RNS Number:7511J
Chorion PLC
08 April 2003
Embargoed until 7.00am on 8 April 2003
Chorion PLC
Results for the year ended 31 December 2002
Chorion to build children's division on back of Noddy success
* Group turnover #9.3 million (2001: #9.8 million)
* EBIT DA (and non-recurring items) #4.1 million (2001: #6.1 million)
* Total net assets per ordinary share up from 2.3p in 2001 to 9.2p
Crime Brands
* Turnover from crime brands up by 12% to #5.6 million
* Christie re-branding has increased book sales by 25% worldwide since
launch
* Over 1.2 million units of Agatha Christie UK partwork series sold in 2002
* 75% of crime brands publishing revenue now covered by minimum guarantee
contracts
Children's Brands
* UK Noddy re-launch a huge success creating a "must have" children's brand
* Make Way for Noddy on Five wins 20% audience share amongst 4-9 year-olds
* Noddy tops pre-school Christmas video charts in UK
* Chorion to retain and develop children's division
William Astor, non-executive Chairman of Chorion, said:
"Chorion has transformed Noddy into a 'must have' brand, demonstrating our
ability to enhance the value of classic children's properties. We have
therefore decided to keep and develop our children's division - building a
dynamic media brand business with considerable growth potential".
Nicholas James, Managing Director of Chorion, said:
"These results reflect the tough market conditions experienced by companies
across the media sector. However, our Christie publishing programme has been
hugely successful - with dramatically increased book sales and popular new
publishing formats launched. In addition, we have taken steps both to guarantee
future revenues and open up growth opportunities in the year ahead. We enter
2003 with greater earnings visibility than ever before and with clear objectives
that will enhance profitability going forward."
- ENDS -
Enquiries:
Analysts/Investors:
Nicholas James
Jeremy Banks
Tel: 020 7434 1880
Press:
Rachel Whetstone
Tel: 020 7404 5344
There will be a presentation to analysts at 9.30am today at The Registry, Royal
Mint Court, London, EC3N 4LB.
CHAIRMAN'S STATEMENT
William Astor
2002 was a challenging year for Chorion. We de-merged mid year into a tough
media market and our results reflect the difficulties experienced by companies
across the sector. However, we have implemented key initiatives to guarantee
future revenues and create growth opportunities in the year ahead.
Turnover for the year was down slightly at #9.3 million (2001: #9.8 million)
due to a decline in television income as broadcasters cut back on programme
commissions and a shortfall in children's revenues from the delayed re-launch of
Noddy. Group operating profit for the year was #682,000 (2001: #4.9 million).
This decrease was driven by a number of factors, including an increase in
overheads associated with being a stand alone PLC and some substantial one-off
costs arising from difficult market conditions. For more details see our Finance
Director's Review.
Against this background, we made good progress developing our crime and
children's properties, demonstrating our ability to inject new life into mature
intellectual properties. In crime, we completed the re-branding of Agatha
Christie in most of our major territories. Our new Christie identity has
significantly increased book sales worldwide and enabled us to develop new
formats, such as partworks series and audio books, to maximise the value of
these properties.
In children's, we concentrated our efforts on re-launching Noddy in the UK.
While this took longer than we had hoped, it has been a considerable success and
we are set to reap the rewards in 2003. We have transformed Noddy from a
popular but essentially declining property, into a "must have" brand. Make Way
for Noddy is now one of the most popular pre-school children's programmes on
British television and the video topped the best seller list at Christmas. This
has led to renewed interest in the Noddy brand from UK retailers and licensees,
and from overseas broadcasters.
Following a strategic review of the business last autumn, we announced our
intention to investigate whether the sale of our Enid Blyton properties would
better maximise shareholder value. Ingenious Corporate Finance, a specialist
media finance house, was appointed to seek expressions of interest from third
parties. The Blyton portfolio generated considerable interest driven by the
recent success of Make Way for Noddy. However, having carefully considered the
offers and expressions of interest received with our advisers, we concluded that
the sale process would not deliver best value for shareholders.
Our ability to update classic children's properties and transform them into
brands with broad appeal has been underlined by the recent successful UK
re-launch of Noddy. That expertise has been significantly enhanced with the
appointment in November of Stephen Green as Director, Children's Brands. It has
also created strong interest in the development of other Blyton properties and
enabled us to build relationships with international broadcasters. This
increases our choice in terms of future funding, including sharing the cost with
co-developers or financing projects through agreements with pre-sale partners.
We have therefore decided to keep and further develop the children's division.
In December, Nick Tamblyn resigned as Chairman. I took over as non-executive
Chairman, with Waheed Alli as non-executive Deputy Chairman. I would like to
take this opportunity to thank Nick for all his advice in guiding the business
through its de-merger and wish him every success in the future.
Now that I have completed the strategic review and we have decided to develop
rather than to sell our children's business, I am delighted to announce that
Waheed Alli is to take over as Chairman. Waheed's extensive experience of the
media sector, particularly his background in television, will be of real benefit
to Chorion. I will take on his role as Deputy Chairman. Nicholas James,
Managing Director since our de-merger, will assume the role of Chief Executive.
Looking ahead our focus is clear. We will keep tight control over costs. We
will return Poirot to UK television screens and maximise Noddy licensing
revenues. We will develop the potential of properties such as Campion, Maigret
and the Famous Five. We will look to strengthen our overall portfolio with
acquisitions in either division.
Finally, I would like to thank all our employees for their hard work and loyalty
over the past year. We enter 2003 in a strong position and can look forward with
confidence to building a dynamic media brand business.
MANAGING DIRCTOR'S REVIEW
Nicholas James
Crime Brands
Turnover from our crime brands increased by 12% to #5.6 million (2001: #5.0
million). This increase was driven by the success of our Agatha Christie
publishing programme, in particular our new UK Agatha Christie partwork series
and by the acquisition of 85% of Georges Simenon Ltd, which was completed during
the second half of 2001. These substantial gains were partially offset by a
subdued year for television revenues where broadcasters cut programme budgets
and new television commissions in response to the continuing advertising
recession. As a result of these cutbacks we were unable to secure the
anticipated 2002 television film commissions for Poirot.
Publishing
We successfully completed the re-launch of Agatha Christie with a fresh new
identity. The re-branding began in 1999 and publishers in most of our major
territories - Britain, France, Germany, Italy and the United States - have now
bought into the new Christie identity and are systematically applying it across
the range of her titles.
Against a background of declining annual sales of Christie books at acquisition,
we have now increased Christie book sales worldwide by 25% to four million books
per annum since commencing the re-branding. We believe this to be a substantial
achievement given the maturity of the property and the general downturn in book
sales over the period.
We also used our expertise to adapt our properties in fresh ways for different
publishing formats. For example, our decision to publish Christie audiobooks in
abridged form for the first time has brought her to a whole new audience.
Launched in the UK in 2001, the abridged audiobooks have helped make Christie
Britain's No.1 spoken word author across all genres. In the mystery audio
category, she now accounts for 14 out of the UK's 20 most popular titles
including the top three.
2002 Audiobook Sales
Author 2002 Unit Sales
Agatha Christie 117,696
J.K Rowling 97,755
Roald Dahl 78,770
J.R.R Tolkein 5,841
Source: Nielsen Bookscan
In 2002 we also extracted added value from the Christie portfolio through the
very successful Agatha Christie UK partwork series. Published twice a month and
consisting of a classic Christie novel and colour magazine, the Christie UK
partwork series sold over 1.2 million units in 2002, exceeding expectations. In
this format Murder on the Orient Express alone sold over 175,000 copies. We
also launched the partwork series in Australia where it sold over 150,000 copies
in its first 11 issues and continues to sell extremely well.
In 2002 we began to bring our branding expertise to bear on the Simenon
portfolio. Simenon was one of the twentieth century's most prolific authors,
writing over 400 novels. We are confident that, having completed the
re-branding of Simenon and Maigret with fresh new identities, we will now be
able to effectively commence exploiting the value of these brands in 2003, the
centenary of the birth of Simenon.
As an early first step, in 2002, we negotiated a new Simenon publishing contract
with French publishers Presses de la Cite, which delivered an instant 30%
increased uplift from the previous level of minimum guarantee that we inherited
at acquisition. This will lock in enhanced revenues from French publishing each
year for the next 10 years.
In 2002 we concentrated our efforts on both consolidating our various publishing
contracts and inserting minimum guarantee payment clauses into them. In most
cases we have been successful in setting these new minimum guarantee payments
above the traditional trading limit. While this consolidation does not, in
itself, necessarily significantly increase publishing revenues, it does remove,
usually for a 10-year period, any risk of a down turn in book sales and allows
us to have confirmed visibility of publishing earnings at the start of each
year.
By the end of 2002 we had locked in, for eight to ten years, some 75% of our
current annual revenues from minimum guarantee contracts in crime publishing.
Typically we earn 10% of the retail price of every book sold. For this reason,
in addition to locking in minimum guarantees, we also remain focused on working
with our publishers on how they can best maximise the effect of their new
branding and marketing programmes in order to increase sales above the level
covered by the minimum guarantee, thus earning us additional revenue.
In May, we acquired the rights to the literary works of Nicolas Freeling, best
known as the author of the Van der Valk detective novels. Freeling's works are
a valuable addition to our portfolio. He wrote 36 crime novels, including 13
featuring the Dutch police inspector Piet Van der Valk and 16 featuring the
French detective Henri Castang.
Television
In July ITV commissioned a contemporary adaptation of Sparkling Cyanide, a
one-off Christie television film. The two hour production by Company Pictures
was completed in February 2003 and is scheduled for broadcast later this year.
Sparkling Cyanide is the first updated Christie drama ever to be made for
British television. By offering broadcasters both classic and modern Christie
drama, we broaden her appeal and extract additional value from her assets.
During the year we also made progress returning Simenon's work to the small
screen. Our Maigret production partners in France, Dune, signed an output deal
with FR2, one of France's leading free-to-air broadcasters, for 12 new Maigret
television films over the next three years. Four of these have now been
produced and will be aired shortly.
Looking Ahead
In 2002, despite television revenues being well below expectations, Agatha
Christie profits were still double those that were being achieved when we
commenced the re-branding in 1999, demonstrating our ability to create and
maintain a significant enhancement in the value of mature intellectual
properties.
The work done in 2002 across all of our crime properties means that the crime
division goes into 2003 with revenues from minimum guaranteed publishing
contracts that will, from the start of the year, deliver 75% of 2003 forecast
crime publishing revenues, far greater visibility of earnings than we have ever
been able to achieve in the past.
In 2003, following the completion of the Simenon re-branding exercise, we intend
to apply our skills to growing the Simenon portfolio. In addition, we will now
start to focus on our ancillary properties - Freeling, Allingham and Crispin -
all of which have untapped potential. We aim to build on that potential by
generating interest in the television rights to these authors.
Our task in 2003 will be to further increase publishing minimum guarantees and
to seek to build our television revenues by returning Christie to UK television
and developing the TV opportunities of our other brands.
Children's Brands
Turnover from our children's brands was #3.7 million, down from #4.8 million in
2001. The principal factor behind this decline was the delayed re-launch of
Noddy.
While it has since become a huge success, our UK Noddy re-launch took longer
than we had hoped. As a result, we suffered a shortfall in revenues during the
year.
Television and Video
We did meet our key strategic objective: the successful re-launch of Noddy on
UK terrestrial television.
The 100X10-minute animated series - Make Way for Noddy - launched on Five, the
UK commercial terrestrial television operator, in September 2002. Broadcast
weekdays and Sunday mornings during the children's Milkshake block, it is one of
the most popular pre-school programmes on UK television. Make Way for Noddy
currently attracts a 20% audience share in the key 4-9 year old market -
compared to Milkshake's average share of 12.4% for that age group prior to
Noddy's launch. Five, the No.2 pre-school broadcaster in the UK, recently
confirmed that it would broadcast the series throughout 2003.
In October, Universal Pictures Video released the video and DVD of Noddy and the
New Taxi. Backed by a two-week advertising and promotional campaign in the
national press and on television, Noddy and the New Taxi was an instant success
selling 23,762 units in its first week. It was the best-selling pre-school
Christmas video/DVD in the UK.
UK Video and DVD Sales (28th October - 28th December 2002)
Title Units Sold Release Date
Noddy and the New Taxi 130,000 28th October
Fimbles: Get the Fimbling Feeling 127,000 28th October
Fimbles: Let's Find the Fimbles 117,000 28th October
Bob the Builder Live 114,000 7th October
Tweenies: Everybody Panto 58,000 14th October
(Source: CIN/The Official UK Charts)
Universal released its second video - Hold on to Your Hat Noddy - in February
2003. It went straight to No.3 in the family best-seller list and No.1 in
pre-school video sales.
We also made progress internationally. Make Way for Noddy has been sold to 16
territories around the world including: Australia (Nickelodeon), Belgium
(RTBF), Canada (TV Ontario), Hong Kong (TVB), Israel (Hop TV), Korea (EB5), New
Zealand (TVNZ), Norway (TV2), Poland (TVP) and Portugal (RTP).
We also signed France 5 to be the broadcaster of Make Way for Noddy in France,
historically Noddy's second biggest market after the UK in terms of consumer
recognition and sales. France 5 is a very good broadcast home for Noddy and
regularly attracts a 25% audience share of viewers under 10-years old. France 5
will commence broadcasting the new series in 2003.
Publishing
In September HarperCollins published six TV tie-in books to coincide with the
launch of Make Way for Noddy on Five, all of which feature the new
computer-generated imagery. In addition, BBC Children's Magazines re-launched
their monthly magazine. Sales of the new-look magazine enjoyed a significant
uplift, averaging a 25% increase for the six months following re-launch compared
to a similar period in the previous year.
We continued to look at new ways to exploit the Noddy brand and drive publishing
revenues. We believe that Noddy is an evergreen property that can sit as an
essential part of childhood in every home year on year. To achieve this we need
to create products that are not television series dependent and can become both
essential elements in growing up and meet the increasing demand around the world
for educational products for children.
For our first educational Noddy product we have developed Learn English with
Noddy, an innovative and exciting 20-part programme consisting of videos, books
and other ancillary learning materials which teaches non-English speaking
children to speak 400 words of English. We believe that this ground-breaking
project will make Noddy a childhood experience in territories that have
traditionally not been exposed to the character. The series does not officially
launch until 2003. However, due to its attractiveness the market, we were able
to conclude the first sale of just half of the programme in one territory for
#250,000 at the end of 2002. Under our accounting policies #60,000 was
recognised in 2002.
We commenced developing another educational Noddy product, a pre-school Noddy
Early Learning study programme. The programme is designed to teach all of the
basic skills set out in the pre-school curriculum such as numbers, movement,
place, size and opposites through the use of storybooks, videos and games. It
has been designed to appeal to pre-schoolers and their parents worldwide.
Licensing
The UK launch of the new Noddy TV series, along with the release of new video,
publishing and merchandising goods, was supported throughout by an aggressive
multi-media marketing campaign by Chorion and our marketing partners valued at
over #1 million. The campaign, combined with the unrivalled promotional power
of television, was a key factor in building awareness of the new-look Noddy in
2002 from which future sales will be driven.
The success of the Noddy re-launch attracted major new licensees as well as
convincing many past licensees to commit once again to the classic character.
Golden Bear, one of Europe's leading plush toy manufacturers, is a significant
new addition to Noddy's list of licensees, along with Universal Pictures Video.
Existing licensees who have committed themselves to the Noddy revival include
toy and game licensees Corgi, Toy Brokers, LB Group, Falcon Games and
Dekkertoys, clothing licensee Aykroyd, publishers Pedigree (annuals) and
Alligator (pop-up books), FMCG licensees, Highgrove and Kerry Foods, stationery
licensees Portico and bedlinen licensee Tex UK.
We appointed a new Master Licensing Agent in France. Their renewed efforts, and
the predicted success on television of the new series, has led to a significant
increase in key licensees including Cobra, which has been appointed to publish a
new-look children's magazine.
Looking Ahead
In 2003 we will further drive Noddy penetration in the UK with an increased
merchandising presence. We also plan to ensure increased success for Noddy in
France as a result of his re-launch on France 5. We will also work to build on
his international appeal in other territories.
We have always said that we would only develop other properties in our Blyton
portfolio after we could show significant progress with Noddy. We believe we
are now able to demonstrate this progress and thus intend to put further
children's properties into development.
Our ability to maximise the potential of Noddy, and to actively develop further
properties, has been greatly enhanced by the appointment of Stephen Green as
Director, Children's Brands in November 2002. He now leads a very experienced
and enthusiastic team.
Our progress in signing new major licensees for Noddy and the strong
relationship we are building with international broadcasters and other partners
gives us confidence that we can both generate additional revenue from Noddy and
create a platform of relationships from which to launch further children's
properties.
All in all we remain excited by our children's business and are confident of
being able to drive growth from it in the next few years.
FINANCE DIRECTOR'S REVIEW
Jeremy Banks
The Group is presenting its first set of audited accounts since its de-merger
from the entertainment and leisure group now known as Urbium Bars PLC. Whilst
the de-merger took place on 17 May 2002, the financial statements and
comparative information are for the years ended 31 December 2002 and 2001.
The following points should be taken into consideration when comparing the
Group's results for the year ended 31 December 2002 with those for the year
ended 31 December 2001.
Analysis of Overhead
2002 2001
#000 #000
Non-recurring items:
Terminated Master Licence (i) 488 -
Relocation Costs (ii) 400 -
Board Reorganisation (iii) 372 -
M&A Fees (iv) 200 -
1,460
Operating Expenses
Post IPO Central Costs (v) 523 -
Depreciation & Amortisation (vi) 1,956 1,228
Staff Costs (vii) 2,279 2,509
Capitalised Costs (viii) (41) (366)
Marketing & Other Operating Expenses (ix) 2,090 1,611
6,807 4,982
8,267 4,982
Net Interest Payable (x) 249 842
2002 was a year of transition and much change for the Group. The de-merger was
successfully achieved in the first half of the year, albeit into a market in
recession, which was to worsen, for media stocks in particular, as the year
progressed.
Non-recurring items:
(i) As was disclosed in the strategic review announced on 7
November 2002, the Group suffered a payment default on a contract signed towards
the end of 2001 with its master licensee in China, as a result of which, the
contract was terminated.
(ii) As a result of the strategic review, the Group will be
moving out of the premises it currently shares with Urbium PLC. The cost of
breaking the lease was agreed towards the end of 2002 and payment will be made
during 2003. The Board is confident that it will be able to negotiate more
attractive rental terms as a result of the move.
(iii) A reorganisation of the Board was announced on 4 December
2002, following the resignation of Nicholas Tamblyn, the former Executive
Chairman of the Group.
(iv) A potential acquisition was aborted during the course of the
year. Relevant costs, together with those costs incurred in relation to the
potential sale of the Enid Blyton estate, have been expensed in full in the
year.
Operating Expenses:
(v) The Group faced seven and a half months of costs associated
with being a stand alone PLC in the year that it did not face in 2001 when it
was operating as a division of a larger group.
(vi) Depreciation & Amortisation has increased for a number of
reasons. 2002 was the first full year of depreciation of the enhanced Noddy
asset, following completion of the new Make Way For Noddy animated series, as
more fully explained below (2002: #791,000; 2001: #450,000). Similarly, the
Georges Simenon estate was acquired in the latter part of 2001, resulting in a
commensurate increase in amortisation in 2002. Total amortisation of copyrights
and goodwill rose to #837,000 (2001: #439,000).
It should be noted that the cost of the original acquisition of the Enid Blyton
estate was written-off in its entirely prior to the de-merger.
(vii) Staff costs have decreased between 2001 and 2002 as management
have sought to focus the Group since its de-merger.
(viii) The Group no longer capitalises the salary cost of staff who
work on capital projects. A large proportion of the amount capitalised in 2001
and all of the amount capitalised in 2002 was in relation to the new Make Way
For Noddy animated series that has now been completed. A number of new capital
projects have commenced in the year (see below). However, no staff costs have
been capitalised in this regard, nor will they be in the future.
(ix) Marketing costs and other operating expenses have increased by
#479,000 (30%). This is for three reasons.
* Amounts owing with regard to two film projects that were not completed
in the year due to the downturn in the media sector have been provided against.
This amounted to some #300,000.
* Certain work-in-progress items that had previously been capitalised
were written-off through the Profit & Loss Account in the year. This increased
write off amounted to some #120,000.
* The new Make Way For Noddy animated series was launched during the
course of 2002. This caused total Sales & Marketing Costs to increase by some
#25,000 although the cost of supporting the Noddy launch contributed a much
greater proportion of the total cost in the year.
Net Interest Payable:
(x) Interest payable has decreased significantly between the two
periods, largely as a result of the elimination of balances previously owed to
Urbium Bars PLC that existed prior to the de-merger.
Accounting Policies
During the year, one new accounting standard, FRS 19: Deferred Tax came into
effect and has been adopted in these financial statements. This has not resulted
in any material changes to the financial statements in the current or previous
periods.
Acquisitions
In May, the copyright and all other intellectual property rights were acquired
to the original literary works written by Nicolas Freeling, together with the
benefit of all the contracts with respect to those works, which includes the
rights to the detective Van der Valk. The nominal consideration will be
amortised over the life of copyright.
Capital Expenditure
Expenditure on the one hundred episodes of the new series of computer generated
imagery ("CGI") programmes entitled Make Way For Noddy, was completed at the
start of the year. A total commitment of some #10 million has been made over the
last three years and will be amortised on a revenue-matching basis in accordance
with the Group's accounting policies. The Noddy CGI asset has been amortised
since 2001, the first year in which it contributed to Group revenues.
During the year, the Group commenced investment in two further capital projects,
Noddy Early Learning and Learn English with Noddy, in both instances making full
use of the cost-saving opportunities that the creation of the Make Way For Noddy
digital asset database now offers. As at the year-end, #964,000 had been
invested in these projects. Total investment is budgeted at #1.3 million.
Cash Flow & Funding
At the time of de-merger, the Group entered into new facilities with Barclays
Bank PLC which, upon admission, provided a range of facilities totalling up to
#20 million to members of the Group to fund its business development and
acquisition strategy.
Following admission, as envisaged in the AIM Admission Document published in
March 2002, Chorion repaid #5 million of indebtedness owing to its former
parent, Urbium Bars PLC, which was drawn down under the new banking facilities.
The Group started the year with a cash balance of #0.7 million and generated a
net cash inflow from operating activities in the year of #3.4 million. The Group
had net borrowings of #4.9 million at the year-end and operated within its
covenants throughout the year.
Consequently, the Group has significant resources at its disposal for future
expansion.
Currency Risk
The Group faces transactional currency exposure. As set out in Note 3 (b):
Segmental Information, 55% of the Group's turnover was generated outside the UK.
Due to uncertain timing of cash flows from foreign currency transactions, and in
accordance with the Group's policy, no hedging contracts were used in respect of
sales and purchases in foreign currencies. As at 31 December 2002 all
significant monetary assets and liabilities, which exclude trade debtors and
creditors, were held in sterling.
Consolidated Profit and Loss Account
for the year ended 31 December 2002
2002 2001
Notes #'000 #'000
Turnover 3 9,273 9,836
Cost of sales (324) 11
Gross profit 8,949 9,847
Administrative expenses (8,267) (4,982)
Group operating profit
Continuing operations:
- Ongoing before amortisation 1,519 5,304
- Amortisation of intangibles 6 (837) (439)
Group operating profit 682 4,865
Interest receivable and similar income 11 53
Interest payable and similar charges (260) (895)
Profit on ordinary activities before taxation 433 4,023
Tax on profit on ordinary activities 4 (592) (1,014)
(Loss)/profit on ordinary activities after (159) 3,009
taxation
Equity minority interests 11 (631) (757)
(Loss)/profit for the financial year (790) 2,252
Retained (loss)/profit for the financial year 10 (790) 2,252
(Loss)/earnings per share 5
Basic (0.15p) 0.44p
Diluted (0.15p) 0.42p
Adjusted (before amortisation of intangibles) 0.01p 0.52p
Consolidated Balance Sheet
as at 31 December 2002
2002 2001
Notes #'000 #'000
Fixed assets
Intangible fixed assets 6 31,393 31,655
Tangible fixed assets 7 951 907
Film & TV and other related investments 8 15,850 14,984
48,194 47,546
Current assets
Debtors due within one year 8,886 8,996
Cash at bank and in hand 584 685
9,470 9,681
Creditors: amounts falling due within one year (4,423) (2,769)
Net current assets 5,047 6,912
Total assets less current liabilities 53,241 54,458
Creditors: amounts falling due after more than one year (5,500) (42,683)
Total net assets 47,741 11,775
Capital and reserves:
Called up ordinary share capital 9 5,175 5,175
Merger reserve 10 31,795 (5,075)
Profit and loss account 10 2,935 3,742
Equity shareholders' funds 39,905 3,842
Preference share capital 9 50 50
Total shareholders' funds 39,955 3,892
Equity minority interests 11 7,786 7,883
47,741 11,775
Company Balance Sheet
as at 31 December 2002
2002
Notes #'000
Fixed assets
Investments 5,175
Current assets
Debtors due within one year 50
Creditors: amounts falling due within one year -
Net current assets 50
Total assets less current liabilities 5,225
Creditors: amounts falling due after more than one year -
Total net assets 5,225
Capital and reserves:
Equity shareholders' funds
Called up ordinary share capital 9 5,175
Non-equity shareholder's funds
Preference shares 9 50
Total shareholders' funds 5,225
Statement of Total Group Recognised Gains and Losses
for the year ended 31 December 2002
2002 2001
#'000 #'000
(Loss)/profit for the financial year (790) 2,252
Currency translation differences on foreign currency net investments (17) -
Total recognised gains and losses (807) 2,252
Reconciliation of Movements in Shareholders' Funds
for the year ended 31 December 2002
2002 2001
#'000 #'000
(Loss)/profit for the financial year (790) 2,252
Retained (loss)/profit for the financial year (790) 2,252
Other net recognised (losses) relating to the year (17) -
Arising on de-merger 36,870 -
Net addition to shareholders' funds 36,063 2,252
At 1 January 3,892 1,640
At 31 December 39,955 3,892
Consolidated Group Cash Flow Statement
for the year ended 31 December 2002
2002 2001
Notes #'000 #'000
Net cash inflow from operating activities 12 3,354 3,552
Returns on investments and servicing of finance
Dividends paid to minority shareholders (639) (713)
Bank charges and interest paid (310) (895)
Interest received 11 53
(938) (1,555)
Taxation (1,246) (908)
Capital expenditure and financial investment
Purchase of tangible fixed assets (326) (654)
Proceeds from disposal of tangible fixed assets - 3
Purchase of intangible assets (366) (7,016)
Investment in films (739) (5,314)
Other Investments (964) -
(2,395) (12,981)
Acquisitions and disposals
Acquisition of intangible assets - (5,294)
Net cash acquired with acquisitions - 68
Acquisition of minority shareholding in subsidiary (209) (361)
(209) (5,587)
Net cash outflow before financing (1,434) (17,479)
Financing
New bank loans 5,500 -
Funding (to)/from Urbium Bars PLC (4,167) 17,667
1,333 17,667
(Decrease)/increase in cash in the year 13 (101) 188
Notes to the financial statements
for the year ended 31 December 2002
1. Basis of preparation
The financial statements have been prepared under the historical cost convention
and in accordance with applicable accounting standards in the United Kingdom.
The following accounting standard is effective for the first time this year and
has been adopted in these financial statements: FRS 19 - Deferred Tax. This has
not resulted in any material changes to the financial statements in the current
or previous periods.
De-merger
The Chorion Group was created following the transfer to the Company of the
Intellectual Property interests of Urbium Bars PLC on 17 May 2002. Urbium PLC
was the new parent company that retained the bars activities of Urbium Bars PLC
(formerly Chorion PLC).
Chorion PLC was incorporated in England and Wales on 27 February 2002 as a
public company limited by shares as New Chorion PLC. On 16 May 2002 the name of
the Company was changed to Chorion PLC.
The acquisitions by the Company of Enid Blyton Ltd and Liontrack Ltd and their
subsidiaries have been accounted for in accordance with the principles of merger
accounting as set out in Financial Reporting Standard No 6 "Mergers and
Acquisitions" and Schedule 4 (A) to the Companies Act 1985. This means that the
consolidated accounts are presented as if Enid Blyton Ltd and Liontrack Ltd and
their subsidiaries had been controlled by the Company throughout the period and
the previous period.
In the Company's balance sheet the investments in Enid Blyton Ltd and Liontrack
Ltd have been stated at the nominal value of the shares issued in consideration
for those companies. As permitted by Sections 131 and 133 of the Companies Act
1985 no premium has been recorded on the ordinary shares issued as
consideration. On consolidation the difference between the nominal value of the
shares issued and received is written off directly to the merger reserve.
Basis of consolidation
These accounts have been prepared on a merger accounting basis assuming that the
Group has traded in its current, de-merged form throughout all periods reported
on.
2. Preparation of Preliminary statement
The financial information set out above does not constitute the Group's
statutory accounts for the years ended 31 December 2002 or 2001. The financial
information for 2001 is derived from the statutory accounts of the subsidiary
companies, which have been delivered to the Registrar of Companies. The report
from the Auditors, KPMG Audit PLC, on the 2002 accounts, was unqualified and did
not contain a statement under section 237 (2) or (3) of the Companies Act 1985.
The statutory accounts for 2002 will be delivered to the Registrar of Companies
following the Company's Annual General Meeting in June 2003.
1. Segmental information
(a) Turnover by class of business
The Group only has one class of business which is the exploitation of
intellectual property rights. The Group's turnover has been analysed by revenue
stream as follows:
2002 2001
#'000 #'000
Publishing/Audio/Magazine/Partworks 4,853 4,611
Television/Video/Films 2,975 3,252
Merchandising 769 1,088
Other 676 885
9,273 9,836
(b) Turnover by geographical segment
The Group's operations are based in the United Kingdom but royalty income is
derived from worldwide sales. The Group has subsidiaries in Eire, Hong Kong and
Singapore. Turnover by destination is analysed as follows:
2002 2001
#'000 #'000
United Kingdom 4,171 2,192
Other European Community 3,445 3,433
Americas 1,071 2,277
Asia and Australia 473 1,565
Other 113 369
9,273 9,836
2. Tax on profit on ordinary activities
2002 2001
#'000 #'000
(i) Analysis of charge in year
Current tax - UK Corporation tax on profits for the year 592 1,014
(ii) Factors affecting tax charge for the year
The tax charge for the year is different from the standard rate of tax in the UK (30%). The differences are
explained below:
2002 2001
#'000 #'000
Profit on ordinary activities before tax 433 4,023
Profit on ordinary activities at the standard rate of UK tax 130 1,206
Effects of:
- Expenses not allowable for tax purposes 202 (138)
- Utilisation of tax losses - (54)
- Losses not eligible for off-set 524 -
- Over provision in previous year (264) -
592 1,014
The Group's effective tax rate in 2002 was 137% (2001: 25%). The effective rate
for 2002 was greater than the standard corporate rate due to expenses not
allowable for tax purposes and losses not eligible for off-set. Amortisation
arising on consolidation has the effect of increasing the effective rate.
The Group has adopted the requirements of FRS 19: Deferred Tax. FRS 19 requires
deferred tax to be recognised in full on timing differences where transactions
or events that give the Group an obligation to pay more tax in the future have
occurred by the balance sheet date. This has not resulted in any material
changes to the financial statements in the current or previous periods. Losses
of #1,749,000 (2001: #150,000) at the Balance Sheet date have not been
recognised as a deferred tax asset on the basis of uncertainty over the timing
of the future generation of profit.
3. Earnings per share
2002 2001
#'000 #'000
Earnings
Basic and diluted (losses)/earnings (790) 2,252
Add amortisation of intangibles 837 439
Adjusted earnings before amortisation of intangibles 47 2,691
(Losses)/earnings per share
Basic (0.15p) 0.44p
Diluted (0.15p) 0.42p
Adjusted (before amortisation of intangibles) 0.01p 0.52p
The calculation of basic earnings per share is based on profit after tax and
minority interests. The calculation of adjusted earnings uses the basic
earnings before amortisation of intangible assets.
The weighted average number of ordinary shares used in the calculation of the
basic, diluted and adjusted earnings per share is as follows:
2002 2001
Weighted average number of shares in issue during the year used 517,499,802 517,330,358
in the calculation of basic and adjusted basic earnings per share
Dilutive effect of options treated as exercisable at the year end - 14,558,939
Weighted average number of shares in issue during the period used 517,499,802 531,889,297
in the calculation of diluted earnings per share
4. Intangible fixed assets
Goodwill Copyrights Total
#'000 #'000 #'000
Group
Cost:
At 1 January 2002 504 32,686 33,190
Additions in period 209 366 575
At 31 December 2002 713 33,052 33,765
Amortisation:
At 1 January 2002 63 1,472 1,535
Charged in the year 83 754 837
At 31 December 2002 146 2,226 2,372
Net book value:
At 31 December 2002 567 30,826 31,393
At 31 December 2001 441 31,214 31,655
Goodwill acquired in the year relates to the increase in the Group's investment
in Enid Blyton (Asia) Pte Ltd and is being written off in equal instalments over
the period to 2008, being the remaining period of the license granted to Enid
Blyton (Asia) Pte Ltd.
The copyrights principally relate to Agatha Christie Ltd and Georges Simenon
Ltd. These estates are being written off in equal instalments over the
remaining copyright period, which is due to expire in 2046 and 2059 for Agatha
Christie and Georges Simenon respectively.
Included within copyrights are trademarks with a net book value of #530,000
(2001: #381,000).
5. Tangible fixed assets
Total
#'000
Group
Cost:
At 1 January 2002 1,425
Additions in period 326
Disposals (36)
At 31 December 2002 1,715
Depreciation:
At 1 January 2002 518
Charged in the year 282
Disposals (36)
At 31 December 2002 764
Net book value:
At 31 December 2002 951
At 31 December 2001 907
6. Film & TV and other related investments
Other Film & TV Total
#'000 #'000 #'000
Group
Cost:
At 1 January 2002 - 18,647 18,647
Additions in period 964 739 1,703
At 31 December 2002 964 19,386 20,350
Amortisation:
At 1 January 2002 - 3,663 3,663
Charged in the year 18 819 837
At 31 December 2002 18 4,482 4,500
Net book value:
At 31 December 2002 946 14,904 15,850
At 31 December 2001 - 14,984 14,984
7. Share capital
On
2002 incorporation
#'000 #'000
Authorised
Equity share capital:
50,000 ordinary shares of #1 - 50
760,000,000 ordinary shares of 1p each (2001: NIL shares) 7,600 -
7,600 50
Non-equity share capital:
50,000 redeemable preference shares of #1 each 50 -
50 -
Total authorised share capital 7,650 50
Allotted, called up and fully paid
Equity share capital:
2 ordinary shares of #1 - -
517,528,789 ordinary shares of 1p each (2001: NIL shares) 5,175 -
5,175 -
Non-equity share capital:
50,000 redeemable preference shares of #1 each 50 -
50 -
Total allotted, called up and fully paid share capital 5,225 -
On incorporation the authorised share capital of the Company was #50,000 divided
into 50,000 shares of #1 each of which two were issued for cash at par to the
subscribers to its Memorandum of Association.
On 21 March 2002 each of the shares of #1 were sub-divided into 100 ordinary
shares of 1p and the entire authorised share capital of the Company was
increased to #7,650,000 by the creation of 50,000 redeemable preference shares
of #1 each and 755,000,000 ordinary shares of 1p.
On 21 March 2002 50,000 redeemable preference shares of #1 each were issued
fully paid to Urbium Bars PLC.
On 17 May 2002 517,529,637 ordinary shares were issued fully paid on a one for
one basis to the holders of shares in Urbium Bars PLC as consideration for the
transfer to the company of Enid Blyton Ltd and Liontrack Ltd.
As set out in the AIM Admission Document dated 25 March 2002, it is intended
that the redeemable preference shares will be redeemed as soon as reasonably
practicable following Admission. There is no premium on redemption and no
voting rights exist.
8. Reserves
Profit
Merger and loss
reserve account
Group #'000 #'000
At 1 January 2002 (5,075) 3,742
Exchange rate adjustment - (17)
Arising on de-merger (see note below) 36,870 -
Retained profit for the year - (790)
At 31 December 2002 31,795 2,935
The opening balance on the merger reserve arose following the allotment of
517,529,637 ordinary shares of 1p on a one for one basis to the holders of
shares in Urbium Bars PLC as consideration for the transfer to the company of
Enid Blyton Ltd and Liontrack Ltd which were the holding companies for the
Intellectual Property interests of Urbium Bars PLC at the time. As a result the
profit and loss account and the comparative results of the group for the
previous periods include the results of Enid Blyton Ltd and Liontrack Ltd and
their subsidiaries as if they had always been part of the Chorion PLC Group. The
capitalisation of amounts owed by Enid Blyton Ltd and Liontrack Ltd to Urbium
Bars PLC and its subsidiaries in 2002 arose as these companies were released
from their obligation to repay the loans in consideration for the issue of one
share in each company to Urbium Bars PLC.
9. Equity minority interests
2002 2001
#'000 #'000
At beginning of year 7,883 7,106
Arising on acquisition (74) 733
Share of retained profit 631 757
Dividends paid or declared during the year (654) (713)
At end of year 7,786 7,883
10. Reconciliation of operating profit to net cash inflow from
operating activities
2002 2001
#'000 #'000
Group operating profit 682 4,865
Amortisation of intangible assets 837 439
Amortisation of film & TV and other related investments 837 648
Depreciation 282 142
Profit on disposal of tangible assets - (3)
Decrease in stock - 66
Decrease/(increase) in debtors 96 (961)
Increase/(decrease) in creditors 620 (1,644)
Net cash inflow from operating activities 3,354 3,552
11. Reconciliation of net cash flow to movement in net debt
2002 2001
#'000 #'000
(Decrease)/increase in cash in year (101) 188
New bank loans (5,500) -
Non-cash movement 36,870 -
Repayment to Urbium Bars PLC 4,167 -
Changes in net debt from cash flow 35,436 188
Net (debt)/funds at start of year (40,352) (40,540)
Net debt at end of year (4,916) (40,352)
The non-cash movement arises following the release of Enid Blyton Limited and
Liontrack Limited from their obligation to repay the loans to Urbium Bars PLC.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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