
* Significant changes in the management structure at Board and Senior
* Developments in the last three years growing from a simple trading entity
with irregular cash flow into a worldwide group with 18 companies.
* Revenues increased to $US8.7m (2000: $US6.1m), up 43.7%.
* Gross profit increased to $US4.8m (2000: $US2.7m), up 79.8%.
* Loss before tax of $US7.6m after writing off programming and developing
* Loss per common share of 0.43 cents (2000: 0.73 cents).
* Cash in balance sheet of $US6.4m (2000: $US30,481).
* Net assets of $US16.7m (2000: $US739,898).
* US operations close to break even for the first time since 1996.
* West Media Events in UK consistently profitable.
* Entry into Europe.
* 50:50 Joint Venture in UK provides entry into major UK broadcasters.
* Revenues from New Zealand doubled and model to be replicated globally.
* Change of Company stockbroker to Beeson Gregory.
Regarding Future Prospects, John McEwen, Chairman and Chief Executive said:
'The group now has a strong base to grow organically after a transitional
year. Whilst there will still be alliances and strategic acquisitions that we
will want to make, the period of rapid acquisition has passed and the focus is
on making each company within the group exploit its potential to maximise
revenues and profitability.
We expect an increase in turnover in the next year and a move towards
For more information, please contact:
West 175 Media Group, Inc.
John McEwen, Chairman and Chief Executive 020 7851 9478 / Mobile: 07901 556 766
Binns & Co PR Ltd
Peter Binns, Caroline Anderson 020 7786 9600
The year to 31 March 2001 and subsequent months have been a defining
transitional period for West 175 Media Group, Inc. ('West 175', the 'Company'
or the 'Group'), which has built up a significant portfolio of assets and
As a whole, the strategy of West 175 is to become a significant international
multimedia player. The ingredients of success depend not only on assets that
can generate cash but also on management to manage those assets effectively.
Significant changes have been made in the management structure throughout the
group, both at board and senior management level, in the UK and Europe, US and
New Zealand, our three core operating areas, geographically. These have been
designed to ensure that the companies within the West 175 group can exploit
fully the opportunities available to grow their revenues, maximise the
opportunities and be brought into profitability. In the last three years,
West 175 has grown from a single trading entity with an irregular cash flow to
a worldwide group of 18 companies. The mix of business and system
improvements have dramatically improved our ability to budget and forecast
In financial terms, the results for the year ended 31 March 2001 reflect the
transitional nature of the year. Revenues increased from $US6,054,000 to
$US8,700,000, an increase of 43.7%. Gross profit increased by 79.8% from
$2,661,000 to $4,785,000. The group operating loss was $7,541,000, after
writing off programming and development costs of $1,934,000 and after charging
some $1,100,000 of costs relating to board restructuring and other
non-recurring operating costs.
Whilst there is a lot of hard work to be done: the year to March 2002 has made
a strong start.
For the first time since 1996, the US operation came close to break-even with
a loss of $128,000 in television production and publishing before corporate
overhead allocation compared with a loss of $2,045,000 the previous year. The
result for the year does not include $750,000 of sponsorship income secured
before 31 March but not contracted until after 31 March 2001. The income will
be credited in the year ending 31 March 2002.
Profitability is being restored to the US operation by removing loss making
divisions, reducing costs and concentrating on the exploitation of the brands
we have long-term (MasterChef, Great Food, Cucina Amore).
MasterChef USA was launched on the PBS network this year and immediately
became their number 1 rated cookery show. This was against 60 other shows on
the same network. This ratings success has helped our ability to increase
sponsorship revenues and exploit merchandising rights.
This year we relaunched Cucina Amore with two new hosts. We have licensed a
book on the series to a US publisher and are expecting licensing revenue
during the coming year.
The live food events did not prove the winner we had hoped in their present
format and are being rebranded 'Master Chef Live' to link in with our
MasterChef TV series. We expect to see the impact of this repositioning in
UK AND EUROPE
West Media Events has an extensive list of clients, has been consistently
profitable and continues to deliver excellent results. Its expertise has been
extended to staging the WORLD COOKBOOK AWARDS purchased from SPA Madrid in
March 2001. The extension of our events management company is in line with
our policy of building our own brands in the lifestyle arena.
The recent acquisition of the World Cookbook Awards positions our company as
the global focus for food communication and delivers us more potential
sponsors for our food television shows. Three award events are planned for
2001 and six planned for 2002. Most of the costs for staging the awards are
covered in advance by the regions where the events are staged.
In November 2000 we made our first entry into UK broadcasting by forming a 50:
50 joint venture with Union Pictures. This new joint venture, called Union
175 Ltd, is West 175's production arm for the UK, thereby giving us an
immediate entry into the major broadcasters of the UK. Under the leadership
of Bradley Adams and Tony Miller, the first Union 175 production was
MasterChef, a series produced by Union Pictures for the last 10 years.
MasterChef is a very strong UK brand with no exploitation to date. We see
significant revenue opportunities from merchandising and publishing coming
from the MasterChef brand and have appointed a sales and marketing director to
oversee their exploitation. In addition Union 175 have in development drama
and documentaries, which we expect to be commissioned in the year to 31st
A significant amount of time and investment has been put into the NZ
operation. This will be developed into a very profitable division of the
group. We are also convinced it will serve well as a model to replicate
Revenue from the NZ operation doubled for the year. Since the year end, the
revenue from the television companies has increased a further 40% on the
comparative months in 2000.
Highlights of the NZ operation include:
Actrix ISP is now trading profitably with subscribers having increased from
3,500 at the time of acquisition in November 1999 to 35,000. Actrix now ranks
fifth in size of the ISP's in the New Zealand market.
CHTV in Christchurch has been successfully rebranded 'NOW TV'. The two
competing local programme providers have withdrawn from the Christchurch
television market due to West's dominance of the local programming sector in
terms of ratings. We are confident of a successful result in the current
Ninox 175 (the production house whose business West acquired in August 2000)
is on target for profitability this coming year and has won the top media
awards for their programming. In July 2001 their series 'Location Location
Location' was the highest rated programme of all productions for the month of
July of all networks with their best rated episode reaching 51% of all viewers
taken across 5 networks.
In addition, Ninox 175's format 'Dream Home' has been sold to Channel 9
Australia and option rights signed for Germany. We also plan to launch this
series in the USA using West 175 Productions. Further sales of these rights
should bring considerable additional revenue to Ninox.
We continue to be optimistic on the way our NZ operation is developing. The
total money spent on television advertising in NZ is approximately NZ$600
million and we see enormous opportunity for us to secure a significant
proportion of this revenue.
In addition, our IT companies have been restructured and we have gained the
unique position of having a backbone delivery system throughout the country
independent of the telecoms and we see significant revenue being generated
from voice and data delivery.
Board Changes and Management
On 4th December 2000 John Gunn left the board to develop certain of his other
interests, which required a substantial input of his time. John still retains
a strong interest in West 175 and is still a significant shareholder, with a
10 per cent shareholding.
We were very pleased to appoint Charles Sebag-Montefiore a Director on 15
December 2000. He was also appointed Deputy Chairman of the Board on 9
February 2001. Charles brings with him a wealth of experience in corporate
governance and long standing relationships in the City.
Earlier this year saw the departure of Rohan Courtney as Chairman of the
company. Rohan had been the Chairman since West 175's admission to AIM in
1996 and was instrumental in raising the much needed development capital for
the company. This followed differences of opinion over the strategic
direction of the company in the context of greater opportunities emerging for
West 175 in the North American and New Zealand markets. The Board joins me in
thanking Rohan Courtney for his significant contribution to the company over
the past five years. The Board also concluded that the position of Chairman
and Chief Executive should be the same person due to the geographical
diversity and the size of the company. This will be reviewed on an annual
Senior Management Appointments
Significant management appointments and changes have been made to strengthen
the management of the individual business units.
Elizabeth Brock was appointed President of the USA operation. Elizabeth was
head of international productions at a large PBS station in the US and brings
with her a wealth of business and production experience. She joined West 175
David Compton was appointed manager of our broadcasting operation. With a
lifetime in the broadcasting business, David's skills are contributing
significantly to the growth of the TV and radio stations.
George Reedy was appointed to manager of our IT companies. George has 18 years
managerial experience in technology based companies. He is a member of the
Institute of Chartered Accountants of NZ and is currently studying for an MBA.
David Baldock and Bronwen Stewart continue to manage Ninox 175 after our
acquisition. Both David and Bronwen are award winning producers in the
reality and documentary areas.
Turnover for the financial year to 31 March 2001 was $8,699,529 (2000:
$6,054,121) representing an increase of 43.7% on last year.
Gross Profit increased by 79.8% to $4,784,955 (2000: $2,661,391) reflecting
the increased margins and costs savings.
The operating loss before writing off all programming and development costs
was $5,607,175. We continue to write off completely all development costs and
therefore the balance sheet carries no value for programme assets. In 2001
the amount written off for programming and development costs was $1,933,905.
The operating loss includes approx $1.1 million of costs relating to board
restructuring costs and other non -recurring operating costs.
The loss per share is 0.43 cents against 0.73 cents in the previous year.
I am pleased to announce that we have appointed Beeson Gregory, as the
Company's nominated Adviser and nominated Stockbroker, effective 3 August
2001. Beeson Gregory have considerable expertise in the media sector.
They replace Teather & Greenwood, the nominated Adviser and Altium Capital,
the nominated Stockbroker. I would like to personally express my thanks to
both of these firms and the people there who have assisted West 175 over the
past few years.
The results for the year to March 2001 show the consistent profitability of
West Media Events and US operation moving forwards into profitability. We
expect both these operations to increase their profitability during the coming
Our investment in New Zealand TV and radio stations have now entered their
third year with two of the three stations budgeted to move close to
profitability in the current year. This is a significant turnaround from the
loss making position of the companies when acquired.
The group now has a strong base to grow organically after a transitional year.
Whilst there will still be alliances and strategic acquisitions that we will
want to make, the period of rapid acquisition has passed and the focus is on
making each company within the group exploit its potential to maximise
revenues and profitability.
We expect an increase in turnover in the next year and a move towards
The overall day to day management control and reporting has rested largely in
the hands of Jeff Green and Paul Burton, responsible for the New Zealand
operations and financial controls, respectively. They have collectively set
in place the day to day management structures that are needed to take the
company into profitability, and all staff are contributing to the growth and
successful transformation of the group.
CEO & Chairman
Consolidated Profit and Loss Account
For the year ended 31 March 2001
31 March 31 March
Continuing operations 7,648,928 6,054,121
Acquisitions 1,050,601 -
Group Turnover 8,699,529 6,054,121
Cost of sales 3,914,574 3,392,730
Gross profit 4,784,955 2,661,391
Other operating expenses (net) 10,063,003 6,026,695
Exchange (gains) / losses 329,127 -
Operating loss before programming and (5,607,175) (3,365,304)
Programming and development costs 1,933,905 2,028,933
Group operating loss (7,541,080) (5,394,237)
Share of operating profit in associate 19,935 -
Share of operating loss in joint venture (315,041) -
Interest payable (110,427) (203,576)
Interest receivable 383,745 -
Loss on ordinary activities before taxation (7,562,868) (5,597,813)
Taxation 56,340 23,141
Loss on ordinary activities after taxation (7,619,208) (5,620,954)
Minority interests - 408,252
Loss for the year attributable to shareholders (7,619,208) (5,212,702)
Loss per share (0.43) (0.73)
Statement of total recognised gains and losses
Loss for the financial year (7,619,208) (5,212,702)
Currency translation difference on foreign currency net (1,046,759) 4,196
Gain on disposal of interest in subsidiary to minority - 65,917
Total recognised gains and losses relating to the year (8,665,967) (5,142,589)
Prior year adjustment - (2,874,937)
Total gains and losses recognised since last annual (8,665,967) (8,017,526)
Consolidated Balance Sheet
For the year ended 31 March 2001
Goodwill 6,421,433 533,872
Tangible assets 3,435,303 888,146
Investments 1,236,080 -
Investments in joint ventures
Share of gross assets 52,894 -
Less: Share of gross liabilities (367,864) -
Stocks 79,764 293,384
Debtors: amounts falling due within one year 4,592,601 3,731,644
Debtors: amounts falling due after more than one 736,118 -
Cash in hand 6,372,330 30,481
Creditors: amounts falling due within one year 5,602,752 4,452,793
Net current assets/(liabilities) 6,178,061 (397,284)
Total assets less current liabilities 16,955,907 1,024,734
Creditors: amounts falling due after more than 153,790 223,663
Provisions for liabilities and charges 61,173 61,173
Capital and reserves
Called up share capital 38,038,094 10,423,131
Profit and loss account (21,297,150)(12,658,685)
Capital reserve - 27,502
Shareholders' funds 16,740,944 (2,208,052)
Unsecured convertible debentures - 2,630,522
Minority interests - 317,428
Consolidated Cash Flow Statement
For the year ended 31 March 2001
Cash flow from operating activities (10,581,591) (6,241,967)
Returns on investments and servicing of 273,318 (203,576)
Taxation (56,340) (23,141)
Capital expenditure and financial investment (2,692,409) (149,477)
Acquisitions and disposals (1,020,984) 472,657
Cash outflow before financing (14,078,006) (6,145,504)
Financing 20,778,726 5,378,445
Increase/(decrease) in cash in the year 6,700,720 (767,059)
Reconciliation of net cash flow to movement in debt
Increase in cash in the year 6,700,720
Cash outflow from decrease in debt and lease financing 361,024
Change in net debt resulting from cash flows 7,061,744
Conversion of loan stock 2,630,522
Movement in net debt in year 9,692,266
Net debt at 1 April 2000 (3,470,100)
Net debt at 31 March 2001 6,222,166
Reconciliation of operating profit to net cash inflow from operating
Operating loss (7,541,080) (5,394,237)
Depreciation and amortisation 1,295,125 345,646
Foreign exchange movement (870,891) -
Decrease / (increase) in stocks 214,258 (11,653)
Increase in debtors (817,646) (3,105,078)
Loss on disposal of fixed assets 897 -
Increase / (decrease) in creditors (2,862,254) 1,923,355
Net cash flow from operating activities (10,581,591) (6,241,967)
Nature of financial information
The financial information set out above does not constitute the Company's
statutory accounts for the year ended 31 March 2001 or for the year ended 31
March 2000. The financial information for 2001 is unaudited and the 2000
information is derived from the statutory accounts for that period. The
report of the Directors and the Accounts of the Company for the year ended 31
March 2001 will be presented at the Annual General meeting on 2 October 2001
together with the report of the Auditors. The auditors have reported on the
2000 accounts, their report was unqualified and did not contain a statement
under section 237(2) or (3) of the Companies Act 1985.
The financial information set out above has been prepared under generally
accepted accounting practices in the UK. The same accounting policies have
been used as for the year ended 31 March 2000.