RNS Number:6213M
UBC Media Group PLC
23 June 2003
UBC MEDIA GROUP
Results for the year ended 31 March 2003
* UBC breaks in to operating profit, before development;
* Turnover increases 12.3% to #10.3 million (2002: #9.2 million);
* Gross Profit increases 8.4% to #3.2 million (2002: #3.0 million);
* Operating Profit for the year before amortisation and development totals
#73,000 (2002: -#210,000) and operating loss after amortisation and
development totals -#1.5 million (2002: -#2.3 million);
* Administration expenditure before goodwill and development, stable at #3.2
million (2002: #3.2 million);
* At 31 March 2003 UBC has cash in the bank of #3.4 million, compared to
#1.2 million at 31 March 2002;
* Deal with Time Out for supply of on-air information and joint marketing
initiatives in London.
Commenting on the results, Michael Peacock, Chairman of UBC Media Group plc,
said:
"UBC Media has moved into operating profit before development, while investing
in a portfolio of strategically important digital radio assets. Our radio
production business had a successful year, despite a difficult environment for
the industry, and stands ready to benefit both from the increased commitment of
BBC Radio to the independent production sector and from any advertising
recovery. Our digital radio assets are very well placed to generate substantial
revenues as DAB digital radio becomes a mass market product".
Enquiries:
Simon Cole, Chief Executive Officer Tel: 020 7453 1600
e-mail: simon.cole@ubcmedia.com
Press:
Tim Allan, Portland for UBC Tel: 020 7404 5351
e-mail: tim.allan@portlandpr.co.uk
There will be a presentation to analysts and investors at 9.30am BST, which will
take place at Bloomberg's offices - 39-45 Finsbury Square, London, EC2A 1PQ, in
Room 5 on the lower ground floor.
Attendees should register by contacting Diane Barnes at
diane.barnes@portlandpr.co.uk or +44 20 7404 5351.
CHAIRMAN'S STATEMENT
I am pleased to be able to report a further year of strong growth for UBC Media
Group, with results ahead of market expectations.
Revenues for the Group increased by 12.3% to #10.3 million (2002: #9.19
million), and profits before development and goodwill increased to #73,000,
compared to a loss of -#210,000 in the preceding period.
The past year has been one of performance and delivery: with all parts of the
Group performing well in the face of what continues to be a difficult trading
environment. In addition, we continued to deliver on the business objectives we
set ourselves at the time of our AIM flotation in June 2000 and repeated at time
of the fund-raising at the start of the financial year.
The rollout of UBC's digital strategy continues and the past year marked a
number of important milestones for the industry. Not least of these was the
launch in the second half of the year of the first sub-#100 DAB digital radio
and the enthusiastic response of consumers. With the launch of new digital
radios in the market and the prospect of the number of digital radios in use
doubling again over the next 12 months, the all important question of 'when
digital radio takes off' is fast being addressed by consumers.
At the same time, UBC's heritage businesses have continued to perform well;
demonstrating the strength and resilience of the Group's range of activities,
and the management team's ability to deliver both strong organic growth and to
manage and extend the business in the face of harsh trading conditions.
UBC is a young and dynamic company, with a staff profile to match. The
achievements of the past year would not have been possible without the
wholehearted enthusiasm and support of all employees and I would like to take
this opportunity on behalf of the Board to thank our staff for their
contribution over the past year.
I am pleased to welcome Kelvin Harrison as a non-executive director of the
Company. Kelvin brings to UBC considerable hands-on experience of growing
medium-sized companies, and I believe his technology and engineering background
and corporate experience will make him a valuable addition to the Board.
The current difficult trading environment shows no sign of easing. However,
given the management team's record to date of delivering on performance targets,
the Board continues to have confidence in the Company's prospects and I believe
the outlook for the forthcoming year is encouraging.
CHIEF EXECUTIVE'S REVIEW OF OPERATIONS
Our vision of an integrated production and broadcasting business well positioned
for the radio industry's transition to digital has taken shape this year.
The development of our core production business, with the addition of the AA
Roadwatch network, and the strong growth at Classic Gold Digital has meant we
have taken the significant step of returning to operating profit earlier than
had originally been anticipated. This has been achieved in a year when digital
radio has stepped up a gear, consumer demand for receivers is strong and the
value of the digital portfolio we have established through careful investment is
becoming apparent.
In addition we announced today that Classic Gold Digital has reached an
agreement with Time Out. Time Out will become the primary supplier of Classic
Gold London's local entertainment news and listings information. The service
will carry Time Out's branding and the news service is being provided at no cost
to Classic Gold with both companies participating in joint marketing initiatives
for the service.
Production
UBC produces a rich mix of audio programmes across a full range of music, news
and speech-based formats and continually strives to extend the range and depth
of its programming operations. The majority of the production division's output
is for commissioned programmes under long-term contracts, and has historically
benefited from both forward visibility and a high level of repeat business.
Alongside this, our bartered network programming provides important revenue
streams from the commercial sector.
In the year to 31 March 2003 UBC's radio production revenues were stable at
#1.97 million (2002: #2.01 million), and operating margins were in line with the
previous year. Major commissioned programmes produced for the BBC include The
Richard Allinson Show and Pick of the Pops for BBC Radio 2 and Something
Understood for Radio 4. During 2002 UBC was commissioned to produce the
re-launched commercial radio sector Hit 40 UK chart show, sponsored by
Woolworths. Looking ahead, we believe the launch of the BBC's five national
digital radio networks creates new production opportunities for the Group. As
the leading independent supplier of radio programmes to the BBC, these are
opportunities UBC is well positioned to exploit.
The sale of airtime within the bartered programming formats created by UBC and
syndicated across a network of commercial radio stations lies at the heart of
UBC's historic business. Despite what continues to be a challenging environment
for airtime sales, our commitment to this area of business was demonstrated by
the launch in the final quarter of the AA Roadwatch traffic and travel news
service, alongside our existing Entertainment News, Bloomberg Business News and
comedy formats. The impact on the scale of UBC's airtime sales business from the
launch of the AA Roadwatch service was immediate, with commercial revenues for
the year up 12.1% at #2.59 million, compared to #2.31million in 2002.
Traffic and travel news bulletins are viewed within the radio industry as a '
must-have' property and the launch of the AA Roadwatch service represents a
step-change in UBC's airtime sales offering. As an indication of the change of
scale that results from the launch of the AA Roadwatch service, UBC's
Entertainment News format is carried by 68 stations reaching 6.2 million adult
listeners, and Bloomberg Business News is carried by 79 stations reaching 3.6
million adult listeners; in contrast, AA Roadwatch is carried by 78 stations
reaching 9.7 million adult listeners, and more than doubles both the number of
impacts available to UBC to sell and the Company's share of the national radio
advertising market. The launch of the AA Roadwatch service and the continued
growth of sponsorship and promotions services to clients, such as Proctor &
Gamble, demonstrate UBC's ability to deliver strong organic growth from within
our traditional business. UBC's commercial airtime sales business enters the new
financial year well positioned to benefit from any upturn in the radio
advertising market when it occurs.
Classic Gold Digital
Classic Gold Digital has had a particularly strong year, demonstrating the
commercial logic of our acquisition of these networks from GWR Group. Revenues
were up 21.6% on the previous period, at #4.5 million, (2002: #3.7 million), in
part reflecting a full-year's contribution from the final six stations acquired
in the preceding period. In addition, Classic Gold Digital also delivered
significant growth in sponsorship and promotions revenues.
Classic Gold Digital broadcasts a mix of hits from the 60's, 70's, 80's and 90's
and is made up of a network of stations that carry national programming,
customised locally to include news, traffic and travel, weather and other
relevant information. Building audiences for the network has traditionally been
hampered by the poor reception associated with broadcasting on AM frequencies.
This presents UBC with both a challenge and an opportunity: the challenge of
arresting the decline in audiences that has become a feature of AM radio
broadcasting in the past decade; an opportunity, because we believe 'gold'
formats potentially stand to gain the most from migration to digital, with its
crystal clear broadcast quality.
We believe the challenge of declining audiences can only be met by investment in
the stations that make up the Classic Gold Digital network. In the past year
Classic Gold Digital has successfully defended its market share, despite
increased competition in some of its main markets. UBC's commitment to invest in
Classic Gold Digital continues, with the launch since the year-end of a new
weekday breakfast show presented by Tony Blackburn, who has recently enjoyed a
high media profile. The latest RAJAR results, which do not take account of the
new breakfast programming, show that Classic Gold Digital has held its market
share across the network and listening hours remain stable.
Classic Gold Digital forms a major part of UBC's digital strategy. We believe
the model of national programming carried across a network of local digital
outlets carries the best prospect of commercial success in the more competitive
digital future by creating a major national music brand, while retaining the
ability to sell local advertising. During the year UBC secured digital coverage
for Classic Gold Digital in the all-important London market. With Classic Gold
Digital's existing analogue and digital coverage, this extends Classic Gold
Digital's audience to 29 million, ranking it as one of the largest digital
formats in the United Kingdom. It is our intention that RAJAR will begin
measuring Classic Gold Digital's audience on digital platforms from the second
half of this year.
Facilities and Radio Services
UBC's radio services division, which trades as Unique Facilities, operates
studio facilities for both the Group's internal use and for external clients. A
major area of growth for the radio services division continues to be providing
outside broadcast facilities to events such as the Ideal Home Show, The Ski &
Snowboard Show and the Boat Show. Another area of growth continues to be the
development of bespoke radio services to clients such as Gala Bingo. In spite of
the continuing over-capacity in the London studio facilities market, in the year
to 31 March 2003 UBC's radio services division delivered revenue growth up 8.5%
to #1.3 million (2002: #1.2 million).
Oneword Radio
During the year UBC increased its shareholding in the national digital
commercial radio station, Oneword, from 33% to 50%, when our former partner
Guardian Media Group opted to convert its shareholding in the station into a
direct shareholding in UBC.
Oneword broadcasts a unique and critically acclaimed format dedicated to the
spoken word. For the last three years Oneword has been nominated for the
prestigious Sony Radio Academy Award - Digital Terrestrial Radio Station of the
Year, winning the award on two successive occasions. One of the prime drivers of
the take-up of DAB digital radio will come from extending consumer choice - this
includes the creation of digital radio formats not available to listeners on
traditional analogue platforms. Oneword very much fits this model - it is new
and innovative and we believe will have substantial audience appeal. Since the
year-end Oneword has published its first RAJAR audience figures - these are very
encouraging and we are hopeful about prospects for the station as digital
audiences grow.
Data Services & Broadcast Software
Since our floatation in 2000, UBC has consistently advocated that one of the key
benefits of digital radio is its ability to broadcast data to portable devices
at speeds higher than other mobile technologies. Our early recognition of this
prospect enabled us to secure a leading position both as owners of data spectrum
and developers of the software that will power future data services.
UBC's software development arm, Unique Interactive, specialises in the
development and sale of software for the management and delivery of media
content to both the analogue and digital radio sectors. Unique Interactive's
main areas of focus in the past year continue to be on the development of the
pioneering 'ManDLS' system for the management of the dynamic label segment (DLS)
of scrolling text which accompanies digital broadcast; and development of an
electronic programme guide (EPG), which potentially allows the creation of an
interactive programming capability via. an EPG-enabled device.
UBC became part of the MXR consortium in 2001 in order to secure data capacity
on the multiplexes serving the major regions of England. This strategy has been
highly successful: during the last year MXR was awarded the Yorkshire regional
licence, to add to licences previously awarded to the consortium covering South
Wales and the West, Northwest and Northeast England and the West Midlands. UBC
has pooled its data capacity on these multiplexes with capacity owned by Capital
Radio in South East England, to create an important data-broadcasting network,
which we will be developing in the coming year. Successful exploitation of the
data broadcasting capabilities of digital radio continues to depend upon the
future development of data-enabled receivers. While UBC expects prototype
devices to be developed in the next 12 months, the opportunity to exploit the
data capability of digital radio remains a longer-term prospect.
Unique Interactive's software development revenues are at an early stage of
development. During the last year, however, Unique Interactive has concluded a
number of landmark deals, including agreements with SMG Radio and EMAP for use
of Unique Interactive's ManDLS digital radio text technology; and agreements
with Capital Radio and Chrysalis Radio to launch the world's first digital radio
EPG network. Taken together, we believe UBC's investment in Unique Interactive
is beginning to bear fruit.
Prospects
Sales of airtime in the first two months of the year were below target, in line
with the rest of the industry, but have shown recent signs of recovery. Overall,
revenues from airtime sales represent only one-third of UBC's turnover and the
rest of the Group continues to operate in-line with expectations. Looking ahead,
we remain confident of prospects for the full year.
The launch of affordable DAB digital radios in the final quarter of 2002 had a
transforming impact on perceptions of digital radio and its prospects. Sales of
receivers increased substantially in 2002, and look set to double again in 2003.
The entry in the market in the past few months of household names in consumer
electronics manufacturing, such as Goodmans and Roberts Radio, is a further
indication of the rapidly improving environment for digital radio in 2003. The
prospects for the business remain strong and UBC's commitment to be at the
forefront of the development of digital radio ensures we are in prime position
to take advantage of future opportunities as they arise.
FINANCE DIRECTOR'S REPORT
The financial highlights of UBC Media Group for the year to 31 March 2003 are as
follows:
* UBC breaks in to operating profit, before development;
* Turnover increases 12.3% to #10.3 million (2002: #9.2 million);
* Gross Profit increases 8.4% to #3.2 million (2002: #3.0 million);
* Operating Profit for the year before amortisation and development totals
#73,000 (2002: -#210,000) and operating loss after amortisation and
development totals -#1.5 million (2002: -#2.3 million);
* Development costs in the year total #1.0 million (2002: #835,000);
* Administration expenditure before goodwill and development, stable at #3.2
million (2002: #3.2 million);
* At 31 March 2003 UBC has cash in the bank of #3.4 million, compared to
#1.2 million at 31 March 2002.
Fund Raising and Use of Proceeds
In April 2002, UBC successfully completed a Placing and Open Offer of
approximately 19.45 million ordinary shares in the Company, representing a 13.3%
enlargement of the Company's issued share capital, raising #4.93 million (net of
expenses). Following the retirement of a #1.35 million interest-bearing loan
note issued to GWR Group that formed part of the consideration for the
acquisition of the Classic Gold Digital network, UBC has committed the balance
of the proceeds to finance the Company's digital strategy through to the
generation of digital revenues.
Investment in Digital Radio
During the year to 31 March 2003 UBC invested the following amounts in its
development strategy:
* Investment of #679,000 (2002: #697,000) towards the development of
Oneword, The Digizone and the Digital News Network;
* Licence fees totalling #814,000 (2002: #548,000) for carriage of Classic
Gold Digital on seven digital multiplexes covering Northern England and
Greater London;
* Data licence fees of #165,000 (2002: #193,000) for broadcasting a regional
data service on 5 MXR digital multiplexes.
In addition, in December 2002 UBC increased its shareholding in Oneword Radio to
50%, following the purchase of part of Guardian Media Group's minority
shareholding in the joint venture. The purchase did not result in an increase in
the level of investment required to fund Oneword Radio in the year to 31 March
2003.
Cash Flow
During the year UBC had a cash inflow after adding back development costs of
#292,000 (2002: #173,000) excluding working capital movements, which
demonstrates that the Group's core business continues to be cash positive and
our investment is solely dedicated to the Group's digital development strategy.
Intangibles and Development
In keeping with previous practice, UBC follows an accounting policy involving
the write-off of development costs and digital intangibles to the Profit & Loss
Account as they are incurred or acquired since, although technical feasibility
has been proven, until DAB Digital Radio has a wider user-base than it currently
has, its economic viability is not assured. Accordingly, during the year we
wrote off the following items:
* Goodwill of #595,000, primarily relating to the Classic Gold Digital
stations;
* #1,004,000 development expenditure incurred by the Group; and
* #679,000 comprising UBC's share of the investment in Oneword, The Digizone
and Digital News Network.
UBC enters the new financial year with a strong financial structure and on
target to deliver on its business plan.
Consolidated Profit and Loss Account
For the year ended 31 March 2003
Year ended 31 March 2003 Year ended 31 March 2002
Goodwill and Total Before Goodwill and Total
Development Goodwill and Development
Before items Development items
Goodwill and Items
Development
Items
#'000 #'000 #'000 #'000 #'000 #'000
Turnover: (including share of joint
ventures)
Continuing operations 10,375 - 10,375 9,281 - 9,281
Less: Share of turnover of joint ventures (52) - (52) (94) - (94)
Group turnover 10,323 - 10,323 9,187 - 9,187
Cost of sales (7,080) - (7,080) (6,198) - (6,198)
Gross profit 3,243 - 3,243 2,989 - 2,989
Administration expenses (3,170) (1,599) (4,769) (3,199) (2,124) (5,323)
Group operating profit/(loss): Continuing 73 (1,573) (1,500) (210) (2,124) (2,334)
operations
Group operating profit/(loss): Acquisitions - (26) (26) - - -
Group operating profit/(loss) 73 (1,599) (1,526) (210) (2,124) (2,334)
Share of operating profit/(loss) in joint 4 (683) (679) (73) (624) (697)
ventures
Total operating profit/(loss): group and 77 (2,282) (2,205) (283) (2,748) (3,031)
share of joint ventures
Interest receivable 124 - 124 52 - 52
Interest payable (16) - (16) (47) - (47)
Profit/(loss) on ordinary activities before 185 (2,282) (2,097) (278) (2,748) (3,026)
taxation
Tax (charge)/credit (55) 82 27 (43) - (43)
Profit/(loss) on ordinary activities after 130 (2,200) (2,070) (321) (2,748) (3,069)
taxation
Equity minority interest (178) 266 88 (110) 367 257
Retained (loss) for the financial year (48) (1,934) (1,982) (431) (2,381) (2,812)
(Loss) per share
Basic - pence (0.03) - (1.39) (0.34) - (2.23)
Diluted - pence (0.03) - (1.39) (0.34) - (2.23)
The Group has no recognized gains and losses than those included in the loss
above, and therefore no separate statement of total recognized gains and losses
has been presented.
Consolidated Balance Sheet
As at 31 March 2003
Group
As at March 2003 As at March 2002
#'000 #'000
Fixed assets
Goodwill and intangible assets 645 1,160
Tangible assets 209 344
854 1,504
Current assets
Work in progress 52 54
Debtors
- due after more than one year 1,605 856
- due within one year 2,092 1,332
3,697 2,188
Cash at bank and in hand 3,351 1,173
7,100 3,415
Creditors: amounts falling due within one year (2,634) (2,027)
Net current assets 4,466 1,388
Total assets less current liabilities 5,320 2,892
Creditors: amounts falling due after more than (341) (1,734)
one year
Provisions for Liabilities and Charges (1,720) (920)
Net assets 3,259 238
Capital and reserves
Called up share capital 1,471 1,264
Share premium account 11,219 6,335
Other reserves (801) (801)
Profit and loss account (8,444) (6,462)
Equity shareholders' funds 3,445 336
Equity minority interest (186) (98)
Capital employed 3,259 238
Consolidated Cash Flow Statement
Year ended 31 March 2003
March 2003 March 2002
#'000 #'000
Net cash (outflow) from operating activities (884) (293)
Returns on investments and servicing of finance
Interest received 124 58
Interest paid (54) (9)
Net cash inflow from returns on investment and servicing 70 49
0f finance
Taxation
UK Corporation tax paid (27) (43)
Capital expenditure and financial investment
Purchase of tangible fixed assets (84) (117)
Purchase on intangible fixed assets (10) (37)
Acquisition of tangible fixed asset investments - (56)
Sale of tangible fixed assets - 31
Loans to joint ventures (549) (581)
Net cash (outflow) from capital expenditure and financial (643) (760)
investment
Acquisitions and disposals
Purchase of business - (1,686)
Purchase of interest in subsidiary - (15)
Purchase of interest in joint ventures (38) (96)
Net cash (outflow) from acquisitions and disposals (38) (1,797)
Net cash (outflow) before financing (1,522) (2,844)
Financing
Unsecured loan stock (1,349) 1,686
Issue of ordinary share capital 5,592 1
Expense of share issue (502) -
Capital element of finance lease (41) (37)
Net cash inflow from financing 3,700 1,650
Increase/(Decrease) in cash in the year 2,178 (1,194)
Cash balances at the beginning of the year 1,173 2,367
Cash balances at the end of the year 3,351 1,173
Represented by
Cash and bank balances 3,351 1,173
1. Goodwill and development items
Goodwill and development costs comprise the following:
Continuing operations
* Development costs of #1,004,000 (2002: #835,000) include digital licence
fees, staffing and professional fees for the development of data
broadcasting and digital delivery systems for broadcast content.
* Amortisation of #485,000 (2002: #410,000) of goodwill relating to analogue
licences in Classic Gold Digital Limited ("CGDL") over the remaining
economic life of the eighteen licences and #7,000 (2002: #3,000)
amortisation of goodwill arising on consolidation.
* Amortisation of #29,000 (2002: #28,000) relating to other intangible
assets acquired by CGDL.
* Impairment of #nil (2002: #848,000) for goodwill relating to digital radio
revenue in CGDL.
* Impairment of goodwill in G-One Limited of #48,000 being goodwill relating
to the original shareholding.
Acquisitions
* Impairment of goodwill in G-One Limited of #26,000 being goodwill on
consolidation resulting from the group obtaining control over G-One Limited.
Share of operating loss in joint ventures
* Oneword Radio Limited: The Group's share of development costs in Oneword
Radio Limited amounted to #377,000 (2002: #305,000). Impairment of #153,000
(#nil 2002) of goodwill relating to the acquisition of a supplementary
shareholding during the year.
* The Digizone Limited: The Group's share of development costs of The
Digizone Limited was #110,000 (2002: #250,000).
* The Digital News Network Limited The Group's share of development costs of
The Digital News Network Limited was #31,000 (2002: #62,000).
* Amortisation of goodwill on consolidation of joint ventures amounted to
#12,000 (2002: #7,000).
2. Goodwill and intangible assets
Purchased Goodwill
intangible Purchased arising on
assets goodwill consolidation Total
#'000 #'000 #'000 #'000
Group
Cost
At 1 April 2002 957 4,486 76 5,519
Additions 10 - 74 84
At 31 March 2003 967 4,486 150 5,603
Amortisation
At 1 April 2002 846 3,506 7 4,359
Charge for year 33 485 7 525
Impairment of goodwill - - 74 74
At 31 March 2003 879 3,991 88 4,958
Net book value
At 31 March 2003 88 495 62 645
At 31 March 2002 111 980 69 1,160
The addition of #74,000 relates to goodwill on consolidation in G-One Limited.
The #74,000 is made up of #48,000 of goodwill relating to a previous year and
#26,000 of goodwill on consolidation.
3. Increase in share capital
During the year ended 31 March 2003, 20,711,107 new shares were issued.
Six employees exercised their share options for a total of 780,000 shares at
exercise prices ranging from 2.46-6.4 pence per share.
As a result of the placing and open offer announced on 22 March 2002, 17,433,378
shares were issued on 25 April 2002 and a further 2,012,014 shares were issued
on 29 April 2002 at 28 pence per share.
On 19 December 2002 485,715 shares were issued to Guardian Media Group plc at
24.5 pence per share.
4. Provisions for liabilities and charges
Investment in joint ventures Provisions for liabilities and charges include
share of net liabilities in joint ventures.
5. Reconciliation of operating (loss) to net cash flow from operating
activities
March 2003 March 2002
#'000 #'000
Operating (loss) (1,526) (2334)
(profit)/loss on sale of fixed assets - (9)
(profit) on disposal of joint venture - (33)
Amortisation of intangible assets 33 32
Impairment of investments - 56
Amortisation of goodwill 492 413
Impairment of goodwill 74 848
Depreciation of tangible fixed assets 219 276
Impairment of tangible fixed assets - 107
Decrease in work in progress 2 6
Increase in debtors (724) (343)
Increase in creditors 546 688
Net cash (outflow) from operating activities (884) (293)
This information is provided by RNS
The company news service from the London Stock Exchange
END
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