DCD Media Plc
Financial statements for the period ended 31 December 2010
DCD MEDIA PLC
FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2010
Company number 03393610
DCD Media Plc
Financial statements for the period ended 31 December 2010
Contents
Financial highlights
Chief Executive’s Overview
Financial Director’s Overview
Report of the Directors
Report of the Auditors
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of cash-flows
Consolidated statement of changes in equity
Notes to the consolidated accounts
Company balance sheet
Notes to the company accounts
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DCD Media Plc
Financial statements for the period ended 31 December 2010
DCD Media plc
(“DCD” or the “Group”)
Final Results for the Eighteen Months Ended 31 December 2010
DCD Media, the independent TV production and distribution group, today reports results for the eighteen
months period ended 31 December 2010.
Financial Summary (comparatives are twelve months to 30 June 2009)
• Revenue
£48.4m (2009: £34.5m)
• Gross profit
£10.2m (2009: £8.7m)
• Adjusted Profit Before Tax
£1.8 m (2009: £2.4m)
• Operating Loss
Loss £11.2m (2009: Profit £0.5m)
• Adjusted EBITDA
£2.3m (2009: £3.0m)
Refer to table within the Financial Review section below for a reconciliation of the adjustments:
Post Balance Sheet Events
• Potential Funding
The Group announces that it is currently exploring options to secure additional funding, either in the form
of debt or equity. The Board has identified a requirement for further short-term working capital in the
order of £1 million. It is in discussions with the Company's larger shareholders, from whom it has
received strong indications of support. Such additional funding is subject to, inter alia, finalisation of
terms and a further update will be provided in due course.
Key Events during the eighteen month period
• Re-organisation and formation of new production division, DCD Factual to maximize synergies of
multiple factual brands within the group and accelerate international expansion
• Strategy of expansion overseas, particularly in the USA, increased revenues from international markets -
now accounting for 31% of turnover. September Films USA successfully continues its transatlantic
success with returning US hit reality series and new talent led primetime format with international
potential.
• Strategy of expansion into the UK’s nations and regions – Matchlight becomes one of Scotland’s leading
production companies on the back of its new commissions, while Wales based producer Prospect Cymru
increases commissioning.
• DCD Rights experiences the upside of third party rights acquired for distribution with large package deals
and strongest portfolio to date. DCD Publishing successfully launches first products into the retail
market and expands ancillary rights portfolio third party and DCD-generated programming.
David Green, Chief Executive, commented:
“We have weathered a very tough environment and with the proposed changes can emerge with an
improved operating structure and (subject to finalisation of terms) additional funding and a more stable
Group, which has been achieved with lower ongoing fixed cost expenditure. The continued strong foothold in
the US production market is a further testament to the determination of our team to improve performance.
The directors believe that, alongside the new commissions already announced in 2011, and the actions
noted above, this will lead to a more stable business to provide a platform for improved performance through
the current year.”
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DCD Media Plc
Financial statements for the period ended 31 December 2010
For further information please contact:
John McIntosh, Finance Director
DCD Media plc
Tel. 020 8563 9393
Jeremy Ellis or Chris Clarke
Evolution Securities
Tel. 020 7071 4300
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DCD Media Plc
Financial statements for the period ended 31 December 2010
Chief Executive's Review
DCD Media has faced its challenges over recent months with cost and development initiatives, a
reorganisation of its production assets and a new funding proposal. The Group has also recently been
addressing the issue of succession planning within certain of its business areas.
To address the production area, DCD Factual has been created to house the existing brands of West Park
Pictures and Prospect Pictures, both of which have enjoyed successful production runs, and to ensure new
talent can be attracted and incentivised. The foundations for this are now in place. To ensure its successful
development, the Board considers that additional funding is required to support this division’s objectives.
Management and Board Changes
Similar development initiatives to the above changes are being considered across the Group and steps are
taking place at an early stage to improve DCD’s performance during the next period. Executive headcount
has reduced during the last financial period and as part of this process, the Group intends to appoint new
non-executive directors to the Board. A full announcement disclosing all the details as required by Schedule
2 paragraph (g) of the AIM Rules will be made once the appointments are confirmed.
Chief Executive’s Review of Divisions
Review of activity within the Group during the eighteen months period.
The group has four key operating divisions :
-
-
-
Factual Television Production - This division is involved in the production of factual based television
content from the Prospect Pictures, Westpark and DCD Factual brands. The results of Matchlight Ltd
are also contained in this division.
Entertainment Television Production – This division is involved in the production of entertainment
based television content. This includes productions by September Films.
Event Management – This division organises and manages events, primarily music concerts through
Done & Dusted.
- Rights and Licensing – This division is involved with the sale of distribution rights, DVDs, music and
publishing deals through DCD Rights, DCD DVD, DCD Music and DCD Publishing.
Factual Division
During the period, the Group reshaped the structure of its factual production wing in order to take advantage
of the synergies and economies of owning successful production brands by further consolidating the
management and back office functions into a centralised DCD Factual operating unit.
This was a strategic move to increase future profitability, bring a distinct focus to DCD Media's strong
presence in the factual genre, and position the factual production pool for an even bigger push into the
international television markets, particularly in the US where other DCD Media producers have a high profile
presence.
The factual division launched in September 2010 continues to promote individual brands with their unique
style and output. Including Prospect Pictures, Prospect Cymru (Wales), and West Park Pictures.
Prospect Pictures / Prospect Cymru (Wales) (Prospect)
During the period, the London and Cardiff based company delivered two successive seasons of its high
volume, low cost lifestyle series Daily Cooks Challenge for ITV1, with a revision of the latest series made
for ITV3. It also substantially increased its supply of short films for BBC One’s flagship magazine show The
One Show from 8 films in 2009 to 50 films for broadcast across 2010-2011.
Factual highlights included the critically acclaimed two-part documentary Autistic Superstars for BBC Three
which received an Royal Television Society award nomination, and a raft of new documentaries for BBC
Four including the award-winning feature length film Elgar – The Man Behind The Mask, Chopin – The
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Financial statements for the period ended 31 December 2010
Women Behind The Music which marked the composer 200th birth anniversary, and Remembrance Day
special Battlefield Poet Keith Douglas.
Prospect also successfully co-produced the world’s first ever 3D live opera broadcast Lucrezia Borgia with
sister company Done and Dusted for Sky and 3D cinemas.
The period notably saw a new commissioning out of the Cardiff-based company, Prospect Cymru, which
produced a number of programmes for the BBC channels. Management believe that Wales is a vital part of
the Group’s factual strategy going forward, expecting Prospect Cymru to become one of the DCD’s main
popular factual content providers in 2011 and as such have increased the Group’s investment there. This
rationale is supported by the fact Wales saw the biggest growth in the BBC’s economic impact of all the
nations and regions with a considerable 17.9% boost in 2009/2010*.
Prospect’s slate for FY2011 includes the transmission of Misbehaving Mums To Be, a major 6-part series
commissioned by BBC Three, the 2-part BBC documentary Passion of Port Talbot starring Michael Sheen,
and a new high profile documentary drama show about the life of Shirley Bassey, currently in pre-production
with BBC Two. Further information on the financial impact of the reorganisation of this unit is contained
within the Finance Director’s Review.
West Park Pictures
Specialist factual producer West Park delivered two instalments of its Masterpiece series produced with The
Prince’s Charities Events – The Arch of Enlightenment and The Emperor’s Secret Garden which were
both broadcast on Sky Arts and continued production on its two part documentary The Tallest Tower for
Channel 4 and Discovery Europe.
Highlights for the period included the one-hour special Last Chance to See Special: Return of The
Northern White Rhino, co-produced with BBC Wales for BBC Two; the delivery of three-part series
Nature’s Power Revealed for Readers Digest and feature length documentary Punchdrunk’s Duchess of
Malfi which transmitted in late 2010 on More4.
Post year end West Park Pictures underwent a management restructure as part of the ongoing integration of
the factual production entities under the new DCD Factual umbrella. West Park's slate of programming for
FY2011 including documentaries for Channel 4, Discovery UK and various corporate clients is now under the
management of the Group’s factual division. Further information of the financial impact of the reorganisation
of this unit is contained within the Finance Director’s Review.
Matchlight
Since its formation Matchlight, the collaboration between DCD and a group of prominent Scottish programme
makers, has grown to become one of Scotland’s leading production companies.
From its base in Glasgow the company is ideally placed to take advantage of the BBC’s increased
commitment to sourcing more of its output from the UK’s nations and regions. The BBC has already met its
2012 target of 6% of original television commissions from Scotland and remains committed to a further rise
of 2.9% to a total of 8.9% by 2016. Channel 4 has also renewed its commitment to out-of-London
commissioning and has identified Scotland as a growth area.
The Group is delighted that the strategic move to capture a share of this market has paid off. In the period
since it was brought within the Group Matchlight was commissioned to make series or individual films for
BBC One, BBC Two, BBC Three, BBC Four, BBC Scotland and Channel 4.
Highlight’s included the Royal Television Society nominated history series At Home with the Georgians for
BBC Two, presented by Prof. Amanda Vickery; a special two-part Imagine arts documentary for BBC One
presented by Alan Yentob and entitled The Trouble with Tolstoy; See You in Court (previously titled Libel)
a major six part documentary series for BBC One; and a two part series for BBC Two fronted by Rory
Stewart MP. Both See You in Court and the BBC Two series are due to transmit later in 2011.
Looking forward Matchlight has secured a solid slate of development projects which contributes to a positive
outlook: it has secured its first commission from Channel 5, a six part popular factual series about nervous
drivers fighting their fears currently entitled So You Think You Can’t Drive; a three part history series for
BBC Two and BBC Four; as well as three major projects in funded development with Channel 4.
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DCD Media Plc
Financial statements for the period ended 31 December 2010
Further information on the financial accounting impact of the formation of this venture are contained within
the Finance Director’s Review.
Entertainment
September Films
September Films, the Group’s transatlantic producer of reality television, entertainment and formats had
another prosperous period, delivering high rated primetime programming in both the UK and the US, and
strategically expanding the breadth of its output into new genres.
In the US, September continued to strengthen its ever-growing reputation in the American reality TV market
with for the first time three major series airing simultaneously on three different cable channels; Season 7 of
WEtv’s long running hit wedding series Bridezillas, A&E’s signature non-fiction franchises Billy The
Exterminator, whose popularity led to the commissioning of a third season, and Mall Cops: Mall of
America, for TLC. The company continued to produce high rated human interest documentaries including
650lb Virgin: The Weight is Over, Marlie’s New Face: 4 Years On, Child Frozen in Time, all for TLC and
Raising Bains for A&E. The company also expanded its broadcaster client base, notably with its first show
for MTV US, the one-hour special Baby High, exploring the issues of teenage pregnancy.
In the UK, September added to the growth of its US operation by anticipating the revival of the ‘magic’ genre
on British Television and delivering an original and daring TV magic show for ITV1 – Penn & Teller: Fool Us
- starring the world famous magic double act and hosted by Jonathan Ross in his first presenting job on ITV.
The ratings and critical success of the 90-minute special in January led to the commissioning post year end
by ITV1 of a major 6-part series due to transmit primetime later this year (a co-production with 1/17
Productions).
Meanwhile in the children’s genre, the BAFTA winning Richard Hammond’s Blast Lab received a further
Children’s BAFTA nomination during the run of its third series in 2010. The franchise now totalling 52 x 30
minute episodes proved a ratings success in the UK and beyond and CBBC commissioned a spin off series
Richard Hammond’s Blast Lab: The Experiments (20x5’) which aired from October 2010 on BBC1 and
CBBC. International TV sales, publishing and merchandising for Blast Lab have also been successful via the
group’s dedicated divisions, which supports the rationale of a vertically integrated structure. A number of best
selling books and a range of science kits are available from major UK retailers such as Argos and Tesco,
while series 4 (13x30’) is due for transmission from this summer.
Looking into FY 2011, September Films’s slate include new seasons of its largest franchises such as
Bridezillas and Billy The Exterminator, and the expansion of its US creative pool with the recent
appointment for the new role of Senior VP, Creative. The outlook remains good for the company which
ideally positioned to be one of the main drivers of DCD’s headlong surge into the American TV marketplace.
DCD Drama
Broadcaster commissioning budget for drama has continued to fall during the period with the total number of
drama hours produced by UK independent companies decreasing significantly between 2009 and 2010.
Hence, the drama division remains on hold in favour of investment in other production and distribution areas.
This will continue until the demand for high budget drama returns.
Event Management
Done and Dusted
The division had a strong period adding major award and live concert commissions which, strengthened their
presence in the ad-funded programming market.
Returning business included the iconic Victoria’s Secret Fashion Show, now in its eight consecutive year
on CBS TV, T4 On the Beach, Channel 4’s sold out flagship live music TV event, and The Laureus World
Sports Awards, the world’s premier sports awards broadcast worldwide from the Emirates Palace in Abu
Dhabi.
New commissions were staged and filmed in both 2009 and 2010, including The Mobo Awards (BBC), T4
On The Beach’s winter counter part T4 Stars (Channel 4), Arthur’s Day’ the live music annual celebrations,
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DCD Media Plc
Financial statements for the period ended 31 December 2010
advertiser funded by Guinness - streamed across bars and pubs worldwide and in the UK on Pub TV. Other
new high profile projects included The Video Games Awards, the most important event in the Video
Gaming industry broadcast on Spike TV, F1 Rocks Singapore advertiser funded by LG for Universal, A
Christmas Carol and the UK red carpet coverage of the 68th Golden Globes both for Sky Movies. Done
and Dusted also continued to film live concerts for a broad range of international music acts ranging from
Neil Diamond to Coldplay.
Done and Dusted also delivered the world’s first 3D live opera broadcast, Lucrezia Borgia. The widely
publicised event aired simultaneously on the new Sky 3D channel in the UK and Germany, on Sky Arts and
in 3D cinemas across the UK. Further 3D credits during the period included a Circus Show broadcast live for
Israel’s largest telecom group, Bezeq.
While operating in an extremely competitive environment the company has successfully managed to
anticipate changes in the market and diversify its revenue outside traditional broadcaster funding or the live
music DVD market. Importantly, due to the ongoing re-organisation of the Group, the management will
propose a new structure within this valued division which will be announced in due course. Further
information is contained within the Finance Director’s Review.
Rights and Licensing
DCD Rights
The international distribution arm of DCD Media sells rights of both DCD and third-party producers to
television, DVD and new media across all genres.
The division had a healthy period, expanding its client base and optimizing its catalogue with further valuable
programming rights despite a very competitive TV distribution market, mostly due to the lack of new products
available for distribution.
The key drivers of the performance were its investment in new programmes such as prestigious dramas from
the BBC and ABC Australia, offering buyers a compelling mix of high profile cast and top producers, large
package deals to existing and new international clients, and the continued success of September’s hit reality
franchise Bridezillas, now totalling 150 hours. DCD Rights also showcased its strongest ever slate of factual
programming at the MIPCOM market in October 2010, spanning 60 hours of new factual content.
Sales were driven by large packages with BBC Worldwide International, multi-national deals with leading
networks such as Discovery, Sundance and the National Geographic channel; key deals in the US notably
included drama series Rake to DirectTV, factual series The Bionic Vet to the Smithsonian Channels, the
ten-part documentary series Hardliners to CurrentTV, and Danger Coast to Discovery International
Channels.
A clutch of awards increased visibility on the international scene for its most recent programmes, including
BAFTA, RTS, National TV Awards, FIPA, and DCD Rights was singled out as one of the most highly rated
distributors by UK producers in the annual survey from one major UK trade publication in autumn 2010.
DCD Rights kick started FY 2011 with a raft of factual sales and launched the original format and series of
the new entertainment show Penn & Teller: Fool Us hosted by Jonathan Ross, one of the highlights of the
division’s new slate of programmes for the MIP TV market in April.
The outlook for distribution remains cautious. Despite challenging trading conditions, DCD Rights is in a
favourable position due to the expansion of its third party programme portfolio, the quality of the shows made
internally by the DCD producers, and a consolidated catalogue focusing on programming with a broad
appeal.
DCD Publishing
DCD Publishing has continued its strategy of signing up third party producers and content owners with a
view to exploiting their IP in publishing, merchandising, DVD and music. Representation deals have been
signed with Windfall Films, Free@Last, WNET Australia, MNG Films and Oxford Films, as well as with
Simon Mann, the Old Etonian mercenary. Licensing deals have been concluded with all these copyright
owners.
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DCD Media Plc
Financial statements for the period ended 31 December 2010
We have also signed a new representation deal with Suzy’s Zoo, the multi US and Japanese pre-school
property and the first licences are now being signed in the bedding, publishing, gift and apparel categories.
Richard Hammond’s Blast Lab science toy range continues to perform well and Puppy Love, a new soft
toy, singing Donny Osmond’s original iconic hit written by Paul Anka was launched successfully. We have
also signed the first deals in our newly developed merchandising programme based on the puppy soft toy in
the stationery, gift, publishing, greetings card and apparel categories.
Finally DCD Music, the consumer-facing music division launched in April 2010, has made good progress in
its first nine months of trading. DCD Music has also developed its music publishing business.
Digital Classics (DVD Label and Digital Download)
DCD's wholly owned DVD label increased the number of titles it brought to market in each quarter of the
period under review, boosting its total output by 180% from 22 titles in the previous period to 62. This
transformational expansion was driven by working with independent producers to release their existing
catalogues. Many of these titles were previously unexploited because of clearance issues. Using its
expertise, Digital Classics has been able to resolve these issues on behalf of the rights holder making the
releases possible.
The label also released two prestigious box sets of existing titles, notably the 8-disc box set, Stephen Fry:
The Definitive Collection and continued to develop its relationship with Stephen Fry by releasing the DCD-
produced Last Chance to See, and licensing two more Fry documentaries licensed in from an external
production company.
The label also started to launch a number of titles on iTunes with two DCD-produced titles, Stephen Fry in
America and Last Chance to See, generating better than expected sales. The label also continued to
release other programmes from DCD producers such as Daily Cooks Challenge, Bridezillas and
Theatreland.
Other externally-licensed title highlights released during this period were The Bridge (Bernhard Wicki's
Oscar-nominated anti-war film), The Great Silence (starring Klaus Kinski) and a number of original films with
iconic 1950s pin-up Bettie Page.
Digital Classics is now looking forward to building on these successes in 2011 with upcoming releases
including Matchlight's RTS-nominated documentary At Home with the Georgians, the multi award-winning
Stephen Fry: Wagner & Me, and other celebrity-led documentary features.
David Green
Chief Executive Officer
30 April 2011
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DCD Media Plc
Financial statements for the period ended 31 December 2010
Finance Director's Review
The Group has faced challenges during recent months to balance current development of the business with
its future growth plans. During the process of re-organsiation, which included the creation of DCD Factual,
described in the CEO review above, it has been necessary to merge certain areas of management and
operations. This kind of change, the risk of which is highlighted in the Business Review section, has potential
to cause reduced momentum and it is important for management to communicate clearly to its key staff the
reasons for change and how it will positively promote improved performance in the near term.
The headline Adjusted EBITDA in the eighteen months ended 31 December 2010, a key performance
measure used by the Board, decreased by 24% to £2.3m (Year ended 30 June 2009: profit of £3.0m) in part
due to reduced momentum, delayed development of programming, and the cost of refocusing its core factual
production away from lesser performing areas. Primarily due to non-cash impairment charges Operating
Profit in the eighteen month period fell to a loss of £11.2m (2009: profit of £1.0m) primarily after accounting
for an impairment review of intangible assets, which resulted in a write down of £10.8m (Year ended 30 June
2009: £Nil) for the period.
The accounting implications in terms of the effect of reporting impaired intangible assets under International
Financial Standards is explained below.
West Park Pictures Limited, an operating unit within the Factual segment, was restructured as part of the
overall re-organisation of the Group’s factual production and transferred future business to the DCD Factual
division of DCD Media Plc. The retention and promotion of the trade name is part of the overall commercial
strategy, however despite the commissions won during the current year, the business no longer supported
the previous goodwill and trade name values associated with them. The re-organisation should enhance
overall profitability going forward but the impacts of these changes have not been assumed as delivered in
assessing carry values and, accordingly management has consequently impaired goodwill by £2.4m. This
reduced the carrying value of goodwill for the operating unit to £nil. Refer to Note 12 below.
Prospect Pictures Limited, an operating unit within the Factual segment, transferred future business to the
DCD Factual division of DCD Media Plc. Similar to above the business no longer supported the previously
associated goodwill values. The re-organisation should enhance overall profitability going forward but the
impacts of these changes have not been assumed as delivered in assessing carry values and. consequently
management has assessed that it should impair goodwill. This resulted in an impairment to goodwill of
£4.9m.
During recent months management has considered how it should value of the Event Management unit which
contains no intellectual property, and has decided that given the risk associated with retention and or
replacing its key staff in the event of failure to retain their service beyond the current period, that it is
appropriate to write down of the carrying goodwill associated with this division by £1.5m. This reduced the
carrying value of goodwill for the operating unit to £1.5m. Management is considering a revised structure for
this division which will be announced in due course.
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DCD Media Plc
Financial statements for the period ended 31 December 2010
Due to the above structural changes and executive departures the Group has also incurred reorganisation
costs of £0.5m (Year ended 30 June 2009: £Nil) during the period.
Period
Operating profit/(loss) per statutory accounts
Add Amortisation of programme rights (note 12)
Add: Impairment of programme rights (note 12)
Add: Amortisation of trade names (note 12)
Add: Impairment of goodwill & related intangibles (note 12)
Less: Capitalised programme rights intangibles (note 12)
Add: Depreciation (note 13)
EBITDA
Add: Restructuring costs (legal and statutory)
Adjusted EBITDA
Less: Net financial income/(expense) (note 8)
Less: Depreciation
Adjusted PBT
Eighteen
months
£m
2010
(11.2)
8.7
1.4
1.5
9.4
(8.1)
0.1
1.8
0.5
2.3
(0.4)
(0.1)
1.8
Twelve months
£m
2009
1.0
6.8
-
1
-
(6.2)
0.1
2.7
0.3
3.0
(0.5)
(0.1)
2.4
For the period to 31 December 2010, the Group provided for no tax provision as it has incurred operating
losses deductible for corporation tax purposes.
Earnings per share
Basic loss per share in the period was 13.38p (Year ended 30 June 2009: 1.27p profit per share) and was
calculated on the losses after taxation of £7.9m (Year ended 30 June 2009: Profit £0.7m) divided by the
weighted average number of shares in issue during the period being 59,019,293 (2009: 53,368,503). The
number of shares has increased due to a conversion of debt to equity in the period, please see note 22.
Balance Sheet
Since the prior year end the Group debt profile has reduced by £3.9m to £5.8m (30 June 2009: £9.9m).
During the period from November 2009 until December 2010 £1m of bank debt was repaid. The remaining
debt is made up of outstanding bank loans £2m (2009: £nil) and overdraft of £0.7m (£nil) and convertible
debt of £3.1m (2009: £9.9m).
Following the restructuring explained in the CEO section above, the Group undertook its regular impairment
review after the period end. As a consequence of that review under the principles of International Financial
Reporting Standards the Group has taken a non-cash charge of £9.4m (2009: £nil) against goodwill and
trade names and £1.4m against the intangible programme rights catalogue. This impairment has been
recorded in the statement of comprehensive income (see note 11).
The Group’s net cash balances as at 31 December 2010 were £4.1m (30 June 2009: £1.8m). The year-on-
year comparative was £3.4m as at 31 December 2009 reflecting the higher proportion of work carried out in
the run up to December. A substantial part of the company cash balances represent the company’s working
capital commitment in relation to its programme making and is not considered to be free cash.
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DCD Media Plc
Financial statements for the period ended 31 December 2010
In these results the Group announces that it is currently exploring options to secure additional funding, either
in the form of debt or equity. The Board has identified a requirement for further short-term working capital in
the order of £1 million. It is in discussions with the Company's larger shareholders, from whom it has
received strong indications of support. Such additional funding is subject to, inter alia, finalisation of terms
and a further update will be provided in due course.
Shareholders’ Equity
Retained earnings as at 31 December 2010 were £(52.3m) (2009: £(45.2m)) and total shareholders’ equity
at that date was £9.8m (30 June 2009: £16.4m).
Amounts attributable to non-controlling interests
During the period the Group brought Matchlight Ltd, a collaboration with a group of leading Scottish
programme makers within its Group accounting. The Group has recognised a loss of £0.15m attributable to
non controlling interests in the statement of comprehensive reserves and an amount of £0.39m as equity
representing the non controlling interest of the company as at the financial year end.
Cost reduction
Other overhead reduction initiatives have begun across the Group particularly with respect to occupancy
costs. These changes will take place during the first half of 2011 in order to deliver property cost savings on
top of the existing re-organisation plans.
John McIntosh
Finance Director
30 April 2011
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DCD Media Plc
Financial statements for the period ended 31 December 2010
Report of the directors for the year ended 31 December 2010
The directors present their report together with the audited financial statements for the period ended 31
December 2010.
Principal Activities
The main activities of the Group continued to be the production and distribution of programmes, with
compatible new lines of business in the publishing and merchandising area.
A detailed review of the Group’s business is contained in the CEO’s statement on pages 3 to 7.
Results
The Group’s Loss before Tax for the eighteen month period ended 31 December 2010 was £8.4m ( Year
ended 30 June 2009: £0.5m). The loss for the period post-taxation was £7.9m (Year ended 30 June 2009:
Proift £0.7m) and has been carried forward in reserves.
The directors do not propose to recommend the payment of a dividend.
Business Review
Risks and uncertainties
The Group’s management aims
to minimise risk by developing a broad, balanced stable of
production/distribution activity and intellectual property. Clear risk assessment and strong financial and
operational management is essential to control and manage the Group’s existing business, retain key staff
and balance current development with future growth plans. The Finance Director’s Review refers to the re-
organisation and the uncertainties which have had to be dealt with during recent Group re-organisation and
following the formation of the DCD Factual division. As the Group operates in overseas markets it is also
subject to exposures on transactions undertaken in foreign currencies.
Acquisition Activity
As described in the Finance Director’s Review during the period of reporting the Group has focused on
stabilizing its existing business while seeking suitable partner opportunities. It is an aim of the Group to
continue to look for suitable opportunities which will add value and enhance earnings. The known risks of
such a strategy can be summarized as: finding appropriate targets or joint ventures opportunities, integration
risk of acquiring (multiple) targets and finding/retaining key staff, and, failure to achieve financial/operational
synergies from those targets.
To minimize risk, the Group uses its financial and operational diligence process, backed by legal diligence.
The Group has already integrated its previous acquisitions, which are regularly monitored through the
Group’s internal control function.
Production and distribution revenue
The Group revenue tends to be seasonally cyclical with a significant element occurring in the second half of
the year. Group revenue arises from a number of broadcasters, corporations and distributors across the
world. No single production or distribution sale represents more than 10% of Group revenue. The Group is
continually looking to broaden its customer base. The action taken to change the year end to 31 December
resulting in these eighteen month results was specifically aimed to match the business’s cycle to avoid
encountering more year-end judgments and estimates than should be necessary for its type of business.
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DCD Media Plc
Financial statements for the period ended 31 December 2010
Report of the directors for the year ended 31 December 2010 (cont.)
Funding and Liquidity
Costs incurred during production are not always funded by the commissioning broadcaster. The Group policy
is to maintain its production cash balances to ensure there is no financial shortfall in the ability to produce a
programme. It is inherent in the production process that in the short-term cash flows on productions can
sometimes be negative initially. This is due to costs incurred before contracted sales have been received, in
order to meet delivery and transmission dates. The Group funds these initial outflows, when they occur, in
two ways: internally, ensuring that overall exposure is minimized; or, through a short term advance from a
bank or finance house, which will be underwritten by the contracted sale. The Group regularly reviews the
cost/benefit of such decisions in order to obtain the optimum use from its working capital. The Group’s net
cash at the end of the period was £3.4m (30 June 2009: £1.8m) including certain production related cash
held to maintain the Group policy. The Group debt consists of Convertible Loans and conventional bank
debt. Details of the interest payable and Convertible Loans are disclosed in note 8, 17 and 19 to the financial
statements, respectively. The Finance Director’s review refers to the ongoing discussions to improve the
group liquidity position.
Liquidity risks
Liquidity risk arises from the Group’s management of working capital and the finance charges and principal
repayments on its debt instruments. A full description of the Group's position regarding its Convertible Loan
Notes is disclosed in the directors consideration of the going concern basis of preparation of the financial
statements. The Group’s exposure to interest rate fluctuations on its conventional bank debt is appropriately
hedged. The Group's exposure to exchange rate fluctuations has historically been small based on its
revenue and cost base. Dependent on the extent the Group’s international revenue grows the appropriate
hedging strategy will be introduced.
It is Group policy to continue to seek the most optimum structure for its borrowings and this policy will be
pursued over the coming year.
Directors and their interests
The directors of the Company, and their beneficial interests in the share capital of the Company, during the
period were as follows:
At 30 December 2010
Ordinary
shares of
10p each
-
Deferred
shares of
0.9 p each
-
At 30 June 2009
Ordinary
shares of
0.1p each
3,349,309
Deferred
shares of
0.9p each
-
David Elstein
(resigned
October 2010)
12th
Tarik Wildman
Simon Pizey
David Green
John McIntosh
29,285
645,157
29,285
645,157
(resigned
December 2010)
7th
2,406,250
4,246,614
-
-
-
-
2,411,452
4,246,614
-
-
-
-
Details of directors’ options are disclosed in note 6 to the financial statements.
Other than as disclosed in note 27 to the financial statements, none of the directors had a material interest in
any other contract of any significance with the Company and its subsidiaries during or at the end of the
financial period.
12
DCD Media Plc
Financial statements for the period ended 31 December 2010
Report of the directors for the year ended 31 December 2010 (cont.)
Substantial Shareholdings
As at 28 April 2011, the following notifications had been made by holders of beneficial interests in 3% or
more of the Company's issued ordinary share capital as follows:
No. of 10 p ordinary shares
Gartmore Investment Management 13,155,458
12,145,157
Taya Communications Limited
4,246,614
D Green (director)
4,221,581
Universities
Scheme
MD Barnard & Co
S Pizey (director)
I Stewart
H Hamilton
2,807,740
2,406, 250
2,406,250
2,406,250
Superannuation
%
21.41
19.77
6.91
6.87
4.57
3.92
3.92
3.92
Share capital
Details of share capital are disclosed in note 22 to the financial statements.
Employment Involvement
The Group’s policy is to encourage employee involvement at all levels as it believes this is essential for the
success of the business. There is significant competition for experienced and skilled creative staff and
administrators. The directors are aware of this and have looked to encourage and develop internal resources
and to put in place succession plans. In addition, the Group has adopted an open management style to
encourage communication and give employees the opportunity to contribute on business issues.
The Group does not discriminate against anyone on any grounds. Criteria for selection and promotion are
based on suitability of an applicant for the job. Applications for employment by disabled persons are always
fully considered, bearing in mind the respective aptitudes of the applicants concerned. In the event of
members of staff becoming disabled, every effort will be made to ensure that their employment with the
Group continues and that appropriate training is arranged. It is the policy of the Group that the training,
career development and promotion of disabled persons should, as far as possible, be at least comparable
with that of other employees.
Financial Instruments
Details of the use of financial instruments by the company are contained in note 21 of the financial
statements.
The Board
As at the date of approval of these financial statements, the board consisted of three members, one of whom
is a Non-Executive Director. Their biographies are to be found on page 16. The Group has adopted a
framework for corporate governance which it believes is suitable for a company of its size with reference to
the key points within the Principles of Good Governance and Code of Best Practice, (“the Combined Code”)
Although the Board consider the costs of full compliance with the code to outweigh the benefits it
would provide to a business the size it is the Group’s stated aim to find an appropriate candidate for the
position of Chairman as soon as practicable.
Corporate governance
The Board meets regularly, normally monthly, and covers strategic, operational, financial performance and
remuneration committee matters as they arise from time to time. A Management Board made up of key
executives from the divisions normally meets monthly to cover cross-group matters and develop new
business opportunities. Matters of significance are raised with the Group Board of directors.
The Board reviews financial and operational information derived from the Group’s Management Board, and
the effectiveness of external audit and internal financial controls. The terms of reference of the Audit
Committee are to assist themselves as Directors in discharging their individual and collective legal
responsibilities for ensuring that:
13
DCD Media Plc
Financial statements for the period ended 31 December 2010
Report of the directors for the year ended 31 December 2010 (cont.)
- the Group’s financial and accounting systems provide accurate and up-to-date information on its current
financial position;
- the Group’s published financial statements represent a true and fair reflection of this position; and
- the external audit, which the law requires in order to provide independent confirmation that these legal
responsibilities are being met, is conducted in a thorough, efficient and effective manner.
The external auditors attend the audit committee meeting and as such it provides them with a direct line of
communication to the directors.
Going Concern
The Group's business activities, together with the factors likely to affect its future development, performance
and position are set out in the CEO's statement. The financial position of the Group, its cash position and
borrowings are set out in the financial review section of the statement. In addition note 21 sets out the
Group's objectives, policies and processes for managing its financial instruments and risk.
As highlighted in note 1 to the financial statements, the Group's day-to-day operations are funded from cash
generated from trading. The Group believes that the opportunity to inject new cash into the Group will help
underpin its stability, help refocus and reduce the need for the Company to divert operating cash towards
short term non operating requirements
The Group has identified a requirement for further short-term working capital in the order of £1 million. It is in
discussions with the Company's larger shareholders, from whom it has received strong indications of
support. Such additional funding is subject to, inter alia, finalisation of terms and a further update will be
provided in due course. which the directors believe will be concluded in the near future on appropriate terms
for the Group.
The Board remain positive about the resilience of the Group despite the pressures from the current economic
conditions and those outlined above. In preparing their forecasts and projections allowance is made for
reasonably possible changes in its trading performance. These projections show that, with the ongoing
support of its senior shareholders and its bank, the Group can continue to generate cash to meet their
obligations as they fall due.
Through the recent negotiations with senior shareholders, and its principal bankers the directors, after
making enquiries, have a reasonable expectation that the company and the Group will have adequate
resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt
the going concern basis in preparing the annual report and financial statements.
Creditor Payment Policy
The Group’s current policy and practice concerning the payment of suppliers is to agree terms of payment
when agreeing the terms of the transactions, varying them as may be agreed from time to time,to ensure that
the suppliers are aware of the terms and to abide by the agreed or varied terms. The company’s averaged
‘creditor days’ at 31 December 2010 was 72 days (30 June 2009: 79 days).
Directors’ Responsibilities for the Financial Statements
The directors are responsible for preparing the annual report and the financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law
the directors have elected to prepare the group financial statements in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European Union. The directors have elected to
prepare the parent company financial statements in accordance with UK GAAP. Under company law the
directors must not approve the financial statements unless they are satisfied that they give a true and fair
view of the state of affairs of the group and company and of the profit or loss of the group and company for
that period. The directors are also required to prepare financial statements in accordance with the rules of
the London Stock Exchange for companies trading securities on the Alternative Investment Market.
14
DCD Media Plc
Financial statements for the period ended 31 December 2010
Report of the directors for the year ended 31 December 2010 (cont.)
In preparing these financial statements, the directors are required to:
•
select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
•
•
state whether they have been prepared in accordance with IFRSs as adopted by the European Union,
subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that
the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and
explain the company’s transactions and disclose with reasonable accuracy at any time the financial position
of the company and enable them to ensure that the financial statements comply with the requirements of the
Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for
taking reasonable steps for the prevention and detection of fraud and other irregularities.
Website publication
The directors are responsible for ensuring the annual report and the financial statements are made available
on a website. Financial statements are published on the company's website in accordance with legislation in
the United Kingdom governing the preparation and dissemination of financial statements, which may vary
from legislation in other jurisdictions. The maintenance and integrity of the company's website is the
responsibility of the directors. The directors' responsibility also extends to the ongoing integrity of the
financial statements contained therein.
Auditors
All of the current directors have taken all the steps that they ought to have taken to make themselves aware
of any information needed by the company’s auditors for the purposes of their audit and to establish that the
auditors are aware of that information. The directors are not aware of any relevant audit information of which
the auditors are unaware.
By Order of the Board
J McIntosh
Director
30 April 2011
15
DCD Media Plc
Financial statements for the period ended 31 December 2010
Board of Directors
DAVID GREEN (CHIEF EXECUTIVE OFFICER)
David Green was appointed Chief Executive Officer of DCD Media plc in December 2009. He joined the
Group in 2007 when London and LA-based television and film production company September Films, of
which he was Chairman and Founder, was acquired by DCD Media. He originally took on the role of DCD
Chief Creative Officer with the task of driving creative synergies across all Group production and distribution
companies. He now merges his corporate CEO role with special responsibility for spearheading DCD
Media's surge into the booming American production market.
A veteran of the British and American Film and television industries where he has successfully built his
career since graduating from Oxford in 1972, David has produced and/or directed over a thousand hours of
primetime television including the landmark 'Hollywood Women' series and September's flagship show
'Bridezillas' - both of which he created. His four feature film directing credits notably include the Oscar-
nominated 'Buster' (4 awards) one of the biggest grossing British films of all time, and the $22m Disney
action adventure 'Wings of the Apache', starring Nicolas Cage and Tommy Lee Jones. He was also the
Executive Producer of two September movies: Oscar-nominated 'Solomon and Gaenor' (7 awards) and
'House of America' (6 awards).
JOHN MCINTOSH (FINANCE DIRECTOR, CHIEF FINANCIAL OFFICER)
John McIntosh qualified as a Chartered Accountant at Deloitte & Touche in 1994 and has held Director roles
in AIM listed companies since 2003. His early professional career allowed him to live in various European
countries, working with international distribution, advertising and media corporations including Sony, D’Arcy
Masius Benton & Bowles and BBC’s corporate finance. During the latter years, John has concentrated on
working for private equity investors in London and has consulted for the Thomson Media Group.
John joined DCD Media in August 2006 holding the joint positions of Chief Financial and Chief Operating
Officer, before he became the group’s Finance Director in June 2008 with overall responsibility for finance
and operations.
TARIK WILDMAN (NON-EXECUTIVE DIRECTOR)
Tarik Wildman has been involved in the financial industry for over 20 years. He was a Director at Credit
Suisse First Boston and Dillon Read and remains an adviser at UBS.
He is also a partner in the Madrid-based firm Forest Asset Management, and runs his own enterprise
Wildman & Company Ltd, which finds financial solutions for a wide variety of corporate clients. Tarik is
currently Managing Director of PJ Investments and sits on the board of a number of companies associated
with Peter Jones, including Phones International Group, UK's premier distributors of mobile phones,
accessories and telecoms services.
16
DCD Media Plc
Financial statements for the period ended 31 December 2010
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DCD MEDIA PLC
We have audited the financial statements of DCD Media Plc for the period ended 31 December 2010 which comprise the
group statement of financial position and company balance sheet, the group statement of comprehensive income, the
group statement of cash flows, the group statement of changes in equity and the related notes. The financial reporting
framework that has been applied in the preparation of the group financial statements is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European Union. The financial reporting framework that has
been applied in preparation of the parent company financial statements is applicable law and United Kingdom
Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
This report is made solely to the company’s members, as a body, in accordance with sections Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a
body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the preparation of
the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and
express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing
(UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards
for Auditors.
Scope of the audit of the financial statements
A description of
www.frc.org.uk/apb/scope/private.cfm.
the scope of an audit of
Opinion on financial statements
In our opinion:
financial statements
is provided on
the APB’s website at
•
•
•
the financial statements give a true and fair view of the state of the group’s and the parent company’s affairs as at 31
December 2010 and of the group’s loss for the period then ended;
the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European
Union;
the parent company’s financial statements have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
•
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the directors’ report for the financial period for which the financial statements are
prepared is consistent with the financial statements.
17
DCD Media Plc
Financial statements for the period ended 31 December 2010
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you
if, in our opinion:
•
•
•
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not
been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
James Brown (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
Bristol
30 April 2011
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC203127).
18
DCD Media Plc
Financial statements for the period ended 31 December 2010
Consolidated statement of comprehensive income for the period ended 31 December 2010
Revenue
4
48,359
34,516
18 Month Period
ended 31
December
2010
£’000
Year ended
30 June
2009
£’000
Note
Cost of sales
Impairment of programme rights
Gross profit
Selling and distribution expenses
Administrative expenses:
- Other administrative expenses
- Impairment of goodwill and impairment and
amortisation of trade names
- Restructuring costs
Other income
Operating (loss)/profit
Finance income
Gain settlement on convertible loan
Finance costs
(Loss)/profit before taxation
Taxation
(Loss)/profit after taxation
Profit attributable to:
Owners of the parent
Non controlling interest
(Loss)/profit and total comprehensive income for the
period
5,12
5
7
17
8
9
(36,743)
(1,422)
(38,165)
10,194
(101)
(25,861)
-
(25,861)
8,655
(63)
(9,934)
(6,499)
(10,899)
(530)
(21,363)
(988)
(94)
(7,644)
54
-
(11,216)
5
3,560
(788)
(8,439)
544
(7,895)
(7,742)
(153)
(7,895)
1,011
62
-
(623)
450
229
679
679
-
679
Earnings per share attributable to the equity holders of the company during the period (expressed as
pence per share)
Basic (loss)/profit per share
Diluted (loss)/profit per share
11
11
(13.38p)
(13.38p)
1.27p
0.77p
The notes on pages 22 to 47 are an integral part of these consolidated financial statements.
19
DCD Media Plc
Financial statements for the period ended 31 December 2010
Consolidated statement of financial position as at 31 December 2010
Company number 03393610
Non-current assets
Goodwill
Other intangible assets
Property, plant & equipment
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Current liabilities
Bank overdrafts
Bank and other loans
Trade and other payables
Taxation and social security
Obligations under finance lease
Provisions
Non-current liabilities
Secured convertible loan
Bank and other loans
Obligations under finance leases
Deferred tax liabilities
Net assets
Equity
Equity attributable to owners of the parent
Share capital
Share premium account
Equity element of convertible loan
Merger reserve
Retained earnings
Equity attributable to owners of the parent
Non controlling interest
Total Equity
12
12
13
14
15
17
17,20
16
16
17
18
19,21
19
19
20
22
19
18 Month Period
ended 31
December
2010
£’000
7,568
7,768
104
15,440
276
7,930
4,135
12,341
(738)
(1,000)
(9,560)
(869)
(11)
(76)
Year ended
30 June
2009
£’000
16,249
11,915
114
28,278
210
6,975
1,845
9,030
-
(9,686)
(7,858)
(1,050)
-
(84)
(12,254)
(18,678)
(3,123)
(1,000)
-
(1,636)
(5,759)
9,768
6,602
49, 451
120
6,356
(52,721)
9,807
(39)
9,768
-
(14)
(2,213)
(2,227)
16,403
5,806
49,100
328
6,356
(45,187)
16,403
-
16,403
The notes on pages 23 to 48 are an integral part of these consolidated financial statements.
The financial statements were approved and authorised for issue by the Board of Directors on 30 April 2011
J McIntosh
Finance Director
20
DCD Media Plc
Financial statements for the period ended 31 December 2010
Consolidated statement of cash flows for the period ended 31 December 2010
12
Cash flow from operating activities
Net (loss)/profit before taxation
Adjustments for:
Depreciation of tangible assets
Amortisation and impairment of intangible assets
Profit on disposal of property, plant and equipment
Profit on refinancing of convertible loan
Loss on disposal of intangible assets
Net bank and other interest charges
Decrease in provision
Net cash flows before changes in working capital
Decrease/(increase) in inventories
(Increase)/Decrease in trade and other receivables
(Decrease)/increase in trade and other payables
Cash from operations
Interest received
Interest paid
Income taxes (received)/paid
Net cash flows from operating activities
Investing activities
Acquisition of subsidiary undertakings, net of cash and overdrafts acquired
Purchase of property, plant and equipment
Purchase of intangible assets
Sale proceeds of property, plant and equipment
31
13
12
18 Month
Period ended
31 December
2010
£’000
(8,439)
79
21,056
-
(3,560)
-
783
(8)
9,911
(66)
(1,143)
870
9,572
5
(169)
(33)
9,375
(179)
(35)
(8,092)
Year ended
30 June
2009
£’000
450
74
7,166
7
-
561
8,258
5
1,524
(2,897)
6,890
62
(623)
-
6,329
-
(10)
(6,233)
7
Net cash flows used in investing activities
(8,306)
(6,236)
Financing activities
Issue of ordinary share capital
Repayment of finance leases
Repayment of loan
New loans raised
Net cash flows from financing activities
Net increase/(decrease) in cash
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
30
-
(3)
(3,480)
3,000
483
1,552
1,845
3,397
-
(10)
(1,700)
363
(1,347)
(1,254)
3,099
1,845
21
DCD Media Plc
Financial statements for the period ended 31 December 2010
Consolidated statement of changes in equity for the period ended 31 December 2010
Balance at 30 June
2008
Profit and total
comprehensive
income for the year
Shares issued
Balance at 30
June 2009
(Loss)and total
comprehensive
income for the
period
Shares issued
Movements on
refinancing
Minority interest
recognised on
obtaining a
controlling interest
Balance at 31
December 2010
Equity
element of
convertible
loan
Merger
reserve
Retained
earnings
Equity
attributable
to owners of
the parent
Amounts
attributable
to non-
controlling
interest
Total
equity
£’000
£’000
£’000
£000
£000
£’000
Share
capital
£’000
Share
premiu
m
£’000
5,772
49,077
328
6,356
(45,866)
15,667
-
-
34
23
-
-
-
-
679
679
-
57
5,806
49,100
328
6,356
(45,187)
16,403
-
-
-
-
15,667
679
57
16,403
-
(7,742)
(7,742)
(153)
(7,895)
-
-
796
351
-
-
-
-
-
-
(208)
-
-
-
-
-
1,147
208
-
-
-
-
-
114
(39)
1,147
-
114
9,768
6,602
49,451
120
6,356
(52,721)
9,808
22
DCD Media Plc
Financial statements for the period ended 31 December 2010
Notes to the financial statements for the period ended 31 December 2010
The principal activity of DCD Media plc and subsidiaries (the Group) is the production of television programmes in the
United Kingdom and United States, and the worldwide distribution of those programmes for television and other media;
the Group also distributes programmes on behalf of other independent producers.
DCD Media plc is the Group's ultimate parent company, and it is incorporated and domiciled in Great Britain. The
address of DCD Media plc’s registered office is One America Square, Crosswall, London EC3N 2SG, and its principal
place of business is London. DCD Media plc’s shares are listed on the Alternative Investment Market of the London
Stock Exchange.
DCD Media plc’s consolidated financial statements are presented in Pounds Sterling (£), which is also the functional
currency of the parent company. The accounts have been drawn up to the balance sheet date 31 December 2010.
These consolidated financial statements have been approved for issue by the Board of Directors on 30 April 2011.
1
Principal accounting policies
The principal accounting policies adopted in the preparation of the consolidated financial statements are set out below.
The policies have been consistently applied to all the periods presented, unless otherwise stated. The group financial
statements have been prepared in accordance with International Financial Reporting Standards, International Accounting
Standards and Interpretations (collectively IFRSs) issued by the International Accounting Standards Board (IASB) as
adopted by European Union ("Adopted IFRSs"), and with those parts of the Companies Act 2006 applicable to
companies preparing their financial statements under Adopted IFRSs.
Change of accounting reference date
During the period, the accounting reference date (ARD) was changed from 30 June to 30 December. Under the
Companies Act 2006, accounts can be made up to a date within 7 days of the ARD. The directors have therefore
selected 31 December as the period end date. The financial statements shown for 2010 are for the period 1 July 2009 to
31 December 2010, a period of 18 months. Comparative figures are for the 12 months to 30 June 2009.
Basis of preparation – Going Concern
The Group's business activities, together with the factors likely to affect its future development, performance and position
are set out in the CEO's statement. The financial position of the Group, its cash position and borrowings are set out in
the financial review section of the statement. In addition note 20 sets out the Group's objectives, policies and processes
for managing its financial instruments and risk.
The Group's day-to-day operations are funded from cash generated from trading, with other activities funded from a
combination of equity and short and medium term debt instruments. In considering the going concern basis of
preparation of the Group’s financial statements, the Board have prepared profit and cash flow projections which
incorporate reasonably foreseeable impacts of the ongoing challenging economic environment. These projections reflect
the ongoing management of the day to day cash flows of the Group which includes assumptions on the profile of
payment of certain existing liabilities of the Group. They show that the day to day operations will continue to be cash
generative, but that additional short term funding is required to help underpin the Group’s stability and enable
management to continue to focus the Group’s activities into profitable production development. The forecasts also show
that in addition to the extra short term funding referred to above, the Group will continue to utilise its term loan and
overdraft facility provided by its principal bankers for the foreseeable future.
The Company is currently exploring options to secure this additional funding, which the Board estimates to be in the
order of £1million, either in the form of debt or equity. It is in discussions with the Company's larger shareholders, from
some of whom it has received strong indications of support. Such additional funding is subject to, inter alia, finalisation of
terms which the Directors believe will be concluded in the near future on appropriate terms for the Group.
The Group’s overdraft facility is currently under review with the bank. Whilst the ongoing facility has not yet been formally
approved, the Group’s bankers have indicated that subject to its satisfactory review of the business it is their intention to
continue with the existing facilities. The Group’s term loan facility contains, inter alia, a number of financial covenants that
are tested periodically throughout the period and on the period end financial statements. These covenants include a
minimum level of Group net assets. The Group’s bankers have indicated that they are aware of the net asset position
and it is their intention to reset the net asset covenant in line with the Group’s current position. Accordingly, the Directors
have a reasonable expectation that both the term loan and the overdraft facility will continue to be available to the Group
for the foreseeable future.
The Group believes that the opportunity to inject new cash into the Group will help underpin its stability, and help
management refocus its balance between profitable current production development and future growth and reduce the
need for the Company to divert operating cash towards short term non operating requirements.
23
DCD Media Plc
Financial statements for the period ended 31 December 2010
The Board remain positive about the resilience of the Group despite the pressures from the current economic conditions
and those outlined above. The Directors forecasts and projections, which make allowance for reasonably possible
changes in its trading performance, show that, with the ongoing support of its senior shareholders and its bank, the
Group can continue to generate cash to meet their obligations as they fall due.
Through the recent negotiations with senior shareholders and its principal bankers, the directors, after making enquiries,
have a reasonable expectation that the Company and the Group will have adequate resources to continue in operational
existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual
report and financial statements.
Basis of Consolidation
The Group financial statements consolidate those of the Company and of its subsidiary undertakings drawn up to 31
December 2010. 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.
The group also holds an investment of 19.9% in Classical TV Limited. This interest is not not accounted for as a
subsidiary or associate as the group does not have sufficient control or interest to do so. The investment had a carrying
value of nil in both the current and previous financial periods.
24
DCD Media Plc
Financial statements for the period ended 31 December 2010
Notes to the financial statements for the period ended 31 December 2010
1
Principal accounting policies (continued)
Changes in accounting policies
New standards, interpretations and amendments effective from 1 July 2009
The following new standards, interpretations and amendments, applied for the first time from 1 July 2009, have had an
effect on the financial statements:
Revised IFRS 3 ‘Business combinations’ Much of the basic approach to business combination accounting required
under the previous version of IFRS 3 ‘Business combinations’ has been retained in this revised version of the standard.
However, in some respects the revised standard may result in very significant changes to the account treatments
previously adopted, including: The requirement to write off all acquisition costs to profit or loss instead of including them
in the cost of investment (which will have a consequent effect on the value of goodwill recognised); the requirement to
recognise an intangible asset even if it cannot be reliably measured; and, an option to gross up the balance sheet for
goodwill attributable to non-controlling interests (known formerly as ’minority interests’) on a combination-by-combination
basis. There are also some significant changes in the disclosure requirements of the revised standard. Contingent
consideration in an IFRS 3(R) business combination will also now fall within the scope of IAS 39 and be measured
initially and subsequently at fair value with remeasurement differences being recognised in profit or loss. Changes in the
value of contingent consideration in a business combination falling with the scope of the old IFRS 3 continue to be
treated as adjustments to goodwill
The revised standard does not require the restatement of previous business combinations and in consequence, the
group’s acquisition of Matchlight Ltd is the first business combination to fall within the scope of IFRS 3 (R.). The principle
effect of the adoption of IFRS 3 (R.) is that on the calculation of goodwill to recognise, the total fair value of net assets
acquired were deducted from a combination of book value of non controlling interest and fair value of consolidation.
Under the previous standard the Group’s percentage of net assets acquired would have been deducted from the fair
value of consideration when calculating the goodwill balance.
Amendments to IAS 27 Consolidated and Separate Financial Statements: This Amendment affects in particular the
treatment of non-wholly-owned subsidiaries. Transactions which increase or decrease the group’s interest in a subsidiary
without altering control will no longer give rise to changes in the carrying value of the subsidiary’s assets or liabilities
(including its associated goodwill) and will not give rise to a gain or loss. Any difference between the consideration paid
or received and the adjustment to the carrying value of the non-controlling interest will be recognised directly in equity. In
addition, total comprehensive income must now be attributed to owners of the parent and to the non-controlling interests
even if this results in the non-controlling interest having a deficit balance. Previously, unfunded losses in such
subsidiaries would be attributed entirely to the group. The Amendment does not require the restatement of previous
transactions and has had no effect on the current financial year.
IFRS 8, Segment Information: This standard requires the Group to disclose segmental reporting in the notes to the
financial statement in the form that Chief Operating Decision maker of the group reviews the financial information. IFRS 8
disclosures are held in note 3 to the financial statements. The prior year comparatives have been restated to make them
comparable with the current period end disclosures.
A number of standards and interpretations have been issued by the IASB. They become effective after the current year
and have not been adopted by the Group. Management have reviewed these standards and believe none of these
standards, which are effective for periods beginning after 1 July 2009 are expected to have a material effect on the
Group’s future financial statements.
25
DCD Media Plc
Financial statements for the period ended 31 December 2010
Notes to the financial statements for the period ended 31 December 2010
Revenue and attributable profit
Production revenue represents amounts receivable from producing programme content, and is recognised over the
period of the production in accordance with the underlying signed contract. The revenue is recognised through the
different stages of production completion, with apportionment across the recognised stages of production including pre-
production, filming, post-production and delivery to the commissioning broadcaster. The assessment of the stage of
completion is made by reference to production costs incurred and after consultation with production staff. Attributable
profit is calculated by recognising all appropriate costs up to the stage of production completion, and amortising
production costs in the proportion that the revenue recognised in the period bears to estimated total revenue from the
programme. The carrying value of programme costs in the balance sheet is subject to an annual impairment review.
Where productions are in progress at the period end and where billing exceeds the value of work done, the excess is
classified as deferred income and is shown within trade payables.
Distribution revenue arises from the licensing of programme rights which have been obtained under distribution
agreements with either external parties or Group companies. Distribution revenue is recognised in the income statement
on signature of the licence agreement, and represents amounts receivable from such contracts.
Revenue from sales of DVDs and other sales is the amounts receivable from invoiced sales during the period.
All revenue excludes value added tax.
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 by equal annual instalments over their expected useful
lives. The rates generally applicable are:
Short leasehold property improvements
Motor vehicles
Office and technical equipment
Over the life of the lease
20% on cost
25%-33% on cost
The assets’ residual values and useful lives are reviewed at each balance sheet date and adjusted if appropriate.
Intangible Assets
Goodwill
Goodwill represents the excess of the cost of a business combination over, in the case of business combinations
completed prior to 1 January 2010, the Group‟s interest in the fair value of identifiable assets, liabilities and contingent
liabilities acquired and, in the case of business combinations completed on or after 1 January 2010, the total acquisition
date fair value of the identifiable assets, liabilities and contingent liabilities acquired. For business combinations
completed prior to 1 January 2010, cost comprises the fair value of assets given, liabilities assumed and equity
instruments issued, plus any direct costs of acquisition. Changes in the estimated value of contingent consideration
arising on business combinations completed by this date are treated as an adjustment to cost and, in
consequence, result in a change in the carrying value of goodwill.
For business combinations completed on or after 1 January 2010, cost comprised the fair value of assets given, liabilities
assumed and equity instruments issued, plus the amount of any non-controlling interests in the acquiree plus, if the
business combination is achieved in stages, the fair value of the existing equity interest in the acquiree. Contingent
consideration is included in cost at its acquisition date fair value and, in the case of contingent consideration classified
as a financial liability, remeasured subsequently through profit or loss. For business combinations completed on or after
1 January 2010, direct costs of acquisition are recognised immediately as an expense.
Goodwill is capitalised as an intangible asset with any impairment in carrying value being charged to the consolidated
statement of comprehensive income. Where the fair value of identifiable assets, liabilities and contingent liabilities
exceed the fair value of consideration paid, the excess is credited in full to the consolidated statement of comprehensive
income on the acquisition date.
Other intangible assets
Trade names
Trade names acquired through business combinations are stated at their fair value at the date of acquisition. They are
amortised through the income statement, following a periodic impairment review, on a straight line basis over their useful
economic lives, such periods not to exceed 10 years.
26
DCD Media Plc
Financial statements for the period ended 31 December 2010
Notes to the financial statements for the period ended 31 December 2010
1
Principal accounting policies (continued)
Development expenditure
Development expenditure incurred on specific projects is capitalised when recoverability can be assessed with
reasonable certainty, when there is the ability and intention to complete development, and when it is estimated that future
sales will exceed total costs of production. Development expenditure that does not satisfy those criteria are written off in
the income statement within cost of sales.
Programme rights
Internally developed programme rights are stated at the lower of cost, less accumulated amortisation, or recoverable
amount. Cost comprises the cost of all productions and all other directly attributable costs incurred up to completion of
the programme and all programme development costs. Where programme development is not expected to proceed, the
related costs are written off to the income statement. Amortisation of programme costs is charged in the ratio that actual
revenue recognised in the current period bears to estimated ultimate revenue. At each balance sheet date, the directors
review the carrying value of programme rights and consider whether a provision is required to reduce the carrying value
of the investment in programmes to the recoverable amount. The expected life of these assets are not expected to
exceed 5 years.
Purchased programme rights are stated at the lower of cost, less accumulated amortisation, or recoverable amount.
Purchase programme rights are amortised over a period inline with expected useful life, not exceeding 5 years.
Amortisation and any charge in respect of writing down to recoverable amount during the period are included in the
income statement within cost of sales.
Leased assets
Property, plant and equipment acquired under finance leases or hire purchase contracts are capitalised and depreciated
in the same manner as other property, plant and equipment, and the interest element of the lease is charged to the
income statement over the period of the finance lease. Minimum lease payments are apportioned between the finance
charge and the reduction of the outstanding liability by using an effective interest rate. The related obligations, net of
future finance charges, are included in liabilities.
Rentals payable under operating leases are charged to the income statement on a straight line basis over the period of
the lease.
Inventories
Inventories comprise pre-production costs incurred in respect of programmes, and finished stock of DVDs available for
resale. Where it is virtually certain production will occur, pre-production costs are capitalised in inventories and
transferred to intangibles on commencement of production. Finished stock of DVDs available for re-sale is also included
within inventories. Inventories are valued at the lower of cost or recoverable amount.
Programme distribution advances
Advances paid in order to secure distribution rights on third party catalogues or programmes are included within current
assets. Distribution rights entitle the company to license the programmes to broadcasters and DVD labels for a sales
commission, whilst the underlying rights continue to be held by the programme owner. The advances are stated at the
lower of the amounts advanced to the rights' owners less actual amounts due to rights owners based on sales to date
and anticipated future sales.
Impairment of non-current assets
For the purposes of assessing impairment, assets are grouped into separately identifiable cash-generating units.
Goodwill is allocated to those cash-generating units that have arisen from business combinations.
At each balance sheet date, the Group reviews the carrying amounts of its non-current assets, to determine whether
there is any indication those assets have suffered an impairment loss. If any such indication exists the recoverable
amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Goodwill is tested for
impairment annually. Goodwill impairment charges are not reversed.
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 and value in use based on an internal
discounted cash flow evaluation.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits. Bank overdrafts that are repayable on
demand and form an integral part of the Group's cash management are included as a component of cash and cash
equivalents. Bank overdrafts are shown in current liabilities on the balance sheet. Overdrafts are included in cash and
cash equivalents for the purpose of the cash flow statement.
27
DCD Media Plc
Financial statements for the period ended 31 December 2010
Notes to the financial statements for the period ended 31 December 2010
1
Principal accounting policies (continued)
Equity element of convertible loan represents the part of the loan classified as equity rather than liability (see
Share capital represents the nominal value of issued Ordinary shares and Deferred shares;
Share premium represents the excess over nominal value of the fair value of consideration received for equity
Equity
Equity comprises the following
-
-
shares, net of expenses of the share issue;
-
note 17);
-
shares issued on acquisition of subsidiaries, net of expenses of the share issue (in accordance with s.612 of the
Companies Act 2006);
-
-
Retained earnings represents retained profits and losses.
Non controlling interest represents net assets owed to non-controlling interests.
Merger reserve represents the excess over nominal value of the fair value of consideration received for equity
Deferred taxation
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the balance sheet
differs from its tax base, except for differences arising on:
-
-
the transaction affects neither accounting or taxable profit, and;
-
of the difference and it is probable that the difference will not reverse in the foreseeable future.
the initial recognition of goodwill;
the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of
investments in subsidiaries and jointly controlled entities where the group is able to control the timing of the reversal
Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available
against which the difference can be utilised.
The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the
balance sheet date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered).
Deferred tax assets and liabilities are offset when the group has a legally enforceable right to offset current tax assets
and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:
the same taxable group company; or
-
-
different group entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the
assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets
or liabilities are expected to be settled or recovered.
Foreign currency
Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary
assets and liabilities in foreign currencies are translated at the rates of exchange ruling at the balance sheet date.
Exchange differences arising on the settlement and retranslation of monetary items are taken to the income statement.
For the purposes of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign
operations are translated at the exchange rate ruling at the balance sheet date. Income and expense items are
translated at the average exchange rates for the period. Exchange differences arising are classified as equity and
transferred to the Group’s translation reserve, but the differences are not considered to be material and there is no
translation reserve at 31 December 2010.
Financial instruments
Financial assets and financial liabilities are initially recognised in the Group’s balance sheet when the Group becomes a
party to the contractual provisions of the instrument at their fair value and thereafter at amortised cost.
28
DCD Media Plc
Financial statements for the period ended 31 December 2010
Notes to the financial statements for the period ended 31 December 2010
1
Principal accounting policies (continued)
Trade Receivables
Trade receivables are recorded at their amortised cost less any provision for doubtful debts. Trade receivables due in
more than one year are discounted to their present value.
Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the
part of the counterparty or default or significant delay in payment) that the group will be unable to collect all of the
amounts due under the terms receivable, the amount of such a provision being the difference between the net carrying
amount and the present value of the future expected cash flows associated with the impaired receivable. For trade
receivables, which are reported net, such provisions are reported in a separate allowance account with the loss being
recognised within administrative expenses in the income statement. On confirmation that the trade receivable will not be
collectable, the gross carrying value of the asset is written off against the associated provision.
Convertible Loans
Convertible loan notes are regarded as compound instruments, consisting of a liability component and an equity
component. At the date of issue the fair value of the liability component is estimated using the prevailing market interest
rate for similar non-convertible debt. The difference between the proceeds of issue of the convertible loan note and the
fair value assigned to the liability component, representing the embedded option to convert the liability into equity of the
Group, is included in equity.
Issue costs are apportioned between the liability and equity components of the convertible loan notes based on their
relative carrying amounts at the date of issue. The portion relating to the equity component is charged directly against
equity.
The interest expense of the liability component is calculated by applying the effective interest rate to the liability
component of the instrument. The difference between this amount and the interest paid is added to the carrying amount
of the convertible loan note.
Bank Borrowings
Bank borrowings and the Group's perpetual preference shares are initially recognised at fair value net of any transaction
costs directly attributable to the issue of the instrument. Such interest bearing liabilities are subsequently measured at
amortised cost using the effective interest rate method, which ensures that any interest expense over the period to
repayment is at a constant rate on the balance of the liability carried in the consolidated statement of financial position.
Finance charges 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 amortised cost.
Equity Instruments
Equity instruments issued by the Group are recorded as the proceeds received, net of direct costs.
Retirement benefits
The Group operates pension schemes for the benefit of a number of its directors. The schemes are defined contribution
schemes and the contributions are charged against profits as they accrue.
2
Critical accounting judgements and key sources of estimation uncertainty
The preparation of the financial statements requires management to make estimates and assumptions that affect the
reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the date of
the financial statements. If in the future such estimates and assumptions which are based on management’s best
judgement at the date of the financial statements, deviate from the actual circumstances, the original estimates and
assumptions will be modified as appropriate in the period in which the circumstances change. Where necessary, the
comparatives have been reclassified or extended from the previously reported results to take into account presentational
changes.
Critical judgements in applying the Group’s accounting policies
In the process of applying the Group’s accounting policies, which are described in note 1, management has made the
following judgements that have the most significant effect on the amounts recognised in the financial statements (apart
from those involving estimations, which are dealt with below).
29
DCD Media Plc
Financial statements for the period ended 31 December 2010
Notes to the financial statements for the period ended 31 December 2010
2
Critical accounting judgements and key sources of estimation uncertainty
Valuation of identifiable assets created during the period
Note 12 details the values attributed to intangible assets acquired and/or created by the Group. In assessing the
recoverable value of the product, management have compared carrying value of the asset to discounted future
cashflows. Where future cashflows do not exceed carrying value an impairment charge has been recorded.
An impairment review takes place against each critical asset class prior to reporting half year and full year financial
results.
Sale and leaseback
As explained in note 23 the Group enters into sale and leaseback arrangements to finance programme production. The
obligations to the lessee are matched by deposits held with financial institutions. The Group is not able to control the
deposit accounts, nor is it able to withhold payments to the investor from the accounts. Accordingly, the Group has
determined that, under IAS39 ‘Financial instruments: Recognition and Measurement’, each sale and leaseback
transaction entered into by the Group has, from inception, failed to meet the definition of an asset and liability and has
therefore not been recognised in these financial statements. The Group has applied guidance from SIC27 ‘Evaluating the
substance of transactions involving the legal form of a Lease’.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date,
that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the
next financial year are discussed below.
Recoverability of programmes in the course of production
During the period, management reviewed the recoverability of its programmes in the course of production which are
included in its balance sheet. The projects continue to progress satisfactorily and management continue to believe that
the anticipated revenues will enable the carrying amount to be recovered in full.
Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating unit to which
the goodwill has been allocated. The value in use calculation requires the entity to estimate the future cash flows
expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. The
carrying amount of goodwill at the balance sheet date was £7.6m. Details relating to the allocation of goodwill to cash-
generating units and potential impairment calculations are given in note 12 below.
Impairment of programme rights
Determining whether programme rights are impaired requires an estimation of the value in use of the cash-generating
unit to which the rights have been allocated. The value in use calculation requires the entity to estimate the future cash
flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. The
carrying amount of programme rights at the balance sheet date was £1.9m. Details relating to the allocation of goodwill
and impairment review calculations are given in note 12 below.
3
Segment information
The Group adopted IFRS 8 Operating segments during the period. This has changed the segments disclosed in the
financial statements. In previous annual financial statements, segments were identified by reference to the dominant
source and nature of the Groups risks and returns. Under IFRS 8 the accounting policy for identifying segments is now
based on the internal management reporting information that is regularly reviewed by the senior management team.
The group has four main reportable segments:
-
-
-
Factual Television Production - This division is involved in the production of factual based television
content from the aggregate of the following reporting lines: Prospect Pictures, West Park Pictures &
DCD Factual brands.
Entertainment Television Production – This division is involved in the production of entertainment
based television content. This includes productions by September Films and Matchlight Ltd,
Event Management – This division organises and manages events, primarily music concerts through
Done & Dusted.
- Rights and Licensing – This division is involved with the sale of distribution rights, DVDs, music and
publishing deals through the aggregate of the following reporting lines: DCD Rights, DC DVD, DCD
Music & DCD Publishing.
30
DCD Media Plc
Financial statements for the period ended 31 December 2010
Notes to the financial statements for the period ended 31 December 2010
3
Segment information (continued)
- Other – This division is involved in the collection of distribution rights of some historic programmes.
The results and assets of this division are not material to the group.
The Group’s reportable segments are strategic business divisions that offer different products to different markets, while
its Central division is its head office function which manages other business which cannot be reported within the other
reportable segments. They are managed separately because each business required different management and
marketing strategies.
Uniform accounting policies are applied across the entire Group. These are described in note 1 of the financial
statements (above).
The Group evaluates performance of the basis of profit or loss from operations but excluding exceptional items such as
goodwill impairments. The board considers the most important KPIs within its business segments to be Revenue and
segmental profit.
Inter-segmental trading occurs between the Rights & Licensing division and the production divisions where sales are
made of distribution rights. Royalties and commissions paid are governed by an umbrella agreement covering the Group
that applies an appropriate rate that is acceptable to the local tax authorities.
Segment assets include all trading assets held and used by the segments for their day to day operations. Goodwill and
trade-names are not included within segmental assets as management views these assets as owned by the Group.
Segment liabilities include all trading liabilities incurred by the segments. Loans & borrowings incurred by the Group are
not allocated to segments; neither are deferred tax liabilities incurred by the Group. Details of these balances are
provided in the reconciliations below:
2010 Segmental Analysis
Factual
2010
£000
Entertain
ment
2010
£000
Event
Management
2010
£000
Rights &
Licensing
2010
£000
Other
Total
2010
£000
2010
£000
Revenue
Total revenue
Inter-segmental
revenue
Group revenue
Amortisation of
programme rights
Impairment of
programme rights
Finance income
Finance costs
Other income
Exceptional gain on
refinancing
8,449
16,266
15,920
9,513
(1,829)
43
50,188
(1,829)
8,449
16,262
15,920
7,684
43
48,359
(1,551)
(6,938)
-
(246)
-
(8,735)
(275)
(230)
(36)
(628)
(253)
(1,422)
1
-
6
2
(2)
1
1
(3)
47
1
(2)
-
-
-
-
5
(788)
54
3,559
Segmental PBT
(1,479)
2,133
(251)
(2,544)
(156)
(2,299)
Exceptional gain on
refinancing
Net Central finance
costs
Central profit/(loss)
Impairment of
goodwill & trade
names (note 12)
Loss before
taxation
3,559
(781)
500
(9,417)
(8,439)
31
DCD Media Plc
Financial statements for the period ended 31 December 2010
Notes to the financial statements for the period ended 31 December 2010
3
Segment information (continued)
Factual
2010
£000
Entertain
ment
2010
£000
Event
Management
2010
£000
Rights &
Licensing
2010
£000
Other
Total
2010
£000
2010
£000
1,247
8,091
-
-
-
9,338
959
4,101
3,149
5,910
48
14,167
222
7,568
5,824
27,781
780
1,845
2,352
4,391
72
9, 440
1,000
5,861
76
1,636
18,013
Additions to non-
current assets
Reportable
segment assets
Central assets
Goodwill
Trade-names
Total group
assets
Reportable
segment liabilities
Central liabilities
Loans &
borrowings
Provisions
Deferred tax
liabilities
Total group
liabilities
2009 Segmental Analysis
Factual
2009
£000
Enterta
inment
2009
£000
Event
Management
2009
£000
Rights &
Licensing
2009
£000
Other
Total
2009
£000
2009
£000
7,812
10,411
9,841
7,285
(1,252)
420
35,769
(1,252)
7,812
10,411
9,841
6,033
420
34,516
(3,011)
(3,578)
-
7
-
-
-
12
-
-
-
-
15
(14)
-
(183)
(45)
(6,816)
-
2
-
-
-
-
(2)
-
-
36
(16)
-
Revenue
Total revenue
Inter-segmental
revenue
Group revenue
Amortisation of
programme rights
Impairment of
programme rights
Finance income
Finance costs
Other income
Segmental PBT
1,127
120
1,806
914
62
4,029
Central costs
Amortisation &
Impairment of
goodwill & trade-
names
Net central finance
costs
Loss before taxation
(1,924)
(988)
666
451
32
DCD Media Plc
Financial statements for the period ended 31 December 2010
Notes to the financial statements for the period ended 31 December 2010
3
Segment information (continued)
Factual
2009
£000
Entertain
ment
2009
£000
Event
Management
2009
£000
Rights &
Licensing
2009
£000
Other
Total
2009
£000
2009
£000
2,625
3,608
-
-
-
6,233
1,633
3,448
1,374
6,358
340
13,153
16,249
8,636
(730)
37,308
1,214
1,534
912
4,244
185
8,089
1,182
9,323
84
2,227
20,905
Additions to non-
current assets
Reportable
segment assets
Goodwill
Trade-names
Central liabilities
offsettable
against
segmental assets
Total group
assets
Reportable
segment liabilities
Central liabilities
Loans &
borrowings
Provisions
Deferred tax
liabilities
Total group
liabilities
4 Revenue
The Group's headquarters is based in the United Kingdom. It also has offices in New York and Los Angeles to conduct
any business in the United States. Outside the United Kingdom, sales are generally denominated in US dollars.
Revenue, which excludes value added tax and transactions between Group companies, represents the sale of television
production services, event management services, commissions on television and film distribution rights and the sale of
television and film distribution rights on behalf of third party producers.
The following table provides an analysis of the Group's revenue by geographical market, irrespective of the origin of the
goods or services:
18 month
period ended
31 December
2010
£’000
Year ended 30
June
2009
£’000
22,726
4,760
15,164
5,709
48,359
18,073
2,460
12,201
1,782
34,516
United Kingdom
Rest of Europe
North and South America, including Canada
Rest of the World
33
DCD Media Plc
Financial statements for the period ended 31 December 2010
Notes to the financial statements for the period ended 31 December 2010
5
Expenses by nature
Auditors' remuneration:
Fees payable to the company's auditor:
For the audit of the company's annual accounts
For the audit of other group companies
For provision of accounting advice
Operating lease rentals:
Plant and machinery
Other
(Profit)/loss on foreign exchange fluctuations
Depreciation, amortisation and impairment:
Intangible assets - programme amortisation in cost of sales
Intangible assets - programme impairment in cost of sales
Intangible assets - goodwill and related intangibles in administrative expenses
(note 12)
Property, plant and equipment
Staff costs (note 5)
Re-organization and restructuring costs (see below)
18 month
period ended
31 December
2010
£’000
Year ended 30
June
2009
£'000
10
65
7
211
543
(65)
8,735
1,422
10,899
79
7,842
530
12
78
-
220
530
(118)
6,200
-
988
74
5,822
94
The restructuring costs relate to redundancy costs within the group in relation to restructrung and include legal costs and
compensation to individuals for loss of office.
6
Directors and employees
Staff costs during the period, including directors, were as follows:
Wages and salaries
Social security costs
Other pension costs
18 month
period ended
31 December
2010
£’000
Year ended 30
June
2009
£’000
6,891
890
61
7,842
5,153
633
36
5,822
Other pension costs include contributions totalling £21,799 (2009: £36,288) to money purchase pension schemes in
respect of three employees. There are no defined benefit schemes in operation.
The average number of employees of the Group during the period were as follows:
Sales and distribution
Production
Directors and administration
34
18 month
period ended
31 December
2010
No.
Year ended 30
June
2009
No.
9
31
31
71
10
30
36
76
DCD Media Plc
Financial statements for the period ended 31 December 2010
Notes to the financial statements for the period ended 31 December 2010
6
Directors and employees
Remuneration in respect of the directors, who are the key management personnel of the Group was as follows for the
eighteen month period versus the comparative figures for twelve months:
D Elstein (resigned 12 October
2010)
T Wildman
S Pizey (resigned 7 December
2010)
D Green
J McIntosh
2010
D Elstein (resigned 12 October
2010)
C Hunt (resigned 20 November
2008)
M Barton (resigned 20
November 2008)
T Wildman
S Pizey (resigned 7 December
2010)
D Green
J McIntosh
J Hytner (resigned 10 April 2009)
2009
Emolu
ments
£'000
64
Pension
Contributions
£'000
-
Money value of non-cash
benefits received
£'000
-
30
177
302
192
765
-
7
-
21
28
-
-
-
Emolu
ments
£'000
55
Pension
Contributions
£'000
-
Money value of non-cash
benefits received
£'000
-
105
12
20
118
150
121
5
586
8
-
4
-
-
-
12
8
-
-
-
8
2010
Total
£'000
64
30
184
302
213
765
2009
Total
£'000
55
121
12
20
122
150
121
5
606
Share options of Ordinary 10 pence shares held by directors or their related parties during the period were as follows:
At 1 July
2009
Granted
during
the
period
Exercised
during
the
period
Lapsed
during
the
period
At 31
December
2010
Exercise
price
(pence)
Date from
which
exercisable
Expiry
date
J McIntosh
30,120
-
-
30,120
- 83p - 99p
15.12.06
14.12.09
7
Finance income
18 month
period ended
31 December
2010
£’000
Year ended
30 June
2009
£’000
5
5
62
62
Interest on short term bank deposits
35
DCD Media Plc
Financial statements for the period ended 31 December 2010
Notes to the financial statements for the period ended 31 December 2010
8
Finance costs
Bank overdraft
Convertible loan interest charge
Convertible loan equity interest charge
Bank loan
18 month
period ended
31 December
2010
£’000
Year ended
30 June
2009
£’000
40
496
123
129
788
14
524
82
3
623
As explained in note 19, the convertible loan note issued on 7 August 2007 was accounted for as a compound
instrument under IFRS 32.
As a result, there has been an interest charge in the period of £123,000 to equalise the equity element of the loan
credited to reserves. The loan reached full maturity in the period. An element of the loan was refinanced as per note 17,
the redemption rate of the remaining loan notes was extended to 31 December 2012.
9
Taxation on ordinary activities
Recognised in the income statement:
Current tax (expense)/credit:
UK corporation tax
US federal and state income taxes
Withholding tax suffered
Adjustment in respect of the previous years
Current period (expense)/credit
Deferred tax (expense)/credit:
Reversal of temporary differences under IFRS
Total tax in income statement
Tax charge represents:
Profit/(loss) on ordinary activities multiplied by standard rate of corporation tax in
the UK of 28% (2009: 28%)
Effects of:
Expenses not deductible for tax purposes
Provisions deductible on paid basis
Net losses in period carried forward/(brought forward losses utilised)
Depreciation in excess of capital allowances
Rate differential on foreign taxes
Overseas withholding tax suffered
Adjustment in respect of prior year
Total tax charge
18 month
period ended
31 December
2010
£’000
Year ended
30 June
2009
£’000
(29)
(4)
(33)
577
544
2010
£’000
(2,363)
2,907
53
36
16
(109)
4
544
-
-
(49)
-
(49)
278
229
2009
£’000
126
551
(132)
(777)
15
(61)
49
-
(229)
A deferred tax asset of approximately £4.2m (2009: £3.2ml) arising principally from losses in the company has not been
recognised. The directors believe that it is prudent not to recognise the deferred tax asset within the financial statements.
10 Dividends
No dividends have been paid or proposed in the period (2009: £nil).
36
DCD Media Plc
Financial statements for the period ended 31 December 2010
Notes to the financial statements for the period ended 31 December 2010
11 Earnings per share
The calculation of the basic profit/(loss) per share is based on the profit/(loss) attributable to ordinary shareholders
divided by the average number of shares in issue during the period. The calculation of diluted (loss)/profit per share is
based on the basic (loss)/profit per share, adjusted to allow for the issue of shares and the post tax effect of dividends
and interest, on the assumed conversion of all other dilutive options and other potential ordinary shares.
Weighted
average
number of
shares
2010
Per share
amount
pence
Loss
£'000
Weighted
average
number of
shares 000's
Profit
£'000
2009 Per
Share
amount
pence
Basic loss per share
Profit/(loss) attributable to
ordinary shareholders
Diluted loss per share
Profit/(loss) attributable to
ordinary shareholders
(7,895)
59,019,293
(13.38)
679
53,368,503
1.27
(7,895)
59,019,293
(13.38)
679
87,962,917
0.77
If convertible loan balances held at the period end were converted at 18 pence the number of shares issued would be
17,326,013. The consequence of this transaction has not been considered for 2010 figures as the effect would be anti-
dilutive.
12 Goodwill and intangible assets
Goodwill
Cost
At 1 July 2008
Additions
Created on business combinations
Disposals
At 30 June 2009
At 1 July 2009
Additions
Created on business combinations (note 31)
Disposals
At 31 December 2010
Amortisation and impairment
At 1 July 2008
Amortisation provided in year in cost of sales
Amortisation provided in year administrative expenses
Disposed in year
At 30 June 2009
At 1 July 2009
Amortisation provided in period in cost of sales
Impairment provided in period in cost of sales
Amortisation provided in period administrative expenses
Impairment provided in period in administrative
expenses
Disposed in period
At 31 December 2010
Net book value
At 31 December 2010
At 30 June 2009
£'000
34,467
-
-
-
34,467
34,467
136
-
34,603
18,218
-
-
-
18,218
18,218
-
-
8,817
-
27,035
7,568
16,249
37
Trade
Names
£'000
Programme
Rights
£'000
9,882
-
-
-
9,882
9,882
-
-
-
9,882
988
-
988
-
25,372
6,233
-
-
31,605
31,605
8,092
-
-
39,697
21,418
6,178
-
-
1,976
27,596
Total
£'000
69,882
6,233
-
-
76,115
76,115
8,092
136
-
84, 343
40,785
6,178
988
-
47,951
47,951
8,735
1,422
1,482
9,417
1,976
-
-
1,482
600
-
4,058
5,824
7,906
27,596
8,735
1,422
-
-
-
37,753
69,007
1,944
4,009
15,336
28,164
DCD Media Plc
Financial statements for the period ended 31 December 2010
Notes to the financial statements for the period ended 31 December 2010
12 Goodwill and intangible assets (continued)
Goodwill acquired in a business combination is allocated, at acquisition, to the cash-generating units (CGUs) that are
expected to benefit from that business combination.
The recoverable amounts of the CGUs are determined from value in use calculations. The key assumptions for the value
in use calculations are those regarding the discount rates, growth rates and expected profitability of the CGUs over the
period. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time
value of money and the risks inherent in the CGUs.
The Group prepares cash flow forecasts derived from the most recent financial budgets approved by management and
extrapolates them. The cash flows are forecast to the period ending 31 December 2011. The growth rates applied from
the end of the period covered by approved budgets into future cash flows for each CGU vary between 0% and 5% based
on management's estimate of likely growth. Expected profitability is based on past results and expectations of future
changes in the market.
The rate used to discount the forecast cash flows is 12% for all CGUs. Whilst a rate of 9% was used in the prior periods;
management felt it would be prudent to increase the discount rate on the basis of continuing uncertainty in the media
market.
If the discount rates used were reduced by 3% to 9%, it is estimated that the recoverable amount of goodwill would have
increased by approximately £1.3m. If the discount rates were increased to 15%, it is estimated that the recoverable
amount of goodwill would be impaired by approximately £1.1m.
Details of goodwill allocated to cash generating units for which the amount of goodwill so allocated is as follows:
Cash generating units (CGU):
DCD Rights Limited
Done and Dusted Group Limited
September Holdings Limited
Prospect Pictures Limited
West Park Pictures Limited
Matchlight Limited
Segment
(note 3)
Rights & Licensing
Event Management
Entertainment
Factual
Factual
Factual
Goodwill carrying amount
31 December
2010
£’000
620
1,453
5,359
-
-
136
7,572
30 June
2009
£’000
624
2,977
5,359
4,926
2,363
-
16,249
Management has assessed the value of the event management unit which contains no intellectual property, and
has considered the risk associated with change of circumstance in the evolving niche market for event management and
opportunity for future potential cashflows; and replacing its key staff in the event of failure to retain their service. This
had an adverse impact on the projected value in use of the operation concerned and consequently resulted in an
impairment to goodwill of £1.524m.
During the period key creative executives left West Park Pictures Limited . This event was seen by management as an
indicator of impairment against the trade name in addition to the annual requirement for an impairment review of
goodwill. This departure had an adverse impact on the projected value in use of the operation concerned resulting in an
impairment of £2.963m. The impairment charge has eliminated goodwill to nil and reduced the carrying value of the
trade-name to £0.6m. Management will continue to trade with the West Park brand name moving forward.
During the period key creative executives left Prospect Picture Limited and the business was also restructured as part of
the overall re-organisation of the Group. This event was seen by management as an indicator of impairment against the
trade name in addition to the annual requirement for an impairment review of goodwill. This impairment review against
the aggregated intangible assets has resulted in an impairment of £4.926m. Projected value in use justifies the carrying
value of the trade name at the financial year end of £2.501m. Management will continue to trade with the Prospect brand
moving forward.
38
DCD Media Plc
Financial statements for the period ended 31 December 2010
Notes to the financial statements for the period ended 31 December 2010
The carrying value of goodwill in the September CGUs is exceeded by a recoverable amount of £3.6m. The carrying
value of goodwill in the DCD Rights CGU is exceeded by a recoverable amount of £1.2m.
Management performed an impairment review of intangible programme rights held by the business. The valuations of
programme rights are based on the recoverable amounts from their value in use using a discount factor of 12%. The
forecasts are based on historic sales of the programmes, and future sales are forecast over a seven year period on a
reducing basis. Seven years is used for the forecasts because the programme rights are held for periods longer than five
years, but not more than ten years. If the discount rate was increased by 3% to 15% the carrying values would
decreased by £0.021m. If the discount rate was decreased by 3% to 9% the carrying value of assets would increase by
£0.011m.
Current estimates of useful economic lives of intangible assets are as follows:
Goodwill
Trade names
Programme Rights
Indefinite
10 years
3-5 years
13 Property, plant and equipment
Short leasehold
property
improvements
£'000
Office and
technical
equipment
£'000
Motor
vehicles
Total
£'000
£'000
Cost
At 1 July 2008
Additions
On acquisition of subsidiaries
Disposals
At 30 June 2009
At 1 July 2009
Additions
On acquisition of subsidiaries
Disposals
At 31 December 2010
Depreciation
At 1 July 2008
Provided in year
Disposed in year
At 30 June 2009
At 1 July 2009
Provided in period
Disposed in period
At 30 December 2010
Net book value
At 31 December 2010
At 30 June 2009
157
-
-
-
157
157
-
-
-
157
157
-
-
157
157
-
-
157
-
-
908
10
-
-
918
918
45
24
(6)
981
771
60
-
831
831
63
(6)
902
93
87
44
-
-
-
44
44
-
-
-
44
3
14
-
17
17
16
-
33
11
27
1,109
10
-
-
1,119
1,119
45
24
(6)
1,182
931
74
-
1,005
1,005
79
(6)
1,078
104
114
The net book value of property, plant and equipment includes an amount of £29,247 (2009: £44,000) in respect of assets
held under finance leases and hire purchase contracts. The related depreciation charge on these assets for the period
was £14,753 (2009: £9,835).
39
DCD Media Plc
Financial statements for the period ended 31 December 2010
Notes to the financial statements for the period ended 31 December 2010
14
Inventories
Pre-production costs
Finished stocks
15 Trade and other receivables
Trade receivables
Less: provision for impairment of trade receivables
Trade receivables – net
Taxation and social security
Other receivables
Prepayments and accrued income
Total trade and other recievables
Total financial assets other than cash and cash equivalents classified as loans
and receivables
31 December
2010
£’000
114
162
276
31 December
2010
£’000
5,437
(110)
5,327
215
908
1,480
7,930
6,235
30 June
2009
£’000
152
58
210
30 June
2009
£’000
4,022
(88)
3,934
-
255
2,786
6,975
4,189
The average credit period taken on sales of goods is 60 days (2009: 79 days). No interest is charged on receivables
within the agreed credit terms. Thereafter, interest may be charged.
An allowance for impairment is made where there is an identified event which, based on previous experience, is
evidence of a reduction in the recoverability of the outstanding amount. The Group provides, in full, for any debts it
believes have become non recoverable. The figures shown above are after deducting a specific provision for bad and
doubtful debts of £110k (2009: £88k). No amounts are included within trade and other are expected to be recovered in
more than one year (2009: £nil). The increase in the bad debt provision is related to further debts being identified where
the directors deem recovery of amounts owed to be unlikely. The directors have reviewed their customer portfolio and
marketplace and do not consider the risk of bad debt to be material to the business.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable set out above.
The ageing of trade receivables that have not been provided for are:
Not due yet
0-29 days
Overdue
30-59 days
60-89 days
90-119 days
120+ days
31 December
2010
£’000
3,239
1,175
203
499
211
5,327
30 June
2009
£’000
2,251
803
382
325
174
3,934
40
DCD Media Plc
Financial statements for the period ended 31 December 2010
Notes to the financial statements for the period ended 31 December 2010
16 Trade and other payables
Trade payables
Other payables
Accruals and deferred income
Taxation & Social Security
Total trade and other payables
Total financial liabilities, excluding loans and borrowings, classified as financial
liability measure at amortised cost
17
Interest bearing loans and borrowings - due within one year
Bank overdrafts (unsecured)
Bank loan
Secured convertible loan
Obligations under finance leases
31 December
2010
£’000
2,424
2,043
5,093
869
10,429
4,467
30 June
2009
£’000
1,408
1,171
5,279
1,050
8,908
2,579
31 December
2010
£’000
30 June
2009
£’000
738
1,000
-
11
1,749
-
-
9,686
-
9,686
On the 30 November the Group announced that the primary holder of convertible loan notes, Highbridge Capital LLC
agreed to cancel approximately £6.9m of convertible loan notes in exchange for 7,631,048 of new ordinary shares in the
Company and satisfied by a further payment of £2.5m of cash. The remaining convertible loan debt is redeemable by
November 2012 if not previously converted at a fixed price of 18p.
The consideration paid on redemption of the debt instruments is allocated to liability and equity using the same method
as used upon originally valuing the instruments. The directors have performed a valuation exercise in respect of the
consideration. The fair value of the consideration has been allocated against the liability component of the convertible
instruments, realising an exceptional gain on early redemption of £3,559,737. This has been recognised in the statement
of comprehensive income.
18 Provision
1 July 2009
Amounts released against provision during the period
Increase in provision in the period
31 December 2010
Restructuring Provision
£’000
84
(84)
76
76
The provision brought forward related to restructuring costs relating to closure of office space in central London. Related
redundancies and associated legal costs. All related costs were received in the current period and as such the provision
was utilised and any over provision was released.
The increase of provision in the period relates to further non-recurring premises re-organisation committed in the current
period. It is expected that these costs will be incurred in the financial year ending 31 December 2011.
41
DCD Media Plc
Financial statements for the period ended 31 December 2010
Notes to the financial statements for the period ended 31 December 2010
19
Interest bearing loans and borrowings - due after more than one year
Secured convertible loan
Bank loan
Obligations under finance leases
31 December
2010
£’000
30 June
2009
£’000
3,123
1,000
-
4,123
-
-
14
14
The convertible loan as at 30 June 2008 was accounted for as a compound instrument, and a calculation has been made
to separate the equity element from the liability element of the loan. A discount rate of 12% has been applied to the
future interest payments and repayment of the loan. This has resulted in a reduction of the liability by crediting an equity
element of £328,000 to reserves. However, there is an interest charge in the income statement up to maturity of the loan
to equalise this reduction in the liability so that by maturity the full liability is reflected in the balance sheet. The interest
charge in the income statement is £123,000 (2008: £82,000).
A proportion of the convertible loan instrument was redeemed in the period. See note 17.
20 Deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Assets
31
December
2010
£'000
-
-
30 June
2009
£'000
-
-
Liabilities
Net
31
December
2010
£'000
1,636
-
30 June
2009
£'000
2,213
-
31
December
2010
£'000
1,636
-
30 June
2009
£'000
2,213
-
Intangible assets
Tax value of carry-forward losses
Net tax (assets)/liabilities
-
-
1,636
2,213
1,636
2,213
A deferred tax asset of £4.2 million, arising principally from losses in the group of £15.6m, has not been recognised
(2009: £3.2 million & 11.4m). These losses can be offset against future trading profits generated. The directors believe
at this stage that it is prudent not to recognise the deferred tax asset within the financial statements.
Movement in deferred tax during the period
Intangible assets
Tax value of carry-forward losses
1 July 2009
£'000
2,213
-
Recognised in
income
£'000
(577)
-
31 December
2010
£'000
1,636
-
Tax value of temporary difference
2,213
(577)
1,636
21 Financial instruments and risk management
Financial risk factors
The Group's financial instruments comprise cash, including short term deposits, trade and other receivables and trade
and other payables that arise directly from its operations, and loan notes. The main risks arising from the Group's
financial instruments are interest rate risk, liquidity risk, credit risk and currency risk. The Board has reviewed and agreed
policies for managing each of these risks and they are summarised below. The Group has no financial assets other than
trade receivables and cash at bank. The Balance Sheet values for the financial assets and liabilities are not materially
different from their fair values.
42
DCD Media Plc
Financial statements for the period ended 31 December 2010
Notes to the financial statements for the period ended 31 December 2010
21 Financial instruments and risk management (continued)
Interest rate risk
The Group finances its operations at present through funds raised on share placings, convertible loan notes and
production loan facilities provided by banks. The Group manages its exposure to interest rate fluctuations by mixing the
duration of its deposits and borrowings to reduce the impact of interest rate fluctuations. Production loan facilities are
short term and secured on the licence fee payable by the commissioning broadcaster at various stages of the production,
which minimises the impact of any variation in interest rates. The interest rate on the convertible loans referred to in
notes 21 is variable and is based on six month sterling LIBOR.
Liquidity risk
The Group seeks to manage financial risk to ensure sufficient liquidity is available to meet foreseeable needs and to
invest cash assets safely and profitably. Some liquidity risk arises from the nature of production income, which does not
always arise in an even manner, and the group's policy is to ensure there are sufficient cash reserves to meet liabilities
during such periods.
Liquidity risk also arises from the interest charges and repayment terms of the convertible loans, which the Group seeks
to manage by means of periodic charges to each Group entity. These are incorporated into rolling 12 month Group cash
flow forecasts, which are reviewed by the board monthly, and the cash flows are monitored at Group level by weekly
cash reports from each operating entity. Short term flexibility is provided through the availability of bank overdraft
facilities. Liquidity risk is referred to in the Chairman's statement and in the note on basis of accounting policies.
Credit risk
The Group’s principal financial assets are bank balances, cash and trade and other receivables. The Group’s credit risk
is primarily attributable to its trade receivables. The group operates to ensure that the payment terms of customers are
matched to the group's own contractual obligations in terms of delivery of programmes and rights. The principal source of
group income is commissioning broadcasters, who are not considered to be a significant credit risk because of their size
and financial resources. Other Group income is derived from distribution sales worldwide, and credit risk is assessed in
relation to knowledge of the customer or by credit references; to minimise credit risk contractual terms may require that
payment is made before delivery of materials.
Currency risk
The Group operates in overseas markets and is subject to exposures on transactions undertaken during the period. The
group's exposure to exchange rate fluctuations is small based on its revenue and cost base and its policy is not to hedge
against foreign currency transactions.
The sterling equivalent of the Group's assets and liabilities denominated in foreign currencies at the Balance Sheet dates
was as follows:
US dollar
Euros
Other
Net assets
Assets
Liabilities
31 December
2010
£'000
4,786
588
464
30 June
2009
£'000
1,694
466
184
31 December
2010
£'000
(1,904)
(441)
(348)
30 June
2009
£'000
(445)
(28)
-
5,838
2,344
(2,693)
(473)
Whilst the main currency that the Group is exposed to is US dollar, a 10% movement in its rate would not have a material
impact on its reported results.
Interest rate and liquidity risk
Interest rate sensitivity
The sensitivity analysis has been based on the average exposure to floating rate debt during the period. It has been
assumed that floating interest rates were 200 basis point higher than those actually incurred.
The effect of such a change would be to increase the loss before tax for the period by £67,000 (2009: loss of £197,000).
Capital risk management
The capital structure of the Group consists of convertible loan note loan financing, bank loan financing and the
shareholders’ equity comprising issued share capital and reserves.
43
DCD Media Plc
Financial statements for the period ended 31 December 2010
Notes to the financial statements for the period ended 31 December 2010
21 Financial instruments and risk management (continued)
The capital structure of the Group is reviewed on an ongoing basis with reference to the costs applicable to each element
of capital, future requirements of the Group, flexibility of capital to be drawn down and availability of further capital should
it be required. Management prepare cashflow projections to plan for repayment of loan facilities used. These projections
are reviewed on a regular basis to check that the group will be able to settle liabilities as they fall due.
The Group’s objectives when maintaining capital are:
-
-
To safeguard the entity’s ability to continue as a going concern, so that it can continue to provide
returns for shareholders and benefits for other stakeholdes, and;
To provide an adequate return to shareholders by pricing products and services commensurately with
the level of risk.
Liquidity and interest risk tables
The following table details the Group’s remaining contractual maturity for its financial liabilities. The tables have been
drawn up based on the undiscounted contractual maturities of the financial liabilities (including interest that will accrue to
maturity). The discount column reflects the adjustments necessary to reconcile to the carrying amounts of the financial
liabilities.
31 December 2010
Fixed rate
Finance lease obligations
Trade payables
Floating rate
Bank overdrafts
Non-convertible loans
Convertible loans
Interest on convertible loans
30 June 2009
Fixed rate
Finance lease obligations
Trade payables
Floating rate
Bank overdrafts
Convertible loans
Interest on convertible loans
Weighted
average
effective
interest
rate
%
18.5%
0%
3.5%
3.5%
7.7%
7.7%
Weighted
average
effective
interest
rate
%
18.5%
0%
3.5%
7.7%
7.7%
Less than
1 month
or on
demand
1-3
months
3-12
months
1-5
years
More
than 5
years
Disco
unt
Total
£'000
£'000
£'000
£'000
£'000
£'000
£'000
1
6
24
(5)
1
2,424
728
250
750
1,000
2,959
164
Less than
1 month
or on
demand
1-3
months
3-12
months
1-5
years
More
than 5
years
Disco
unt
27
2,424
728
2,000
2,959
164
Total
£'000
£'000
£'000
£'000
£'000
£'000
£'000
1
1,255
-
-
-
1
-
-
-
191
6
-
-
9,935
574
25
-
-
-
-
-
-
-
-
-
(5)
28
- 1,255
-
-
-
- 9,935
765
-
Refer to note 17 for explanation of the reduction of the convertible loan note.
44
DCD Media Plc
Financial statements for the period ended 31 December 2010
Notes to the financial statements for the period ended 31 December 2010
22 Share capital
Authorised
100,000,000 (2009: 100,000,000) ordinary shares of 10p (2009: 10p) each
50,933,729 (2009: 50,933,729) deferred shares of 0.9p each
Allotted, called up and fully paid
61,441,265 (2009: 53,480,503) ordinary shares of 10p (2009: 10p) each
50,933,729 (2009: 50,933,729) deferred shares of 0.9p each
31 December
2010
£'000
30 June
2009
£'000
10,000
458
10,000
458
10,458
10,458
6,144
458
6,602
5,348
458
5,806
The deferred shares are not entitled to receive a dividend or other distribution, to attend or vote at any General Meeting
and on return of capital on a winding up, shall only be entitled to receive the amount paid up on the shares after holders
of the ordinary shares have received £100,000 for each ordinary share.
On 30 November 2009, 7,631,048 were issued to holders of convertible debt instruments as part of the early settlement
of the convertible loan instruments. The issue of these shares have been accounted for at fair value resulting in
£1,087,424 of shares being issued.
On 16 November 2010, a small portion of convertible debt was converted to equity at 18p per share resulting in 59,769
shares being issued for a consideration of £10,758.
On 29 November 2010, a small portion of convertible debt was converted to equity at 18p per share resulting in 269,945
shares being issued for a consideration of £48,590.
23 Contingent liabilities – sale and leaseback agreements
One subsidiary company has a liability to pay annual rentals under a sale and leaseback agreement relating to television
programme rights until 2015. This obligation has not been recognised in the financial statements because at 31
December 2010 an amount of £522,034 (30 June 2009: £519,003) is held in a bank deposit account which may only be
used to settle those rental obligations. The deposit is held with the same bank to whom the rentals are paid, and full set-
off is applicable in the event of the failure of the bank.
Other subsidiary companies have entered into sale and leaseback agreements relating to television programme rights
where the obligations to pay rentals are guaranteed by amounts payable from bank deposits. These obligations have not
been recognised in the financial statements because the contingent liability would only crystallise upon the failure of the
bank holding the deposit. Further:
(a) the Group is not able to control the deposit account in pursuit of its own objectives and any payments under the lease
are due out of this restricted account. The Group has neither control over the bank balance nor over any interest earned
thereon.
(b) the risk of reimbursing the amount of fee receivable by the Group in respect of tax losses transferred and the risk of
paying an amount due under the guarantee in case of collapse of the bank holding the deposit are remote; and
(c) other than the initial cash flows at inception of the arrangement, the only cash flows expected under this arrangement
are the lease payments satisfied solely from funds withdrawn from the separate account established for this
arrangement.
Given the above, the asset and the liability in respect of the sale and leaseback transactions do not represent an asset
and a liability of the Group and according to SIC-27 "Evaluating the Substance of Transactions Involving the Legal Form
of a Lease", and have not been recognised in these financial statements.
45
DCD Media Plc
Financial statements for the period ended 31 December 2010
Notes to the financial statements for the period ended 31 December 2010
24 Contingent liabilities – sale and leaseback agreements (continued)
The liabilities from these agreements are as follows:
As at 31 December 2010
As at 30 June 2009
25 Capital commitments
Due within 1
year
£'000
Due within 2
to 5 years
£'000
Due after 5
years
£'000
Total
£'000
1,207
1,149
7,039
5,935
2,576
10,822
8,140
15,225
There were no capital commitments at 31 December 2010 or 30 June 2009.
26 Share based payments
The Company operates two equity-settled share based remuneration schemes for employees: a long term incentive
scheme and an unapproved scheme for non-executive directors and certain senior management. The options are
awarded by the Board and are governed by written rules.
No share options were granted during the period.
Share options of Ordinary 10 pence shares held by directors or their related parties during the period were as follows:
At 1 July
2009
Granted
during
the
period
Exercised
during
the
period
Lapsed
during
the
period
At 31
December
2010
Exercise
price
(pence)
Date from
which
exercisable
Expiry
date
J McIntosh
30,120
-
-
30,120
- 83p - 99p
15.12.06
14.12.09
27 Transactions with directors and other related parties
Loans from directors
At 31 December 2010 there were 3 loans due to directors. They were as follows John McIntosh £22,805 (2009: £nil),
David Green £139,280 (2009: £nil) and Tarik Wildman £25,000 (2009: £nil). All loans due relate to deferred emoluments
and expenses for services performed as directors within DCD Media Plc.
Other transactions
During the period the following amounts were received from/(paid to) companies in which the directors have an interest:
Director
Amount received/(paid)
Description
Kazoo Communications Limited
S Pizey (resigned 7
December 2010)
The balances outstanding at the period end were as follows:
Kazoo Communications Limited
S Pizey
28 Retirement benefit schemes
2010
£'000
5
2009
£'000
(3) Office charges
Amount
receivable/(payable)
2010
£'000
-
2009
£'000
(3) Net trading balance
The group operates defined contribution pension schemes for the benefit of three employees. The assets of the scheme
are administered by trustees in funds independent from those of the group.
The total cost charged to income of £nil (2009: £36,183) represents contributions payable to the schemes by the Group
according to the rules of the schemes.
46
DCD Media Plc
Financial statements for the period ended 31 December 2010
Notes to the financial statements for the period ended 31 December 2010
29 Operating lease rental commitments
At 31 December 2010 the Group had operating lease rental commitments as follows:
Leases expiring within one year:
Land and buildings
Motor Vehicles
Other
Leases expiring after more than one year but less than five years:
Land and buildings
Office refurbishment and equipment
Motor vehicles
30 Notes supporting the cash flow statement
Cash and cash equivalents for the purposes of the cash flow statement comprises:
Cash available on demand
Overdraft
31 Acquisitions – Matchlight Limited
31 December
2010
£'000
197
9
2
208
-
-
-
-
208
31 December
2010
£'000
4,135
(738)
3,397
30 June
2009
£'000
10
-
-
10
520
101
10
631
641
30 June
2009
£'000
1,845
-
1,845
On 9 July 2009 the Group acquired a controlling interest of the voting equity instruments of Matchlight Ltd, a company
whose principal activity is the development and production of television programmes primarily intended for exploitation
on television. The principle reason for acquiring this controlling interest was to increase the Group’s exposure to markets
and opportunities across the UK. The Group also hopes to utilise expertise and know-how acquired in the development
of new opportunities.
The Group owns 50% of the Matchlight Ltd’s called up and allotted share capital but have the casting vote.
Details of the fair value of identifiable assets and liabilities acquired, purchased consideration and goodwill are as
follows:
Property, plant & equipment
Receivables
Cash
Payables
Total net assets
Book value
£000
Adjustment
£000
Fair value
£000
28
188
71
(59)
228
-
-
-
-
28
188
71
(59)
228
47
DCD Media Plc
Financial statements for the period ended 31 December 2010
Notes to the financial statements for the period ended 31 December 2010
31 Acquisitions – Matchlight Limited
Calculation of Goodwill
Fair value of non recoupable loan capital paid
Book value of non-controlling interests
Fair value of assets
Goodwill (note 12)
£’000
250
114
364
228
136
The main factors leading to the recognition of goodwill are:
-
Expertise and know-how acquired for which the Group is prepared to pay a premium
The goodwill recognised will not be deductable for tax purposes.
Since the acquisition date, Matchlight Ltd has contributed £2,297,604 to Group revenues and a loss of £306,646 to
Group loss. The results have been consolidated from the 1 July 2009 as management do not believe this would generate
materially different results than if consolidation was from 9 July 2009.
32 Post balance sheet events
The Group has identified that it is likely to require further short-term funding, in the order of £1m, and the Board is
exploring options to secure such additional funding, either in the form of debt or equity. The Board is in discussions with
the Group's larger shareholders in this regard and, in particular, has received a strong indication of support from its
senior shareholders. Such additional funding is subject to, inter alia, finalisation of terms which the Directors believe will
be concluded in the near future on appropriate terms for the Group..
48
DCD Media Plc
Financial statements for the period ended 31 December 2010
COMPANY BALANCE SHEET AS AT 31 DECEMBER 2010
Fixed assets
Property, Plant & Equipment
Investments
Current assets
Stock
Debtors
Cash at bank and in hand
Creditors: amounts falling due within one year
Net current assets/(liabilities)
Total assets less current liabilities
4
5
6
7
8
31 December
2010
£’000
Note
30 June
2009
£’000
7
26,532
2
12,244
12,246
26,539
95
6,553
150
6,798
-
6,714
12
6,726
(4,525)
(12,352)
2,273
(5,626)
14,519
20,913
Creditors: amounts falling due after more than one year
9
(4,123)
-
Net assets
Capital and reserves
Called up share capital
Share premium account
Equity element of convertible loan
Profit and loss account
Shareholders' funds
11
12
12
12
10,396
20,913
6,602
49,451
120
(45,777)
5,806
49,100
328
(34,321)
10,396
20,913
The financial statements were approved and authorised for issue by the Board of Directors on 30 April 2011.
J McIntosh
Director
DCD Media Plc
Company number 03393610
49
DCD Media Plc
Financial statements for the period ended 31 December 2010
NOTES TO THE COMPANY ACCOUNTS FOR THE PERIOD ENDED 31 DECEMBER 2010
Principal accounting policies
1
These financial statements have been prepared in accordance with the historical cost convention and applicable
accounting standards, on a going concern basis under UK GAAP. The principal accounting policies have remained
consistent with those adopted in the previous year.
The Group's business activities, together with the factors likely to affect its future development, performance and position
are set out in the CEO's statement. The financial position of the Group, its cash position and borrowings are set out in
the financial review section of the statement. In addition note 19 sets out the Group's objectives, policies and processes
for managing its financial instruments and risk. The directors have adopted the going concern assumption in the
preparation of the financial statements; please see note 1 of the Group accounts for more detail,
Tangible fixed assets and depreciation
Depreciation is provided at rates calculated to write off the cost or valuation of fixed assets, less their estimated residual
value, over the expected useful economic lives on the following bases:
Short leasehold property improvements
Office and technical equipment
straight line over the life of the lease
25-33% straight line
Financial instruments
Financial assets are recognised in the balance sheet at the lower of cost and net realisable value. Provision is made for
diminution in value where appropriate. Income and expenditure arising on financial instruments is recognised on the
accruals basis, and credited or charged to the income statement in the financial period to which it relates.
Deferred taxation
Deferred tax is recognised on all timing differences where the transactions or events that give the company an obligation
to pay more tax in the future, or right to pay less tax in the future, have occurred by the balance sheet date. Deferred tax
assets are recognised when it is more likely than not that they will be recovered. Deferred tax is measured using rates of
tax that have been enacted or substantively enacted by the balance sheet date. Deferred tax balances are not
discounted.
Leasing
Rentals payable under operating leases are charged to the income statement on a straight line basis over the period of
the lease
Pension costs
The company operates pension schemes for the benefit of a number of its directors. The schemes are defined
contribution schemes and the contributions are charged against profits as they accrue.
Foreign currency
Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary
assets and liabilities in foreign currencies are translated at the rates of exchange ruling at the balance sheet date. Any
differences are taken to the income statement.
Convertible debt
The proceeds received on issue of the company's convertible debt are allocated into their liability and equity components
and presented separately in the balance sheet.
The amount initially attributed to the debt component equals the discounted cash flows using a market rate of interest
that would be payable on a similar debt instrument that did not include an option to convert.
Investments
Investments held as fixed assets are stated at cost less any provision for impairment. Investments held as current assets
are stated at the lower of cost or net realisable value.
50
DCD Media Plc
Financial statements for the period ended 31 December 2010
NOTES TO THE COMPANY ACCOUNTS FOR THE PERIOD ENDED 31 DECEMBER 2010
1
Principal accounting policies (continued)
The difference between the net proceeds of the convertible debt and the amount allocated to the debt component is
credited direct to equity and not subsequently remeasured. On conversion, the debt and equity elements are credited to
share capital and share premium as appropriate.
Transaction costs that relate to the issue of the instrument are allocated to the liability and equity components of the
instrument in proportion to the allocation of proceeds.
Profit for the financial period
2
DCD Media plc has taken advantage of section s408 Companies Act 2006 and has not included its own income
statement in these financial statements. The Company's loss for the year after tax was £11,664,863 (2009: Profit,
£953,401).
Dividends
3
No dividends have been paid or proposed in the period (2009: £nil).
4
Property, plant and equipment
Cost
At 1 July 2009
Additions
At 31 December 2010
Depreciation
At 1 July 2009
Provided in period
At 30 December 2010
Net book value
At 31 December 2010
At 30 June 2009
5
Fixed asset investments
Cost or valuation
At 1 July 2009
At 31 December 2010
Accumulated amortisation
At 1 July 2009
Provided in period
At 31 December 2010
Net book value
At 31 December 2010
At 30 June 2009
Short
leasehold
property
improvements
£'000
Office and
technical
equipment
£'000
122
-
122
122
-
122
-
-
564
5
569
557
10
567
2
7
Total
£'000
686
5
691
679
10
689
2
7
Shares in subsidiary
undertakings
£’000
47,652
-
47,652
21,120
14,308
35,541
12,224
26,532
51
DCD Media Plc
Financial statements for the period ended 31 December 2010
NOTES TO THE COMPANY ACCOUNTS FOR THE PERIOD ENDED 31 DECEMBER 2010
5
Fixed asset investments (continued)
The principal operating subsidiary companies are listed below. All are 100% owned, unless noted otherwise:
Digital Classics Distribution Limited
Digital Classics DVD Limited
DCD Rights Limited
Done and Dusted Group Limited
Done and Dusted Incorporated
Done and Dusted Productions Incorporated
Done and Dusted West Coast Incorporated
September Films Limited
September Films USA Incorporated
Exterminator Limited Liability Company
Prospect Pictures Limited
West Park Pictures Limited
DCD Media USA Inc
Matchlight Ltd*
During the period DCD Drama Limited (formerly CreaTVty Limited) was purchased from NBD Holdings Limited, a
connected company. DCD Drama is not part of ongoing trading operations.
Done and Dusted Group Limited, September Films Limited, Prospect Pictures Limited and West Park Pictures Limited
and are involved with the production of programmes for television and other media. Digital Classics Distribution Limited
and DCD Rights Limited sell programme rights worldwide to all media. Digital Classics DVD Limited produces and
markets DVD's to the retail market.
Digital Classics Education Limited and Box TV Limited are not part of ongoing trading operations.Iambic Productions
Limited was dissolved on 12 December 2010. The investment in Iambic Productions Limited had been previously written
down to nil value.
*September Films Ltd holds a 50% equity in Matchlight, a company that produces programmes for television and other
media. During the year it was adjudged by management that the group exercised control over the company; it has been
consolidated in the group financial statements.
The company also holds a 19.9% trade investment in Classical TV Limited. This was granted to the company in May
2008 in exchange for services to be provided to Classical TV Limited by DCD employees. The carrying value of this
asset of this investment is nil (2009: nil).
All the subsidiary companies are incorporated in England and Wales, except for:
- Done and Dusted Incorporated which is incorporated in New York, and Done and Dusted Productions Incorporated
which is incorporated in California. Both of these companies are 100% owned by Done and Dusted Group Limited
- Done and Dusted West Coast Incorporated which is incorporated in California, and is 100% owned by Done and
Dusted Productions Incorporated
- September Films USA Incorporated, which is incorporated in California and is 100% owned by September Films
Limited
- Exterminator Limited Liability Company, which is incorporated in Louisiana and is 100% owned by September Films
USA Incorporated
- DCD Media USA Incorporated, which is incorporated in California and is 100% owned by DCD Media Plc
- West Park Pictures West Limited, which is incorporated in the Republic of Ireland and is 100% owned by West Park
Pictures Limited
-Matchlight Ltd, which is incorporated in Scotland and is 50% owned by September Films Ltd.
6
Stock
Finished products
31December
2010
£'000
95
30 June
2009
£'000
-
52
DCD Media Plc
Financial statements for the period ended 31 December 2010
NOTES TO THE COMPANY ACCOUNTS FOR THE PERIOD ENDED 31 DECEMBER 2010
7
Debtors
Trade debtors
Amounts owed by group undertakings
Other debtors
Prepayments and accrued income
31
December
2010
£'000
136
6,163
43
211
30 June
2009
£'000
-
5,633
229
852
6,553
6,714
The directors have confirmed that under normal circumstances they will not seek repayment within one year of amounts
owed to the company by group undertakings at 31 December 2010.
8
Creditors: amounts falling due within one year
Overdraft
Bank loans
Secured convertible loan
Trade creditors
Amounts owed to group undertakings
Taxation and social security
Other creditors
Accruals and deferred income
31
December
2010
£'000
30 June
2009
£'000
738
1,000
-
864
1,059
222
299
343
-
9,686
499
1,203
276
209
479
4,525
12,352
Included in trade creditors other creditors and accruals are amounts owed to directors as follows: John McIntosh £22,805
(2009: £nil), David Green £139,280 (2009: £nil) and Tarik Wildman £25,000 (2009: £nil). All loans due relate to deferred
emoluments and expenses for services performed as directors within DCD Media Plc.
On the 30 November the Group announced that the primary holder of convertible loan notes, Highbridge Capital LLC
agreed to cancel approximately £6.9m of convertible loan notes in exchange for 7,631,048 of new ordinary shares in the
Company and satisfied by a further payment of £2.5m of cash. The remaining convertible loan debt is redeemable by
November 2012 if not previously converted at a fixed price of 18p.
The consideration paid on redemption of the debt instruments is allocated to liability and equity using the same method
as used upon originally valuing the instruments. The directors have performed a valuation exercise in respect of the
consideration. The fair value of the consideration has been allocated against the liability component of the convertible
instruments, realising an exceptional gain on early redemption of £3,559,737. This has been recognised in the profit and
loss account.
53
DCD Media Plc
Financial statements for the period ended 31 December 2010
NOTES TO THE COMPANY ACCOUNTS FOR THE PERIOD ENDED 31 DECEMBER 2010
9
Creditors: amounts falling due after more than one year
Bank and other borrowings
Secured convertible loan
10 Bank and other borrowings
Due within one year or on demand
Bank loans and overdrafts
Secured (a)
Unsecured
Due after more than one year
Bank loans
Secured (a)
Unsecured
Convertible loan notes (b)
31 December
2010
£'000
30 June
2009
£'000
1,000
3,123
4,123
-
-
-
31 December
2010
£'000
30 June
2009
£'000
1,000
738
1,738
1,000
-
1,000
3,123
4,123
9,686
-
9,686
-
-
-
-
-
Total borrowings
5,861
9,686
(a) On 30 November 2009 a new senior bank loan was secured from Coutts & Co. of £3.0m. It was provided on normal
commercial terms and is repayable over three years in equal quarterly instalments. The secured bank loans and
overdrafts are secured by a fixed charge over the company’s intangible programme rights assets.
(b) The terms of some convertible loan note were extended on 30 November 2009 and is redeemable in November 2012
if not previously converted at the fixed price of 18p per share. The difference between the carrying value at the date
extension and vale over the subsequent twelve years will be accounted through the effective interest rate of the
instrument.
(c) Those loan notes that were not extended were settled by early redemption. The treatment of this transaction is
disclosed in note 9.
The convertible loan had been accounted for as a compound instrument, and a calculation has been made to separate
the equity element from the liability element of the loan. A discount rate of 12% has been applied to the future interest
payments and repayment of the loan. This has resulted in a reduction of the liability by crediting an equity element of
£328,000 to reserves. However, there is an interest charge each year in the income statement up to maturity of the loan
to equalise this reduction in the liability so that by maturity the full liability is reflected in the balance sheet. The interest
charge in the income statement is £132,000 (2008: £82,000).
54
DCD Media Plc
Financial statements for the period ended 31 December 2010
NOTES TO THE COMPANY ACCOUNTS FOR THE PERIOD ENDED 31 DECEMBER 2010
11 Share capital
Authorised
100,000,000 (2009: 100,000,000) ordinary shares of 10p (2009: 10p) each
50,933,729 (2009: 50,933,729) deferred shares of 0.9p each
Allotted, called up and fully paid
61,441,265 (2009: 53,480,503) ordinary shares of 10p (2009: 10p) each
50,933,729 (2009: 50,933,729) deferred shares of 0.9p each
31
December
2010
£'000
30 June
2009
£'000
10,000
458
10,000
458
10,458
10,458
6,144
458
5,348
458
6,602
5,806
The deferred shares are not entitled to receive a dividend or other distribution, to attend or vote at any General Meeting
and on return of capital on a winding up, shall only be entitled to receive the amount paid up on the shares after holders
of the ordinary shares have received £100,000 for each ordinary share.
The deferred shares are not entitled to receive a dividend or other distribution, to attend or vote at any General Meeting
and on return of capital on a winding up, shall only be entitled to receive the amount paid up on the shares after holders
of the ordinary shares have received £100,000 for each ordinary share.
On 30 November 2009, 7,631,048 were issued to holders of convertible debt instruments as part of the early settlement
of the convertible loan instruments. The issue of these shares have been accounted for at fair value resulting in
£1,087,424 of shares being issued.
On 16 November 2010, a small portion of convertible debt was converted to equity at 18p per share resulting in 59,769
shares being issued for a consideration of £10,758.
On 29 November 2010, a small portion of convertible debt was converted to equity at 18p per share resulting in 269,945
shares being issued for a consideration of £48,590.
12 Share premium account and reserves
Equity
element of
convertible
loan
£'000
Profit and
loss
account
£'000
Share
premium
£'000
49,077
-
23
49,100
49,100
-
-
391
49,451
328
-
-
328
328
-
(208)
-
120
(35,274)
953
-
(34,321)
(34,321)
(11,664)
208
-
(45,777)
Total
£'000
14,131
953
23
15,107
15,107
(11,664)
-
391
3,794
At 1 July 2008
Profit for the year
Share capital issued
At 30 June 2009
At 1 July 2009
Loss for the year
Equity element of convertible loan
Share capital issued
At 31 December 2010
13 Capital commitments
There were no capital commitments at 31 December 2010 or 30 June 2009.
55
DCD Media Plc
Financial statements for the period ended 31 December 2010
NOTES TO THE COMPANY ACCOUNTS FOR THE PERIOD ENDED 31 DECEMBER 2010
14 Share based payment
The Company operates two equity-settled share based remuneration schemes for employees: a long term incentive
scheme and an unapproved scheme for non-executive directors and certain senior management. Where options are
awarded by the Board they are governed by written rules.
Details of the Company's share options are detailed in note 22 to the consolidated accounts above.
15 Transactions with directors and other related parties
Details of related party transactions for the company are as disclosed for the Group in note 23 to the consolidated
accounts.
The company is not exempt from disclosing transactions with its non-wholly owned subsidiaries. No transactions have
occurred in the year.
16 Pension costs
The group operated defined contribution pension schemes for the benefit of one director. This scheme is no longer in
operation. The assets of the scheme are administered by trustees in funds independent from those of the group.
The total cost charged to income of £nil (2009: £11,208) represents contributions payable to the schemes by the
Company according to the rules of the schemes.
17 Post Balance Sheet Events
See group accounts note 32.
56
DCD Media Plc
Financial statements for the period ended 31 December 2010
Corporate information
Company secretary & registered offices
John Bottomley FCIS
One America Square
Crosswall
London
EC3N 2SG
Nominated Adviser and Broker
Evolution Securities Limited
100 Wood Street
London
EC2V 7AN
www.evosecurities.com
Bankers
Coutts & Co
440 Strand
London
WC2R 0QS
www.coutts.com
Registrars
Capita Registrars
Northern House
Woodsome Park
Fenay Bridge
Huddersfield
HD8 0LA
www.capitaregistrars.com
Auditors
BDO LLP
Fourth Floor
One Victoria Street
Bristol
BS1 6AA
www.bdo.co.uk
Solicitors
Taylor Wessing
5 New Street Square
London
EC4A 3TW
57