RNS Number:3921S
UBC Media Group PLC
24 November 2003
PRESS RELEASE
24 November 2003
UBC MEDIA GROUP PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2003
6 MONTHS FINANCIAL HIGHLIGHTS
- Turnover #6.51 million (2002: #4.96 million), up 31%
- Profit before Amortisation and Development Expenditure #152,000
(2002: loss of #24,000)
- Development Expenditure #503,000 (2002: #489,000)
- Cash at 30 September 2003 #3.52 million (2002: #3.24 million)
- Loss before tax -#758,000 (2002: -#1.03 million)
STRATEGIC HIGHLIGHTS
- Marked improvement in advertising revenues during the latter
months of the period.
- Production Division benefited from new commissions for BBC
digital services.
- Classic Gold Digital profits before digital licence costs up
31% to #665,000 (2002: #509,000).
- Classic Gold Digital saw strong growth in sponsorship revenues.
- Appointment of Hoare Govett as sole Nominated Adviser and
principal broker.
Simon Cole, Chief Executive, commented:
"despite a tough year in the sector, marked by disappointment and pessimism, the
growth in our profitability has remained on track and inline with expectations.
Our decision to invest in creating the AA Roadwatch service positions us to
benefit from an advertising recovery, of which we have seen the first
encouraging signs in the last few months. The entire radio industry is now alive
to the opportunities in digital radio - opportunities in which we have carefully
been investing for the last three years"
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 Miranda Good at
miranda.good@portlandpr.co.uk or +44 20 7421 6121.
OVERVIEW
UBC has again demonstrated the strengths of its strategy, delivering organic
growth and improved operating margins; while its mix of different businesses has
again shown UBC's defensive qualities. The response to weak advertising markets
has been to strengthen and extend UBC's core brands and to innovate, while
controlling costs and remaining totally customer-focused.
Although still in its early stages, the take-off of DAB digital radio is now
gathering momentum and the results for the first half of the financial year show
that UBC is well positioned to benefit from its investment over the past three
years.
Production
In the first-half of the year UBC's radio Programming Division has once again
performed well, with revenues up 6% at #1.19 million (2002: #1.12 million) and
operating margins in line with the previous year. UBC ranks as the largest
independent supplier of audio programmes to the BBC, and includes amongst its
core programme offering the BBC's flagship programmes, Pick of the Pops, Pause
for Thought, the Richard Allinson Show and Something Understood. Part of the
growth in the first six months of the year has come from the award of a number
of important new commissions from BBC Radio 3 and Radio 4, which further extend
the range and depth of UBC's programming operations. Since the period end UBC
has announced that it will cease to produce the Hit 40 UK radio programme from 1
January 2004. The effect of this is immaterial to turnover and profitability
this year. Also since the period-end, UBC has been successful in several
unbudgeted 'top-up' commissioning rounds from BBC Radio 1, Radio 3 and Radio
5Live. These latest successes demonstrate UBC's ability to produce programming
across the full range of genres, and it is particularly significant that the
Radio 1 commissions include programming for the BBC's new digital service,
1Xtra. UBC sees the growth in spending by the BBC on its digital services as a
key area for future revenue growth by the Production Division.
UBC's Commercial Division experienced very different trading conditions in the
first and second quarters of the new financial year. Market conditions in April
and May were as tough as any experienced in the last two years. In contrast, the
second quarter saw a marked improvement in advertising revenues. UBC took swift
action in response to the downturn in the national advertising market at the
start of the period, initially scaling back the daily syndicated business news
service, and taking the decision to focus on the two largest bartered programme
formats, Entertainment News and the AA Roadwatch traffic and travel news
service. In the six months period to 30 September 2003 revenues for the
Commercial Division more than doubled to #2.39 million (2002: #1.10 million),
largely reflecting the contribution from the AA Roadwatch service. The service
was launched in the final quarter of the last financial year in the belief that
it positioned UBC well to benefit from any advertising recovery. Airtime sales
have continued to perform well since September. However, while we have growing
confidence about prospects for the full year, trading conditions remain
challenging and we continue to monitor progress closely.
Classic Gold Digital
Classic Gold Digital continues to perform strongly within the UBC Group, with
revenues in the six months to 30 September 2003 up 5% on the same period last
year at #2.40 million (2002: #2.28 million), and the Company reporting a profit
before interest, goodwill amortisation and digital licence costs of #665,000
(2002: #509,000). Classic Gold Digital owns and produces the Classic Gold
Digital format, which is broadcast on a network of analogue AM and digital
platforms across the UK. Unlike the rest of the commercial radio sector, the
performance of Classic Gold Digital is not linked directly to the sale of
advertising, which is handled by GWR Group, but instead to an audience fee which
GWR Group pays to Classic Gold Digital and which is based on the number of
listeners to the Classic Gold Digital network.
Given the inferior reception associated with services broadcasting on AM
frequencies, declining audiences has been a long-term characteristic of all '
Gold' formats in the UK, including Classic Gold Digital. UBC's strategy for
Classic Gold Digital is based on a belief that 'Gold' services will benefit
disproportionately from the migration to digital platforms, with all radio
services broadcasting at the same quality. The challenge for UBC continues to be
arresting the long-term decline in Classic Gold Digital's analogue audience in
the interim period until the establishment of significant digital audiences.
This year, any decline in analogue audiences has been offset by an increase in
sponsorship and promotions revenues. In the six months to 30 September 2003 UBC
maintained its strategy of investing in Classic Gold Digital, with the launch of
the new breakfast show hosted by Tony Blackburn at the start of the period,
continued promotion of the network in its key markets, and evolving the music
format to attract a younger audience. UBC last year strengthened the sponsorship
sales team at Classic Gold Digital, recognising that the new breakfast show in
particular presents a prime sales opportunity.
RAJAR will begin measuring Classic Gold Digital's audience on digital platforms
in the final quarter of 2003. The results of this first survey will have only a
limited impact this year on Classic Gold Digital's revenues. However, we believe
Classic Gold Digital's audience on digital platforms will become an important
new revenue source in the future.
Oneword Radio
Oneword Radio broadcasts a critically acclaimed spoken word radio format on
terrestrial digital radio, Sky and Freeview. The size of a radio station's
audience is the currency on which a commercial radio station trades. Oneword
Radio published its first RAJAR audience figures during the period and has
successfully used these numbers to generate its first revenues from mainstream
advertising agencies.
Facilities and Radio Services
UBC's Facilities and Radio Services businesses continued to perform to budget in
the period, with revenues in the six months to 30 September 2003 up 16% at
#530,000 (2002: #458,000). Despite continuing over-capacity in the London
facilities market, we have seen further improvements in both occupancy rates and
yields for our studio facilities. An important additional source of revenues in
the period was the supply of outside broadcast services to clients such as dmg
world media. In addition, since the end of the period, UBC has been awarded a
further three-year contract by Gala Bingo to supply its bespoke in-house radio
service and has provided outside broadcast facilities at events such as The
Autumn Ideal Home Show and the Daily Mail Ski and Snowboard Show.
UBC's software development arm, Unique Interactive, has continued to make good
progress in the period. Unique Interactive specialises in the development and
sale of software that is used in the delivery of broadcast services to both the
analogue and digital radio sectors. During the six months to 30 September 2003
Unique Interactive began trials of its 'ManDLS' system (which is used to manage
the scrolling text that forms part of every digital radio service) with the
BBC's regional radio stations across England. Unique Interactive's revenues from
software sales are still at an early stage of development. However, UBC is
gaining increasing recognition as one of the foremost software developers in its
area of expertise, and is well positioned to benefit from the growing investment
in digital radio that is taking place in both the UK and now increasingly across
Europe.
Appointment of Nominated Adviser and Broker
UBC has today announced the appointment of Hoare Govett as sole Nominated
Adviser and principal broker to the Company. Seymour Pierce will continue to act
as secondary broker.
Prospects for Digital Radio
In the three years since its flotation, UBC has concentrated on building a
business that will benefit across all its divisions from the radio industry's
transition to digital. Until last year, many questioned the likely uptake of
this new medium. The absence of affordable receivers held back demand amongst
consumers, while no major electrical retailer was likely to show interest in
digital radio until there were affordable products in the market and it could
see real consumer demand for the technology. The last 12 months, however, has
witnessed a major change in market sentiment.
A year ago the radio industry welcomed the launch of the first sub-#100 digital
radios and the enthusiastic response of customers. Since then, the momentum has
gathered pace. There are currently more than 40 different DAB digital radio
products on the market in the UK, with nearly 70 products expected in the market
by the end of 2003, extending across the entire range of radios - from kitchen
radios to hand-held portables, from clock radios to personal stereos. Sony is
the most recent company to announce plans to launch a range of digital radio
products, and which is expected to take place in the first quarter of 2004.
In 2002 sales of DAB digital radios grew by 170% to 175,000 units. This rate of
growth has continued through 2003. UBC's own projections are that the number of
sets will have more than doubled by the end of December 2003. With a steady
stream of new manufacturers and products coming to the market, industry
observers are forecasting sales of 1 million units by the end of 2004. In
addition, consumer awareness of digital radio continues to grow, with the most
recent Digital Radio Development Board (DRDB) survey reporting an awareness of
the new technology amongst 30% of consumers (equivalent to 17.2 million of the
population), and with 6% of consumers (equivalent to 3.4 million consumers)
reportedly planning to purchase a DAB digital radio in the next six months -
which we believe represents a significant level of consumer awareness and
support for a new technology.
Furthermore, responding to the strong consumer demand for digital radios shown
throughout the year, the number of retailers selling digital radios has grown in
12 months from 600 to over 3,000. Dixons Group, the UK's largest electrical
retailer, reports that sales of digital radios are now running at approximately
50% (by retail value) of their sales of portable radios. In a sign of further
growing retailer confidence in digital radio, both Sainsbury's and Tesco have
announced plans for trial sales of DAB digital radios, with the possibility of a
further roll out across all their stores.
The past 12 months have transformed perceptions of digital radio amongst
consumers, electronics manufacturers and retailers. We believe the next year
will see further substantial growth and that over the next 12-18 months UBC will
be well positioned to grow its revenues from its portfolio of digital assets.
Outlook
We continue to look at ways to grow the business, both by strengthening our
current product portfolio and by acquisition, and are ready to respond to the
right opportunity when it arises. Although market conditions continue to be
challenging, we have seen a marked improvement in the advertising market in the
second quarter of the current financial year and we are well positioned to
benefit from any continuation of this trend. Overall, we believe prospects for
the remainder of the year are positive.
FINANCIAL REVIEW
The main financial highlights of the six-month period to 30 September 2003 are
as follows:
- Turnover in the period increased 31% to #6.51 million (2002: #4.96
million).
- Reduction in administrative costs in the period to #1.50 million
(2002: #1.65 million).
- Gross profit in the period increased 2% to #1.65 million (2002:
#1.62 million).
- Operating profit before amortisation and development expenditure of
#152,000 (2002: -#24,000), and operating loss after amortisation and
development expenditure of -#530,000 (2002: -#817,000).
- Development expenditure in the period totalled #503,000 (2002:
#489,000).
- Losses before Interest, Tax, Depreciation and Amortisation (EBITDA)
for the Group in the period were -#267,000 (2002: -#439,000) or a Profit
before Interest, Tax, Depreciation and Amortisation of #236,000
(2002: #50,000) before development costs.
- At 30 September 2003 UBC had #3.52 million in cash in the bank
(2002: #3.24 million).
In the six-month period to 30 September 2003 UBC expensed #503,000 (2002:
#489,000) of development expenditure in digital carriage fees for the Group's
audio and data services. In addition, in the six-month period UBC continued its
investment in the development of its joint ventures, primarily comprising
Oneword Radio and Digital News Network, which together totalled #278,000 (2002:
#249,000).
In response to institutional demand for the Company's shares, in July 2003 UBC
placed a total of 3,500,000 new ordinary shares at 29.5p per share, raising an
additional #1.03 million (net of expenses) for the Company. In addition, in July
2003 UBC also received proceeds of approximately #600,000 from the exercise of
warrants for 2.4 million new ordinary shares that had been issued at the time of
the Company's admission to AIM in June 2000. The Company intends to use the
proceeds of both the share placing and exercise of warrants to finance its
ongoing digital strategy.
The Board is not recommending the payment of a dividend for the interim period.
Consolidated Profit & Loss Account for the six months ended 30 September 2003
Unaudited Unaudited Audited
six months six months Full year
ended 30 ended 30 March
September September 31st
2003 2002 2003
#'000 #'000 #'000
Notes
Before Goodwill and Before Goodwill and
Goodwill and Development Goodwill and Development
Development Items Development Items
Items (Note 3) Total Items (Note 3) Total Total
Turnover (including
share of joint
ventures)
Continuing operations 6,514 - 6,514 4,960 - 4,960 10,375
Less: Share of
turnover
of joint ventures - - - (3) - (3) (52)
Group turnover 6,514 - 6,514 4,957 0 4,957 10,323
Cost of sales (4,860) - (4,860) (3,336) - (3,336) (7,080)
Gross profit 1,654 - 1,654 1,621 - 1621 3,243
Administrative (1,502) (682) (2,184) (1,645) (793) (2,438) (4,769)
expenses
Group operating
profit/(loss)
Continuing operations 152 (682) (530) (24) (793) (817) (1,526)
Acquisitions - - - - - - -
Group operating
profit/(loss) 152 (682) (530) (24) (793) (817) (1,526)
Share of operating
profit/(loss) in joint
ventures - (277) (277) 0 (249) (249) (679)
Total operating
profit/(loss): group
and
share of joint 152 (959) (807) (24) (1,042) (1,066) (2,205)
ventures
Interest receivable 49 - 49 41 - 41 124
Interest payable - - - (4) - (4) (16)
Profit/(Loss) on
ordinary
activities before 201 (959) (758) 13 (1,042) (1,029) (2,097)
taxation
Tax (charge)/ credit 5 (20) - -20 0 - - 27
Profit/(Loss) on
ordinary
activities after 181 (959) (778) 13 (1,042) (1,029) (2,070)
taxation
Equity minority - - - (95) 138 43 88
interest
Retained (loss) for
the
financial year 181 (959) (778) (82) (904) (986) (1,982)
Earnings per share (0.51) (1.42) (1.39)
(pence)
Consolidated Balance Sheet at 30 September 2003
Notes Unaudited Unaudited Audited
As at 30 As at 30 As at 31
September September March
2003 2002 2003
#'000 #'000 #'000
Fixed assets
Goodwill and intangible assets 492 868 645
Tangible assets 198 338 209
Investments
Share of Gross Assets 115 84 -
Share of Gross Liabilities (2,109) (1,290) (1,720)
Goodwill Arising on Acquisition - 57 -
Net Interest in Joint Ventures (1,994) (1,149) (1,720)
(1,304) 57 (866)
Current assets
Work in progress - 60 52
Debtors
- due after more than one year 1,966 1,089 1,605
- due within one year 2,476 1,573 2,092
4,442 2,662 3,697
Cash at bank and in hand 3,516 3,238 3,351
7,958 5,960 7,100
Creditors: amounts falling due within one year (2,129) (1,471) (2,634)
Net current assets 5,829 4,489 4,466
Total assets less current liabilities 4,525 4,546 3,600
Creditors: amounts falling due after more
than one year (337) (368) (341)
Provisions for Liabilities & Charges - - -
Net assets 4,188 4,178 3,259
Capital and reserves
Called up share capital 1,591 1,465 1,471
Share premium account 12,806 11,103 11,219
Other reserves (801) (801) (801)
Profit and loss account (9,408) (7,448) (8,444)
Equity shareholders' funds 4,188 4,319 3,445
Equity minority interest - (141) (186)
Capital employed 4,188 4,178 3,259
Consolidated Cash Flow Statement 6 Months ended 30 September 2003
6 Months 6 Months 12 Months
30 September 30 September 31 March
2003 2002 2003
#'000 #'000 #'000
Net cash (outflow) from
operating activities (1,132) (1,174) (884)
Returns on investments and
servicing of finance
Interest received 92 14 124
Interest paid (43) (51) (54)
Net cash inflow/(outflow) from returns
on investment and servicing of finance 49 (37) 70
Taxation
UK Corporation tax paid 0 14 (27)
Capital expenditure and
financial investment
Purchase of tangible fixed assets (78) (66) (84)
Purchase of intangible fixed asset (27) (10) (10)
Sale of tangible fixed assets 5 - -
Loans to joint ventures (360) (240) (549)
Net cash (outflow) from capital
expenditure and financial investment (460) (316) (643)
Acquisitions and disposals
Purchase of interest in subsidiary - 0 (38)
Purchase of interest in joint ventures - (22) -
Net cash (outflow) from acquisitions
and disposals 0 (22) (38)
Financing
Unsecured loan stock - 0 (1,349)
Issue of ordinary share capital 1,708 5,471 5,592
Repayment of Long Term Loan - (1,349) 0
Expense of share issue 0 (502) (502)
Capital element of finance lease 0 (20) (41)
Net cash inflow from financing 1,708 3,600 3,700
Increase in cash in the year 165 2,065 2,178
Cash balances at the beginning of the year 3,351 1,173 1,173
Cash balances at the end of the year 3,516 3,238 3,351
Represented by
Cash and bank balances 3,516 3,238 3,351
3,516 3,238 3,351
Notes
1 Basis of Preparation
These financial statements do not constitute statutory accounts
within the meaning of the Companies Act 1985 and are unaudited. The
figures for the year to 31 March 2003 have been extracted from the
statutory accounts for that year which have been delivered to the
Register of Companies and contain an unqualified audit report.
2 Accounting Policies
The statements have been prepared on the basis of the accounting
policies applied at the year ended 31 March 2003.
3 Goodwill and Development
Goodwill and Development costs include goodwill of #179,000
(2002: #304,000), digital license fees of #503,000 (2002: #463,000)
and other costs of #nil (2002: #26,000).
4 Loss per share
The loss per share for the six months ended 30th September 2003 is
0.51 pence (2002: 1.42 pence). The loss per share has been
calculated based on the loss for the period and the weighted
average of shares in issue during the period.
5 Taxation
A provision of #20,000 has been made for taxation for Classic Gold
Digital Limited. The rest of the Group has trading losses for the
period to 30 September 2003
This information is provided by RNS
The company news service from the London Stock Exchange
END
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