DCD MEDIA PLC
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2012
Company number 03393610
Contents
Audited results for the year ended 31 December 2012
Executive Chairman’s review
Report of the Directors for the year ended 31 December 2012
Board of Directors
Independent auditor’s report to the members of DCD Media Plc
Consolidated income statement for the year ended 31 December 2012
Consolidated statement of comprehensive income for the year ended 31 December 2012
Consolidated statement of financial position as at 31 December 2012
Consolidated statement of cash flows for the year ended 31 December 2012
Consolidated statement of changes in equity for the year ended 31 December 2012
Notes to the consolidated financial statements for the year ended 31 December 2012
Parent company balance sheet as at 31 December 2012
Notes to the parent company financial statements for the year ended 31 December 2012
Corporate information
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DCD Media Plc
Financial statements for the year ended 31 December 2012
DCD Media Plc
(“DCD Media” or the “Company”)
Audited results for the year ended 31 December 2012
DCD Media and its subsidiaries, the independent TV production and distribution group (the “Group”), today report results
for the year ended 31 December 2012.
Financial Summary
Continuing operations:
• Revenue
• Gross profit
• Operating loss
Discontinued operations:
• Revenue
• Gross profit
£16.1m (2011: £19.4m)
£4.8m (2011: £6.3m)
£(1.9m) (2011: (£5.7m))
£0.1m (2011: £8.4m)
£0.1m (2011: £1.2m)
• Operating profit/(loss)
£0.7m (2011: (£2.3m))
Group results:
• Unadjusted operating loss
£(1.2m) (2011: (£8.0m))
• Adjusted EBITDA
£0.8m (2011: £0.4m)
• Adjusted profit/(loss) before tax
£0.6m (2011: (£0.1m))
Note that the 2011 comparatives above have been restated as a result of various prior year adjustments that are
explained in note 2 to the consolidated financial statements.
Please refer to the table within the Performance section below for an explanation of the profit adjustments.
Business highlights
• Change of ownership and management following a restructure of convertible loan notes and conversion
to equity
• Greatly improved balance sheet with substantial reduction in loans
•
•
Investments being made in strategic growth areas by major shareholders
Indications that the strategy of refocusing on developing the vertically integrated model is beginning to
show signs of improvement in performance
David Craven, Executive Chairman and Chief Executive Officer, commented: “We are pleased we have delivered an
EBITDA positive performance and a considerable improvement on last year. The performance review of the year should
be understood against a backdrop of significant corporate and executive change to the Group, essential to its survival
and future development.
“Having undertaken a major review of business and implemented changes both at Executive and Board level, DCD
Media is poised to take advantage of a supportive shareholder base keen to invest in the development of this exciting
business.”
For further information please contact:
Nahid Burke
Investor Relations/ Media Relations, DCD Media Plc
Tel: +44 (0)20 8563 6976
ir@dcdmedia.co.uk
Stuart Andrews, Charlotte Stranner or Rose Herbert
finnCap
Tel: +44 (0) 20 7220 0500
DCD Media Plc
1
Financial statements for the year ended 31 December 2012
Executive Chairman’s review
The financial year to 31 December 2012 was one of transition and achievement for the Group. With major shareholders
freeing the Group from the onerous burden of unmanageable debt, DCD Media now has a stronger and more stable
balance sheet. With a continued desire from the major shareholders to significantly enhance the prospects for growth
through further investment, the key creative business winners in the Group now have the capacity to act on the many
development opportunities being presented to the Group.
Following a change of majority ownership in DCD Media, as a result of the shareholder approved debt to equity
conversion last July, the Group immediately streamlined its activities with a number of personnel changes at Board and
Executive level. Alongside this, operating expenses were dramatically reduced to a manageable level reflecting the
reality of the current economic conditions.
The new Board charged the Executive with a detailed business and operations review of the Group, which resulted in an
organisational restructure and a refocus on strategic objectives designed to grow market share in the core production
activities in the UK and US.
The DCD Media businesses are now well-placed to consolidate on this work, targeting additional development
opportunities both in the UK and the US. In these circumstances, at an operating level, a number of the key DCD Media
businesses delivered a credible performance in the year.
As part of the consolidation process, the DCD Rights team recently relocated to the Group headquarters in Glen House,
Hammersmith, to join the production teams, publishing and administration arms of the Group.
During the year, DCD Rights secured a deal with shareholder Timeweave to create a new fund for the acquisition of
third-party distribution rights, positioning this key part of the business to build up a significant library of content. The first
projects acquired under the deal were factual rescue series Coast Guard Florida and the third season of Coast Guard
Alaska. The funding terms agreed were more favourable to the Group than previous funding arrangements in place in the
last three years.
The acquisition in February 2012 of post-production house, Sequence, was a progressive step towards achieving a
Group strategic goal of delivering production cost-efficiencies and synergies. Sequence continues to assert itself in the
post-production marketplace, securing a number of key contracts with the UK’s foremost programme makers. Key to
these wins has been an investment in new equipment built around its unique platform.
Corporate highlights of the year
Debt to equity conversion
In February 2012, Timeweave acquired the majority of the outstanding convertible loan notes in the Company and
subsequently converted a portion of the principal sum of its loan notes into shares representing 29.99% of the
Company’s issued share capital.
The remaining loan notes had a total principal outstanding of approximately £3.2 million, of which approximately £2.4m
was owed to Timeweave. The principal plus accrued interest fell due on 28 November 2012 and the Group’s financial
resources were not sufficient to repay the outstanding balance to the note holders.
Consequently, Timeweave and Henderson Global Investors converted their remaining loan notes and interest, taking
Timeweave initially to 49.99% of the Company’s enlarged share capital and subsequently to 55.19% and Henderson
Global Investors to 20.63%.
Board changes
The year saw a number of changes to the Board. Timeweave Directors, David Craven and Richard McGuire were
appointed to the Board of DCD Media Plc on 4 July 2012.
On 29 November 2012, Sammy Nourmand resigned as a Board Director and as CEO. At the same time, David Green
stepped down as Chairman of DCD Media. He remains an ex-officio Executive Director of the DCD Media Plc main
Board and is charged with capitalising on the success of September Films and building a strong creative team committed
to developing new landmark productions in the USA on a full-time basis.
Timeweave’s CEO, David Craven, was appointed as DCD Media’s new CEO and subsequently, on 15 January 2013 was
appointed as Executive Chairman of the Group following the resignation of Richard McGuire.
The Group also announced that Neil McMyn and Andrew Lindley joined the Board of DCD Media as Non-Executive
Directors on 21 September 2012. John Cusins and Tarik Wildman stepped down from the Board in September 2012.
Both Neil McMyn and Andrew Lindley form the Audit Committee and Remuneration Committee.
On 29 November 2012, John Sadler, FCIS was appointed as Company Secretary of the Group.
DCD Media Plc
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Financial statements for the year ended 31 December 2012
Executive Chairman’s review
Strategic outlook
The major shareholders have now financially stabilised the business by relieving it of its largest debt burden. The
Executive focus in the last nine months has been on providing management with the capacity to act; to further develop
the business model and return the Group to growth. DCD Media’s core production element is highly scalable and, with
new investment, is now well placed to grow in current markets and diversify into new areas of production.
The new Board recognises the strengths of DCD Media as a large independent vertically-integrated broadcast media
business. Consequently, the Group has shifted the weight of the business towards content production as well as a
renewed focus on distribution and rights, to maximise revenues from the growing demand for multi-platform content.
The Group has also seen through recent investment, strong shareholder support for growth in the distribution and rights
arms particularly with the acquisition of third party rights and exploitation of the Group’s existing intellectual property. The
Executive has also embarked on digitising its significant rights library in preparation for exploitation on digital platforms
either through third party aggregators or, potentially, direct to consumers.
The Directors also report that, in accordance with the shareholder agreement and following detailed discussions with
management, DCD Media acquired a further 17.6% of the shares from former directors in Glasgow-based production
business, Matchlight. The Group expects to complete the acquisition of the remaining outstanding shares in 2013 from
the current directors. The Matchlight business, which was formed as a 50/50 venture with DCD Media and management,
is showing signs of meaningful growth.
Finally, the Board has recently established an incentive plan for key management and employees across the Group. The
options granted in 2013 have an exercise price of 2.5 pence and vest in equal annual tranches over a four year period
running from 2014 to 2017 subject to share price hurdle rates.
Review of divisions for the year to 31 December 2012
Production
The Production division comprises the factual brands Prospect, Prospect Cymru/Wales and September Films UK, as well
as looking after the interests and integration of Rize USA and Matchlight, all in the United Kingdom and the reality
television, entertainment and formats production company September Films USA in America. The division oversees the
output in several genres including Entertainment, Factual and Lifestyle programming in which the brands have a strong
track record.
Prospect won two awards and two nominations at BAFTA Wales 2012: ‘Shirley’ was awarded Best TV Drama and
nominated for Best Sound; and ‘Passion in Port Talbot’ was awarded for Best Director, Factual (Rupert Edwards) and
nominated for Best Single Documentary. These accolades followed several awards and nominations including BAFTA
TV, Royal Television Society, and Irish Film and Television Awards.
Other factual highlights included ‘The Tallest Tower: Building The Shard’ broadcast on Channel 4, and ‘The Hunt for
Britain's Metal Thieves’ which transmitted in February 2013 achieving a slot winning audience of 2.6 million viewers on
BBC One.
Matchlight
Since its launch in 2009 as a joint venture with DCD Media, the Glasgow based factual producer Matchlight has
confirmed its position as one of Scotland’s leading production companies. This reputation was further cemented in 2012
with a prestigious Scottish BAFTA for Best Factual Series, won for its BBC Two documentary ‘Afghanistan: The Great
Game, a Personal View by Rory Stewart’.
This year Matchlight was commissioned to make documentary, history, arts, current affairs and popular factual
programmes for all major UK channels including BBC One, ITV1, BBC Two, BBC Three, BBC Four, Channel 4, Channel
5, and BBC Scotland, and added further high profile personalities to its roster including Russell Brand, Lenny Henry,
Embarrassing Bodies’ Dr. Christian Jessen, and The Real Hustle’s Alexis Conran.
Highlights included acclaimed series and one-offs ‘Russell Brand: From Addiction to Recovery’ for BBC Three/BBC One;
‘She Wolves: England's Early Queens’ presented by Helen Castor for BBC Two, which made The Radio Times Top 40
TV Shows of 2012, and was one of only two history programmes on the annual list; ‘Perspectives: Lenny Henry- Finding
Shakespeare’, Matchlight’s first commission for ITV1; and a second series of ‘Dangerous Drivers’ School’ which
transmitted post year end on Channel 5, all of which were sold internationally by DCD Rights.
In 2012, Matchlight also commenced production on new series for BBC Two and BBC Four presented by Amanda
Vickery and Helen Castor – these will be transmitted in 2013/14.
DCD Media Plc
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Financial statements for the year ended 31 December 2012
Executive Chairman’s review
Rize USA
Rize USA (“Rize”) was launched at the end of 2011 as a co-venture between Founder/Creative Director Sheldon Lazarus
and DCD Media. The factual and reality producer with offices in London and Los Angeles had a strong first year winning
over £2.5 million worth of orders from major UK and US broadcasters, and generating valuable IP which was exploited
worldwide by the Group’s distributor DCD Rights.
Series were secured on both sides of the Atlantic including the six-part real life teen mums series ‘High School Moms’ for
TLC and Discovery Fit & Health (US), aired in autumn 2012, and the four-part primetime wedding series ‘A Very British
Wedding’ which was broadcast post year end on BBC Two.
Rize’s performance was underpinned by a solid flow of current affairs and documentary productions for Channel 4,
including the critically acclaimed ‘The Curious Case of the Clark Brothers’ for ‘Cutting Edge’, ‘My Social Network Stalker’
for ‘True Stories’, ‘The Girl Who Became Three Boys’, and ‘The Twins Who Share a Body’ for ‘Bodyshock’, and
‘Accused: The 74-Stone Babysitter’. Rize also produced the internationally publicised special ‘Bubble Skin Man’ for major
cable network TLC.
Rize has gained exclusive access to breaking news stories enabling it to secure TV rights to highly sought-after stories
for a string of new productions to be aired in 2013.
September Films USA
Reality television, entertainment and formats production company September Films USA was the main driver of the
Group’s performance in the US market. The LA-based company secured further seasons of its hit reality shows including
a sixth season of ‘Billy The Exterminator’ for A&E which aired in 2012, as well as a ninth season of the long-running
wedding series ‘Bridezillas’ which transmitted on WE tv for 23 weeks during the second half of the year. The success of
Season 9 led to the commission of the show’s 10th Anniversary Season at the end of 2012. The ‘Bridezillas’ franchise
now totals over 200 hours sold internationally by DCD Rights and it has consistently been one of the distributor’s top
selling shows with acquisitions in over 50 territories.
Following the strategic analysis of the business in autumn 2012, DCD Media repositioned its resources to address the
significant revenue and growth potential of the North American TV production market. September Films’ founder David
Green relinquished his corporate Group role to concentrate on capitalizing on the success of the company’s stateside
operations and building a strong creative team committed to developing new landmark productions in the USA, growing
its output across all non-fiction genres.
As a result, September Films USA expanded its creative team with the appointment of senior development executives,
and the company now has several promising projects in the pipeline for 2013/14 which are the subject of paid
development deals by four different US broadcasters.
Finally US production also generated new business opportunities for other DCD Media producers during the year,
notably for Prospect which secured its first US documentary commission for Discovery US.
Rights and Licensing
DCD Rights
DCD Rights had a strong year with blue chip high-end factual programming, award winning drama and top international
music acts - three key genres that the company has increasingly emphasized during the year under review.
As mentioned, the division signed a ground-breaking investment deal with Timeweave, to partner on acquisition of new
third party distribution rights and further its ambitions toward a rapid expansion of the catalogue over the coming years.
The first new series acquired through this fund were ‘Coast Guard Florida’ and a third season of ‘Coast Guard Alaska’
which delivered a total of 26 hours of new original programming, launched at the MIPCOM International TV sales market
2012.
High-end music programming continued to generate worldwide sales including new Iron Maiden Live concert ‘EN VIVO’,
while Australian drama enjoyed strong demand across the world markets including multi award winning series, ‘The
Slap’, which received both Emmy and BAFTA nominations and starred Oscar winners, Sophie Okonedo and Melissa
George. Satirical legal drama, ‘Rake’, extended to Season 2, Brian Cox starred in crime series ‘The Straits’, and further
comedies and dramas, ‘The Strange Calls’, ‘A Moody Christmas’, ‘Devil’s Dust’ all won multiple awards. In addition to US
cable and other US TV sales, several dramas were acquired as US formats and major multiple international channel
deals were signed with broadcasters including notably with AMC/Sundance Channel Global.
In the factual genre, DCD Rights signed 200 hours of sales at the beginning of the year when it launched its largest ever
slate of new factual entertainment shows at the MIPTV market. Factual programming continued to perform well
throughout the year and, in particular the ‘Coast Guard’ franchise mentioned above, enabling the company to capitalise
on further seasons for 2013. Importantly, sales highlights from Group producers included multiple sales for ‘She Wolves:
England’s Early Queens’ and two seasons of ‘Dangerous Drivers’ School’, from Matchlight. Finally DCD Rights started to
distribute programming from Rize, sales of which will be reflected in 2013.
DCD Media Plc
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Financial statements for the year ended 31 December 2012
Executive Chairman’s review
DCD Publishing
In 2012, the licensing arm of DCD Media which exploits DCD-owned and third party brands and intellectual property,
refocused as an agency specialising in brand development in all areas including: television; book publishing; consumer
products; brand endorsements; public appearances and DVD.
The division launched programmes of licensed consumer products for talent including notably ‘The Duchess of
Northumberland’ and ‘Zalza’ - Russell Grant and Flavia Cacace’s fitness/dance concept.
It significantly broadened its talent division signing representation deals with Japanese Chef Yuki Gomi, visual artist
Alison Jackson, Strictly Come Dancing dancers Flavia Cacace and Vincent Simone, journalist Kate Spicer and boxing
legend Glenn McCrory, as well as ITV children's property Dino Dan.
Highlights included Yuki Gomi’s book publishing deal with Penguin for ‘Sushi at Home’ along with a brand ambassador
deal with Kai for their range of high-end cooking knives. Donny Osmond was licensed to Danilo, the UK’s leader in the
official calendar market. A number of lyric merchandising deals were signed with retail manufacturers including AJ Carter
which signed a license with EMI Publishing to produce a range of lyrical babywear, and Bluw Toys which licensed
several iconic Lennon and McCartney tracks from the Sony ATV catalogue and also licensed the EMI publishing song
‘We’re in the Money’. DCD Publishing represents major music publishers Universal, EMI, Chrysalis, peermusic, Carlin,
Sony/ATV for music merchandising, with access to over six million songs.
The in-house DVD label, now renamed DCD Publishing, released over 30 new titles including award winning ‘Terry
Pratchett: Living with Alzheimer’s’, ‘Tony Robinson Down Under’ as well as Matchlight’s ‘The Many Lovers of Jane
Austen’ and ‘She Wolves : England’s Early Queens’.
2013 started well, with a major Zalza DVD deal for QVC, and the signing of several new talents about to sign major
publishing deals.
Post-Production - Sequence Post
The London based post-production house was acquired by DCD Media in February 2012 in a strategic move to add a
profitable activity that complements the Group’s range of TV production businesses.
In addition to working for high profile third party clients across all television, film and commercial genres, Sequence Post
now provides an effective in-house post department capable of servicing each of its production companies with the
highest level of post and channel delivery.
Benefiting from the Group’s business infrastructure, Sequence Post had its busiest year ever gaining new business and
expanding their client base, producing work for companies including ITV Studios, BBC, IMG, Arrow Media, Fresh One, JJ
Stereo, Dunlop Goodrich and Waddell Media across projects including ‘Guinness Totally Bonkers World Records’
‘Cheryl: Access All Areas’, ‘Girls Aloud Ten The Hits Tour’, ‘Hollyoaks Later’, ‘Top Gear’ commercials, ‘Sochi Winter
Olympics’ promos and ‘James Bond Skyfall’ end titles.
Pioneer of Apple based work-flows and specialist in creative post-production, Sequence Post continued its expansion
strategy post period with the launch of the first totally file based, video deck free, HD post house in the UK, allowing
clients to switch easily between all mainstream non-linear editing platforms and video formats.
The outlook for 2013 is positive as the UK braces itself for an influx of drama shooting and an anticipated upsurge in
business for UK facilities following the new UK tax breaks schemes for foreign drama productions.
Performance
At a turnover level, the Group delivered £16.1m in revenue compared to a restated comparative of £19.4m in 2011,
largely as a result of reduced production activity from the UK production arm.
The Group made an operating loss for the year of £1.2m (2011: £8.0m), which is stated after impairment and
amortisation of intangible assets, including goodwill and trade names.
Adjusted EBITDA and Adjusted PBT are the key performance measures that are used by the Board, as they more fairly
reflect the underlying business performance by excluding the significant non-cash impacts of goodwill, trade name and
programme rights amortisation and impairments.
The headline Adjusted EBITDA in the year ended 31 December 2012 was £0.8m (2011: £0.4m), which included an
accounting profit on sale of Digital Classics Distribution Ltd and Digital Classics Distribution Rights Ltd in the 2012.
Adjusted EBITDA on continuing operations was £0.1m in 2012 compared to £0.2m in 2011.
Adjusted PBT for the Group was £0.6m in 2012 against an adjusted loss of £0.1m for the year to 31 December 2011. On
a continuing basis the Group made an adjusted PBT loss of £0.1m, an improvement against a loss of £0.3m in 2011.
DCD Media Plc
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Financial statements for the year ended 31 December 2012
Executive Chairman’s review
Performance during the year was as expected but impacted by a number elements including:-
• Underperformance of the UK production business to deliver revenues
• Unmanageable cost structure unsupported by the lower revenues
• A major restructure of Executive and Board teams led by the restructure of the loan burden
• Re-organisation and restructuring costs within the Group as part of the strategy to refocus on the core element
of the business of television programming.
The following table represents the reconciliation between the operating loss per the consolidated income statement of
and adjusted Profit Before Tax (PBT) and adjusted Earnings Before Interest Tax Depreciation and Amortisation
(EBITDA):
Year ended
31 December
2012
£m
Year ended
31 December
2011
£m
Operating loss per statutory accounts (continuing operations)
Add: Discontinued operations (note 11)
Operating loss per statutory accounts
Add Amortisation of programme rights (note 13)
Add: Impairment of programme rights (note 13)
Add: Amortisation of trade names (note 13)
Add: Impairment of goodwill and related intangibles (note 13)
Less: Capitalised programme rights intangibles (note 13)
Add: Depreciation (note 14)
EBITDA
Add: Restructuring costs (legal and statutory) (note 6)
Add: Discontinued US operations costs
Add: Staff cost normalisation
Adjusted EBITDA
Continuing adjusted EBITDA
Discontinued adjusted EBITDA
Less: Net financial expense (notes 8 & 9)
Less: Depreciation
Adjusted PBT
Continuing adjusted PBT
Discontinued adjusted PBT
(1.9)
0.7
(1.2)
4.7
0.8
0.5
0.7
(5.0)
0.0
0.5
0.3
-
-
0.8
0.1
0.7
(0.2)
(0.0)
0.6
(0.1)
0.7
(5.7)
(2.3)
(8.0)
6.6
1.1
1.0
5.1
(6.7)
0.1
(0.8)
0.1
0.5
0.6
0.4
0.2
0.2
(0.4)
(0.1)
(0.1)
(0.3)
0.2
Intangible assets
The Group’s consolidated income statement and consolidated statement of financial position has again this year been
impacted by the amortisation and impairment of intangible assets, see note 13.
The Group has seen amortisation and impairment of goodwill and trade names for the year of £1.2m (2011: £6.1m) and
a net amortisation and impairment of programme rights of £5.5m (2011: £7.7m).
The accounting implications, in terms of the effect of reporting impaired intangible assets under International Financial
Standards, are explained below.
September Films
September Holdings, an operating unit within the production cash generating unit (CGU) had its performance impaired in
the first half of the year due to delayed investment in programme development in the prior year. In the second half of the
year, the business started to rebuild its development and commissioning pipeline and management now consider the
forecast cash flows and profitability of the business support the current carrying value of the goodwill. An impairment of
£0.7m was therefore applied to the goodwill, leaving a carrying value of £3.1m (2011: £3.9m).
Trade names
Trade names are amortised over ten years on a straight line basis and a non cash expense of £0.5m was expensed in
the year relating to trade names. The carrying value of trade names after the amortisation was £2.1m (2011: £2.5m).
DCD Media Plc
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Financial statements for the year ended 31 December 2012
Executive Chairman’s review
Restructuring costs
Restructuring costs of £0.3m have been disclosed in the consolidated statement of comprehensive income.
Restructuring costs relate to redundancy payments, legal and professional costs relating to the conversion of the loan
notes and other refinancing and legal and professional costs that arose from the disposal of Digital Classics Distribution
Ltd and Digital Classics Distribution Rights Ltd.
Earnings per share
Basic loss per share in the year was 0.51p (year ended 31 December 2011: 9.45p loss per share) and was calculated on
the loss after taxation of £1.3m (year ended 31 December 2011: loss £7.1m) divided by the weighted average number of
shares in issue during the year being 257,430,103 (2011: 75,354,034). The number of shares has increased due to
conversions of debt to equity in the year, detailed in note 22.
Balance sheet
The Board has been determined to understand the key underlying businesses and their financial and operating policies,
reporting systems and controls. The streamlining of processes and generation of operating efficiencies has also covered
financial aspects of each core segment and in doing so has reviewed the Group’s principal accounting policies in detail,
resulting in prior year adjustments to comparative information as previously reported where, in the Board’s opinion,
income recognition policies had not been fully adhered to in the past and the carrying value of certain assets had not
been appropriately reported.
The impact of the adjustments to the prior periods is considerable. However, the Board is satisfied that the financial
position at 31 December 2012 is robust and presents a sound base for the future.
The Group’s net cash balances have substantially reduced to £3.1m at 31 December 2012 from £5.8m at 31 December
2011 as a result of repaying loans funding losses in the Group, settling historic Group liabilities and investing in
productions throughout the year.
A substantial part of the Group cash balances represents working capital commitment in relation to its programme
making and is not considered free cash.
Current liabilities have been reduced, partly as a result of conversion of the loan notes (£4.3m) and a reduction in
accruals and deferred income (£3.6m) as a result of fewer productions spanning the year end at 31 December 2012.
During the year repayments of £0.2m against bank debt were made.
The Group has an available gross overdraft facility of £0.8m and a net facility of £0.55m.
Shareholders’ equity
Retained earnings as at 31 December 2012 were £(54.8m) (2011: £(53.4m)) and total shareholders’ equity at that date
was £6.2m (2011: £3.4m).
Amounts attributable to non-controlling interests
At the year end, the Group held a 67.6% stake in Matchlight Ltd and 80% stake in Rize Television Ltd. The Group has
recognised a loss of £0.006m (2011: profit of £0.04m) attributable to non controlling interests in the statement of
comprehensive reserves and an amount of (£0.005m) (2011: £0.001m) as equity representing the non controlling interest
of the Group as at the year end.
Current trading
At a production level, the Group has had a slow start to 2013 against budget, with several promising commissions taking
longer than anticipated to materialise.
However, we are encouraged by the higher than normal volume of recently agreed paid-for funding agreements whereby
broadcaster ‘seed funding’ is passed to the creative teams who deliver pilot or ‘taster’ content for commissioning editors
to make a decision on commissions. The development pipeline for these funding agreements has never been so strong
for DCD Media.
Notwithstanding the positive pipeline, cash reserves remain tight. The Directors have reviewed future cash requirements
and, allowing for slower production income and the continued settlement of historic creditors, believe the Group needs
additional funding of approximately £1.0m. Having considered the available options, it was determined that the Company
issue a further £1.0m of principal convertible loan notes to the major shareholders. The new loan note instrument was
signed on 31 May 2013 and has a maturity date of 30 May 2015. The convertible element of the loan notes is subject to
shareholder approval of, inter alia, the authorisation to issue sufficient shares to satisfy the conversion rights, which will
be put to shareholders in the upcoming AGM. The notes accrue interest at 10% per annum from the date of issue unless
DCD Media Plc
7
Financial statements for the year ended 31 December 2012
Executive Chairman’s review
the authorities are not approved in which case interest increases to 20% per annum, back dated to date of issue. The
new notes will be convertible at 0.5 pence per share, however, assuming that the proposed capital reorganisation (as
described below) is approved by the shareholders at the AGM, the adjusted conversion price for notes shall be £5.00 per
share.
As part of the issue of new loan notes, the Directors intend to undertake a restructure of the share capital of the
Company. The Companies Act 2006 prevents any company from issuing any share at a price which is less than its
nominal value. Accordingly, in order to enable the Company to proceed with any conversion of the new convertible loan
notes at 0.5 pence when the current nominal value of its ordinary shares is 1.0 pence, the Company proposes to divide
each existing ordinary share into one new ordinary share of 0.5 pence each and one new deferred share.
In addition to the share split, the Company is intending a share consolidation as part of the wider capital reorganisation.
The Company currently has approximately 1,130 shareholders of whom over 76% hold fewer than 1,000 ordinary shares.
The Board is aware that it can be difficult for shareholders to sell very small shareholdings and that dealing charges
might make selling such small shareholdings uneconomic. Furthermore, maintaining a large share register of very small
shareholdings can be expensive for the Group and is considered by the Board not to be in the best interests of
shareholders as a whole. The Board is, therefore, of the view that it would benefit the Group and shareholders to reduce
the number of ordinary shares in issue and, accordingly, is proposing to consolidate every 1,000 0.5 pence ordinary
shares into one consolidated new ordinary share of £5.00 each. It is expected that this reorganisation will reduce the
number of shareholders to approximately 260. Details of this reorganisation are provided in the notice of AGM.
Going concern
The Group's business activities, together with the factors likely to affect its future development, performance and position
are set out above. The financial position of the Group, its cash position and borrowings are set out in the Performance
section of the statement. In addition note 21 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 and the use of an overdraft facility of
£0.55m, with other activities funded from a combination of equity and short and medium term debt instruments. Following
discussions with the Group’s principal bankers, Coutts & Co (“Coutts”), the overdraft facility has recently been extended
until 11 May 2014.
In August 2012, DCD Media entered into a new loan facility with Coutts. The facility was for £1.2m, incurs interest at
LIBOR plus 3.5% and is scheduled to be repaid in quarterly instalments to 30 November 2014, but is repayable on
demand. In the period to 31 December 2012 the Group repaid £0.24m of this loan, leaving a balance of £0.96m at 31
December 2012. The Group continues to make its quarterly payments, having paid a further £0.24m of this term loan
since year end.
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 a period in excess of 12 months from the date of approval of these financial statements.
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. The forecasts show that the Group will continue to utilise its term loan and
overdraft facility provided by its principal bankers for the foreseeable future.
As noted above, the forecasts also show a potential funding requirement of approximately £1.0m, which has been
satisfied by the issue of additional convertible loan notes to the major shareholders (subject to shareholder approval of
certain matters at the AGM).
The Directors’ forecasts and projections, which make allowance for potential changes in its trading performance, show
that, with the ongoing support of its shareholders, lenders and its bank, the Group can continue to generate cash to meet
its obligations as they fall due.
Through the recent negotiations with its shareholders and its principal bankers, the Directors 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.
D Craven
Executive Chairman and Chief Executive Officer
31 May 2013
DCD Media Plc
8
Financial statements for the year ended 31 December 2012
Report of the Directors for the year ended 31 December 2012
The Directors present their report together with the audited financial statements for the year ended 31 December 2012.
Principal activities
The main activities of the Group continued to be content production, distribution and rights exploitation. During the year
the Group added post-production to its suite of production related activities. The main activity of the Company continued
to be that of a holding company, providing support services to its subsidiaries.
Business review
A detailed review of the Group’s business including key performance indicators and likely future developments is
contained in the Executive Chairman’s Review on pages 2 to 8, which should be read in conjunction with this report.
Results
The Group’s loss before taxation for the year ended 31 December 2012 was £1.4m (2011: £8.4m). The loss for the year
post-taxation was £1.3m (2011: £7.1m) and has been carried forward in reserves.
The Directors do not propose to recommend the payment of a dividend (2011: £nil).
Risks and uncertainties
General commercial risks
The Group’s management aims to minimise risk of over-reliance on individual business segments, members of staff,
productions or customers 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. As the Group
operates in overseas markets it is also subject to exposures on transactions undertaken in foreign currencies.
Production and distribution revenue
Revenue is subject to fluctuations throughout the year. As the business develops, a broad range of activities is expected
to smooth out these fluctuations.
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 the short-term cash flows on productions can sometimes be negative initially. This
is due to costs incurred before contracted payments 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 other 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 cash and cash equivalents net of overdraft at the end of the period was £3.1m (31 December 2011: £5.8m)
including certain production related cash held to maintain the Group policy. The Group debt consists primarily overdraft
and conventional bank debt. Details of interest payable, funding and risk mitigation are disclosed in notes 9, 19 and 21 to
the consolidated financial statements.
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.
Exchange rate risk
The Group's exposure to exchange rate fluctuations has historically been small based on its revenue and cost base.
Dependent on the extent to which the Group’s international revenue grows an appropriate hedging strategy will be
introduced.
DCD Media Plc
9
Financial statements for the year ended 31 December 2012
Report of the Directors for the year ended 31 December 2012
Directors and their interests
The Directors of the Company, and their beneficial interests in the share capital of the Company, during the year were as
follows:
At 31 December 2012
At 31 December 2011
Ordinary
shares of
1p each
Deferred
shares of
0.9p each
Deferred
shares of
9p each
Ordinary
shares of
1p each
Deferred
shares of
0.9p each
Deferred
shares of
9p each
D Green
D Craven(1)
N McMyn(2)
A Lindley(3)
R McGuire(4)
S Nourmand(5)
T Wildman (6)
J Cusins(7)
24,246,614
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
24,246,614
-
-
-
-
-
-
-
24,246,614
-
-
-
-
452,972
29,285
2,000,000
-
-
-
-
-
-
645,157
-
24,246,614
-
-
-
-
-
-
-
1. D Craven
2. N McMyn
3. A Lindley
4. R McGuire
5. S Nourmand
6. T Wildman
7. J Cusins
(appointed on 4 July 2012)
(appointed on 21 September 2012)
(appointed on 21 September 2012)
(appointed on 4 July 2012 and resigned on 15 January 2013)
(resigned on 29 November 2012)
(resigned on 28 September 2012)
(resigned on 28 September 2012)
Mr Lindley and Mr McMyn are Non-Executive Directors. Biographies of all the Company’s Directors can be found on
page 14.
Other than as disclosed in note 25 to the consolidated 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 year.
Substantial shareholdings
The Company has been notified, as at 28 May 2013, of the following material interests in the voting rights of the
Company under the provisions of the Disclosure and Transparency Rules:
Name
Timeweave Ltd*
Colter Ltd*
Henderson Global Investors Ltd
D Green (Director)
No. of 1p ordinary shares
104,642,550
124,000,000
85,449,696
24,246,614
%
25.26%
29.93%
20.63%
5.85%
*Timeweave Ltd and Colter Ltd are under the common ownership (see note 30).
Share capital
Details of share capital are disclosed in note 22 to the consolidated 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.
DCD Media Plc
10
Financial statements for the year ended 31 December 2012
Report of the Directors for the year ended 31 December 2012
Financial instruments
Details of the use of financial instruments by the Company are contained in note 21 of the consolidated financial
statements.
Corporate governance
Statement of compliance
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 UK Corporate Governance Code issued by the Financial Reporting Council (“the
Combined Code”).
DCD Media Plc's shares are quoted on AIM, a market operated by the London Stock Exchange Plc and as such there is
no requirement to publish a detailed Corporate Governance Statement nor comply with all the requirements of the
Combined Code. However, the Directors are committed to ensuring appropriate standards of Corporate Governance are
maintained by the Group and this statement sets out how the Board has applied the principles of good Corporate
Governance in its management of the business in the year ended 31 December 2012.
The Board recognises its collective responsibility for the long term success of the Group. It assesses business
opportunities and seeks to ensure that appropriate controls are in place to assess and manage risk.
During a normal year there is a minimum of eight scheduled Board meetings with other meetings being arranged at
shorter notice as necessary. During 2012, there were eight scheduled meetings. Meetings of the Board were attended by
all Directors who were appointed at the time of the meeting. The Board agenda is set by the Chairman in consultation
with the other Directors and Company Secretary.
The Board has a formal schedule of matters reserved to it for decision which is reviewed on an annual basis.
Under the provisions of the Company’s Articles of Association all Directors are required to offer themselves for re-
election at least once every three years. In addition, under the Articles, any Director appointed during the year will stand
for election at the next annual general meeting, ensuring that each Board member faces re-election at regular intervals.
The Directors are entitled to take independent professional advice at the expense of the Company and all have access to
the advice and services of the Company Secretary.
Board committees
The Board has established an Audit, Nomination and Remuneration Committee. All are formally constituted with written
terms of reference. The terms of reference are available on request from the Company Secretary.
Relations with shareholders
The Company communicates with its shareholders through the Annual and Interim Reports and maintains an on-going
dialogue with its principal institutional investors from time to time. The Board welcomes all shareholders at the annual
general meeting where they are able to put questions to the Board. This assists in ensuring that the members of the
Board, in particular the Non-Executive Directors, develop a balanced understanding of the views of major investors of the
Company.
The Group uses the website www.dcdmedia.co.uk to communicate with its shareholders.
Internal control
The Board has overall responsibility for ensuring that the Group maintains a sound system of internal control to provide it
with reasonable assurance that all information used within the business and for external publication is adequate,
including financial, operational and compliance control and risk management.
It should be recognised that any system of control can provide only reasonable and not absolute assurance against
material misstatement or loss, as it is designed to manage rather than eliminate those risks that may affect the Group
achieving its business objectives.
Going concern
For the reasons set out in the Executive Chairman’s Review, the Directors consider it is appropriate to continue to adopt
the going concern basis in preparing the annual report and financial statements.
DCD Media Plc
11
Financial statements for the year ended 31 December 2012
Report of the Directors for the year ended 31 December 2012
Statement of Directors’ responsibilities
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, and the parent company financial statements in accordance with United
Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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 for that period.
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 IFRSs as adopted by the European Union and applicable UK accounting standards have been
followed, subject to any material departures disclosed and explained in the Group and parent company financial
statements respectively; and
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
Group’s and the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the
Group and of the Company and enable them to ensure that the financial statements comply with the Companies Act
2006. They are also responsible for safeguarding the assets of the Group and the Company and hence for taking
reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the company’s website. Legislation in the United
Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other
jurisdictions.
Supplier payment policy
The Company and Group’s policy is to settle terms of payment with suppliers when agreeing the terms of each
transaction, to ensure that suppliers are made aware of the terms of payment and to abide by the terms of the payment.
Share capital
Details of the Company’s share capital and changes to the share capital are shown in note 22 to the Consolidated
Financial Statements.
Resolutions at the Annual General Meeting
The Company’s AGM will be held on 28 June 2013. Accompanying this Report is the Notice of AGM which sets out the
resolutions to be considered and approved at the meeting together with some explanatory notes. The resolutions cover
such routine matters as the renewal of authority to allot shares, to disapply pre-emption rights and to purchase own
shares. In addition, the Notice of AGM also describes the resolutions that are required to authorise the Board to issue
shares related to the new convertible loan notes and the proposed capital reorganisation.
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 (www.dcdmedia.co.uk) 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 on-going integrity of the financial statements contained
therein.
Charitable and political donations
Group donations to charities worldwide were £nil (2011: £nil). No donations were made to any political party in either
year.
DCD Media Plc
12
Financial statements for the year ended 31 December 2012
Report of the Directors for the year ended 31 December 2012
Auditors
For the year ended 31 December 2012, the Board undertook a review of the external audit services provided to the
Company. Following this review, it was agreed that BDO LLP would resign as auditor and that SRLV would be appointed
as auditor to the Group with effect from 1 February 2013 to audit the Group’s financial statements for the year ended 31
December 2012. Accordingly, having been appointed as auditor in the period since the Company’s AGM in 2012, a
resolution will be proposed to appoint SRLV as the Company’s auditor at the AGM to be held on 28 June 2013.
Disclosure of information to the Auditors
In the case of each of the persons who are Directors at the time when the annual report is approved, the following
applies:
•
•
so far as that Director is aware, there is no relevant audit information of which the Company's auditor is
unaware; and
that Director has taken all the steps that they ought to have taken as a Director in order to be aware of any
relevant audit information and to establish that the Company's auditor is aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies
Act 2006.
Directors’ Report approved by the Board on 31 May 2013 and signed on its behalf by:
D Craven
Executive Chairman and Chief Executive Officer
31 May 2013
DCD Media Plc
13
Financial statements for the year ended 31 December 2012
Board of Directors
David Craven (Executive Chairman & CEO)
David Craven was appointed CEO of DCD Media in October 2012 and Executive Chairman in January 2013. He is also
CEO and Director of Timeweave Ltd - which he joined in April 2011. David brings significant sector-specific and broad
commercial experience to the Group, having held senior roles with News Corporation, UPC Media and Trinity
Newspapers. He was also joint MD of the Tote for six years and was closely involved in its privatisation, and has held
senior executive roles at UK Betting Plc and Wembley Plc. David was also a co-founder of broadband and interactive TV
media group, UPC Chello, and is a co-founder of the Gaming Media Group.
David Green (Executive Director)
David Green joined the Group in 2007 when London and LA-based TV and film production company September Films, of
which he was Chairman and Founder, was acquired by DCD Media. He took on the role of Group Chief Creative Officer
before becoming CEO in 2009 and Executive Chairman in 2012. In November 2012, he relinquished his corporate role to
concentrate on addressing the significant revenue and growth potential of the US TV production market.
Oxford educated and a veteran of the UK and US film and TV industries, David's feature film directing credits include
'Buster' and 'Wings of the Apache', and he has produced over 2,000 hours of primetime TV programming including
landmark series 'Hollywood Women' and 'Bridezillas' - both of which he created.
Andrew Lindley (Non-Executive Director)
Andrew Lindley joined the Board of DCD Media in September 2012. He is a practicing solicitor and holds other non-
executive roles with Turf TV and Lottoland.com as well as being a consultant with Axiom. Andrew was Director of the
Tote for the six years up to its sale in 2011 and before that spent five years at Northern Foods Plc, where he focused on
M&A and complex contracts.
Neil McMyn (Non-Executive Director)
Neil McMyn is a chartered accountant and Chief Financial Officer of Tavistock Europe, an international private
investment organisation. Previously Neil spent nine years with Arthur Andersen Corporate Finance in Edinburgh and six
years in advisory and funds management roles at Westpac Institutional Bank in Sydney. He became a Non-Executive
Director of DCD Media in September 2012.
DCD Media Plc
14
Financial statements for the year ended 31 December 2012
Independent auditor’s report to the members of DCD Media Plc
We have audited the Group and parent company financial statements (the ‘‘financial statements’’) of DCD Media Plc for
the year ended 31 December 2012 which comprise the consolidated income statement, the consolidated statement of
comprehensive income, the consolidated statement of financial position, the consolidated statement of cash flows, the
consolidated statement of changes in equity, the notes to the consolidated financial statements, the parent company
balance sheet and the notes to the parent company financial statements. 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 the
preparation of the parent company financial statements is applicable law and United Kingdom Accounting Standards
(United Kingdom Generally Accepted Accounting Practice).
Respective responsibilities of directors and auditors
As explained more fully in the statement of Directors’ responsibilities set out on page 12, 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
Ethical Standards for Auditors.
This report is made solely to the Company’s members, as a body, in accordance with 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.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or
error. This includes an assessment of: whether the accounting policies are appropriate to the Group’s and parent
company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of
significant accounting estimates made by the Directors; and the overall presentation of the financial statements. In
addition, we read all the financial and non-financial information in the financial statements to identify material
inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or
inconsistencies we consider the implications for our report.
Opinion
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the Group’s and of the parent company’s affairs
as at 31 December 2012 and of the Group’s loss and cash flows for the year then ended;
the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union;
the parent company 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 matter prescribed by the Companies Act 2006
In our opinion the information given in the Directors’ Report for the financial year for which the financial statements are
prepared is consistent with the financial statements.
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.
Richard Gilbert (Senior Statutory Auditor)
for and on behalf of SRLV
Chartered Accountants and Statutory Auditor
89 New Bond Street
London
W1S 1DA
31 May 2013
DCD Media Plc
15
Financial statements for the year ended 31 December 2012
Consolidated income statement for the year ended 31 December 2012
Revenue
Cost of sales
Impairment of programme rights
Gross profit
Selling and distribution expenses
Administrative expenses:
- Other administrative expenses
- Impairment of goodwill and trade names
- Amortisation of trade names
- Restructuring costs
Other income
Operating loss
Finance income
Finance costs
Loss before taxation
Taxation
Loss after taxation from continuing operations
Profit/(loss) on discontinued operations net of tax
Loss for the financial year
(Loss)/profit attributable to:
Owners of the parent
Non controlling interest
Note
5
6,13
6,13
6,13
6
8
9
10
11
Year ended
31 December
2012
£’000
Year ended
31 December
2011
£’000
16,084
19,370
(10,455)
(782)
(11,237)
4,847
(24)
(5,309)
(740)
(462)
(339)
(11,920)
(1,106)
(13,026)
6,344
(44)
(7,630)
(3,366)
(988)
(105)
(6,850)
(12,089)
130
79
(1,897)
(5,710)
2
(245)
2
(381)
(2,140)
(6,089)
106
1,293
(2,034)
(4,796)
715
(2,326)
(1,319)
(7,122)
(1,313)
(6)
(1,319)
(7,162)
40
(7,122)
Earnings per share attributable to the equity holders of the Company during the year (expressed as pence per
share)
Basic loss per share from continuing operations
Basic profit/(loss) per share from discontinued operations
Total basic loss per share
Diluted loss per share from continuing operations
Diluted profit/(loss)per share from discontinued operations
Total diluted loss per share
12
11
12
12
11
12
(0.79p)
0.28p
(0.51p)
(0.79p)
0.28p
(0.51p)
(6.36p)
(3.09p)
(9.45p)
(6.36p)
(3.09p)
(9.45p)
The notes on pages 21 to 48 are an integral part of these consolidated financial statements.
DCD Media Plc
16
Financial statements for the year ended 31 December 2012
Consolidated statement of comprehensive income for the year ended 31 December 2012
Loss for the financial year
Prior year adjustments
Note
Year ended
31 December
2012
£’000
Year ended
31 December
2011
£’000
(1,319)
(7,122)
2
(41)
-
Loss reported since the prior year
(1,360)
(7,122)
Other comprehensive expenses
Exchange losses arising on translation of foreign operations
Total other comprehensive expenses
Total comprehensive expense
Total comprehensive expense attributable to:
Owners of the parent
Non controlling interest
(79)
(79)
(122)
(122)
(1,439)
(7,244)
(1,433)
(6)
(1,439)
(7,284)
40
(7,244)
DCD Media Plc
17
Financial statements for the year ended 31 December 2012
Consolidated statement of financial position as at 31 December 2012
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Trade and other receivables
Current assets
Inventories and work in progress
Trade and other receivables
Cash and cash equivalents
Assets held for sale
Current liabilities
Bank overdrafts
Secured convertible loan
Bank and other loans
Trade and other payables
Taxation and social security
Obligations under finance leases
Non-current liabilities
Secured convertible loan
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
Translation reserve
Own shares held
Retained earnings
Equity attributable to owners of the parent
Non controlling interest
Total equity
Note
13
13
14
16
15
16
17
19
19,21
19,21
18
18
19
19,21
19
19
20
22
Company number 03393610
Year ended
31 December
2012
£’000
Year ended
31 December
2011
£’000
3,894
2,653
149
263
6,959
73
4,735
3,728
-
8,536
(634)
-
(984)
(6,608)
(422)
(10)
(8,658)
(49)
(54)
(27)
(483)
(613)
6,224
10,145
51,118
1
(201)
(83)
(54,751)
6,229
(5)
6,224
4,634
3,583
78
-
8,295
186
5,483
6,386
83
12,138
(615)
(4,314)
(1,154)
(9,768)
(540)
(17)
(16,408)
-
-
(24)
(622)
(646)
3,379
7,393
49,391
154
(122)
-
(53,438)
3,378
1
3,379
The notes on pages 21 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 31 May 2013
DCM Craven
Director
DCD Media Plc
18
Financial statements for the year ended 31 December 2012
Consolidated statement of cash flows for the year ended 31 December 2012
Cash flow from operating activities including discontinued operations
Net loss before taxation
Adjustments for:
Depreciation of tangible assets
Amortisation and impairment of intangible assets
Profit on disposal of property, plant and equipment
Net bank and other interest charges
Profit on disposal of undertakings
Net exchange differences on translating foreign operations
Decrease in provision
Net cash flows before changes in working capital
Decrease in inventories
Decrease in trade and other receivables
Decrease in trade and other payables
Cash from operations
Interest received
Interest paid
Income taxes received
Net cash flows from operating activities
Investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Year ended
31 December
2012
£’000
Year ended
31 December
2011
£’000
(1,421)
(8,149)
37
6,702
-
243
(715)
(79)
-
4,767
113
50
(2,430)
2,500
2
(66)
150
2,586
(110)
(5,032)
56
13,464
53
390
(123)
(76)
5,615
90
2,468
(190)
7,983
2
(112)
145
8,018
(83)
(6,423)
14
13
6
8,9
15
16
18
14
13
Net cash flows used in investing activities
(5,142)
(6,506)
Financing activities
Issue of ordinary share capital
New finance leases received
Repayment of finance leases
Repayment of loan
New loans raised
Net cash flows from financing activities
Net (decrease)/increase in cash
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
28
-
-
(5)
(894)
778
(121)
(2,677)
5,771
3,094
703
46
(16)
(846)
975
862
2,374
3,397
5,771
DCD Media Plc
19
Financial statements for the year ended 31 December 2012
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C
Notes to the consolidated financial statements for the year ended 31 December 2012
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 Glen House, 22 Glenthorne Road, London, W6 0NG, 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 date of 31 December 2012.
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 years 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.
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 Executive Chairman’s review. 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.
The Group's day-to-day operations are funded from cash generated from trading and the use of an overdraft facility of
£0.55m, with other activities funded from a combination of equity and short and medium term debt instruments.
The Group’s overdraft facility has recently been extended by its principal bankers until 11 May 2014. In August 2012
DCD Media entered into a new loan facility with Coutts & Co bank. The facility was for £1.2m, incurs interest at LIBOR
plus 3.5% and is repayable in quarterly instalments to 30 November 2014. In the period to 31 December 2012 the Group
repaid £0.24m of this loan, leaving a balance of £0.96m at 31 December 2012. The Group continues to make its
quarterly payments, having paid a further £0.24m of this term loan since year end. 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.
At 31 December 2011 the Group had £4.3m of convertible debt. Through a series of conversion during the year, this has
been reduced to £0.049m at year end, which is due for repayment after the Coutts loan has been fully repaid.
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 and allow for
slower production income and the continued settlement of historic creditors.
Based on these projections, the Directors believe the Group needs additional funding of approximately £1.0m. Having
considered the available options, it was determined that the Company issue a further £1.0m of principal convertible loan
notes to the major shareholders. The new loan note instrument was signed on 31 May 2013 and has a maturity date of
30 May 2015. The convertible element of the loan notes is subject to shareholder approval of, inter alia, the authorisation
to issue sufficient shares to satisfy the conversion rights, which will be put to shareholders in the upcoming AGM. The
notes accrue interest at 10% per annum from the date of issue unless the authorities are not approved in which case
interest increases to 20% per annum, back dated to date of issue. The new notes will be convertible at 0.5 pence per
share, however, assuming that the proposed capital reorganisation is approved by the shareholders at the AGM, the
adjusted conversion price for notes shall be £5.00 per share.
The Directors’ forecasts and projections, which make allowance for reasonably possible changes in its trading
performance, show that, with the ongoing support of its lenders and its bank, the Group can continue to generate cash to
meet their obligations as they fall due.
Through the recent negotiations with its shareholders, its loan note holders 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.
The financial statements do not include the adjustments that would result if the Group or Company was unable to
continue as a going concern.
DCD Media Plc
21
Financial statements for the year ended 31 December 2012
Notes to the consolidated financial statements for the year ended 31 December 2012
1
Principal accounting policies (continued)
Changes in accounting policies
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 January 2012 are expected to have a material effect on the
Group’s future financial statements.
Revenue and attributable profit
Production revenue represents amounts receivable from producing programme/production content, and is recognised
over the period of the production in accordance with the milestones within the underlying signed contract. Profit
attributable to the period is calculated by capitalising all appropriate costs up to the stage of production completion, and
amortising production costs in the proportion that the revenue recognised in the year bears to estimated total revenue
from the programme. The carrying value of programme costs in the statement of financial position is subject to an annual
impairment review.
Event management revenue arises where the Group produced and filmed events in the period. Event management
revenue is recognised in accordance with the milestones agreed within the underlying signed contract. Associated costs
are recognised in-line with the agreed budgets aligned to the contractual milestones.
Where productions are in progress at the year end and where billing is in advance of the completed work per the
contract, the excess is classified as deferred income and is shown within trade and other 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 statement of
comprehensive income 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 year.
All revenue excludes value added tax.
Basis of consolidation
The Group financial statements consolidate those of the Company and of its subsidiary undertakings drawn up to 31
December 2012. 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.
At the beginning of the year, the Group held an investment of 19.9% in Classical TV Ltd. This interest was not accounted
for as a subsidiary nor associate as the Group did not have sufficient control or influence to do so. The investment had a
carrying value of nil and was sold in the year.
Non-controlling interests
For business combinations completed prior to 1 July 2009, the Group initially recognised any non-controlling interest in
the acquiree at the non-controlling interest’s proportionate share of the acquiree’s net assets. For business combinations
completed on or after 1 July 2009 the Group has the choice, on a transaction by transaction basis, to initially recognise
any non-controlling interest in the acquiree which is a present ownership interest and entitles its holders to a
proportionate share of the entity’s net assets in the event of liquidation at either acquisition date fair value or, at the
present ownership instruments’ proportionate share in the recognised amounts of the acquiree’s identifiable net assets.
Other components of non-controlling interest such as outstanding share options are generally measured at fair value.
The Group has not elected to take the option to use fair value in acquisitions completed to date.
From 1 July 2009, the total comprehensive income of non-wholly owned subsidiaries is attributed to owners of the parent
and to the non-controlling interests in proportion to their relative ownership interests. Before this date, unfunded losses in
DCD Media Plc
22
Financial statements for the year ended 31 December 2012
Notes to the consolidated financial statements for the year ended 31 December 2012
1
Principal accounting policies (continued)
Non-controlling interests (continued)
such subsidiaries were attributed entirely to the Group. In accordance with the transitional requirements of IAS 27 (2008),
the carrying value of non-controlling interests at the effective date of the amendment has not been restated.
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 July 2009, the total acquisition date
fair value of the identifiable assets, liabilities and contingent liabilities acquired. For business combinations completed
prior to 1 July 2009, 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 July 2009, 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, re-measured 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.
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
25% on cost
25%-33% on cost
The assets’ residual values and useful lives are reviewed at each statement of financial position date and adjusted if
appropriate.
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 statement of comprehensive income, following a periodic impairment review, on a straight line
basis over their useful economic lives, such periods not to exceed 10 years.
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 statement of comprehensive income. Amortisation of programme costs is charged in
the ratio that actual revenue recognised in the current year bears to estimated ultimate revenue. At each statement of
financial position 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 is not expected to exceed 7 years.
Purchased programme rights are stated at the lower of cost, less accumulated amortisation, or recoverable amount.
Purchased programme rights are amortised over a period in-line with expected useful life, not exceeding 7 years.
Amortisation and any charge in respect of writing down to recoverable amount during the year are included in the
statement of comprehensive income within cost of sales.
DCD Media Plc
23
Financial statements for the year ended 31 December 2012
Notes to the consolidated financial statements for the year ended 31 December 2012
1
Principal accounting policies (continued)
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
statement of comprehensive income 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 statement of comprehensive income on a straight line basis
over the period of the lease.
Inventories
Inventories comprise pre-production costs incurred in respect of programmes deemed probable to be commissioned, 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.
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 statement of financial position 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 statement of financial position. Overdrafts are included
in cash and cash equivalents for the purpose of the cash flow statement.
Assets held for sale
Non-current assets and disposal groups are classified as held for sale when:
•
they are available for immediate sale;
• management is committed to a plan to sell;
•
•
•
•
it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn;
an active programme to locate a buyer has been initiated;
the asset or disposal group is being marketed at a reasonable price in relation to its fair value; and
a sale is expected to complete within 12 months from the date of classification.
Non-current assets and disposal groups classified as held for sale are measured at the lower of:
•
•
their carrying amount immediately prior to being classified as held for sale in accordance with the Group's
accounting policy; and
fair value less costs to sell.
Following their classification as held for sale, non-current assets (including those in a disposal group) are not
depreciated.
DCD Media Plc
24
Financial statements for the year ended 31 December 2012
Notes to the consolidated financial statements for the year ended 31 December 2012
1 Principal accounting policies (continued)
Discontinued operations
The results of operations disposed during the year are included in the consolidated statement of comprehensive income
up to the date of disposal.
A discontinued operation is a component of the Group's business that represents a separate major line of business or
geographical area of operations or is a subsidiary acquired exclusively with a view to resale, that has been disposed of,
has been abandoned or that meets the criteria to be classified as held for sale.
Discontinued operations are presented in the consolidated statement of comprehensive income as a single line which
comprises the post-tax profit or loss of the discontinued operation along with the post-tax gain or loss recognised on the
re-measurement to fair value less costs to sell or on disposal of the assets or disposal groups constituting discontinued
operations.
Equity
Equity comprises the following:
• 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
shares, net of expenses of the share issue;
• Equity element of convertible loan represents the part of the loan classified as equity rather than liability;
Translation reserve represents the exchange rate differences on the translation of subsidiaries from a
•
functional currency to Sterling at the year end;
• Own shares held represents shares in employee benefit trust;
• Retained earnings represents retained profits and losses; and
• Non controlling interest represents net assets owed to non-controlling interests.
Deferred taxation
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the statement of
financial position differs from its tax base, except for differences arising on:
•
•
•
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 the transaction affects neither accounting or taxable profit; and
investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the
reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.
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
statement of financial position 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 statement of financial
position date. Exchange differences arising on the settlement and retranslation of monetary items are taken to the
statement of comprehensive income.
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 statement of financial position date. Income and expense
items are translated at the average exchange rates for the year. Exchange differences arising are classified as equity
and transferred to the Group’s retained earnings reserve.
DCD Media Plc
25
Financial statements for the year ended 31 December 2012
Notes to the consolidated financial statements for the year ended 31 December 2012
1 Principal accounting policies (continued)
Financial instruments
Financial assets and financial liabilities are initially recognised in the Group’s statement of financial position when the
Group becomes a party to the contractual provisions of the instrument at their fair value and thereafter at amortised cost.
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 statement of comprehensive income. 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 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 year 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 year
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 contributes to the personal pension plans for the benefit of a number of its employees. Contributions are
charged against profits as they accrue.
2
Prior year adjustments
In certain cases, the Directors have reanalysed corresponding amounts to make their disclosure more meaningful.
Following a review of the application of the Group’s income recognition policies, the Directors have recognised the
appropriate treatment of amounts recognised in turnover and cost of sales relating to production revenue and production
costs during the previous years. Comparatives have been restated accordingly. The effect of this adjustment is to
decrease the value of turnover by £2,214k (2010: decrease by £49k), decrease the value of cost of sales by £1,660k
(2010: decrease by £856k), increase the value of accrued income brought forward by £134k (2010: increase by £190k),
decrease the value of accrued costs brought forward by £119k (2010: decrease by £617k) and to increase profit and loss
reserves brought forward by £253k (2010: increase by £807k).
The Directors also applied the Group’s policy on programme rights to Matchlight in 2012, and restated the prior year
comparatives. This resulted in £896k of production cost being capitalised in the prior year, offset by an amortisation of
£772k. The net result of £124k increased profit and loss reserves and intangible assets in 2011.
DCD Media Plc
26
Financial statements for the year ended 31 December 2012
Notes to the consolidated financial statements for the year ended 31 December 2012
2
Prior year adjustments (continued)
The Directors reviewed the timing of the recognition of tax credits recoverable in the US. This resulted in the tax credit for
a year being booked as recoverable in that year. The credit had previously been recognised when received. This
resulted in an increase to the overall taxation credit in the income statement of £121k and a similar increase to current
assets.
A review of opening consolidation entries was also performed. As a result, retained earnings in 2010 and 2011 were
decreased by £717k. Intangible assets were reduced by £81k, other assets by £42k, prepayments by £23k and accruals
and deferred income increased by £863k. A review of 2011 consolidation entries revealed that administration costs were
overstated by £353k.
In addition, a further £115k was added to the impairment of programme rights in 2011.
The impact of these adjustments in on the net assets allocable to the non-controlling interests in 2011 was a reduction of
£60k (2010:nil).
In total, as a consequence of the adjustments noted above, 2011 retained earnings were reduced by £41k and 2010
retained earnings increased by £90k.
In order to reconcile previously stated figures, it is also necessary to adjust turnover by £259k and cost of sales by £169k
to account for the restatement of activities that were classified as being discontinued in 2012.
3
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 year 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).
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 statement of financial
position 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.
Revenue recognition
Production revenue represents amounts receivable from producing programme/production content, and is recognised
over the period of the production in accordance with the milestones within the underlying signed contract.
Recoverability of programmes in the course of production
During the year, management reviewed the recoverability of its programmes in the course of production which are
included in its statement of financial position. 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.
Carrying value of goodwill and trade names
Determining whether goodwill and trade names are 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 and trade names at the statement of financial position date was £6.0m.
Details relating to the allocation of goodwill to cash-generating units and potential impairment calculations are given in
note 13.
DCD Media Plc
27
Financial statements for the year ended 31 December 2012
Notes to the consolidated financial statements for the year ended 31 December 2012
3
Critical accounting judgements and key sources of estimation uncertainty (continued)
Carrying value 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 statement of financial position date was £0.6m. Details of the impairment
review calculations are given in note 13.
4
Segment information
Under IFRS 8 the accounting policy for identifying segments is based on the internal management reporting information
that is regularly reviewed by the senior management team.
The Group has three main reportable segments:
• Production - This division is involved in the production of television content.
• Post-Production – This division is involved in post-production and contains Sequence Post.
• 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, DCD DVD, DCD Music
and DCD Publishing.
In 2012, the Group revised its reporting structure to the divisions noted above. 2011 comparatives have been restated to
align the prior year results with the revised structure.
The Group’s reportable segments are strategic business divisions that offer different products to different markets, while
its Other 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 requires different management and
marketing strategies.
Uniform accounting policies are applied across the entire Group. These are described in note 1 of the financial
statements.
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 and 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 and borrowings and deferred tax
liabilities incurred by the Group are not allocated to segments. Details of these balances are provided in the
reconciliations below:
DCD Media Plc
28
Financial statements for the year ended 31 December 2012
Notes to the consolidated financial statements for the year ended 31 December 2012
4
Segment information (continued)
2012 Segmental Analysis – income statement
n
o
i
t
c
u
d
o
r
P
d
n
a
s
t
h
g
R
i
i
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n
s
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u
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o
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P
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e
h
t
O
2
1
0
2
l
a
t
o
T
Total revenue
Inter-segmental revenue
Total revenue from external customers
Discontinued operations
£’000
£’000
£’000
£’000
£’000
11,983
-
11,983
4,021
(644)
3,377
-
(69)
508
-
508
-
285
-
285
16,797
(644)
16,153
-
(69)
Group’s revenue per consolidated statement of
comprehensive income
11,983
3,308
508
285
16,084
Operating (loss)/profit before tax – continuing operations
Operating (loss)/profit before tax - discontinued operations
(2,473)
(77)
(495)
760
(264)
-
1,335
36
(1,897)
719
Operating (loss)/profit before tax
(2,550)
265
(264)
1,371
(1,178)
Capitalisation of programme rights
Amortisation of programme rights
Impairment of programme rights
Amortisation of goodwill and trade names
Impairment of goodwill and trade names
Depreciation
Segmental EBITDA
Restructuring costs
(5,031)
4,712
658
462
740
20
-
-
58
-
-
9
-
-
-
-
-
7
-
5
66
-
-
1
(989)
332
(257)
1,443
-
-
-
339
Segmental adjusted EBITDA
(989)
332
(257)
1,782
(5,031)
4,717
782
462
740
37
529
339
868
Net finance expense
Depreciation
(1)
(20)
(8)
(9)
-
(7)
(234)
(1)
(243)
(37)
Segmental adjusted (loss)/profit before tax
(1,010)
315
(264)
1,547
588
DCD Media Plc
29
Financial statements for the year ended 31 December 2012
Notes to the consolidated financial statements for the year ended 31 December 2012
4
Segment information (continued)
2012 Segmental Analysis – financial position
n
o
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t
c
u
d
o
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P
d
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a
s
t
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R
i
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s
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O
2
1
0
2
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a
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o
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Non-current assets
Reportable segment assets
Goodwill
Trade-names
Total Group assets
£’000
£’000
£’000
£’000
£’000
596
27
5,038
4,167
3,270
2,078
624
-
96
228
-
-
-
90
-
-
719
9,523
3,894
2,078
10,386
4,791
228
90
15,495
Reportable segment liabilities
3,065
3,587
188
305
7,145
Loans and borrowings
Deferred tax liabilities
Total Group liabilities
-
483
-
-
-
-
1,643
-
1,643
483
3,548
3,587
188
1,948
9,271
DCD Media Plc
30
Financial statements for the year ended 31 December 2012
Notes to the consolidated financial statements for the year ended 31 December 2012
4
Segment information (continued)
2011 Segmental Analysis (restated) – income statement
n
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u
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1
1
0
2
l
a
t
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T
£’000
£’000
£’000
£’000
£’000
Total revenue
Inter-segmental revenue
Total revenue from external customers
Discontinued operations
Group’s revenue per consolidated statement of
comprehensive income
15,166
(18)
15,148
5,107
(872)
4,235
(122)
(137)
15,026
4,098
Operating (loss)/profit before tax – continuing operations
(4,529)
637
Operating loss before tax - discontinued operations
(177)
(354)
Operating (loss)/profit before tax
Capitalisation of programme rights
Amortisation of programme rights
Impairment of programme rights
Amortisation of goodwill and trade names
Impairment of goodwill and trade names
Depreciation
Segmental EBITDA
Restructuring costs
Discontinued US operations
Staff normalisation
Intercompany write off
Segmental adjusted EBITDA
Net finance expense
Depreciation
(4,706)
(6,275)
6,183
153
988
3,781
21
283
-
36
870
-
-
14
145
1,203
47
-
167
2,276
-
-
269
-
2,635
1,472
(6)
(21)
(2)
(14)
Segmental adjusted profit/(loss) before tax
2,608
1,456
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,362
-
8,362
28,635
(890)
27,745
(8,116)
(8,375)
246
19,370
(1,818)
(5,710)
(1,784)
(2,315)
(3,602)
(8,025)
(412)
338
83
-
1,370
21
(6,687)
6,557
1,106
988
5,151
56
(2,202)
(854)
58
512
120
(2,276)
(3,788)
105
512
556
-
319
(371)
(21)
(379)
(56)
(4,180)
(116)
DCD Media Plc
31
Financial statements for the year ended 31 December 2012
Notes to the consolidated financial statements for the year ended 31 December 2012
4
Segment information (continued)
2011 Segmental Analysis (restated) – financial position
n
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P
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2
1
0
2
l
a
t
o
T
Non-current assets
Reportable segment assets
Goodwill
Trade-names
Asset held for sale
Total Group assets
Reportable segment liabilities
Loans and borrowings
Deferred tax liabilities
Total Group liabilities
5 Revenue
£’000
£’000
£’000
£’000
£’000
940
41
6,532
4,832
4,010
2,540
-
624
-
-
13,082
5,456
(3,108)
(4,991)
-
(622)
-
-
(3,730)
(4,991)
-
-
-
-
-
-
-
-
-
-
43
1,024
1,812
13,176
-
-
83
4,634
2,540
83
1,895
20,433
(2,250)
(10,349)
(6,083)
-
(6,083)
(622)
(8,333)
(17,054)
The Group's headquarters is based in the United Kingdom. It also has offices in 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:
United Kingdom
Rest of Europe
North and South America, including Canada
Rest of the World
Year ended
31 December
2012
£’000
Year ended
31 December
2011
£’000
3,425
1,069
10,384
1,206
16,084
8,413
1,878
8,034
1,045
19,370
DCD Media Plc
32
Financial statements for the year ended 31 December 2012
Notes to the consolidated financial statements for the year ended 31 December 2012
6
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
Operating lease rentals:
Other
Gain on foreign exchange fluctuations
Loss on disposal of property, plant and equipment
Depreciation, amortisation and impairment:
Intangible assets - programme amortisation in cost of sales (note 13)
Intangible assets - programme impairment in cost of sales - continued operations
(note 13)
Intangible assets - programme impairment in cost of sales - discontinued
operations (note 13)
Intangible assets - goodwill impairment in administrative expenses (note 13)
Intangible assets – trade names impairment in administrative expenses – continued
operations (note 13)
Intangible assets – trade names impairment in administrative expenses –
discontinued operations (note 13)
Intangible assets - trade names amortisation in administrative expenses (note 13)
Intangible assets - assets held for sale (note 13)
Property, plant and equipment (note 14)
Staff costs (note 7)
Restructuring costs (see below)
Year ended
31 December
2012
£’000
Year ended
31 December
2011
£’000
15
30
540
4
-
4,717
782
740
-
-
462
-
37
2,994
339
10
55
444
6
(53)
6,557
954
152
1,485
1,881
415
988
1,370
56
5,206
105
In 2012, restructuring costs related to redundancies, legal and professional costs relating to the conversion of the loan
notes and other refinancing and legal and professional costs that arose from the disposal of Digital Classics Distribution
Ltd and Digital Classics Distribution Rights Ltd.
In 2011, restructuring costs related to the change in premise of the head office, separation costs for the departure of
Done and Dusted Group Ltd from the Group and redundancy costs within the Group including legal costs and
compensation to individuals for loss of office.
7
Directors and employees
Staff costs during the year, including Directors, were as follows:
Wages and salaries
Social security costs
Other pension costs (note 26)
Year ended
31 December
2012
£’000
Year ended
31 December
2011
£’000
2,792
187
15
2,994
4,698
490
18
5,206
DCD Media Plc
33
Financial statements for the year ended 31 December 2012
Notes to the consolidated financial statements for the year ended 31 December 2012
7
Directors and employees (continued)
The average number of employees of the Group during the year were as follows:
Sales and distribution
Production
Post-production
Directors and administration
Year ended
31 December
2012
No.
Year ended
31 December
2011
No.
11
30
6
15
62
9
29
-
24
62
Remuneration in respect of the Directors, who are the key management personnel of the Group was as follows for the
year:
Emoluments
£'000
Pension
Contributions
£'000
Money value
of non-cash
benefits
received
£'000
D Green
S Nourmand (resigned 29 November 2012)
T Wildman (resigned 28 September 2012)
J Cusins (resigned 28 September 2012)
D Craven (appointed 4 July 2012)
R McGuire (appointed 4 July 2012, resigned
15 January 2013)
N McMyn (appointed 21 September 2012)
A Lindley (appointed 21 September 2012)
2012
(67)
204
27
26
25
-
-
-
215
In 2012, two directors waived their deferred emoluments.
-
8
-
-
-
-
-
-
8
7
15
-
-
1
-
-
-
23
Emoluments
£'000
Pension
Contributions
£'000
Money value
of non-cash
benefits
received
£'000
5
301
165
252
40
763
-
-
-
5
-
5
-
-
-
-
-
-
J Cusins (appointed 17 November 2011)
D Green
J McIntosh (resigned 28 July 2011)
S Nourmand (appointed 16 November 2011)
T Wildman
2011
Employee Benefit Trust
2012
Total
£'000
(60)
227
27
26
26
-
-
-
246
2011
Total
£'000
5
301
165
257
40
768
During the year, 7,218,750 shares, that had been held by the directors of Done and Dusted Ltd (see note 11), were
transferred into an employee benefit trust.
8
Finance income
Interest on short term bank deposits
Year ended
31 December
2012
£’000
Year ended
31 December
2011
£’000
2
2
DCD Media Plc
34
Financial statements for the year ended 31 December 2012
Notes to the consolidated financial statements for the year ended 31 December 2012
9
Finance costs
Bank overdraft
Convertible loan interest charge
Bank loan
Other interest charges
10 Taxation on ordinary activities
Recognised in the statement of comprehensive income:
Current tax (expense)/credit:
Continuing operations
UK corporation tax
US federal and state income taxes
Withholding tax suffered
Discontinued operations
US federal and state income taxes
Current year (expense)/credit
Deferred tax credit:
Reversal of temporary differences under IFRS
Total tax in statement of comprehensive income
Tax credit represents:
Loss on ordinary activities – continuing operations
Profit/(loss) on ordinary activities – discontinued operations
Loss on ordinary activities multiplied by standard rate of corporation tax in the UK
of 24.50% (2011: 26.49%)
Effects of:
Expenses not deductible for tax purposes (amortisation and impairment of
intangibles)
Expenses not deductible for tax purposes (other)
Net losses in year(brought forward losses utilised)/carried forward
Depreciation in excess of capital allowances
Rate differential on foreign taxes
Overseas withholding tax suffered
Total tax credit
Year ended
31 December
2012
£’000
Year ended
31 December
2011
£’000
17
179
38
11
245
27
282
70
2
381
Year ended
31 December
2012
£’000
Year ended
31 December
2011
£’000
-
(33)
-
(4)
(37)
139
102
2012
£’000
(2,140)
719
(1,421)
(348)
484
(45)
(21)
12
20
-
102
-
280
(1)
(11)
268
1,014
1,282
2011
£’000
(6,089)
(2,315)
(8,404)
(2,226)
2,909
11
101
8
480
(1)
1,282
A deferred tax asset of approximately £4.2m (2011: £3.1m) 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.
The asset has been calculated the asset value based upon the 2013 tax rate of 23%. If the brought forward losses were
not utilised until 2014 a tax rate of 21% would be applicable, resulting in a deferred tax asset of £3.8m, a reduction of
£0.4m.
DCD Media Plc
35
Financial statements for the year ended 31 December 2012
Notes to the consolidated financial statements for the year ended 31 December 2012
11 Discontinued operations
In June 2011, the Board took the decision to part company with key management at one of its subsidiaries, Done and
Dusted Group Ltd (“Done and Dusted”). This decision was to allow the Company to focus on its key markets, that of
television production and distribution. Done and Dusted remained within the Group, however trade names were passed
to key management in consideration of key management returning their shares in the Company. The return of ordinary
shares in the Company had not completed by the signing date of the prior year financial statements. Operations within
Done and Dusted ceased from 1 January 2012.
In March 2012, West Park Pictures Ltd was placed into administration. In previous periods, several key creative
executives had left and in 2011, management made the decision to not invest in the West Park brand any longer. This
event meant that no further value in use was identified in the trade name and it was impaired to a value of £nil.
In October 2012, the Group disposed of two subsidiaries, Digital Classics Distribution Ltd and Digital Classics Distribution
Rights Ltd in satisfaction of its liabilities and obligations to Classical Television Ltd.
Asset held for sale (note 17)
Result of discontinued operations
Revenue
Expenses other than finance costs
Finance costs
Impairment of goodwill
Impairment of trade names
Profit/(loss) from discontinued operations before tax
Tax expense
Profit/(loss) from discontinued operations after tax
Basic earnings/(loss) per share (pence)
Diluted earnings/(loss) per share (pence)
31 December
2012
£’000
31 December
2011
£’000
-
83
Year ended
31 December
2012
£’000
Year ended
31 December
2011
£’000
69
650
-
-
-
719
(4)
715
0.28p
0.28p
8,375
(8,894)
(11)
(1,370)
(415)
(2,315)
(11)
(2,326)
(3.09p)
(3.09p)
As mentioned in note 12 below, diluted earnings per share has not been considered for either the 2012 or 2011 figures
as, due to the overall loss position of the group, this effect would be anti-dilutive.
Statement of cash flows
The statement of cash flows includes the following amounts related to discontinued operations:
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Net cash flow from discontinued operations
12 Earnings per share
Year ended
31 December
2012
£’000
Year ended
31 December
2011
£’000
(1,351)
-
-
(1,351)
61
(320)
(11)
(270)
The calculation of the basic loss per share is based on the loss attributable to ordinary shareholders divided by the
weighted average number of shares in issue during the year. The calculation of diluted loss per share is based on the
basic loss 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.
DCD Media Plc
36
Financial statements for the year ended 31 December 2012
Notes to the consolidated financial statements for the year ended 31 December 2012
12 Earnings per share (continued)
Weighted
average
number of
shares
2012
Per share
amount
pence
Loss
£'000
Weighted
average
number of
shares
2011
Per share
amount
pence
Loss
£'000
Basic and diluted loss per share
Loss attributable to ordinary shareholders
(1,319) 257,430,103
(0.51)
(7,122)
75,354,034
(9.45)
If convertible loan balances held at the year-end were converted at their respective conversion prices of 1 pence, and the
share options were converted at their conversion price 10 pence, the number of shares issued would be 257,644,988
(2011: 204,848,375 shares if all the convertible loan balances held at the prior year end had been converted at their
respective conversion prices of 18 pence and 1 pence, and the share options had been converted at their respective
conversion prices of 1 pence and 10 pence).
The consequence of this transaction has not been considered for either the 2012 or 2011 figures as the effect would be
anti-dilutive.
13 Goodwill and intangible assets
Cost
At 1 January 2011 (as previously reported)
Prior year adjustment
At 1 January 2011 (restated)
Additions
Transfer of goodwill to assets held for sale (note 11, 17)
Disposals
At 31 December 2011
At 1 January 2012
Additions
Disposals
At 31 December 2012
Amortisation and impairment
At 1 January 2011 (as previously reported)
Prior year adjustment
At 1 January 2011 (restated)
Amortisation provided in year in cost of sales
Impairment provided in year in cost of sales - continued operations
Amortisation provided in year in administrative expenses
Impairment provided in year in administrative expenses – continued
operations
Impairment provided in year in administrative expenses –
discontinued operations
Disposals
Transfer of accumulated amortisation
Goodwill
£'000
Trade
Names
£'000
Programme
Rights
£'000
Total
£'000
34,603
(2,893)
31,710
-
(11,959)
-
19,751
19,751
-
(2,363)
9,882
-
9,882
-
-
(1,846)
8,036
8,036
-
-
39,697
(3,014)
36,683
6,687
-
(2,840)
40,530
84,182
(5,907)
78,275
6,687
(11,959)
(4,686)
68,317
40,530
5,031
(10,028)
68,317
5,031
(12,391)
17,388
8,036
35,533
60,957
27,035
(2,897)
24,138
-
-
-
4,058
-
4,058
-
-
988
37,753
(3,089)
34,664
6,557
1,106
-
68,846
(5,986)
62,860
6,557
1,106
988
1,485
1,881
-
3,366
1,370
-
(11,876)
415
(1,846)
-
-
(2,840)
-
1,785
(4,686)
(11,876)
At 31 December 2011
15,117
5,496
39,487
60,100
At 1 January 2012
Amortisation provided in year in cost of sales
Impairment provided in year in cost of sales
Amortisation provided in year in administrative expenses
Impairment provided in year in administrative expenses
Disposals
At 31 December 2012
Net book value
At 31 December 2012
At 31 December 2011 (restated)
15,117
-
-
-
740
(2,363)
5,496
-
-
462
-
-
39,487
4,717
782
-
-
(10,028)
60,100
4,717
782
462
740
(12,391)
13,494
5,958
34,958
54,410
3,894
4,634
2,078
2,540
575
1,043
6,547
8,217
DCD Media Plc
37
Financial statements for the year ended 31 December 2012
Notes to the consolidated financial statements for the year ended 31 December 2012
13 Goodwill and intangible assets (continued)
Goodwill and trade names
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.
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 Ltd
September Holdings Ltd
Matchlight Ltd
Cash generating units (CGU):
September Holdings Ltd
Prospect Pictures Ltd
Segment (note 4)
Rights and Licensing
Production
Production
Segment (note 4)
Production
Production
Goodwill carrying amount
31 December
2012
£’000
31 December
2011
£’000
624
3,134
136
3,894
624
3,874
136
4,634
Trade name carrying amount
31 December
2012
£’000
31 December
2011
£’000
1,885
193
2,078
2,304
236
2,540
Goodwill and trade names are allocated to CGUs for the purpose of the impairment review. 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 future seven years.
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 Board performs an annual impairment review of all intangible assets, including goodwill and trade names. The
recoverable amounts of all the above CGUs have been determined from value in use calculations. Detailed budgets and
forecasts cover a two year period to December 2014. The forecasts are then extrapolated for a further three years using
growth rates noted below and then a further two years to December 2019 with no growth. The Board uses this seven
year period of projection as it believes it is reasonably aligned with the expected lifespan of a TV production. The
impairments arising from this value in use calculation are recorded below.
Goodwill
Segment (note 4)
Cash generating units (CGU):
Done and Dusted Group Ltd
September Holdings Ltd
Other
Production
Impairment charge
31 December
2012
£’000
31 December
2011
£’000
-
740
740
1,370
1,485
2,855
DCD Media Plc
38
Financial statements for the year ended 31 December 2012
Notes to the consolidated financial statements for the year ended 31 December 2012
13 Goodwill and intangible assets (continued)
Trade names
Amortisation charge
Impairment charge
Segment
(note 4)
31 December
2012
£’000
31 December
2011
£’000
31
December
2012
£’000
31
December
2011
£’000
Cash generating units (CGU):
September Holdings Ltd
Prospect Pictures Ltd
West Park Pictures Ltd
Production
Production
Production
419
43
-
462
419
385
184
988
-
-
-
-
-
1,881
415
2,296
In 2011, the directors of Done and Dusted Group Ltd chose to leave the Group. The board considered the value in use of
the goodwill being an estimate of amounts recoverable as proceeds from the return of certain DCD Media Plc shares to
the Group from the directors. This charge was £1.37m. As a result the goodwill in relation to Done and Dusted Group Ltd
of £1.45m was impaired to a carrying value of £0.08m equating to the fair value of DCD Media Plc shares held by the
exiting key management of Done and Dusted Group Ltd which were contractually returnable to DCD Media Plc as part of
exit contract which became effective on 1 January 2012. During 2012, these shares were transferred to an employee
benefit trust and transferred to reserves.
In 2011, management made the decision to not invest in the West Park brand any longer. This event meant that no
further value in use was identified in the trade name and it was impaired to a value of nil. The CGU was wound down
and closed in 2012.
During 2011 key executives left Prospect Pictures Ltd and the decision was taken to restructure the operations of the
division. The effect of this restructuring led to an impairment of £1.88m in 2011. The Group continues, however, to trade
this division.
Management has assessed the value of September Films Holdings and has considered the risk associated with the
refocusing of the business and re-assessed future cash flows based on revised cash flows. At the half year, this had an
adverse impact on the projected value in use of the operation concerned and consequently resulted in an impairment to
goodwill of £0.74m, which was retained at the year end.
The key assumptions used for value in use calculations are the discount factor and growth rates applied to the forecasts.
The rate used to discount the forecast cash flows is 12.5% for all CGUs. If the discount rates used were increased by 3%
to 15.5%, it is estimated that the recoverable amount of goodwill would have impaired by approximately £0.17m. If the
discount rates were decreased to 9.5%, it is estimated that the recoverable amount of goodwill would be increased by
approximately £0.70m.
Varying growth rates are applied dependent upon the historical growth of the CGU. These growth rates are only applied
for the five years subsequent to the initial period of formally approved budgets.
Trade names
Cash generating units (CGU):
DCD Rights Ltd
Done and Dusted Group Ltd
September Holdings Ltd
Prospect Pictures Ltd
Matchlight Ltd
Programme rights
Discount factor
Growth rate
31 December
2012
%
31 December
2011
%
31 December
2012
%
31 December
2011
%
12.5
12.5
12.5
12.5
12.5
12
12
12
12
12
5
5
5
5
5
5
5
5
5
5
The Board performed an impairment review of 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 12.5%. 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 15.5% the carrying values would decrease by £0.011m.
If the discount rate was decreased by 3% to 9.5% the carrying value of assets would increase by £0.013m.
DCD Media Plc
39
Financial statements for the year ended 31 December 2012
Notes to the consolidated financial statements for the year ended 31 December 2012
14 Property, plant and equipment
Short leasehold
property
improvements
£'000
Office and
technical
equipment
£'000
Motor
vehicles
£'000
Cost
At 1 January 2011
Additions
Disposals
At 31 December 2011
At 1 January 2012
Additions
Disposals
At 31 December 2012
Depreciation
At 1 January 2011
Provided in year
Disposed in year
At 31 December 2011
At 1 January 2012
Provided in year
Disposed in year
At 31 December 2012
Net book value
At 31 December 2012
At 31 December 2011
157
-
(157)
-
-
-
-
-
157
-
(157)
-
-
-
-
-
-
-
981
36
(154)
863
863
110
(445)
528
888
43
(109)
822
822
28
(444)
406
122
41
44
47
(44)
47
47
-
(1)
46
33
13
(36)
10
10
9
-
19
27
37
Total
£'000
1,182
83
(355)
910
910
110
(446)
574
1,078
56
(302)
832
832
37
(444)
425
149
78
The net book value of property, plant and equipment includes an amount of £26,707 (2011: £36,909) in respect of assets
held under finance leases and hire purchase contracts. The related depreciation charge on these assets for the year was
£8,902 (2011: £13,791).
15
Inventories
Pre-production costs
Finished stocks
31 December
2012
£’000
31 December
2011
£’000
29
44
73
71
115
186
DCD Media Plc
40
Financial statements for the year ended 31 December 2012
Notes to the consolidated financial statements for the year ended 31 December 2012
16 Trade and other receivables
Trade receivables
Less: provision for impairment of trade receivables
Trade receivables – net
Taxation and social security
Other receivables
Due from related parties (note 25)
Prepayments and accrued income
Total trade and other receivables
Total financial assets other than cash and cash equivalents classified as loans
and receivables
31 December
2012
£’000
31 December
2011
£’000
2,067
(8)
2,059
241
501
46
1,888
4,735
2,710
3,486
(11)
3,475
300
828
-
880
5,483
4,303
The average credit period taken on sales of goods is 52 days (2011: 43 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 £8,000 (2011: £11,000). The decrease in the bad debt provision is related to a reduced number of
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
Trade debtors in current assets
Trade debtors in non-current assets
17 Assets held for sale
Intangible assets
31 December
2012
£’000
31 December
2011
£’000
1,766
1,875
160
32
40
324
2,322
2,059
263
2,322
459
230
210
701
3,475
3,475
-
3,475
31 December
2012
£’000
31 December
2011
£’000
-
83
Non-current assets are transferred to assets held for sale when it is expected that their carrying amounts will be
recovered principally through disposal and a sale is considered likely. They are held at the lower of carrying amount and
fair value less costs to sell.
The creation of assets held for sale arose from the transfer of goodwill relating to Done and Dusted Group Ltd. The
amount held was the fair value of DCD Media Plc shares held by the exiting key management of Done and Dusted
Group Ltd which were contractually returnable to DCD Media Plc as part of exit contract which became effective on 1
January 2012. During the year, these shares were transferred to an employee benefit trust and transferred to reserves.
DCD Media Plc
41
Financial statements for the year ended 31 December 2012
Notes to the consolidated financial statements for the year ended 31 December 2012
18 Trade and other payables
Trade payables
Other payables
Accruals and deferred income
Taxation and social security
Amount owed to related parties (note 25)
Total trade and other payables
Total financial liabilities, excluding loans and borrowings, classified as financial
liability measured at amortised cost
19
Interest bearing loans and borrowings
Due within one year
Bank overdrafts (secured)
Bank loan (secured)
Other loan
Amount owed to related parties (note 25)
Convertible debt (secured)
Obligations under finance leases
31 December
2012
£’000
31 December
2011
£’000
3,115
314
3,078
422
101
7,030
3,429
1,452
1,306
6,642
540
368
10,308
2,758
31 December
2012
£’000
31 December
2011
£’000
634
960
-
24
-
10
1,628
615
1,000
154
-
4,314
17
6,100
The principal terms and the debt repayment schedule for the Group’s loans and borrowings are as follows as at 31
December 2012:
Bank overdrafts (secured) *
Bank loan (secured)**
Amount owed to related parties (note 25)
Convertible debt (secured)
Obligations under finance leases
Bank borrowings
Currency Nominal rate %
Sterling
Sterling
Sterling
Sterling
Sterling
3.00 over Base
Rate
3.50 over
LIBOR
10.85
8.22
18.50
Year of
maturity
2013
2013
2015
2014
2014
*The bank overdraft has been extended to 11 May 2014, but is repayable on demand.
**The bank loan is scheduled to be repaid in quarterly instalments up to November 2014, but is repayable on demand.
Bank overdrafts and bank loans are secured by a fixed charge over the Group’s intangible programme rights and a
floating charge over the remaining assets of the Group.
Convertible debt
Convertible debt is secured by a floating charge over the assets of the Group and is subordinate to bank overdrafts and
bank borrowings.
During the year £4.5m of notes and accrued interest were converted into equity as explained in note 22. These
conversions eliminated the remaining equity element of the convertibles loans. The remaining balance is due for
repayment once the Coutts’ loan has been fully repaid.
DCD Media Plc
42
Financial statements for the year ended 31 December 2012
Notes to the consolidated financial statements for the year ended 31 December 2012
19
Interest bearing loans and borrowings – (continued)
Due after more than one year
Convertible debt (secured)
Amount owed to related parties (note 25)
Obligations under finance leases
20 Deferred tax liabilities
Deferred tax liabilities are attributable to the following:
31 December
2012
£’000
31 December
2011
£’000
49
54
27
130
-
-
24
24
Intangible assets
Net tax liabilities
Liabilities
Net
31 December
2012
£'000
31 December
2011
£'000
31 December
2012
£'000
31 December
2011
£'000
483
483
622
622
483
483
622
622
A deferred tax asset of £4.2m, arising principally from losses in the Group of £18.1m, has not been recognised (2011:
£3.1m and £13.4m). 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 as the Directors do not
believe that profits will be recognised in the near future.
Movement in deferred tax during the year:
Intangible assets
Tax value of temporary difference
21 Financial risk management
Financial risk factors
1 January
2012
£'000
Recognised in
income
£'000
31 December
2012
£'000
622
622
(139)
(139)
483
483
The Group's financial assets and liabilities comprise cash, including short term deposits, trade and other receivables and
trade and other payables that arise directly from its operations, overdrafts, bank loans and convertible debt. The main
risks arising from the Group's financial assets and liabilities 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 values in the Consolidated Statement
of Financial Position for the financial assets and liabilities are not materially different from their fair values.
Interest rate risk
The Group finances its operations at present through equity, bank overdraft, bank loan, convertible debt and production
and other loan facilities provided by banks and other organisations. 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 note 19 is fixed at 8.22%.
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.
DCD Media Plc
43
Financial statements for the year ended 31 December 2012
Notes to the consolidated financial statements for the year ended 31 December 2012
21 Financial risk management (continued)
Liquidity risk also arises from the interest charges and repayment terms of convertible debt, which the Group seeks to
manage by means of periodic charges for central administration services and support to each Group entity. These are
incorporated into rolling twelve 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.
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 year. 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 31 December 2012 and
31 December 2011 was as follows:
US dollar
Euros
Other
Total assets/(liabilities)
Assets
Liabilities
31 December
2012
£'000
31 December
2011
£'000
31 December
2012
£'000
31 December
2011
£'000
3,883
264
-
4,147
4,196
95
1
4,292
(1,786)
-
-
(1,786)
(1,913)
-
-
(1,913)
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 year. 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 year by £16,600 (2011: loss of £32,300).
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.
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 cash flow 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 stakeholders; and
to provide an adequate return to shareholders by pricing products and services commensurately with the level
of risk.
DCD Media Plc
44
Financial statements for the year ended 31 December 2012
Notes to the consolidated financial statements for the year ended 31 December 2012
21 Financial risk management (continued)
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.
Weighted
average
effective
interest
rate
%
Less than
1 month
or on
demand
£'000
18.5%
0%
1
3,115
3.5%
3.5%
10.9%
8.2%
8.2%
634
960
2
-
-
31 December 2012
Fixed rate
Finance lease
obligations
Trade payables
Floating rate
Bank overdrafts
Non-convertible debt
Other debt
Convertible debt
Interest on
convertible debt
1-3
months
£'000
3-12
months
£'000
1-5 years
£'000
More than
5 years
£'000
1
-
-
-
4
-
-
8
-
-
18
-
-
27
-
-
-
54
39
10
-
-
-
-
-
-
Total
£'000
37
3,115
634
960
78
39
10
The non-convertible debt is scheduled to be repaid in equal quarterly instalments up to November 2014, but is repayable
on demand.
Weighted
average
effective
interest
rate
%
Less than
1 month
or on
demand
£'000
1-3
months
£'000
3-12
months
£'000
1-5 years
£'000
More than
5 years
£'000
18.5%
0%
1
1,452
3.5%
3.5%
8.2%
8.2%
615
-
-
-
1
-
-
404
-
-
12
-
-
750
3,778
536
27
-
-
-
-
-
-
-
-
-
-
-
Total
£'000
41
1,452
615
1,154
3,778
536
31 December 2011
Fixed rate
Finance lease
obligations
Trade payables
Floating rate
Bank overdrafts
Non-convertible debt
Convertible debt
Interest on
convertible debt
22 Share capital
Allotted, called up and fully paid
414,281,533 (2011: 139,095,283) ordinary shares of 1p each
50,933,729 (2011: 50,933,729) deferred shares of 0.9p each
61,595,283 (2011: 61,595,283) deferred shares of 9p each
31 December
2012
£'000
31 December
2011
£'000
4,143
458
5,544
10,145
1,391
458
5,544
7,393
Pursuant to a resolution passed at the on 24 July 2012 and in accordance with the provisions of the Companies Act 2006
the Company has ceased to have authorised share capital.
DCD Media Plc
45
Financial statements for the year ended 31 December 2012
Notes to the consolidated financial statements for the year ended 31 December 2012
22 Share capital (continued)
During the year the following conversion of convertible loan notes into 1p ordinary shares took place:
•
•
•
•
12 April 2012 – notes to a value of £595,750 were converted at 1p per share resulting in 59,575,000 shares
being issued;
1 August 2012 - notes and interest to a value of £431,378 were converted at 1p per share resulting in
43,137,764 shares being issued;
1 August 2012 - notes and interest to a value of £2,588,026 were converted at 2p per share resulting in
129,401,286 shares being issued; and
31 December 2012 - notes and interest to a value of £861,444 were converted at 2p per share resulting in
43,072,200 shares being issued.
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.
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 2012 an amount of £517,472 (31 December 2011: £518,072) 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:
•
•
•
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;
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
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.
The liabilities from these agreements are as follows:
As at 31 December 2012
As at 31 December 2011
24 Capital commitments
Due within 1
year
£'000
Due within 2
to 5 years
£'000
Due after 5
years
£'000
Total
£'000
1,446
1,295
7,519
8,194
-
8,965
771
10,260
There were no capital commitments at 31 December 2012 or 31 December 2011.
25 Transactions with Directors and other related parties
Loans to Directors
At 31 December 2012 there were no loans due to Directors. At the prior year end, the amounts outstanding were as
follows: David Green - £319,137 and Sammy Nourmand - £161,011. These loans related to deferred emoluments and
expenses for services performed as Directors within DCD Media Plc. These directors waived their outstanding deferred
emoluments in 2012.
DCD Media Plc
46
Financial statements for the year ended 31 December 2012
Notes to the consolidated financial statements for the year ended 31 December 2012
25 Transactions with Directors and other related parties (continued)
Other transactions
During the year the following amounts were charged by companies in which the Directors have an interest or share
directorships:
Company
Director
Polygon Productions Inc
Greed Ltd
JRC Business Consulting
Services Ltd
Wildman and Co
Nicola Crane
Administration
Roscoe Capital Ltd
D Green
S Nourmand
J Cusins
T Wildman
A Lindley
N McMyn
Amount charged
2012
£'000
2011
£'000 Description
107
30
26
27
20
11
157 Production services at September Films USA Inc
34 Production services at September Films USA Inc
5 Services as Director of DCD Media Plc
40 Services as Director of DCD Media Plc
- Provision of business services
- Provision of accounting services
The balances outstanding at the year end were as follows:
Company
Director
Polygon Productions Inc
Greed Ltd
Roscoe Capital Ltd
D Green
S Nourmand
N McMyn
Other related parties
Amount payable
2012
£'000
2011
£'000 Description
-
90
11
101
246 Net trading balance
122 Net trading balance
- Provision of accounting services
368
In December 2012, a group company, Sequence Post Ltd, obtained a loan of £77,700 from Timeweave Ltd, a
shareholder in DCD Media Plc, to fund the acquisition of new IT equipment. The loan and interest combined is
repayable in equal instalments over three years. At the year end, £77,700 was still outstanding.
At 31 December 2012, a group company, DCD Rights Ltd, was owed £46,000 from Timeweave Ltd. As noted in the
Executive Chairman’s report, DCD Rights secured a deal with Timeweave to create a new fund for the acquisition of
third-party distribution rights. After the year end, these amounts were invoiced to Timeweave and settled.
26 Retirement benefit schemes
The Group contributes to the personal pension plans of three employees (2011: three). Contributions in the year
amounted to £14,954 (2011:£18,055).
27 Operating lease rental commitments
The Group maintains property, plant and equipment on operating leases. The terms of the property lease is tenant
repairing with a break clause after five years. Other leases review period vary between one and three years.
The total future value of minimum lease payments are is due as follows:
Not later than one year
Later than one year and not later than five years
Later than five years
31 December
2012
£'000
31 December
2011
£'000
377
500
-
877
174
594
-
768
DCD Media Plc
47
Financial statements for the year ended 31 December 2012
Notes to the consolidated financial statements for the year ended 31 December 2012
28 Notes supporting the cash flow statement
Cash and cash equivalents for the purposes of the cash flow statement comprises:
Cash available on demand
Overdraft
29 Events after the reporting date
31 December
2012
£'000
31 December
2011
£'000
3,728
(634)
3,094
6,386
(615)
5,771
Changes in Directorate
On 15 January 2013, the Group announced a change in the directorate. Richard McGuire stepped down from his role as
non-executive Chairman. David Craven, the CEO of the Group, was appointed as Executive Chairman.
Convertible Loan Notes
Post year end, the Group’s largest shareholders agreed to lend a further £1.0m in the form of new convertible loan notes,
which have an interest rate of 10% and a conversion price of 0.5p subject to any adjustment as a result of, inter alia, a
capital re-organisation. These notes are due for repayment on 30 May 2015 if not previously converted.
Bank Lending
The Group’s overdraft facility has recently been extended by its principal bankers until 11 May 2014.
30 Ultimate parent company and ultimate controlling party
The Directors consider the family interests of Mr Joe Lewis to have ultimate control by virtue of their indirect beneficial
ownership of the issued share capital of Timeweave Ltd, registered in England and Wales and Colter Ltd, a company
incorporated in the Bahamas.
DCD Media Plc
48
Financial statements for the year ended 31 December 2012
Parent company balance sheet as at 31 December 2012
Company number 03393610
31 December
2012
£’000
31 December
2011
£’000
Note
Fixed assets
Intangible assets
Property, plant and equipment
Investments
Current assets
Stock
Debtors
Cash at bank and in hand
Creditors: amounts falling due within one year
Net current liabilities
Total assets less current liabilities
4
5
6
7
8
9
Creditors: amounts falling due after more than one year
10
Net assets
Capital and reserves
Called up share capital
Share premium account
Equity element of convertible loan
Own shares held
Profit and loss account
Shareholders' funds
12
13
13
13
13
-
4
7,228
7,232
14
1,394
1
1,409
39
1
7,029
7,069
96
648
29
773
(2,253)
(6,693)
(844)
6,388
(49)
6,339
10,145
51,118
1
(83)
(54,842)
(5,920)
1,149
-
1,149
7,393
49,391
154
-
(55,789)
6,339
1,149
The financial statements were approved and authorised for issue by the Board of Directors on 31 May 2013.
DCM Craven
Director
DCD Media Plc
49
Financial statements for the year ended 31 December 2012
Notes to the parent company financial statements for the year ended 31 December 2012
1
Principal accounting policies
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 21 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.
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 made contributions to the personal pension plan of one director in the year. Contributions are charged
against profits as they accrue.
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 statement of financial position
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 statement of financial position date.
Deferred tax balances are not discounted.
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 statement of financial
position date. Any differences are taken to the income statement.
Intangible assets - 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 year bears to estimated ultimate revenue. At each statement of financial position 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 is not
expected to exceed 7 years.
Purchased programme rights are stated at the lower of cost, less accumulated amortisation, or recoverable amount.
Purchased programme rights are amortised over a period in line with expected useful life, not exceeding 7 years.
Amortisation and any charge in respect of writing down to recoverable amount during the year are included in the income
statement within cost of sales.
Tangible fixed assets and depreciation
Property, plant and equipment are stated at cost net of depreciation and any provision for impairment. 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 basis:
Office and technical equipment
25-33% straight line
Financial instruments
Financial assets are recognised in the statement of financial position 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 year to which it
relates.
DCD Media Plc
50
Financial statements for the year ended 31 December 2012
Notes to the parent company financial statements for the year ended 31 December 2012
1
Principal accounting policies (continued)
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.
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 re-measured. 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.
2
Profit for the financial year
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 profit for the year after tax was £947,420 (2011: loss
£10,004,430).
3
Prior year adjustments
A review of the cost and accumulated impairment of investments was performed in 2012 resulting in an adjustment to
2011 opening cost, accumulated impairments, and retained earnings amounting to a net £448,000 at 1 January 2011.
The impact of this review on the net book value of investments brought forward and retained profit is £8,000.
4
Intangible assets
At 1 January 2012
Additions
At 31 December 2012
Amortisation and impairment
At 1 January 2012
Impairment provided in year in cost of sales
At 31 December 2012
Net book value
At 31 December 2012
At 31 December 2011
Programme Rights
£'000
320
-
320
281
39
320
-
39
DCD Media Plc
51
Financial statements for the year ended 31 December 2012
Notes to the parent company financial statements for the year ended 31 December 2012
5
Property, plant and equipment
Office and technical equipment
£'000
Cost
At 1 January 2012
Additions
Disposals
At 31 December 2012
Depreciation
At 1 January 2012
Disposals
Provided in year
At 31 December 2012
Net book value
At 31 December 2012
At 31 December 2011
6
Fixed asset investments
Cost or valuation
At 1 January 2011 (as previously reported)
Opening adjustment
At 1 January 2011 (restated)
Transfer to assets held for sale
At 31 December 2011
At 1 January 2012
Additions
Disposals
At 31 December 2012
Accumulated amortisation
At 1 January 2011 (as previously reported)
Opening adjustment
At 1 January 2011 (restated)
Provided in year
Transferred to assets held for sale
At 31 December 2011
569
4
(557)
16
568
(557)
1
12
4
1
Shares in subsidiary
undertakings
£’000
47,652
(5,727)
41,925
(11,959)
29,966
29,966
200
(4,872)
25,294
35,428
(5,279)
30,149
4,747
(11,959)
22,937
DCD Media Plc
52
Financial statements for the year ended 31 December 2012
Notes to the parent company financial statements for the year ended 31 December 2012
6
Fixed asset investments (continued)
Accumulated amortisation (continued)
At 1 January 2012
Provided in year
Disposals
At 31 December 2012
Net book value
At 31 December 2012
At 31 December 2011
Shares in subsidiary
Undertakings
£’000
22,937
1
(4,872)
18,066
7,228
7,029
During the year, the Directors reviewed the company’s investments and adjusted the opening cost and depreciation for
investments that had been sold in prior periods.
The principal operating subsidiary companies are listed below. All are 100% owned, unless noted otherwise:
DCD Publishing Ltd (formerly Digital Classics DVD Ltd
DCD Productions (UK) Ltd (formerly Prospect Pictures Ltd)
DCD Rights Ltd
September Films Ltd
September Films USA Incorporated
Exterminator Limited Liability Company
September Scripted Incorporated
September Scripted Productions Limited Liability Company
Prospect Pictures Ltd (formerly Prospect West Ltd)
Prospect Cymru/Wales Ltd
Sequence Post Ltd (formerly DCD Post-Production Ltd)
Matchlight Ltd*
Rize Television Ltd **
September Films Ltd, DCD Productions (UK) Ltd, Prospect Pictures Ltd, Prospect Cymru/Wales Ltd, Matchlight Ltd,
September Films USA Incorporated, September Scripted Incorporated, September Scripted Productions Limited Liability
Company and Rize Television Ltd are involved with the production of programmes for television and other media.
DCD Rights Ltd sell programme rights worldwide to all media. DCD Publishing Ltd produces and markets DVD's to the
retail market.
Box TV Ltd, DCD Drama Ltd, DCD Media USA Incorporated, Done and Dusted Group Ltd, Done and Dusted
Incorporated, Done and Dusted Productions Incorporated and Done and Dusted West Coast Incorporated are not part of
ongoing trading operations.
Sequence Post Ltd is involved in post-production.
*September Films Ltd holds a 50% equity stake in Matchlight Ltd, a company that produces programmes for television
and other media. In 2012, DCD Productions (UK) Ltd acquired a further 17.64% of the share capital of Matchlight for no
consideration.
** The company holds an 80% equity stake in Rize Television Ltd, a production company and focuses on factual, factual
entertainment and reality programming for the international market.
During the year, the Company disposed of its 19.9% trade investment in Classical TV Ltd. This had been granted to the
Company in May 2008 in exchange for services to be provided to Classical TV Ltd by DCD employees. The carrying
value of this asset of this investment at the point of disposal was £nil (2011: £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 Ltd;
• Done and Dusted West Coast Incorporated which is incorporated in California and is 100% owned by Done and
Dusted Productions Incorporated;
DCD Media Plc
53
Financial statements for the year ended 31 December 2012
Notes to the parent company financial statements for the year ended 31 December 2012
6
Fixed asset investments (continued)
• September Films USA Incorporated, which is incorporated in California and is 100% owned by September Films
Ltd;
• Exterminator Limited Liability Company, which is incorporated in Louisiana and is 100% owned by September
Films USA Incorporated;
• September Scripted Incorporated, which is incorporated in California and is 100% owned by September Films
Ltd;
• September Scripted Productions Limited Liability Company, which is incorporated in California and is 100%
owned by September Scripted Incorporated;
7
Stock
Finished products
8
Debtors
Trade debtors
Amounts owed by group undertakings
Other debtors
Prepayments and accrued income
Asset held for sale
9
Creditors: amounts falling due within one year
Bank overdraft (secured)
Bank loans (secured)
Convertible debt (secured)
Trade creditors
Amounts owed to group undertakings
Taxation and social security
Other creditors
Accruals and deferred income
10 Creditors: amounts falling due after more than one year
Convertible debt (secured)
31 December
2012
£‘000
31 December
2011
£‘000
14
96
31 December
2012
£'000
31 December
2011
£'000
29
1,272
4
89
-
1,394
50
375
17
123
83
648
31 December
2012
£'000
31 December
2011
£'000
616
960
-
165
1
280
90
141
2,253
615
1,000
4,314
178
-
150
236
200
6,693
31 December
2012
£'000
31 December
2011
£'000
49
-
DCD Media Plc
54
Financial statements for the year ended 31 December 2012
Notes to the parent company financial statements for the year ended 31 December 2012
11 Bank and other borrowings
Due within one year or on demand
Bank loans and overdrafts - secured (a)
Convertible loan notes (b)
Convertible loan notes (c)
Due after more than one year
Convertible loan notes (b)
Total borrowings
31 December
2012
£'000
31 December
2011
£'000
1,576
-
-
1,576
49
1,625
1,615
3,349
965
5,929
-
5,929
a)
In August 2012 DCD Media entered into a new loan facility with Coutts & Co bank. The facility was for £1.2m, incurs
interest at LIBOR plus 3.5% and is repayable in quarterly instalments to 30 November 2014 or on demand. In the
period to 31 December 2012 the Group repaid £0.24m of this loan, leaving a balance of £0.96m at 31 December
2012. A further £0.24m has been repaid since the year end.
The Group's day-to-day operations are funded from cash generated from trading and the use of a net overdraft
facility of £0.55m. The Group’s overdraft facility has recently been extended by its principal bankers until 11 May
2014. Accounts with positive balances in the overall overdraft facility are reflected in bank and cash in the current
assets section of the balance sheet.
The secured bank loans and overdrafts are secured by a fixed charge over the company’s intangible programme
rights assets.
(b) The remaining loan notes will be redeemed following the repayment of the secured bank loan in 2014.
(c) The convertible notes of £965,000 that were issued in September 2011 were converted in the year.
12 Share capital
See Group accounts note 22.
13 Share premium account and reserves
Equity
element of
convertible
loan
£'000
Share
premium
£'000
Profit and loss
account
£'000
Own shares
held
£’000
At 1 January 2011 (as previously
reported)
Opening adjustment (note 3)
At 1 January 2011 (restated)
Loss for the year
Capitalisation of professional fees
Convertible loan note issued
Shares issued on conversion of loan
At 31 December 2011 (restated)
At 1 January 2012
Profit for the year
Shares allocated to employee benefit
trust
Shares issued on conversion of loan
At 31 December 2012
49,451
-
49,451
-
(72)
-
12
49,391
49,391
-
-
1,727
51,118
120
-
120
-
-
35
(1)
154
154
-
-
(153)
(45,777)
(8)
(45,785)
(10,004)
-
-
-
(55,789)
(55,789)
947
-
-
1
(54,842)
-
-
-
-
-
-
-
-
-
-
-
(83)
-
(83)
Total
£'000
3,794
(8)
3,786
(10,004)
(72)
35
11
(6,244)
(6,244)
947
(83)
1,574
(3,806)
DCD Media Plc
55
Financial statements for the year ended 31 December 2012
Notes to the parent company financial statements for the year ended 31 December 2012
14 Pension costs
The Company made contributions of £5,713 to the personal pension scheme of one Director for part of the year.
15 Events after the reporting date
See Group accounts note 29.
16 Transactions with Directors and other related parties
During the year the following amounts were paid to companies in which the Directors have an interest:
Company
Director
JRC Business Consulting
Services Ltd
Wildman and Co
Roscoe Capital Ltd
Nicola Crane
Administrative Services
J Cusins
T Wildman
N McMyn
A Lindley
Amount paid
2012
£'000
2011
£'000 Description
26
27
11
20
5 Services as Director of DCD Media Plc
40 Services as Director of DCD Media Plc
- Provision of accounting services
- Provision of business services
At 31 December 2012, £10,975 was due to Roscoe Capital Ltd. No balances were outstanding at the prior year end.
17 Ultimate parent company and ultimate controlling party
The Directors consider the family interests of Mr Joe Lewis to have ultimate control by virtue of their indirect beneficial
ownership of the issued share capital of Timeweave Ltd, registered in England and Wales and Colter Ltd, a company
incorporated in the Bahamas.
DCD Media Plc
56
Financial statements for the year ended 31 December 2012
Corporate information
Company secretary and registered offices
Registrars
John Sadler FCIS
Glen House
22 Glenthorne Road
London
W6 0NG
Capita Registrars
Northern House
Woodsome Park
Fenay Bridge
Huddersfield
HD8 0LA
www.capitaregistrars.com
Nominated Adviser and Broker
Auditors
SRLV
89 New Bond Street
London
W1S 1DA
www.srlv.co.uk
Solicitors
Addleshaw Goddard
Milton Gate
60 Chiswell Street
London
EC1Y 4AG
www.addleshawgoddard.com
finnCap
60 New Broad Street
London
EC2M 1JJ
www.finncap.com
Bankers
Coutts & Co
440 Strand
London
WC2R 0QS
www.coutts.com
Company Headquarters
DCD Media Plc
Glen House
22 Glenthorne Road
London
W6 0NG
T +44 (0)20 8563 9393
info@dcdmedia.co.uk
www.dcdmedia.co.uk
DCD Media Plc
57
Financial statements for the year ended 31 December 2012