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Seven Arts Pictures plc LSE: SAPP |
Nov 12, 2008 12:14 ET
Preliminary Results
SEVEN ARTS PICTURES PLC
("Seven Arts", the "Company" or "the Group")
PRELIMINARY RESULTS FOR THE 15 MONTHS ENDED 30 JUNE 2008
Seven Arts Pictures Plc (PLUS: SAPP and OTCBB: SAPXF), the PLUS-quoted feature films producer and
distributor, announces its preliminary results for the 15 months ended 30 June 2008.
FINANCIAL HIGHLIGHTS
* Revenue up 51% to £8,874,197 (2007: £5,879,289)
* Profit After Tax increased by 107% to £2,006,780 (2007: £967,130)
* Basic EPS up 19% to 8.51 pence (2007: 7.18 pence)
* Repayment of approximately £4,000,000 of film finance
OPERATIONAL HIGHLIGHTS
* 4 films delivered during the reporting period up 50% on the year ended 31 March 2007
* OTC Bulletin Board listing
Peter Hoffman, Chief Executive, commented:
"We are delighted with our achievements to date. The growth and traction we have attained are a key and an
exciting step in achieving growth. We look forward to the future with confidence."
---- Ends ----
The Directors of the Issuer accept responsibility for this announcement.
For further information please contact:
Seven Arts Pictures plc US contact:
Peter Hoffman Tel: +1 323 692 5010
phoffman@7artspictures.com
Seven Arts Pictures plc UK contact:
Elaine New, Finance Director Tel: +44 (0) 20 3006 8222
enew@7artspictures.com
Corporate Adviser & Broker
Daniel Stewart & Co Plc
Stewart Dick Tel: + 44 (0) 20 7628 6550
CHIEF EXECUTIVE OFFICER'S STATEMENT
RESULTS
I am pleased to report that gross revenues for Seven Arts Pictures plc rose to £8,874,197 in the 15 months to
30 June 2008 compared to £5,879,289 in the year ended 31 March 2007.
Film related revenues in the 15 month period have increased 81% to £6,671,576 from £3,684,054 in the 12
months to 31 March 2007.
Profit after tax increased to £2,006,780 from £967,130 and basic earnings per share increased to 8.51 pence
from 7.18 (fully diluted to 4.65 pence from 2.59).
During the 15 month period, the Company also repaid a net total of approximately £4,000,000 of film finance
debt and shareholder's funds increased from £4,555,846 to £6,897,525.
REVIEW OF OPERATIONS
Noise (starring Tim Robbins and William Hurt) and Deal (starring Burt Reynolds and Shannon Elizabeth) both
commenced distribution through ThinkFilm and MGM in the United States respectively in April, 2008.
The Company delivered four films in the period ended 30 June 2008 compared with two in the year ended 31
March 2007. These new deliveries were American Summer and Autopsy (both produced by Warren Zide, a producer
of American Pie), Knife Edge (directed by Anthony Hickox and featuring a strong UK cast including Natalie
Press, Joan Plowright, Hugh Bonneville and Tasmin Egerton), and A Broken Life (starring Ving Rhames and Tom
Sizemore).
CORPORATE ACTIVITY AND BOARD CHANGES
The Company secured a listing on the OTC Bulletin Board on 4 March 2008 and trading volumes in the Company's
shares have increased substantially in September and October 2008.
In May 2008 the Group completed a transaction with Zeus Partners LLP to raise capital for investment into the
production and distribution costs of Seven Arts existing and future motion picture productions and
acquisitions.
The total investment raised was approximately £134,000,000. Substantially all the net proceeds from that
transaction receivable by Seven Arts, of approximately £ 8,500,000 have been accounted for as a reduction in
the carrying value of the film costs in the balance sheet.
Accounting for the Zeus investments has resulted in the recognition of substantial assets and liabilities
arising from the related financing arrangements. The impact of the Zeus investments as at 30 June 2008 was
to increase cash on hand by £56,400,000, to increase debtors falling due within one year by £117,000,000 and
to increase creditors falling due within one year by £173,00,000.
The cash proceeds received from the transaction have been principally used to reduce Seven Art's
indebtedness, with existing production loan repayments being made in full to Cheyne Capital, Too Easy
Entertainment and Blue Rider.
An associate company, Seven Arts Pictures Louisiana, owned by Seven Arts Pictures Inc, was established, in
New Orleans Louisiana USA, as the distribution company for the Group.
Michael Garstin joined the Company as President and Managing Director in June 2008 and after the period end
Philip Kendall was appointed as Chairman of the Board in September 2008. Both bring extensive corporate
finance experience and knowledge of the film industry. Further appointments are expected to be announced to
further strengthen the Board.
Anthony Bryan and Rufus Pearl resigned their posts after the period end, and I would like to thank them for
their contribution to the development of the Group.
Daniel Stewart and Company Plc were appointed as PLUS Corporate Adviser and Broker to the Group in September
2008 replacing St Helens Capital plc. We would like to thank St Helens for their help and advice over the
last 15 months on the PLUS market.
An Employee Benefit Trust was established in October 2008. The trust has acquired the £3 million preference
shares previously held by Armadillo Investment Trust in return for a cash payment and the return of the 1.6
million shares the Group held in Armadillo. Both the cash payment and the share value of £800k were loaned to
the trust at a nominal interest rate. The trust has requested the conversion of the majority of the
preference shares into 10 million ordinary shares in the Group.
OUTLOOK
Current trading remains strong with revenues expected in the current year from Noise and Deal following their
theatrical and DVD distribution, from the four films recently delivered, and from the Group's library which
now totals 32 films and which continue to contribute significantly to revenues.
The Company is currently in principal photography on Night of the Demons (starring Shannon Elizabeth, Diora
Baird and Edward Furlong), a remake of the successful horror series of the 1980's and expects to commence
principal photography on Catwalk later this year (starring Julie Ordon, Kevin McKidd and Kevin Zegers). The
Company also expects to deliver Nine Miles Down (starring Adrian Paul and Kate Nauta), Drunkboat (starring
John Malkovich), Black Waters of Echo Pond and New Orleans Mon Amour by the close of fiscal year end 30 June
2009.
Winter Queen (directed by Paul Verhoeven of Basis Instinct and Total Recall) is expected to commence
principal photography in March 2009.
With this increased level of activity and a number of key deliveries in prospect, I am confident that Seven
Arts will enhance its reputation as one of only a few reliable and experienced producers of independently
produced motion picture.
Peter Hoffman
CEO
CONSOLIDATED PROFIT AND LOSS ACCOUNTS Unaudited Audited
15 months ended 30 Year ended 31 March
June 2008 2007
£ £
Turnover 8,874,197 5,879,289
Cost of Sales
- cost of sales (4,745,295) (1,052,211)
- amortisation of intangible assets (964,640) (1,711,509)
------------ ------------
GROSS PROFIT 3,164,262 3,115,569
Other operating expenses (2,143,985) (1,218,531)
------------ -----------
OPERATING PROFIT 1,020,277 1,897,038
Share of operating profit in associate 1,052,969 -
------------ -----------
Profit before interest and taxation 2,073,246 1,897,038
Interest payable (343,898) (388,021)
Interest receivable 27,432 33,857
------------ ------------
Profit on ordinary activities before 1,756,780 1,542,874
Taxation 250,000 (575,744)
------------ ------------
Retained profit for the period 2,006,780 967,130
------------ ------------
Earnings per share in pence 8.51 7.18
Diluted earnings per share in pence 4.65 2.59
------------ ------------
CONSOLIDATED STATEMENT OF Unaudited Audited
CHANGES IN EQUITY
15 months ended 30 Year ended 31 March
June 2008 2007
£ £
Shareholders' equity at beginning of period (194,154) (3,159,451)
Share issue 426,000 2,197,368
Share based payment 90,991 25,297
Retained profit for period 2,006,780 967,130
Exchange differences on translation of foreign (182,092) (224,498)
operations
------------ ------------
Shareholders' equity at end of period 2,147,525 (194,154)
------------ ------------
CONSOLIDATED CASHFLOW Unaudited Audited
15 months ended 30 Year ended 31 March
June 2008 2007
£ £
Cash flow from operating activities (56,631,192) 2,322,979
Returns on investments and servicing of finance (316,463) (1,412,885)
Capital expenditure and financial investment (5,289,014) (5,781,206)
------------ ------------
Cash outflow before financing (62,236,669) (4,871,112)
Financing 119,174,777 4,178,954
------------ ------------
Increase in cash in the period 56,938,108 (692,158)
------------ ------------
CONSOLIDATED BALANCE SHEETS Unaudited Audited
15 months ended 12 months ended
30 June 2008 31 March 2007
£ £
Fixed assets
Intangible assets 13,374,660 9,013,268
Goodwill 2,603,799 2,655,042
Tangible assets 18,620 15,554
Investment in associates 1,052,969 -
Investments 800,000 800,000
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17,850,048 12,483,864
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Current assets
Debtors: amounts falling due within one year 136,380,269 6,023,646
Debtors: amounts falling due after more than 1,312,692 663,626
one year
Cash at bank and in hand 56,942,856 4,748
---------------------------------------
194,635,817 6,692,020
Creditors: amounts falling due within one year (202,212,116) (8,312,453)
---------------------------------------
Net current liabilities (7,576,299) (1,620,433)
Total assets less current liabilities 10,273,749 10,863,431
Creditors: amounts falling due after more than (3,376,224) (6,307,585)
one year
--------------------------------------
Total assets less current liabilities 6,897,525 4,555,846
--------------------------------------
--------------------------------------
Called up share capital 10,150,500 10,017,000
Share premium account 2,130,686 1,838,186
Share-based payments 116,288 25,297
Convertible debt 1,750,000 1,750,000
Profit and loss account (7,249,949) (9,074,637)
--------------------------------------
Shareholders' funds 6,897,525 4,555,846
--------------------------------------
--------------------------------------
Equity 2,147,525 (194,154)
Non-equity 4,750,000 4,750,000
--------------------------------------
6,897,525 4,555,846
--------------------------------------
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NOTES
1.PREPARATION OF FINANCIAL INFORMATION
The financial information set out in this announcement does not constitute the Company's statutory financial
statements as defined in Section 240 of the Companies Act 1985 for the 15 month period ended 30 June 2008 and
the year ended 31 March 2007. A copy of the statutory financial statements prepared under United Kingdom
Generally Accepted Accounting Principles (UK GAAP) for the year ended 31 March 2007 has been delivered to the
Registrar of Companies and those for the fifteen month period ended 30 June 2008 will be delivered to
shareholders prior to the Company's Annual General Meeting.
The financial information for the fifteen month period ended 30 June 2008 has been prepared using the
accounting policies which are consistent with those adopted in the audited financial statements for the year
ended 31 March 2007 and after taking into account any accounting standards issued since that date, none of
which have resulted in any changes to the accounting policies of the Company.
The financial statements for the fifteen month period ended 30 June 2008 will be finalised on the basis of
the financial information presented by the Directors in this preliminary announcement. Whilst the auditors
have not yet reported on the financial statements for the fifteen month period ended 30 June 2008, they
anticipate issuing an unqualified report which will not contain statements under Section 237(2) and (3) of
the Companies Act 1985.
The financial information for the year ended 31 March 2007 is derived from the statutory accounts for that
year.
The auditors issued an unqualified report in respect of these financial statements.
The financial information set out in this announcement has been agreed by the auditors and was approved by
the Board of Directors on 23 October 2008.
The Directors do not recommend the payment of a dividend.
2. TAX
The Group is subject to corporation tax at standard rates.
3. EARNINGS PER SHARE
The basic and diluted earnings per share figures are calculated using the
following profit for the period:
2008 2007
£ £
Retained profit for the period 2,006,780 967,130
______________________
The basic earnings per ordinary share are calculated based on the weighted average number of shares in issue
of 23,575,579 (2007: 13,474,411). The weighted average number of shares in issue is calculated by
time-apportioning the shares in issue during the 15 month period.
The diluted earnings per ordinary share are calculated based on the weighted average number of shares in
issue plus the weighted average number of potential ordinary shares, which amounted to 43,164,615 (2007:
37,270,575):
2008 2007
No. No.
Weighted average number of ordinary shares for the 23,575,579 13,474,411
purposes of basic earnings per share
Effect of dilutive potential ordinary shares:
- convertible preference shares 12,000,000 12,000,000
- convertible debt 7,000,000 11,767,671
- share options 589,036 28,493
--------------------------------
Weighted average number of ordinary shares for the 43,164,615 37,270,575
purposes of diluted earnings per share
-------------------------------
4. The audited financial statements for the period ended 30 June 2008 will shortly be posted to shareholders
and copies will be available for a period free of charge from the Company's registered office at Crosswall, 1
America Square, London, EC3N 2SG.
5. The Annual General Meeting of the Company will be held at 11am on 15 December 2008 at the Company's
registered office at Crosswall, 1 America Square London, EC3N 2SG.
For more information, please contact
Seven Arts Pictures plc