DCD MEDIA PLC
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
Company number 03393610
Contents
Audited results for the year ended 31 December 2016
Executive Chairman’s review
Group strategic report
Group report of the Directors for the year ended 31 December 2016
Board of Directors
Independent auditor’s report to the members of DCD Media Plc
Consolidated income statement for the year ended 31 December 2016
Consolidated statement of comprehensive income for the year ended 31 December 2016
Consolidated statement of financial position as at 31 December 2016
Consolidated statement of cash flows for the year ended 31 December 2016
Consolidated statement of changes in equity for the year ended 31 December 2016
Notes to the consolidated financial statements for the year ended 31 December 2016
Parent company balance sheet as at 31 December 2016
Notes to the parent company financial statements for the year ended 31 December 2016
Corporate information
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DCD Media Plc
Financial statements for the year ended 31 December 2016
DCD Media Plc
(“DCD Media” or the “Company”)
Audited results for the year ended 31 December 2016
DCD Media and its subsidiaries, the independent TV distribution and production group (the “Group”), today report results
for the year ended 31 December 2016.
Financial Summary
Continuing operations:
• Revenue
• Gross profit
• Operating loss
Discontinued operations:
• Revenue
• Gross profit
• Operating profit
Group results:
£8.6m (2015: £11.1m)
£2.8m (2015: £2.9m)
£0.1m (2015: £2.2m)
£0.0m (2015: £0.0m)
£0.0m (2015: £0.0m)
£0.1m (2015: £0.0m)
• Operating loss
• Adjusted EBITDA
• Adjusted profit/(loss) before tax
£0.0m (2015: £2.2m)
£0.8m (2015: £0.2m)
£0.8m (2015: (£0.1m))
Please refer to the table within the Performance section below for an explanation of the profit adjustments.
Business highlights
• Continued focus on our rights business yields positive adjusted EBITDA of £0.8m and provides a platform for
further growth.
• Continued focus and execution of strategy to expand DCD Media into one of the UK’s leading independent
pure-play TV rights and distribution businesses.
• Relocation of DCD Media to new premises close to the heart of London’s media centre.
• DCD Rights distributed drama Rake scoops awards for best drama series in both the Screen Producer Awards
and the AWGIEs. Several other distributed dramas earn nominations.
• DCD Rights benefitted from the launch of a number of programmes at MIPTV such as Real Detective, signing
deals with Sony True Crime, Nine Networks Australia, Universal, and Sky Italy.
• DCD Rights delivered the second series and secured the co-production of the third series of Penn & Teller:
Fool Us in Vegas. The series is a co-production between 1/17 Productions and September Films for the CW
Network in the USA.
• DCD Rights secures additional funding for content acquisition and expands its acquisition team.
• Rize USA’s hugely popular talent show for teenagers Got What it Takes? aired on CBBC. The second series,
a co-production with Disney, began filming in the summer and was delivered post year end.
• Sequence Post successfully completed the 4K post-production of ‘The Rolling Stones: Havana Moon’
released on 23 September 2016.
DCD Media Plc
1 Financial statements for the year ended 31 December 2016
Overview
We are very pleased to announce that the comprehensive package of measures designed to place DCD Media on a
strong footing to deliver on its strategic ambitions will ensure that the business can deliver value to our shareholders in
the medium to long-term.
Over the last five years, under the Timeweave stewardship, the DCD Media Board has taken action to restructure the
business model, implement extensive cost-saving measures and importantly, to refocus the business for the improving
sales and distribution environment, including rationalising the production divisions ensuring that output from productions
has remained very strong through outsourced co-production arrangements.
Simultaneously, DCD Media has been working on a range of other programme funding options, which underpin the
continued improvements and growth we announced today. We are in discussions with a variety of alternative finance
providers as well as EIS funds and remain grateful to our lenders Timeweave and EIS fund, Back Catalogue Distribution
Ltd for their continued support.
The Board remains confident in the long-term potential of the DCD Media business, and is of the view that the completed
restructuring and consequent business growth will enhance value for all stakeholders.
During the year, the rights division saw its fourth consecutive year of turnover growth and the Board expects this to
continue to drive the financial performance of the Group in the current financial year. The business was profitable and
delivered an increase in turnover of approximately 12% over the previous year alongside a 23% increase in gross profit
overall. This result was particularly pleasing given the obvious distractions of a relocation and restructuring of the
production businesses. The Board recognises the strength and depth of talent now assembled in the DCD Media rights
business which again places the organisation on sound foundations going forward.
As the marketplace evolves and the consumption model for consumers shifts heavily towards on-demand content
provision, DCD Media has capitalised with significant block sales deals with major international cable and SVOD
platforms which are expected to continue throughout 2017.
As a consequence of the rise in investment in programming, we also saw an expansion of our catalogue across all
genres, although many of the new series are due to be delivered toward the end of the year, resulting in a push of
benefits into 2017.
In spite of the strategic shift to the rights and distribution model, the Board delivered on two notable recommissions for
production franchises in the year. DCD Rights secured a new series of the 1/17 Productions and September Films co-
production of hit network show Penn & Teller: Fool Us in Vegas for the CW Network in the USA. In addition, the UK
market, Rize USA won a new commission to produce a ten part series of the hugely popular talent show for teenagers
Got What it Takes? for CBBC.
David Craven, Executive Chairman and Chief Executive Officer, commented: “We are delighted that the hard work and
commitment to the task over the last four years is yielding results. The DCD Media team have prevailed against the
tough commercial challenges which face small independent TV distributors. DCD Media is now well-placed to benefit
from a scaled operation and we fully expect the business to thrive in the marketplace. The team continues to build its
strong catalogue with creative and commercial guidance from a highly experienced team to consistently provide the
market with entertaining TV product.
“The DCD Media business reports an adjusted EBITDA profit of £0.8m compared to £0.2m in 2015. While this is a
modest increase, it reflects a steady performance underpinning the consolidation work undertaken in the last few years.
The strategy was to deliver consistent, higher quality earnings, and we are now delivering year on year growth with a
commercial platform for a sustainable rights and distribution business. This is largely brought about through a strong and
experienced management team, more sources of programme funding and a strong creditable reputation in the
marketplace.
“The Board remains optimistic for the future and while we see expansion from the rights division, the immediate goal is
delivery against targets in the new financial year which looks very promising. We believe we have now created a thriving
rights business capable of sustained growth in the coming years.’’
For further information please contact:
Angelica Tziotis
Investor Relations/ Media Relations, DCD Media Plc
Tel: +44 (0)20 3869 0190
Stuart Andrews / Carl Holmes / Giles Rolls
finnCap
Tel: +44 (0)20 7220 0500
ir@dcdmedia.co.uk
DCD Media Plc
2 Financial statements for the year ended 31 December 2016
Executive Chairman’s review
The distribution and licencing business continued on its growth path with strong top-line growth and a credible underlying
EBITDA performance in the financial year to 31 December 2016.
Last year was a transitional year and perhaps a seminal point in the Company’s history which witnessed a shift into pure-
play rights and distribution of content, away from an unsustainable vertical model which was prefaced with an
underperforming and time-intensive production division, resulting in a redundancy programme being completed.
The vision for the business under the aegis of Timeweave has been the creation of a large independent rights business
meeting the growing demands of TV consumers to watch compelling content when and where they choose. In this
respect the Board is pleased to report a 12% growth in rights and licensing turnover from the previous year with
significant further expansion expected in the next financial year.
Underpinning this financial performance, DCD Rights improved on its position as one of the world’s top independent TV
rights distributors in 2016. The DCD Rights drama catalogue was a strong performer and its appeal to international
distributors augurs well for the future growth plans. Legal drama series Rake (season 4) scooped two prestigious
industry awards together with nominations for other drama series represented by DCD Rights, Deep Water, Janet King:
The Invisible Wound, Jack Irish: Blind Faith, and The Code 2.
At MIPTV 2016, the business launched its 4th star-studded season of Off Camera with Sam Jones, and MIPTV also
saw the launch of the second season of Sarah Graham Food Safari, with food blogger Sarah Graham exploring new
corners of Africa’s culinary scene.
DCD Rights partnered with Scottish production company Tern TV to present four new factual series at the October TV
Market in Cannes with programmes including Shoreline Detectives, Beechgrove Garden, Can I Catch It? and Art
Detectives.
The music catalogue also had a good year, with more than 50 hours of music programming sold globally. These included
Berlin Live, a new documentary on David Gilmour – Wider Horizons, Imagine: John Lennon 75th Birthday Concert
and a seven part series The Great Songwriters that featured exclusive performances and compelling interviews with
Barry Gibb, Carly Simon, Norah Jones, Chuck D, Ryan Adams, Jimmy Webb and Bill Withers.
We were also delighted in the year to welcome to the acquisitions team, Philippa Chuter, previously a senior executive
at Passion Media, joining the company as a Senior Acquisitions Executive.
The Board believes that we are well-placed for the rights division to deliver strong growth in 2017 and beyond.
D Craven
Executive Chairman and Chief Executive Officer
31st May 2017
DCD Media Plc
3 Financial statements for the year ended 31 December 2016
Group strategic report
Strategic outlook
The historic model for success in media and entertainment with multiple revenue streams and distinct exploitation
windows is no longer viable in today’s media world.
To thrive in today’s environment, DCD Media recognised some years ago that it needed to drive both innovation and
efficiency, embracing new approaches to content development, and more efficient and cost-effective distribution. In
short, the DCD Rights business has adapted its strategy, capabilities, and operating model to address several key
trends, namely, technology shifts which are affecting the value of content and distribution. This takes into account that
the consequent costs for content delivery are lower than ever and that online video, social media and mobile media are
expanding rapidly.
In order to harness these new opportunities in the changing market, DCD Media has implemented new strategies to
embrace the on-demand media culture in particular.
DCD Media will continue to prime the global media and entertainment industry growth through the traditional mature
markets across existing and new technical platforms, but also by tapping into the emerging markets of Latin America,
Asia, Russia and the Middle East.
In short, the strategy to scale up on a business that is working well has been a successful approach and now by
embracing the new trends in the media and entertainment industry, the outlook is very positive for DCD Media.
We look forward to future growth in 2017.
Review of divisions for the year to 31 December 2016
Rights and Licensing
DCD Rights
The business remained profitable and delivered an increase in turnover of approximately 12% over the previous year
alongside a 23% increase in gross profit overall.
During the year DCD Rights relocated to a more central location in London’s Edgware Road, and focused on building
and consolidating the management teams in order to accommodate an increase in acquisitions funding, this was
confirmed during the year as part of a new relationship with an EIS fund for television programming rights. The business
remained profitable and delivered an increase in turnover of approximately 12% over the previous year having benefited
from some large sales to major international cable and SVOD platforms which are expected to continue throughout 2017.
As a result of the rise in company investment, we also saw an expansion of our catalogue across all genres, although
many of the new series delivered toward the end of the year which will push benefits into 2017.
The DCD Rights Drama catalogue continued to generate strong results throughout the year. Satirical Legal drama series
Rake (season 4) won two awards at the prestigious AACTA Awards in Australia, including “Best Direction in a TV Drama
or Comedy”. This was alongside nominations for other drama series represented by DCD Rights, Deep Water, Janet
King: The Invisible Wound, Jack Irish: Blind Faith, and The Code 2. In terms of the sales of our drama catalogue,
significant deals include that with BBC 4 who acquired the UK broadcast rights for Deep Water, and on the other side of
the Atlantic, Acorn TV who acquired all rights for The Code in the USA. Senior school drama The Principal and office
comedy Dreamland (Utopia) also received awards at the 6th Annual Equity Awards for “Best Ensemble Performance in
a Drama Series” and “Best Ensemble Performance in a Comedy Series” respectively and secured strong international
sales.
At MIPTV 2016, DCD Rights launched its 4th star-studded season of Off Camera with Sam Jones, introducing exclusive
interviews with a new range of celebrities. MIPTV also saw the launch of the second season of Sarah Graham Food
Safari, an Okhule Media production that sees food blogger Sarah Graham explore new corners of Africa’s culinary
scene.
DCD Rights partnered with production company Tern TV to present 4 new factual series at the October TV Market in
Cannes, MIPCOM 2016. Programs included Shoreline Detectives, Beechgrove Garden, Can I Catch It? and Art
Detectives. Also launching at MIPCOM was Irish legal drama Striking Out prior to its debut launch on RTE in January.
The music catalogue continued to expand with the acquisition of over 50 hours of music programming to be sold across
the globe. These included Berlin Live, a 44 x 60’ series produced by BMG Rights Management GMBH for Arte, a new
documentary on David Gilmour – Wider Horizons, Imagine: John Lennon 75th Birthday Concert and a 7 part series
The Great Songwriters that featured exclusive performances and compelling interviews with Barry Gibb, Carly Simon,
Norah Jones, Chuck D, Ryan Adams, Jimmy Webb and Bill Withers.
This year, DCD Media expanded its acquisitions team, hiring Philippa Chuter, previously an acquisitions executive at
Passion Media, to join the company as a Senior Acquisitions Executive as part of the ongoing consolidation and
expansion of the business.
DCD Media Plc
4 Financial statements for the year ended 31 December 2016
Group strategic report
Productions
The DCD Media productions division comprised the following brands:
Rize USA
London, UK
September Films UK
London, UK
The output of each organisation is overseen by DCD Media and complimented by the Group’s Rights and Licensing
division.
September Films
September Films co-produced with the second US based 1/17 Productions the 13x60’ series, Penn & Teller: Fool Us in
Vegas, fronted this time by Alyson Hannigan, which aired in primetime on The CW in the US.
September Films will continue to be involved in the production of future series of Penn & Teller: Fool Us in Vegas. The
company continues to review its library of formats and titles.
Rize USA
Productions hit a high note at the start of 2016, with the transmission of episode one of Got What it Takes? airing on
CBBC in the first week of January. The 10-episode talent series saw children competing for the chance to perform at
Radio 1’s Big Weekend in May. The show was received extremely well, has regularly made the top 25 on BBC’s iPlayer
chart, and has continued to attract attention both in the press and on social media.
Rize USA will continue to be involved in the production of future series of Got What it Takes?.
Post - Production
Sequence Post
Over the last year, Sequence has continued to forge new relationships with local commercial producers resulting in
finishing post-production for the likes of Cadbury’s, Budweiser, Martini, Dermalogica, Barry M, Shu Uemura, Chanel and
Farfetched along with many more. The work undertaken for such recognisable brands is invaluable to the business
allowing it showcase its expertise and professional output.
During the year Sequence completed two features for The Rolling Stones, namely Havana Moon and Ole, Ole, Ole: A
Trip Across Latin America. Both films were showcased at numerous film festivals garnering lots of positive reviews.
These films were a huge investment and achievement for the team, spanning a total of eight months from start to finish.
At present, the team are completing delivery on a 360º virtual reality workflow involving a collaboration between the
band Royal Blood and Samsung. With a fast turn-around and new technology to explore, it has been a real learning
curve and should serve to provide great publicity once delivered.
Performance
At a turnover level, the Group delivered £8.6m in revenue all from continuing operations compared with £11.1m in 2015.
The reduction as mentioned is a result of streamlining the business into a predominantly rights and distribution business
and consciously moving away from new productions.
The Group made an operating result for the year of £0.0m (2015: loss of £2.2m), 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 2016 was £0.8m (2015: £0.2m), inclusive of £0.5m of
foreign exchange gains (2015: £0.0m).
Adjusted profit before tax for the Group was £0.8m in 2016 against an adjusted loss of £0.1m for the year to 31
December 2015.
DCD Media Plc
5 Financial statements for the year ended 31 December 2016
Group strategic report
Performance (continued)
The following table represents the reconciliation between the operating loss per the consolidated income statement and
adjusted Profit Before Tax (PBT) and adjusted Earnings Before Interest Tax Depreciation and Amortisation (EBITDA):
Operating loss per statutory accounts (continuing operations)
Add: Discontinued operations (note 9)
Operating result per statutory accounts
Add: Amortisation of programme rights (note 11)
Add: Impairment of programme rights (note 11)
Add: Amortisation of trade names (note 11)
Add: Impairment of goodwill and related intangibles (note 11)
Less: Capitalised programme rights intangibles (note 11)
Add: Depreciation (note 12)
EBITDA
Add: Restructuring costs/(income) (note 5)
Adjusted EBITDA
Continuing adjusted EBITDA
Discontinued adjusted EBITDA
Less: Net financial expense (note 7)
Less: Depreciation
Adjusted profit/(loss) before tax
Continuing adjusted profit/(loss) before tax
Discontinued adjusted profit/(loss) before tax
Intangible assets
Year ended
31 December
2016
£m
Year ended
31 December
2015
£m
(0.1)
0.1
0.0
0.3
0.0
0.4
0.0
(0.2)
0.0
0.5
0.3
0.8
0.8
0.0
(0.0)
(0.0)
0.8
0.8
0.0
(2.2)
0.0
(2.2)
0.7
0.2
0.4
1.8
(0.7)
0.1
0.3
(0.1)
0.2
0.2
0.0
(0.2)
(0.1)
(0.1)
(0.1)
0.0
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 11.
The Group has seen amortisation and impairment of goodwill and trade names for the year of £0.4m (2015: £2.2m) and
a net amortisation and impairment of programme rights of £0.3m (2015: £0.8m).
The accounting implications, in terms of the effect of reporting impaired intangible assets under International Financial
Standards, are explained below.
Goodwill
The Directors have assessed the carrying value of goodwill attributable to September Films and have booked no
impairment in 2016. (2015: £1.8m). This in light of the back-end catalogue income expected to be received within the
business.
Trade names
Trade names are amortised over ten years on a straight line basis and a non-cash expense of £0.4m was expensed in
the year relating to trade names. The carrying value of trade names after the amortisation was £0.2m (2015: £0.6m).
Restructuring costs
Restructuring costs of £0.3m (2015: income of £0.1m) have been disclosed in the consolidated statement of
comprehensive income and relates to non-recurring costs within the production entities whose activity was wound down
in the year.
DCD Media Plc
6 Financial statements for the year ended 31 December 2016
Group strategic report
Earnings per share
Basic profit per share in the year was 1p (year ended 31 December 2015: 254p loss per share) and was calculated on
the result after taxation of £0.0m (year ended 31 December 2015: loss £2.3m) divided by the weighted average number
of shares in issue during the year being 2,541,419 (2015: 915,470).
Balance sheet
The Group’s net cash balances have increased to £2.2m at 31 December 2016 from £1.2m at 31 December 2015. A
substantial part of the Group cash balances represent working capital commitment in relation to its rights business and is
not considered free cash. The increase in the year is largely due to temporary movements in receivables and payables in
working capital.
During the year, the Group accrued £0.2m of recharges for director, management and financial services from Timeweave
Ltd, its major shareholder that remain unpaid.
At the year end, the Group had an available gross overdraft facility of £0.5m and a net facility of £0.25m.
Shareholders’ equity
Retained earnings as at 31 December 2016 were £(61.0m) (2015: £(60.8m)) and total shareholders’ equity at that date
was £2.5m (2015: £2.5m).
Current trading
2017 has begun well for the Group’s rights and distribution arm with encouraging turnover and availability of programme
acquisition funding.
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 18 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 with
other activities funded from a combination of equity and short and medium term debt instruments. The overdraft facility
remained at £0.25m throughout the year and has recently been extended to April 2018. The facility will reduce by
£0.025m each quarter down to a revised limit of £0.15m by January 2018. The overdraft will be reviewed further by the
Group’s principal bankers, Coutts & Co (“Coutts”), on 30 April 2018 but the Directors have a reasonable expectation that
an 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 has prepared profit
and cash flow projections which incorporate reasonably foreseeable impacts of the ongoing challenging trading
environment. These projections reflect the 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 overdraft
facility provided by its principal bankers for the foreseeable future.
In addition, the Group is in discussion with Timeweave Ltd, its major shareholder, to formalise the debt that has built-up
on management charges which have not been cash-settled.
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.
The Directors have regular discussions with the Group’s main shareholders and its principal bankers and 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.
DCD Media Plc
7 Financial statements for the year ended 31 December 2016
Group strategic report
Key Performance Indicators (KPIs)
Revenue from continuing operations (£m)
Operating loss from continuing operations (£m)
Adjusted EBITDA (£m)
Adjusted profit/(loss) before tax (£m)
Principal risks and uncertainties
Year ended
31 December
2016
Year ended
31 December
2015
8.6
0.1
0.8
0.8
11.1
2.2
0.2
(0.1)
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 and distribution activities 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
Production revenue will fall as the Group has ceased to pursue productions in development and is due to focus on its two
current franchises. Distribution revenue is forecast to rise as this division is the prime focus of the Group going forward.
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 three ways: internally, ensuring that overall exposure is
minimised; through a short term advance from a bank or other finance house; or through a short term loan from
Timeweave Ltd, its main shareholder, 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 £2.2m (2015: £1.2m) including
certain production related cash held to maintain the Group policy. The Group debt consists primarily of an overdraft,
some convertible debt and accrued management recharges due to Timeweave. Details of interest payable, funding and
risk mitigation are disclosed in notes 7, 16 and 18 to the consolidated financial statements.
Exchange rate risk
Management review expected cash inflows and outflows in source currency and when required, take out forward options
to protect against any short term fluctuations.
D Craven
Executive Chairman and Chief Executive Officer
31 May 2017
DCD Media Plc
8 Financial statements for the year ended 31 December 2016
Group report of the Directors for the year ended 31 December 2016
The Directors present their report together with the audited financial statements for the year ended 31 December 2016.
Principal activities
The main activities of the Group in the year continued to be distribution and rights exploitation and content production.
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 and Group Strategic Report on pages 4 to 8, which should be read in
conjunction with this report.
Results
The Group’s loss before taxation for the year ended 31 December 2016 was £0.1m (2015: £2.4m). The result for the
year post-taxation was £0.0m (2015: loss of £2.2m) and has been carried forward in reserves.
The Directors do not propose to recommend the payment of a dividend (2015: £nil).
Directors and their interests
At 31 December 2016
At 31 December 2015
Ordinary
shares of
£1 each
Deferred
shares of
£1 each
Ordinary
shares of
£1 each
Deferred
shares of
£1 each
D Green*
N Davies Williams
D Craven
N McMyn
A Lindley
* David Green resigned from the board on 18 August 2016.
-
69,317
-
-
-
-
781
-
-
-
132,197
781
-
-
-
503,428
69,317
-
-
-
Mr Lindley and Mr McMyn are Non-Executive Directors. Biographies of the Company’s Directors can be found on page
13.
Other than as disclosed in note 22 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 30 May 2017, of the following material interests in the voting rights of the
Company under the provisions of the Disclosure and Transparency Rules:
Name
Timeweave Ltd*
Lombard Odier Investment Managers
Colter Ltd*
No. of £1 ordinary shares
1,694,377
671,978
124,000
%
66.67
26.44
4.88
*Timeweave Ltd and Colter Ltd are under common ownership (see note 26).
Share capital
Details of share capital are disclosed in note 19 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 to future strategy discussions and decisions on business issues.
DCD Media Plc
9 Financial statements for the year ended 31 December 2016
Group report of the Directors for the year ended 31 December 2016
Employment Involvement (continued)
The Group does not discriminate against anyone on any grounds. Criteria for selection and promotion are based on
suitability of an applicant for the job. Applications for employment by disabled persons are always fully considered,
bearing in mind the respective aptitudes of the applicants concerned. In the event of members of staff becoming
disabled, every effort will be made to ensure that their employment with the Group continues and that appropriate
training is arranged. It is the policy of the Group that the training, career development and promotion of disabled persons
should, as far as possible, be at least comparable with that of other employees.
Financial instruments
Details of the use of financial instruments by the Company are contained in note 18 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 2016.
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 are a number of scheduled Board meetings with other meetings being arranged at shorter
notice as necessary. 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.
DCD Media Plc
10 Financial statements for the year ended 31 December 2016
Group report of the Directors for the year ended 31 December 2016
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.
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 (Financial Reporting Standard 102 “The Financial Reporting Standard
applicable in the United Kingdom and Republic of Ireland’ 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 agree terms of payment with suppliers when agreeing the overall terms of each
transaction, to ensure that suppliers are aware of the terms of payment and that Group companies 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 19 to the consolidated
financial statements.
Resolutions at the Annual General Meeting
The Company’s AGM will be held on Thursday 29 June 2017. 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 dis-apply pre-emption rights and to
purchase own shares.
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 (2015: £nil). No donations were made to any political party in either
year.
DCD Media Plc
11 Financial statements for the year ended 31 December 2016
Group report of the Directors for the year ended 31 December 2016
Auditors
A resolution to re-appoint SRLV as the Company’s auditors will be put forward at the AGM to be held on 29 June 2017.
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 2017 and signed on its behalf by:
D Craven
Executive Chairman and Chief Executive Officer
31 May 2017
DCD Media Plc
12 Financial statements for the year ended 31 December 2016
Board of Directors
David Craven (Executive Chairman & CEO)
David Craven was appointed CEO of DCD Media in October 2012 and Executive Chairman in January 2014. He is also
CEO and a 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.
Nicky Davies Williams (Executive Director)
Nicky Davies Williams was appointed CEO of DCD Rights, DCD Media’s distribution and licencing division, in December
2005 when she sold NBD TV, a company she founded and ran successfully for over 22 years, to the Group. An English
Literature graduate from Leeds University, she began her career in the music business, moving into film and television
distribution at Island Pictures, where she rose to the post of Sales Director, prior to founding her own company in 1983.
She has managed DCD Rights’ growth into one of the world’s leading independent distributors. Her experience includes
non-executive directorships on the Board of The Channel Television Group from 1991-1998, and as a founding
non-executive of the Women in Film and Television in the UK.
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. Neil was also appointed as
Finance Director of Ultimate Finance Group in July 2015. He became a Non-Executive Director of DCD Media in
September 2012.
Andrew Lindley (Non-Executive Director)
Andrew Lindley joined the Board of DCD Media in September 2012. He is a practicing solicitor and holds another non-
executive role with Turf TV as well as being a consultant with Axiom LLP. Andrew was a 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.
DCD Media Plc
13 Financial statements for the year ended 31 December 2016
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 2016 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 the Financial Reporting Standard 102 “The
Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland (‘FRS 102’).
Respective responsibilities of directors and auditors
As explained more fully in the statement of Directors’ responsibilities set out on page 11, 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 Financial Reporting Council’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 presented on pages 1 to 13 to identify material
inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect
based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. 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 2016 and of the Group’s result 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 FRS 102; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit, the information given on pages 1 to 13 for the
financial year for which the financial statements are prepared is consistent with those financial statements and this report
has been prepared in accordance with applicable legal requirements. In the light of our knowledge and understanding of
the company and its environment obtained in the course of the audit, we have not identified material misstatements in
the Director's Report.
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 2017
DCD Media Plc
14 Financial statements for the year ended 31 December 2016
Consolidated income statement for the year ended 31 December 2016
Revenue
Cost of sales
Impairment of programme rights
Gross profit
Selling and distribution expenses
Administrative expenses:
- Other administrative expenses
- Impairment of goodwill
- Amortisation of trade names
- Restructuring (costs)/income
Operating loss
Finance costs
Loss before taxation
Taxation
Loss after taxation from continuing operations
Profit on discontinued operations net of tax
Profit/(loss) for the financial year
Profit/(loss) attributable to:
Owners of the parent
Non-controlling interest
Note
4
5,11
5,11
5,11
5
7
8
9
Year ended
31 December
2016
£’000
Year ended
31 December
2015
£’000
8,597
(5,744)
(9)
(5,753)
2,844
-
(2,253)
-
(419)
(287)
(2,959)
(115)
(24)
(139)
76
(63)
96
33
33
-
33
11,115
(8,041)
(152)
(8,193)
2,922
(37)
(2,936)
(1,772)
(419)
54
(5,073)
(2,188)
(164)
(2,352)
118
(2,234)
-
(2,234)
(2,324)
90
(2,234)
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 earnings per share from discontinued operations
Total basic profit/(loss) per share
Diluted loss per share from continuing operations
Diluted earnings per share from discontinued operations
Total diluted profit/(loss) per share
9
10
9
10
(3p)
4p
1p
(3p)
4p
1p
(254p)
-
(254p)
(254p)
-
(254p)
The notes on pages 20 to 44 are an integral part of these consolidated financial statements.
DCD Media Plc
15 Financial statements for the year ended 31 December 2016
Consolidated statement of comprehensive income for the year ended 31 December 2016
Year ended
31 December
2016
£’000
Year ended
31 December
2015
£’000
Note
Profit/(loss) for the financial year
33
(2,234)
Other comprehensive income
Exchange gains arising on translation of foreign operations
Total other comprehensive income
Total comprehensive income/(expense)
Total comprehensive income/(expense) attributable to:
Owners of the parent
Non-controlling interest
177
177
210
210
-
210
4
4
(2,230)
(2,320)
90
(2,230)
The notes on pages 20 to 44 are an integral part of these consolidated financial statements.
DCD Media Plc
16 Financial statements for the year ended 31 December 2016
Consolidated statement of financial position as at 31 December 2016
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
Total assets
Current liabilities
Bank overdrafts
Other loans
Unsecured convertible loan
Trade and other payables
Taxation and social security
Obligations under finance leases
Non-current liabilities
Obligations under finance leases
Deferred tax liabilities
Total 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
11
11
12
14
13
14
16
16,18
16
15
15
16
16
17
19
Company number 03393610
Year ended
31 December
2016
£’000
Year ended
31 December
2015
£’000
1,017
265
94
224
1,600
-
8,975
2,628
11,603
13,203
(427)
(133)
(67)
(10,014)
(25)
(23)
(10,689)
-
(40)
(40)
(10,729)
2,474
12,272
51,215
1
-
(37)
(60,977)
2,474
-
2,474
1,017
745
68
398
2,228
5
8,149
1,594
9,748
11,976
(413)
(61)
(62)
(8,676)
(101)
(10)
(9,323)
(22)
(125)
(147)
(9,470)
2,506
12,272
51,215
1
(177)
(37)
(60,800)
2,474
32
2,506
The notes on pages 20 to 44 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 2017.
DCM Craven
Director
DCD Media Plc
17 Financial statements for the year ended 31 December 2016
Consolidated statement of cash flows for the year ended 31 December 2016
Cash flow from operating activities including discontinued operations
Year ended
31 December
2016
£’000
Year ended
31 December
2015
£’000
12
11
7
13
14
15
12
11
Net loss before taxation
Adjustments for:
Depreciation of tangible assets
Amortisation and impairment of intangible assets
Net bank and other interest charges
Increase in provisions
Net exchange differences on translating foreign operations
Net cash flows before changes in working capital
Decrease in inventories
Increase in trade and other receivables
Increase in trade and other payables
Cash from continuing operations
Cash flow from discontinued operations
Net profit before taxation
Adjustments for:
Profit on discontinued operations
Net cash flows before changes in working capital
Cash from discontinued operations
Cash from operations
Interest paid
Net cash flows from operating activities
Investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Net cash flows used in investing activities
Financing activities
Repayment of finance leases
Repayment of loan
New loans raised
Net cash flows from financing activities
Net increase/(decrease) in cash
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
25
The notes on pages 20 to 44 are an integral part of these consolidated financial statements.
(43)
37
676
24
-
-
694
5
(652)
1,257
1,304
96
(96)
-
-
1,304
(25)
1,279
(63)
(196)
(259)
(10)
(61)
71
-
1,020
1,181
2,201
(2,422)
57
2,996
164
(51)
4
748
-
(1,750)
1,712
710
-
-
-
-
710
(22)
688
(46)
(653)
(699)
(8)
(147)
61
(94)
(105)
1,286
1,181
DCD Media Plc
18 Financial statements for the year ended 31 December 2016
Consolidated statement of changes in equity for the year ended 31 December 2016
Share
capital
£’000
Share
premium
£’000
Equity
element of
convertible
loan
£’000
Translation
reserve
£’000
Own
shares
held
£’000
Retained
earnings
£’000
Equity
attributable
to owners
of the
parent
£’000
Amounts
attributable
to non-
controlling
interest
£’000
Total
equity
£’000
10,145
51,118
98
(181)
(37)
(58,476)
2,667
(58)
2,609
Balance at 31 December
2014
Loss and total comprehensive
income for the year
Shares allotted on conversion
of loan notes
Equity element on issue of
convertible loans
Exchange differences on
translating foreign operations
-
2,127
-
-
-
-
97
-
Balance at 31 December 2015 12,272
51,215
Profit and total comprehensive
income for the year
Exchange differences on
translating foreign operations
Movement between reserves
-
-
-
-
-
-
Balance at 31 December 2016 12,272
51,215
-
-
(97)
-
1
-
-
-
1
-
-
-
4
-
-
-
-
(2,324)
(2,324)
90
(2,234)
-
-
-
2,127
-
4
-
-
-
2,127
-
4
(177)
(37)
(60,800)
2,474
32
2,506
-
(33)
210
-
-
-
33
-
(210)
33
(33)
-
-
(37)
(60,977)
2,474
(32)
-
-
-
1
(33)
-
2,474
DCD Media Plc
19 Financial statements for the year ended 31 December 2016
Notes to the consolidated financial statements for the year ended 31 December 2016
During the year, the principal activity of DCD Media Plc and subsidiaries (the Group) was the worldwide distribution of
programmes for television and other media; the Group also distributes programmes on behalf of other independent
producers. On 27 May 2016, the Group announced the cessation of development in its TV production divisions and the
continued focus is primarily on the distribution division where the business has significant expertise and knowledge.
DCD Media Plc is the Group's ultimate parent company, and it is incorporated and registered in England and Wales. The
address of DCD Media Plc’s registered office is 9th Floor, Winchester House, 259 - 269 Old Marylebone Road, London,
NW1 5RA, 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 2016.
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 and the Strategic Report. The financial position of the Group, its cash
position and borrowings are set out in the financial review section of the Strategic Report. In addition, note 18 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 a net overdraft facility of
£0.25m (£0.5m gross), with other activities funded from a combination of equity and short and medium term debt
instruments.
The Group’s overdraft facility has been extended by its principal bankers until 30 April 2018. The overdraft facility will
reduce in even instalments quarterly down to £0.15m as at January 2018. The Directors have a reasonable expectation
that an overdraft facility will continue to be available to the Group for the foreseeable future and beyond the current
extension period.
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 market
environment.
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 its obligations as they fall due.
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 were unable to
continue as a going concern.
DCD Media Plc
20 Financial statements for the year ended 31 December 2016
Notes to the consolidated financial statements for the year ended 31 December 2016
1
Principal accounting policies (continued)
Changes in accounting policies
A number of amendments to standards issued by IASB become effective from 1 January 2016. These have been
reviewed and no adjustments deemed necessary. Those becoming effective from 1 January 2017 have not been
adopted early by the Group. Management have reviewed these standards and believe none are expected to have a
material effect on the Group’s future financial statements.
Application of new and revised International Financial Reporting Standards (IFRSs)
New and revised IFRSs in issue but not yet effective
The Group has not applied the following new and revised IFRSs that have been issued but are not yet effective:
Standard
Description
Issued
date
Effective
date
IFRS 1 First Time Adoption of
IFRSs
IFRS 2 Share-based Payments
IFRS 4 Insurance Contracts
IFRS 12 Disclosure of Interests in
Other Entities
IFRS 16 Leases
IAS 7 Statement of Cash Flows
IAS 12 Income Taxes
IAS 28 Investments in Associates
and Joint Ventures
IAS 40 Investment Property
Amendments resulting from Annual Improvements 2014–
2016 Cycle (removing short-term exemptions)
Amendments to clarify the classification and
measurement of share-based payment transactions
Original issue
Amendments resulting from Annual Improvements 2014–
2016 Cycle
Original issue
Amendments as result of the Disclosure initiative
Amendments regarding the recognition of deferred tax
assets for unrealised losses
Amendments resulting from Annual Improvements 2014–
2016 Cycle (clarifying certain fair value measurements)
Amendments to clarify transfers or property to, or from,
investment property
Dec-16
Jan-18
Jun-16
Jan-18
Sep-16
Dec-16
Jan-18
Jan-17
Jan-16
Jan-16
Jan-16
Jan-19
Jan-17
Jan-17
Dec-16
Jan-18
Dec-16
Jan-18
No early adoption has been taken up where permitted on any of the above revisions, amendments and original issue
IFRSs.
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.
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.
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 2016. 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.
DCD Media Plc
21 Financial statements for the year ended 31 December 2016
Notes to the consolidated financial statements for the year ended 31 December 2016
1
Principal accounting policies (continued)
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
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:
Motor vehicles
Office and technical equipment
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.
DCD Media Plc
22 Financial statements for the year ended 31 December 2016
Notes to the consolidated financial statements for the year ended 31 December 2016
1
Principal accounting policies (continued)
Programme rights (continued)
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.
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 in 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.
DCD Media Plc
23 Financial statements for the year ended 31 December 2016
Notes to the consolidated financial statements for the year ended 31 December 2016
1
Principal accounting policies (continued)
Assets held for sale (continued)
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.
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.
DCD Media Plc
24 Financial statements for the year ended 31 December 2016
Notes to the consolidated financial statements for the year ended 31 December 2016
1 Principal accounting policies (continued)
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.
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.
DCD Media Plc
25 Financial statements for the year ended 31 December 2016
Notes to the consolidated financial statements for the year ended 31 December 2016
2
Critical accounting judgements and key sources of estimation uncertainty
The preparation of the financial statements requires management to make estimates and assumptions that affect the
reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the date of
the financial statements. If in the future such estimates and assumptions which are based on management’s best
judgement at the date of the financial statements, deviate from the actual circumstances, the original estimates and
assumptions will be modified as appropriate in the 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 20, the Group has entered 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 £1.2m.
Details relating to the allocation of goodwill to cash-generating units and potential impairment calculations are given in
note 11.
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 £0.1m. Details of the impairment
review calculations are given in note 11.
Adequacy of accruals and provisions
Determining whether accruals and provisions are adequate requires an estimate to be made of the likelihood of a liability
crystallising and the potential amount. Management has reviewed each provision and, where considered necessary, has
taken external advice to ensure adequacy.
3
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:
• Rights and Licensing – This division is involved with the sale of distribution rights, DVDs, music and
publishing deals through DCD Rights.
• Production - This division is involved in the production of television content.
• Post-Production – This division is involved in post-production and contains Sequence Post.
DCD Media Plc
26 Financial statements for the year ended 31 December 2016
Notes to the consolidated financial statements for the year ended 31 December 2016
3
Segment information (continued)
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 activities that 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,
segmental adjusted EBITDA and adjusted profit before tax.
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 allocated to their respective segments. Segment liabilities include all trading liabilities incurred by the
segments. Loans and borrowings incurred by the Group are not allocated to segments. Details of these balances are
provided in the reconciliations below:
2016 Segmental Analysis – income statement
Total revenue
Inter-segmental revenue
Total revenue from external customers
Discontinued operations
Group’s revenue per consolidated statement of
comprehensive income
Operating (loss)/profit before tax – continuing operations
Operating profit before tax – discontinued operations
Operating (loss)/profit before interest and tax
Capitalisation of programme rights
Amortisation of programme rights
Impairment of programme rights
Amortisation of goodwill and trade names
Depreciation
Segmental EBITDA
Restructuring expense
Segmental adjusted EBITDA
Net finance expense
Depreciation
Segmental adjusted profit/(loss) before tax
n
o
i
t
c
u
d
o
r
P
d
n
a
s
t
h
g
R
i
g
n
i
s
n
e
c
i
L
t
s
o
P
n
o
i
t
c
u
d
o
r
P
r
e
h
t
O
6
1
0
2
l
a
t
o
T
£’000
£’000
£’000
£’000
£’000
703
(147)
556
7,558
-
7,558
-
-
455
(23)
432
-
105
(54)
51
-
8,821
(224)
8,597
-
556
7,558
432
51
8,597
(750)
-
(750)
(196)
248
9
419
-
655
-
655
-
-
-
-
27
(270)
682
287
-
17
682
3
-
(2)
(27)
20
653
(9)
-
(9)
-
-
-
-
9
-
-
-
-
(9)
(9)
(11)
96
(115)
96
85
(19)
-
-
-
-
1
86
-
86
(25)
(1)
60
(196)
248
9
419
37
498
287
785
(24)
(37)
724
DCD Media Plc
27 Financial statements for the year ended 31 December 2016
Notes to the consolidated financial statements for the year ended 31 December 2016
3
Segment information (continued)
2016 Segmental analysis – financial position
Non-current assets
Reportable segment assets
Goodwill
Trade-names
Total Group assets
n
o
i
t
c
u
d
o
r
P
d
n
a
s
t
h
g
R
i
g
n
i
s
n
e
c
i
L
t
s
o
P
n
o
i
t
c
u
d
o
r
P
r
e
h
t
O
6
1
0
2
l
a
t
o
T
£’000
£’000
£’000
£’000
£’000
-
46
570
11,179
-
210
1,017
-
21
83
-
-
27
94
144
10,523
-
-
1,017
210
780
12,196
83
144
13,203
Reportable segment liabilities
(361)
(9,060)
(33)
(1,019)
(9,020)
Loans and borrowings
Deferred tax liabilities
Total Group liabilities
2015 Segmental analysis – income statement
Total revenue
Inter-segmental revenue
Total revenue from external customers
Discontinued operations
Group’s revenue per consolidated statement of
comprehensive income
Operating (loss)/profit before tax – continuing operations
Operating (loss)/profit before interest and 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 income
(126)
(40)
(23)
-
-
-
(67)
-
(216)
(40)
(527)
(9,083)
(33)
(1,086)
(10,729)
n
o
i
t
c
u
d
o
r
P
d
n
a
s
t
h
g
R
i
g
n
i
s
n
e
c
i
L
t
s
o
P
n
o
i
t
c
u
d
o
r
P
r
e
h
t
O
5
1
0
2
l
a
t
o
T
£’000
£’000
£’000
£’000
£’000
3,936
(148)
3,788
6,841
-
6,841
-
-
535
(91)
444
-
147
(105)
42
11,459
(344)
11,115
-
-
3,788
6,841
444
42
11,115
(1,939)
(1,939)
(653)
653
152
419
1,772
-
680
680
-
-
-
-
-
19
404
699
(54)
-
14
14
-
-
-
-
-
32
46
-
(943)
(2,188)
(943)
(2,188)
-
-
-
-
-
6
(937)
-
(653)
653
152
419
1,772
57
212
(54)
158
Segmental adjusted EBITDA
350
699
46
(937)
Net finance expense
Depreciation
-
-
(3)
(19)
-
(32)
(161)
(6)
(164)
(57)
Segmental adjusted profit/(loss) before tax
350
677
14
(1,104)
(63)
DCD Media Plc
28 Financial statements for the year ended 31 December 2016
Notes to the consolidated financial statements for the year ended 31 December 2016
3
Segment information (continued)
2015 Segmental analysis – financial position
n
o
i
t
c
u
d
o
r
P
d
n
a
s
t
h
g
R
i
g
n
i
s
n
e
c
i
L
t
s
o
P
n
o
i
t
c
u
d
o
r
P
r
e
h
t
O
5
1
0
2
l
a
t
o
T
£’000
£’000
£’000
£’000
£’000
Non-current assets
117
46
21
1
185
Reportable segment assets
828
9,097
145
261
10,331
Goodwill
Trade-names
Total Group assets
393
628
624
-
-
-
-
-
1,017
628
1,849
9,721
145
261
11,976
Reportable segment liabilities
(488)
(7,684)
(91)
(927)
(9,190)
Loans and borrowings
Deferred tax liabilities
Total Group liabilities
4 Revenue
(61)
(125)
(32)
-
-
-
(62)
-
(155)
(125)
(674)
(7,716)
(91)
(989)
(9,470)
The Group's headquarters is based in the United Kingdom. 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, 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 from continuing operations 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
2016
£’000
Year ended
31 December
2015
£’000
1,684
5,053
1,345
515
8,597
5,939
1,416
3,056
704
11,115
DCD Media Plc
29 Financial statements for the year ended 31 December 2016
Notes to the consolidated financial statements for the year ended 31 December 2016
5
Expenses by nature
Auditor’s 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
Depreciation, amortisation and impairment:
Intangible assets - programme amortisation in cost of sales (note 11)
Intangible assets - programme impairment in cost of sales (note 11)
Intangible assets - goodwill impairment in administrative expenses (note 11)
Intangible assets - trade names amortisation in administrative expenses (note 11)
Property, plant and equipment (note 12)
Staff costs (note 6)
Restructuring costs/(income) (see below)
Year ended
31 December
2016
£’000
Year ended
31 December
2015
£’000
25
37
151
(535)
248
9
-
419
37
1,394
287
25
44
208
(24)
653
152
1,772
419
57
1,790
(54)
In 2016, restructuring costs arise from wages for staff who are now redundant and the corresponding redundancy
charges made within the production side of the business that is now closed. Other restructuring costs include non-
recurring expenses in relation to production activity that will no longer be incurred going forward. In 2015 net
restructuring income arose out of the Group’s US production companies.
6
Directors and employees
Staff costs during the year, including Directors, were as follows:
Wages and salaries
Social security costs
Other pension costs (note 23)
Redundancy costs
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
2016
£’000
Year ended
31 December
2015
£’000
1,145
120
6
123
1,394
1,611
176
3
-
1,790
Year ended
31 December
2016
No.
Year ended
31 December
2015
No.
12
2
4
4
22
13
6
7
5
31
DCD Media Plc
30 Financial statements for the year ended 31 December 2016
Notes to the consolidated financial statements for the year ended 31 December 2016
6
Directors and employees (continued)
Remuneration in respect of the Directors, who are the key management personnel of the Group was as follows for the
year:
D Green*
D Craven
N Davies Williams
N McMyn
A Lindley
Emoluments
£'000
Pension
Contributions
£'000
Money value
of non-cash
benefits
received
£'000
-
75
160
32
5
272
-
-
1
-
-
1
-
-
11
-
-
11
* David Green resigned from the board on 18 August 2016
Emoluments
£'000
Pension
Contributions
£'000
Money value
of non-cash
benefits
received
£'000
-
100
141
131
9
381
-
-
-
-
-
-
-
-
10
-
-
10
D Green
D Craven
N Davies Williams
N McMyn
A Lindley
Employee Benefit Trust
2016
Total
£'000
-
75
172
32
5
284
2015
Total
£'000
-
100
151
131
9
391
In 2012, 7,218,750 shares, that had been held by the directors of Done and Dusted Ltd, were transferred into an
employee benefit trust. After the share consolidation in 2013, the number of shares reduced to 7,218 and following a
transfer of 4,000 to an ex-director in 2013, the number of shares at 31 December 2016 was 3,218 (2015: 3,218).
Employee Share Option Scheme
In 2013, 18,800,000 options over the Company’s 1p ordinary share capital were granted. As a result of share
consolidations in the interim, the equivalent number of options would be 18,800 over the Company’s £1.00 ordinary
share capital. 25% of the options were due to vest in January 2014 and a further 25% in January of each of the three
following years should certain share price hurdles be met. Should the price hurdle in one year not be met, the options will
be available for vesting should the share price meet the subsequent hurdle. No options have been exercised to date. If
all hurdles were to be met in line with the agreement, the weighted average number of options outstanding at 31
December 2016 is 1,650 (2015: 1,500). The Directors have assessed the likelihood that the future hurdle rates will be
met and that any charge to the income statement in the current or future years to be immaterial and as a consequence,
no charge has been booked. The Directors will reassess this on a regular basis.
7
Finance costs
Bank overdraft
Convertible loan interest charge
Other interest charges
Year ended
31 December
2016
£’000
Year ended
31 December
2015
£’000
16
5
3
24
13
141
10
164
DCD Media Plc
31 Financial statements for the year ended 31 December 2016
Notes to the consolidated financial statements for the year ended 31 December 2016
8
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
Current year credit
Deferred tax credit:
Reversal of temporary differences under IFRS
Total tax credit in statement of comprehensive income
Tax credit represents:
Loss on ordinary activities – continuing operations
Profit on ordinary activities – discontinued operations
Loss on ordinary activities multiplied by standard rate of corporation tax in the
UK of 19.25% (2015: 20.0%)
Effects of:
Expenses not deductible for tax purposes (amortisation and impairment of
intangibles)
Net losses in year carried forward/(brought forward losses utilised)
Depreciation in excess of capital allowances
Rate differential on foreign taxes
Total tax credit
Year ended
31 December
2016
£’000
Year ended
31 December
2015
£’000
-
(10)
(10)
86
76
-
23
23
95
118
Year ended
31 December
2016
£’000
Year ended
31 December
2015
£’000
(139)
96
(43)
(8)
114
(28)
7
(9)
76
(2,352)
-
(2,352)
(470)
533
2
11
42
118
A deferred tax asset of approximately £2.5m (2015: £3.9m) 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 based upon the 2016 tax rate of 19% (2015 asset based on the 2015 rate of 20%).
9
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. Operations within Done
and Dusted ceased from 1 January 2012.
Result of discontinued operations
Profit from discontinued operations before tax
Tax expense
Profit from discontinued operations after tax
Year ended
31 December
2016
£’000
Year ended
31 December
2015
£’000
96
-
96
-
-
-
DCD Media Plc
32 Financial statements for the year ended 31 December 2016
Notes to the consolidated financial statements for the year ended 31 December 2016
9
Discontinued operations (continued)
Profit on discontinued operations
Basic earnings per share (pence)
Year ended
31 December
2016
£’000
Year ended
31 December
2015
£’000
96
4p
-
-
Diluted earnings per share would remain at 4 pence were convertible loan balances held at the year-end converted at
their respective conversion prices.
10 Earnings per share
The calculation of the basic profit/(loss) per share is based on the profit/(loss) attributable to ordinary shareholders
divided by the weighted average number of shares in issue during the year. The calculation of diluted profit/(loss) per
share is based on the basic profit/(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.
Weighted
average
number
of shares
2016
Per share
amount
pence
Profit
£'000
Weighted
average
number of
shares
2015
Per share
amount
pence
Loss
£'000
Basic and diluted loss per share
Profit/(loss) attributable to ordinary
shareholders
33 2,541,419
1
(2,324)
915,470
(254)
If convertible loan balances held at the year-end were converted at their respective conversion prices the number of
shares issued would be 2,608,890 (2015: 2,603,880 shares if all the convertible loan balances held at the prior year end
had been converted at their respective conversion prices). Diluted earnings per share would remain at 1 pence were this
transaction to take place. Prior year figures have not been restated as, due to the overall loss position of the group in
that year, the effect would be anti-dilutive.
DCD Media Plc
33 Financial statements for the year ended 31 December 2016
Notes to the consolidated financial statements for the year ended 31 December 2016
11 Goodwill and intangible assets
Cost
At 1 January 2015
Additions
Disposals
At 31 December 2015
At 1 January 2016
Additions
At 31 December 2016
Amortisation and impairment
At 1 January 2015
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 2015
At 1 January 2016
Goodwill
£'000
Trade
Names
£'000
Programme
Rights
£'000
Total
£'000
17,388
-
-
8,036
-
-
37,697
653
(1,600)
63,121
653
(1,600)
17,388
8,036
36,750
62,174
17,388
-
8,036
-
36,750
196
62,174
196
17,388
8,036
36,946
62,370
14,599
6,989
37,428
59,016
-
-
-
1,772
-
-
-
419
-
-
653
152
-
-
(1,600)
653
152
419
1,772
(1,600)
16,371
7,408
36,633
60,412
16,371
7,408
36,633
60,412
Amortisation provided in year in cost of sales
Impairment provided in year in cost of sales
Amortisation provided in year in administrative expenses
-
-
-
-
-
419
248
9
-
248
9
419
At 31 December 2016
Net book value
At 31 December 2016
At 31 December 2015
Goodwill and trade names
16,371
7,827
36,890
61,088
1,017
1,017
209
628
56
117
1,282
1,762
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 Films Ltd
Segment (note 3)
Rights and Licensing
Production
Goodwill carrying amount
31 December
2016
£’000
31 December
2015
£’000
624
393
624
393
1,017
1,017
DCD Media Plc
34 Financial statements for the year ended 31 December 2016
Notes to the consolidated financial statements for the year ended 31 December 2016
11 Goodwill and intangible assets (continued)
Goodwill and trade names (continued)
Segment (note 3)
Trade name carrying amount
31 December
2016
£’000
31 December
2015
£’000
Cash generating units (CGU):
September Films Ltd
Production
209
209
628
628
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 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 2018. The forecasts are then extrapolated for a further five years using
models that estimate the distribution income profile of the GGU’s library. 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 3)
Cash generating units (CGU):
September Films Ltd
Production
Impairment charge
31 December
2016
£’000
31 December
2015
£’000
-
-
1,772
1,772
Trade names
Segment
(note 3)
Amortisation charge
Impairment charge
31 December
2016
£’000
31 December
2015
£’000
31 December
2016
£’000
31 December
2015
£’000
Cash generating units (CGU):
September Films Ltd
Production
419
419
419
419
-
-
-
-
The key assumption used for value in use calculations is the discount factor applied to the forecasts.
The rate used to discount the forecast cash flows is 4.9% for all CGUs. If the discount rates used were increased by 3%
to 7.9%, the carrying value of goodwill would still not be impaired.
DCD Media Plc
35 Financial statements for the year ended 31 December 2016
Notes to the consolidated financial statements for the year ended 31 December 2016
11 Goodwill and intangible assets (continued)
Cash generating units (CGU):
DCD Rights Ltd
September Films Ltd
Programme rights
Discount factor
31 December
2016
%
31 December
2015
%
4.9
4.9
12.5
12.5
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 4.9%. 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 7.9% the carrying values would decrease by £753. If
the discount rate was decreased by 3% to 1.9% the carrying value of assets would increase by £831.
12 Property, plant and equipment
Cost
At 1 January 2015
Additions
At 31 December 2015
At 1 January 2016
Additions
Disposals
At 31 December 2016
Depreciation
At 1 January 2015
Provided in year
At 31 December 2015
At 1 January 2016
Provided in year
Disposals
At 31 December 2016
Net book value
At 31 December 2016
At 31 December 2015
Office and
technical
equipment
£'000
Motor
vehicles
£'000
404
45
449
449
63
(246)
266
365
47
412
412
27
(246)
193
73
37
47
1
48
48
-
-
48
7
10
17
17
10
-
27
21
31
Total
£'000
451
46
497
497
63
(246)
314
372
57
429
429
37
(246)
220
94
68
The net book value of property, plant and equipment includes an amount of £21,221 (2015: £30,709) in respect of assets
held under finance leases and hire purchase contracts. The related depreciation charge on these assets for the year was
£10,008 (2015: £10,008).
DCD Media Plc
36 Financial statements for the year ended 31 December 2016
Notes to the consolidated financial statements for the year ended 31 December 2016
13
Inventories and work in progress
Pre-production costs
14 Trade and other receivables
Due after one year
Trade receivables
Other receivables
Total trade and other receivables due after one year
Due within one year
Trade receivables
Less: provision for impairment of trade receivables
Trade receivables – net
Taxation and social security
Other receivables
Due from related parties (note 22)
Prepayments and accrued income
Total trade and other receivables due within one year
Total financial assets other than cash and cash equivalents classified as
loans and receivables
31 December
2016
£’000
31 December
2015
£’000
-
-
5
5
31 December
2016
£’000
31 December
2015
£’000
147
77
224
325
73
398
31 December
2016
£’000
31 December
2015
£’000
3,800
(11)
3,789
340
736
902
3,208
8,975
4,347
2,088
(35)
2,053
75
787
611
4,623
8,149
2,664
The average credit period taken on sales of goods is 168 days (2015: 96 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 £11k (2015: £35k). The movement in the bad debt provision is related to a small decrease in the
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.
DCD Media Plc
37 Financial statements for the year ended 31 December 2016
Notes to the consolidated financial statements for the year ended 31 December 2016
14 Trade and other receivables (continued)
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
15 Trade and other payables
Trade payables
Other payables
Accruals and deferred income
Taxation and social security
Amount owed to related parties (note 22)
Total trade and other payables
Total financial liabilities, excluding loans and borrowings, classified as
financial liability measured at amortised cost
16
Interest bearing loans and borrowings
Due within one year
Bank overdrafts (secured)
Convertible debt (unsecured)
Amount owed to related parties (note 22)
Obligations under finance leases
31 December
2016
£’000
31 December
2015
£’000
1,686
1,501
596
185
8
1,461
3,936
3,789
147
3,936
405
97
105
270
2,378
2,053
325
2,378
31 December
2016
£’000
31 December
2015
£’000
697
1,167
6,811
25
1,339
10,039
2,206
636
652
6,480
101
908
8,777
1,288
31 December
2016
£’000
31 December
2015
£’000
427
67
133
23
650
413
62
61
10
546
The principal terms and the debt repayment schedule for the Group’s loans and borrowings are as follows as at 31
December 2016:
Bank overdrafts (secured) *
Convertible debt (unsecured)
Other debt
Obligations under finance leases
Currency Nominal rate %
Sterling
Sterling
Sterling
Sterling
3.5 over Base
Rate
8.0
10.0
6.7
Year of
maturity
2017
2017
2017
2017
DCD Media Plc
38 Financial statements for the year ended 31 December 2016
Notes to the consolidated financial statements for the year ended 31 December 2016
16
Interest bearing loans and borrowings (continued)
Bank borrowings
* The bank overdraft has been extended to 30 April 2018, but is repayable on demand. The Directors expect an overdraft
facility to be available to the Group for the foreseeable future.
Bank overdrafts 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 unsecured and is subordinate to the bank overdraft.
Due in less than one year
Obligations under finance leases
Due after more than one year
Obligations under finance leases
31 December
2016
£’000
31 December
2015
£’000
22
22
10
10
31 December
2016
£’000
31 December
2015
£’000
-
-
22
22
17 Deferred tax liabilities
Deferred tax liabilities are attributable to the following:
Intangible assets
Net tax liabilities
Liabilities
Net
31 December
2016
£'000
31 December
2015
£'000
31 December
2016
£'000
31 December
2015
£'000
40
40
125
125
40
40
125
125
A deferred tax asset of £2.5m, arising principally from losses in the Group of £13.1m, has not been recognised (2015:
£3.9m and £18.8m). 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 sufficient profits will be recognised in the near future to make use of these losses.
Movement in deferred tax during the year:
Intangible assets
Tax value of temporary difference
1 January
2016
£'000
Recognised in
income
£'000
31 December
2016
£'000
125
125
84
84
41
41
DCD Media Plc
39 Financial statements for the year ended 31 December 2016
Notes to the consolidated financial statements for the year ended 31 December 2016
18 Financial risk management
Financial risk factors
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, 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.
Liquidity risk
The Group seeks to manage financial risk to ensure sufficient liquidity is available to meet foreseeable needs and to
invest cash assets safely and profitably. Some liquidity risk arises from the nature of production income, which does not
always arise in an even manner, and the Group's policy is to ensure there are sufficient cash reserves to meet liabilities
during such periods.
Liquidity risk also arises from the interest charges and repayment terms of 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 2016 and
31 December 2015 was as follows:
US dollar
Euros
Other
Total assets/(liabilities)
Assets
Liabilities
31 December
2016
£'000
31 December
2015
£'000
31 December
2016
£'000
31 December
2015
£'000
3,644
444
175
4,263
2,178
147
190
2,515
(12)
(33)
-
(45)
(352)
(48)
(148)
(548)
Whilst the main foreign 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.
DCD Media Plc
40 Financial statements for the year ended 31 December 2016
Notes to the consolidated financial statements for the year ended 31 December 2016
18 Financial risk management (continued)
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 points higher than those actually incurred. The effect of such a
change would be to increase the loss before tax for the year by £9,000 (2015: loss of £8,000).
Capital risk management
The capital structure of the Group consists of convertible loan note loan financing, bank loan financing and the
shareholders’ equity comprising issued share capital and reserves.
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.
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
1-3
months
£'000
3-12
months
£'000
1-5 years
£'000
More than
5 years
£'000
Total
£'000
6.7%
n/a
8.0%
n/a
10%
3.5%
1
807
-
-
-
427
2
-
-
-
94
-
19
-
39
28
39
-
-
-
-
-
-
-
-
-
-
-
-
-
22
807
39
28
133
427
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
Total
£'000
6.7%
N/a
8.0%
N/a
10.0%
1
636
-
-
3.5%
413
2
-
-
-
-
7
-
39
23
61
-
22
-
-
-
-
-
-
-
-
-
32
636
39
23
61
413
31 December 2016
Fixed rate
Finance lease
obligations
Trade payables
Convertible debt
Interest on
convertible debt
Other debt
Floating rate
Bank overdrafts
31 December 2015
Fixed rate
Finance lease
obligations
Trade payables
Convertible debt
Interest on
convertible debt
Other debt
Floating rate
Bank overdrafts
DCD Media Plc
41 Financial statements for the year ended 31 December 2016
Notes to the consolidated financial statements for the year ended 31 December 2016
19 Share capital
Share capital
Share premium
Issued capital comprises:
Allotted, called up and fully paid
2,541,419 ordinary shares of £1 each (2015: 2,541,419 ordinary shares of £1
each)
9,730,514 deferred shares of £1 each (2015: 9,730,514 deferred shares of £1
each)
31 December
2016
£'000
31 December
2015
£'000
12,272
51,215
63,487
12,272
51,215
63,487
31 December
2016
£'000
31 December
2015
£'000
2,541
9,731
2,541
9,731
12,272
12,272
Fully paid ordinary shares:
Ordinary shares have full voting, dividend and capital distribution rights attached to them.
Number of
shares
Share capital
£'000
Share
premium
£'000
Balance at 1 January 2016 and 31 December 2016
12,271,933
12,272
51,215
Pursuant to a resolution passed on 24 July 2012 and in accordance with the provisions of the Companies Act 2006 the
Company ceased to have authorised share capital.
The deferred shares are not entitled to receive a dividend or other distribution, to attend or vote at any General Meeting
and on return of capital on a winding up, shall only be entitled to receive the amount paid up on the shares after holders
of the ordinary shares have received £100,000 for each ordinary share.
On 7 October 2015, the 2013 and 2014 Convertible Loan Notes and accrued interest to that date were converted into
2,127,138 ordinary £1 shares.
20 Contingent liabilities – sale and leaseback agreements
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.
DCD Media Plc
42 Financial statements for the year ended 31 December 2016
Notes to the consolidated financial statements for the year ended 31 December 2016
20
Contingent liabilities – sale and leaseback agreements (continued)
The liabilities from these agreements are as follows:
As at 31 December 2016
As at 31 December 2015
21 Capital commitments
Due within 1
year
£'000
Due within 2
to 5 years
£'000
Due after 5
years
£'000
771
1,629
-
771
-
-
Total
£'000
771
2,400
There were no capital commitments at 31 December 2016 or 31 December 2015.
22 Transactions with directors and other related parties
Loans to Directors
At 31 December 2016 and 2015 there were no loans due to Directors.
Other transactions
During the year the following amounts were charged by companies in which the Directors have an interest or share
directorships:
Company
Director
Amount charged
2016
£'000
2015
£'000 Description
Timeweave Ltd
D Craven
210
417
Provision of director, finance and management
services
The balances outstanding at the year-end were as follows:
Company
Director
Amount payable
2016
£'000
2015
£'000 Description
Timeweave Ltd
D Craven
828
603
Provision of director, finance and management
services
Other related party transactions
In 2012, DCD Rights Ltd secured a deal with Timeweave Ltd, a shareholder of DCD Media plc, to create a new fund for
the acquisition of third-party distribution rights. At 31 December 2016, DCD Rights Ltd was owed £901,706 from
Timeweave Ltd (31 December 2015: £611,122) and owed £1,339,106 to Timeweave Ltd (31 December 2015:
£305,446).
In September 2015, Rize Television Ltd obtained a loan from Timeweave Ltd to fund the production of Got What it
Takes? for CBBC. The facility was for £125,582. At 31 December 2016, £132,582 was outstanding (31 December
2015: £60,887). At the date of signing these accounts, £31,657 is outstanding.
Compensation of key management personnel of the Group
Short-term employee benefits
Termination payments
Pension benefits
31 December
2016
£'000
31 December
2015
£'000
572
-
4
576
696
-
3
699
Only directors and employees who attend the monthly executive meetings are deemed to be key management
personnel.
DCD Media Plc
43 Financial statements for the year ended 31 December 2016
Notes to the consolidated financial statements for the year ended 31 December 2016
22 Transactions with directors and other related parties (continued)
The principal operating subsidiary companies are listed below:
Subsidiary
DCD Rights Ltd
September Films Ltd
Sequence Post Ltd
Rize Television Ltd
Country of incorporation % owned
Nature of business
England & Wales
England & Wales
England & Wales
England & Wales
100%
100%
100%
100%
Distribution of programme rights
Production of programmes for television
Post production
Production of programmes for television
23 Retirement benefit schemes
The Group contributed to the personal pension plans of 18 employees in 2016 (2015: one). Contributions in the year
amounted to £5,796 (2015: £2,880).
24 Operating lease rental commitments
The Group maintains property, plant and equipment on operating leases.
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
25 Notes supporting the cash flow statement
Cash and cash equivalents for the purposes of the cash flow statement comprises:
Cash available on demand
Overdraft
31 December
2016
£'000
31 December
2015
£'000
209
429
638
148
77
225
31 December
2016
£'000
31 December
2015
£'000
2,628
(427)
2,201
1,594
(413)
1,181
26 Ultimate parent company and ultimate controlling party
The immediate parent company is Timeweave Ltd, registered in England and Wales. The smallest and largest group that
consolidates the results of the company is Mayfair Capital Investments UK Ltd, registered in England and Wales. The
results of Mayfair Capital Investments UK Ltd can be obtained from Companies House website at
www.companieshouse.gov.uk .
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 Mayfair Capital Investments Ltd and Colter Ltd, a company incorporated in the
Bahamas. The Directors consider Mayfair Capital Investments Ltd, a company incorporated in the Bahamas to be the
ultimate parent company.
DCD Media Plc
44 Financial statements for the year ended 31 December 2016
Parent company balance sheet as at 31 December 2016
Fixed assets
Intangible assets
Property, plant and equipment
Investments
Trade and other receivables
Current assets
Trade and other receivables
Cash at bank and in hand
Total assets
Creditors: amounts falling due within one year
Total liabilities
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
Company number 03393610
31 December
2016
£’000
31 December
2015
£’000
Note
3
4
5
6
6
7
9
10
10
10
10
-
-
3,876
76
3,952
1,309
-
1,309
5,261
-
1
4,008
73
4,082
1,050
-
1,050
5,132
(3,425)
(2,939)
(3,425)
(2,939)
1,836
2,193
12,272
51,215
1
(37)
(61,615)
12,272
51,215
1
(37)
(61,258)
1,836
2,193
The notes on pages 47 to 52 are an integral part of these financial statements.
The financial statements were approved and authorised for issue by the Board of Directors on 31 May 2017.
DCM Craven
Director
DCD Media Plc
45 Financial statements for the year ended 31 December 2016
Statement of Changes in Equity for the year ended 31 December 2016
Share
capital
£’000
Share premium
Equity element of
convertible loan
Own shares
held
Retained earnings
Total equity
£’000
£’000
£’000
£’000
£’000
Balance at 31 December 2014
10,145
51,118
Loss and total comprehensive income for the year
Shares allotted on conversion of loan notes
Equity element on issue of convertible loans
-
2,127
-
-
-
97
Balance at 31 December 2015
12,272
51,215
Loss and total comprehensive income for the year
-
-
Balance at 31 December 2016
12,272
51,215
98
-
(97)
1
-
1
(37)
(58,573)
2,751
-
-
-
(2,685)
-
-
(37)
(61,258)
-
(357)
(37)
(61,615)
(2,685)
2,127
-
2,193
(357)
1,836
DCD Media Plc
46 Financial statements for the year ended 31 December 2016
Notes to the parent company financial statements for the year ended 31 December 2016
1
Principal accounting policies
These financial statements are prepared on the going concern basis, under the historical cost convention and in
accordance with applicable United Kingdom accounting standards, including Financial Reporting Standard 102 – 'The
Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland' ('FRS 102'), and with the
Companies Act 2006.
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 18 of the consolidated financial statements 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. The Company has taken advantage of the reduced disclosure requirements to not prepare a cashflow
statement in line with FRS 102 paragraph 1.11 and 1.12.
Judgements in applying accounting policies and key sources of estimation uncertainty
In preparing these financial statements, the Directors have made the following judgements:
(cid:1) Determine whether amounts recoverable from group companies are recoverable and the carrying value of
investments are appropriate. These decisions depend on the financial position of the relevant group company
and forecasts of future cash flows.
(cid:1) Assess the recoverability of other debtors. The Directors have assessed the financial position of the relevant
counterparties.
(cid:1) Determine whether leases are finance or operating leases. Material leases have been reviewed to assess
appropriateness of classification.
(cid:1) Review the carrying value of tangible fixed assets.
(cid:1) Assess the adequacy of accruals and provisions. Directors have assessed the likelihood and scale of potential
liabilities that were present at the balance sheet date.
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
Pension costs were paid for one employee during the year and as per prior years were charged against profits as they
accrued.
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.
DCD Media Plc
47 Financial statements for the year ended 31 December 2016
Notes to the parent company financial statements for the year ended 31 December 2016
1
Principal accounting policies (continued)
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.
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.
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.
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.
2
Loss 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 loss for the year after tax was £357,000 (2015: loss
£2,685,000). The result for the year includes £25,000 for the audit of the Company and as parent of the DCD Media Plc
group (2015: £25,000).
3
Intangible assets
Cost
At 1 January 2016 and at 31 December 2016
Amortisation and impairment
At 1 January 2016 and at 31 December 2016
Net book value
At 31 December 2016
At 31 December 2015
Programme Rights
£'000
320
320
-
-
DCD Media Plc
48 Financial statements for the year ended 31 December 2016
Notes to the parent company financial statements for the year ended 31 December 2016
4
Property, plant and equipment
Cost
At 1 January 2016 and at 31 December 2016
Depreciation
At 1 January 2016
Provided in year
At 31 December 2016
Net book value
At 31 December 2016
At 31 December 2015
5
Fixed asset investments
Cost or valuation
At 1 January 2016 and 31 December 2016
Accumulated amortisation
At 1 January 2016
Provided in year
At 31 December 2016
Net book value
At 31 December 2016
At 31 December 2015
Office and technical equipment
£'000
32
31
1
32
-
1
Shares in subsidiary
undertakings
£’000
25,294
21,286
132
21,418
3,876
4,008
All shares held in subsidiary undertakings are ordinary shares with full voting, dividend and distribution rights.
The principal operating subsidiary companies are listed below. All are 100% owned:
Company name
Place of
incorporation
Principal activity
DCD Rights Ltd
September Films Ltd
Sequence Post Ltd
Rize Television Ltd
England & Wales
England & Wales
England & Wales
England & Wales
Distribution of programme rights
Production of programmes for television
Post production
Production of programmes for television
DCD Rights Ltd sell programme rights worldwide to all media.
Net
assets
£’000
(728)
2,219
(638)
251
Profit/(loss)
for year
£’000
383
648
(70)
(109)
September Films Ltd and Rize Television Ltd are involved with the production of programmes for television and other
media.
Sequence Post Ltd is involved in post-production.
September Films NY Inc., September Films West Coast Inc. September Films USA Incorporated and September
Scripted Incorporated, companies incorporated in the USA, were all wound up in the year.
Box TV Ltd, DCD Drama Ltd, Done and Dusted Group Ltd, DCD Publishing Ltd, DCD Productions (UK) Ltd, Prospect
Pictures Ltd and Prospect Cymru/Wales Ltd are not part of ongoing trading operations.
All the subsidiary companies are registered in England and Wales.
DCD Media Plc
49 Financial statements for the year ended 31 December 2016
Notes to the parent company financial statements for the year ended 31 December 2016
6
Trade and other receivables
Non-current assets
Other debtors
Current assets
Amounts owed by group undertakings
VAT recoverable
Other debtors
Prepayments and accrued income
7
Creditors: amounts falling due within one year
Bank overdraft (secured)
Convertible debt (unsecured)
Trade creditors
Amounts owed to group undertakings
Amounts due to related parties
Taxation and social security
Accruals and deferred income
8
Bank and other borrowings
Due within one year or on demand
Bank overdrafts - secured (a)
Convertible loan notes (b)
Total borrowings
31 December
2016
£'000
31 December
2015
£'000
76
73
31 December
2016
£'000
31 December
2015
£'000
1,241
26
23
19
1,309
868
45
59
78
1,050
31 December
2016
£'000
31 December
2015
£'000
10
67
28
2,357
828
-
135
3,425
6
62
72
2,044
603
4
148
2,939
31 December
2016
£'000
31 December
2015
£'000
10
67
77
6
62
68
a) The Group's day-to-day operations are funded from cash generated from trading and the use of a net overdraft
facility of £0.25m (£0.5m gross). The facility is repayable on demand. At the time of signing the accounts the facility
has been extended by its principal bankers until 30 April 2018. The overdraft facility will reduce in even instalments
quarterly down to £0.15m as at January 2018. The Directors have a reasonable expectation that an overdraft facility
will continue to be available to the Group for the foreseeable future and beyond the current extension period.
The overdraft is secured by a fixed charge over the Company’s and Group’s intangible programme rights assets.
(b) The 2005 and 2008 loan notes are repayable once the Coutts facilities have been repaid.
9
Share capital
See Group accounts note 19.
DCD Media Plc
50 Financial statements for the year ended 31 December 2016
Notes to the parent company financial statements for the year ended 31 December 2016
10 Share premium account and reserves
Equity
element of
convertible
loan
£'000
98
-
(97)
1
1
1
Share
premium
£'000
51,118
-
97
51,215
51,215
-
51,215
Profit and loss
account
£'000
(58,573)
(2,685)
Own shares
held
£’000
-
(37)
-
Total
£'000
(7,394)
(2,685)
-
-
-
(61,258)
(37)
(10,079)
(61,258)
(357)
(61,615)
(37)
-
(37)
(10,079)
(357)
(10,436)
At 1 January 2015
Loss for the year
Equity
element
convertible loans
on
issue
of
At 31 December 2015
At 1 January 2016
Loss for the year
At 31 December 2016
11 Financial instruments
Financial assets
Financial assets measured at fair value through the profit and loss
Financial assets that are debt instruments measured at amortised cost
Financial liabilities
Financial liabilities measured at amortised cost
31 December
2016
£'000
31 December
2015
£'000
-
1,092
1,092
3,424
3,424
-
1,050
1,050
2,939
2,939
Financial assets measured at amortised cost include trade and other debtors, recoverable VAT, prepayments and
accrued income and amounts owed by group undertakings.
Financial liabilities measured at amortised cost include trade and other creditors, amounts owed to group undertakings
and related parties, accruals and deferred income and convertible debt.
12 Pension costs
The Company made contributions for one employee towards a personal pension scheme (2015: no contributions to
personal pension schemes).
13 Transactions with Directors and other related parties
During the year the following amounts were charged by companies in which the Directors have an interest:
Company
Director
Amount charged
2015
£'000 Description
2016
£'000
Timeweave Ltd
D Craven
210
417
Provision of director and accounting
services to DCD Media Plc.
At
31
December
2016,
£828,352
was
due
to
Timeweave
Ltd
(2015:
£602,776).
The company has taken advantage of the exemptions available under FRS 102 not to disclose any transactions or
balances with entities that are 100% controlled by DCD Media Plc.
DCD Media Plc
51 Financial statements for the year ended 31 December 2016
Notes to the parent company financial statements for the year ended 31 December 2016
14 Ultimate parent company and ultimate controlling party
The immediate parent company is Timeweave Ltd, registered in England and Wales. The smallest and largest group that
consolidates the results of the company is Mayfair Capital Investments UK Ltd, registered in England and Wales. The
results of Mayfair Capital Investments UK Ltd can be obtained from Companies House website at
www.companieshouse.gov.uk .
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 Mayfair Capital Investments Ltd and Colter Ltd, a company incorporated in the
Bahamas. The Directors consider Mayfair Capital Investments Ltd, a company incorporated in the Bahamas to be the
ultimate parent company.
DCD Media Plc
52 Financial statements for the year ended 31 December 2016
Corporate information
Company secretary and registered offices
Registrars
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
BR3 4TU
www.capitaregistrars.com
Auditors
SRLV
89 New Bond Street
London
W1S 1DA
www.srlv.co.uk
Solicitors
Dickson Minto WS
16 Charlotte Square
Edinburgh
EH2 4DF
www.dicksonminto.com
Andrew Lindley
9th Floor, Winchester House,
259 - 269 Old Marylebone Road,
London, NW1 5RA
Nominated Adviser
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
9th Floor, Winchester House,
259 - 269 Old Marylebone Road,
London, NW1 5RA
+44 (0)20 3869 0190
info@dcdmedia.co.uk
www.dcdmedia.co.uk
DCD Media Plc
53 Financial statements for the year ended 31 December 2016