15 December 2014

LUDORUM PLC INTERIM RESULTS

Ludorum plc, the AIM-listed media investment company, today announces its results for the half-year ended 30 September, 2014.

Highlights for the period 1 April 2014 to 30 September 2014

Turnover £2.03 m (2013: £2.53 m)

Broadcast income £0.51 m (2013: £0.43 m)

Consumer products revenues £1.53 m (2013: £2.10 m)

            Operating profit £0.11 m (2013: £0.01 m)

            Administrative expenses £0.51 m (2013: £0.82 m)

            EBITDA £0.61 m (2013: £0.35 m)

Chuggington has now been licensed for broadcast to 175 countries

Rob Lawes, Chief Executive, said:

"We have been able to grow EBITDA by 74% to £0.61m and increase operating profit by £0.1m despite a decline from our consumer products revenues over the first six months of 2014. This has been achieved through an increase in broadcast and digital revenues and a reduction in administrative expenses."

Cancellation of Admission to trading on AIM

The Company also announces its intention to seek Shareholder approval to delist. A Circular to Shareholders outlining the proposal will be sent out in due course.

Contacts

Ludorum plc                                                  020 8939 6280

Rob Lawes     

Investec Investment Banking (NOMAD)   020 7597 4000

David Flin

Andrew Pinder

Chief Executive's Review

Overview

We have been able to grow EBITDA by 74% to £0.61m and increase operating profit by £0.1m despite a decline from our consumer products revenues over the first six months of 2014. This has been achieved through an increase in broadcast and digital revenues and a reduction in administrative expenses.

We completed the delivery of series four to our broadcaster partners in Spring 2014.  We are also currently in production of a further 10 episodes for delivery in Spring 2015. Broadcast demand for the new content remains strong with all our key broadcaster partners acquiring the new content.  We have been encouraged by demand from global SVOD partners such as Netflix and Amazon for our content.  We have recently concluded SVOD deals for the US, Canada, France and UK with revenues commencing in the next financial period.

The fall in consumer product revenues was predominately driven by a £0.3m reduction in revenues from our master toy partner. Despite this reduction, we are pleased that Tomy has made some exciting innovations to their Stack Track and Wooden Systems for launch in 2015 including the development of a new Stack Track motorized system.

We are also actively exploring opportunities to create enhanced revenue streams from new distribution platforms and also introduce Chuggington into new markets.

Chuggington

Chuggington is an action packed series of train adventures that come to life in a vibrant modern world called Chuggington.  Wilson and his friends Brewster and Koko take on exciting challenges that test their courage, speed and determination.  Along the way, they learn positive values and new skills empowering them to become the best trainees they can be.  To date we have created 118 x 10" episodes and 46 x 4" shorter episodes.  We are in production on a further 10 x 10" episodes with delivery of these episodes scheduled for early 2015.

The first Chuggington series was created by Ludorum in 2006 and has continually and successfully been on air since 2008. We have concluded broadcast agreements with all leading broadcasters in their respective territories in over 175 countries.  The series has established a highly successful ratings record in many markets including the UK (BBC -Cbeebies), North America (The Disney Channel), Germany (Super RTL), France (TF1), Japan (Fuji -TV), and Australia (ABC). 

Financial Review

Ludorum generated revenues of £2.03m for the first six months ending 30 September 2014 (2013: £2.53m), a 19% reduction over the first six months of 2013. This reduction is the result of lower reported consumer product revenues of £1.53m (£2.09m), a 27% reduction. Consumer products revenues represented 75% of revenues.  Broadcast revenues represented 25% of revenues at £0.51m (2013: £0.43m), a 19% increase.

Europe (including the UK) represented 52% (2013: 45%) of total revenues at £1.06m, The Americas represented 35% (2013: 38%) of revenues at £0.72m and Austral/Asia 13% (2013: 16 %) of revenues at £0.26m.

Gross profit decreased from to £0.82m, to £0.62m largely driven by the £0.16m increase in the amortisation charge following the delivery of series four.

Total administrative costs were £0.52m a reduction of 37% over the prior period cost of £0.82m.

Operating profit for the six-month period grew by £0.10m to £0.11 m versus a £0.01m profit for the prior period.

EBITDA for the period grew by 74% to £0.61m versus £0.35m for the prior period.

As at 30 September 2014, the Company had a net overdraft position of £0.54m (30 September 2013 £0.55m).  In June 2014, the Company renewed its £0.75m overdraft facility with Coutts until 1 December 2014 at which time it reduced to £0.50m. The Company is operating within its lower overdraft facilities.

The Company has £2.75m of loan notes held by client funds of Downing LLP and D C Thomson & Co Limited. The loan notes are repayable in March 2017.  The coupon on all notes is the higher of 7.5% or 3% above LIBOR for the first three years and increases in April 2015 to 12.5%.

On the basis of enquiries made by the Directors and in the light of current financial projections and facilities available, the Directors have reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, we continue to adopt the going concern basis in preparing the accounts.

Delisting

The size of the Company and the lack of liquidity of the market in the Company's shares has led the Directors to undertake a review of the merits or otherwise of the Company continuing to be admitted to trading on AiM.  After careful consideration, the Directors have concluded that it is no longer in the interests of the Company to retain its admission on AIM and that a proposal to cancel Admission should be made to the Shareholders at the General Meeting.  Further details will be outlined in a Circular that will be sent to Shareholders shortly.

Outlook

We remain committed to building Chuggington into an evergreen pre-school global train property.  We have built a significant library of content and secured strong global broadcast distribution which is further enhanced by our recently concluded SVOD deals. We feel our content aligned to some great toy product will help us achieve our strategic aim.

Ludorum plc

Unaudited consolidated statement of comprehensive income

for the six months ended 30 September 2014

Ludorum plc

Unaudited consolidated balance sheet as at 30 September 2014

Ludorum plc

Unaudited statement of changes in shareholders' equity

Ludorum plc

Unaudited consolidated cash flow statement for the six months ended 30 September 2014

Ludorum plc

Notes to the consolidated interim financial statements for the six months ended 30 September 2014

1.             Accounting policies

General Information

The Company is a public limited company incorporated and domiciled in the United Kingdom.  The address of its registered office is 10 The Old Power Station, 121 Mortlake High Street, London SW14 8SN.  The registered number is 5595899.  This Company is listed on AIM.

The condensed consolidated interim financial information was approved for issue on 10 December 2014. 

Basis of preparation

The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 March 2014, which have been prepared in accordance with IFRSs.

The condensed consolidated interim financial information has not been reviewed or audited by the Company's auditors and does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006.  Statutory accounts for the year ended 31 March 2014 were approved by the Board for issue on 23 June 2014 and have been delivered to the Registrar of Companies.  The auditors' report on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under sections 498 (2) or (3) of the Companies Act 2006.    

Accounting policies

The accounting policies applied are consistent with those of the annual financial statements for the year ended 31 March 2014, as described in those financial statements.

2.      Segmental analysis

The Group currently has one operating segment, the development and exploitation of its rights in Chuggington. Further information about revenue derived from the Group's product lines is set out below. Management information used by the Chief Operating Decision Maker ("CODM") is in a format similar to the Consolidated Statement of Comprehensive Income and Consolidated Balance Sheet.  The CODM is considered to be the Board of Directors.

Revenue by product line

Geographical analysis of revenue by location of customer

All material assets are located in the UK.

3.    Intangible assets

4.    Borrowings                                

The following borrowings are included in trade and other liabilities:

The Company has overdraft facilities of £750,000 from Coutts & Co. With effect from 1 December 2014, the overdraft facilities were reduced to £500,000. The overdraft is secured by a first charge over the Company's assets (including the Company's intellectual property). Ludorum has the legal right to set off balances within the Group.

The Company has £2.75m of loan notes held by client funds of Downing LLP and D C Thomson & Co Limited.  The loan notes are repayable in March 2017.  The coupon on all notes is the higher of 7.5% or 3% above LIBOR for the first three years and increases in April 2015 to 12.5%.

5.    Related party transactions

Included in trade and other liabilities at 30 September 2014 is £135,000 in respect of unpaid remuneration (and the associated employer's National Insurance payable) owed to directors of the Company (30 September 2013: £135,000, 31 March 2014: £135,000). Also included in trade and other liabilities at 30 September 2014 are accrued pension costs owed to the directors of £121,000 (30 September 2013: £97,000, 31 March 2014: £109,000).

6.    Commitments

In 2007 the Company entered into an agreement with Tomy, a toy manufacturer, under the terms of which Tomy agreed to fund 50% of the production cost of the Company's animated series "Chuggington" in return for which it has a global master toy licence and the right to participate in the net profit of the property. The Company and Tomy have now jointly funded the production of four series, comprising 118 x 10 minute episodes and 46 x 4 minute episodes of Chuggington. The Company and Tomy have also agreed to produce a fifth series of 10 episodes. Production of the series commenced in 2013 and it is expected to be delivered in 2015. The budget is $3m. Tomy has agreed to initially fund 100% of the costs of the series and recover the Company's half share of the production costs from a reduced toy royalty payment commencing January 2015.