DHX Media Announces Fiscal 2008 Year-end Results - Revenue increases 102 %



    www.dhxmedia.com
    AIM and TSX: DHX

    HALIFAX, le 29 sept. /CNW/ - DHX Media Ltd. ("DHX Media" or the
"Company") (AIM & TSX ticker: "DHX"), a leading independent international
producer and distributor of mainly children's entertainment content, announced
its audited financial results for the year ended June 30, 2008.

    
    Highlights:
    (All amounts in Canadian dollars)

    - Revenues doubled to $52.5 million, up from $26.0 million, an increase
      of 102 percent

    - Exceptional impairment of $2.8 million relating to value of certain
      film and television investments (2007: nil)

    - Net loss of $1.03 million ($0.03 per share), down from a net income of
      $1.2 million for Fiscal 2007 ($0.04 per share)

    - Gross margin was $17.3 million, an increase of 78 percent in absolute
      dollars compared to $9.7 million for Fiscal 2007, but at an overall 33
      percent of revenue represents a slight decline in percentage compared
      to 37 percent for Fiscal 2007

    - Adjusted EBITDA(1) of $5.9 million, a 31 percent improvement as
      compared to the EBITDA(2) of $4.5 million for Fiscal 2007

    - Cash and short-term investment at year end $9.2 million (2007:
      $5.3 million)

    (1) Adjusted EBITDA adds back approximately $2.8 million exceptional
        impairment of certain investment in film programs
    (2) EBITDA represents net earnings (loss) of the Company before
        amortization expense, interest and other income (expense), non-
        controlling interest, equity income (loss), development expenses and
        stock-based compensation expense.

    Michael Donovan, Chairman and CEO, DHX Media commented, "Our Fiscal 2008
results are in-line with our expectations and reflect our emergence as a
leader in children's and family entertainment. We are very pleased with the
exceptional performance posted by our production and distribution groups as
they continued to post significant wins in the domestic and international
arenas. Although our overall results are offset by a net loss due to an
exceptional impairment in value of certain of our investments in film, the
majority of which was isolated to one project, our foundation for continued
growth remains solid."

    Business Highlights

    DHX achieved a number of strategic objectives during Fiscal 2008,
including:

    - Raised $17.46 million through a bought deal to support its growth
      strategy and solidify the Company's balance sheet

    - Grew its library from 1,750 to 2,190 half-hours

    - Proprietary film and television production grew 85 percent to more than
      233 half hour episodes in Fiscal 2008

    - Completed the acquisitions of Studio B Productions and Bulldog
      Interactive as part of its consolidation strategy.


    Consolidated Statements of Income and Comprehensive Income Data

                                                     Year Ended
                                                       June 30,
                                      ---------------------------------------
                                            2008          2007          2006
                                               $             $             $
                                      ---------------------------------------
    Revenues                          52,446,847    25,970,619    15,748,409
    Direct production costs and
     amortization of film and
     television programs produced     35,144,598    16,237,033    12,928,759
                                      ---------------------------------------
    Gross margin                      17,302,249     9,733,586     2,819,650
                                      ---------------------------------------
    Selling, general, and
     administrative                   12,226,876     7,340,714     2,627,177
    Impairment of certain
     investments in film and
     television programs               2,781,802             -             -
    Income before the following          742,653      3,118,501      178,388
    Income from strategic
     investments                         (59,062)     1,736,761      187,230
    Interest and other (expenses),
     net                              (1,672,661)    (1,327,746)  (1,167,278)
    Provision for (recovery of)
     income taxes                         40,000        590,000      (74,000)
    Net income (loss) and
     comprehensive income             (1,029,070)     1,200,755     (914,890)
    Basic earnings (loss) per
     common share                          (0.03)          0.04        (0.06)
    Fully diluted earnings (loss)
     per common share                      (0.03)          0.03        (0.06)
    Weighted average common shares
     outstanding
      Basic                           39,038,719     32,698,508   15,076,332
      Fully Diluted                   39,038,719     35,732,836   16,452,346


    Subsequent to Fiscal 2008, the Company achieved the following milestones:

    - On July 21, 2008, DHX Media closed its acquisition of imX
      Communications Inc. and its library of 20 feature films and 26 half-
      hours of television drama, documentary and animation entertainment for
      total consideration paid at closing for the acquisition of imX
      Communications is $755,000, consisting of $655,000 in cash and 67,552
      common shares of the Company

    - On July 31, 2008, DHX Media announced both a third season commission
      from Canada's Family Channel for The Latest Buzz, a live action series
      aimed at teens, and several international sales of the series. The new
      commission will bring the total to 65 half hour episodes that are
      available for the international market

    - On August 27, 2008, the Company announced that its Bo on the GO! series
      was commissioned for a third season by CBC in Canada, where it is
      currently one of the broadcaster's highest rating preschool shows.
      Produced by DHX Media's Halifax Film subsidiary, the series has also
      made several sales to international broadcasters
    

    Revenues for Fiscal 2008 were $52.45 million, up from $25.97 million for
Fiscal 2007, representing an increase of 102%. The increase was generally due
to increases in the Company's production and distribution revenue categories.
Management is extremely pleased with the growth in revenue and feels that it
is validation of the Company's model to focus on producing and distributing
quality children's, youth, and family programming and distributing its content
internationally. The Company benefited from previous Fiscal 2007 deliveries in
the amount of $3.21 million in proprietary production revenues where the
license periods commenced in Fiscal 2008.
    Proprietary production revenues for Fiscal 2008 of $34.41 million were up
156% over the $13.45 million for Fiscal 2007. The increase included a 95%
increase to $14.98 million (Fiscal 2007: $7.67 million) in proprietary
production revenue for Halifax Film, a 203% increase to $17.55 million for
Fiscal 2008 (Fiscal 2007: $5.78 million) for Decode, and the inclusion of
$1.88 million (Fiscal 2007: nil) for Studio B.
    For Fiscal 2008 distribution revenues were up 48% to $14.43 million from
$9.76 million for Fiscal 2007. For Fiscal 2008 the Company recognized revenue
on several contracts throughout its existing library and delivered episodes of
newer titles. Some of the more significant sales were on the following titles:
$0.76 million for This Hour Has 22 Minutes Seasons I to XIII, $0.5  million
for Franny's Feet Seasons I and II, $0.83 million for Naturally Sadie Seasons
I to III, $0.96 million for Bo on the Go! Season I, $1.44 million for Urban
Vermin Season I, $1.18 million for Chop Socky Chooks Season I, $3.01 million
for The Latest Buzz Seasons I and II, and $0.94 million for Delilah & Julius
Season II. Fiscal 2008 distribution revenues also included $1.06 million
related to the feature film Shake Hands With the Devil.
    The Company recorded an additional $0.05 million as an equity pickup for
Lunar Jim Season II and no amounts for Lunar Jim Season I for Fiscal 2008,
versus $0.01 million and $0.35 million respectively for Fiscal 2007.
    In addition, as of June 30, 2008 the Company delivered $3.09 million for
26 half-hours of proprietary television programs where the license periods had
not yet commenced by June 30, 2008, and therefore the revenue recognition
criteria have not been met to recognize in Fiscal 2008. These license periods
are scheduled to commence throughout Fiscal 2009 and will be recognized in the
corresponding quarters, when the license periods have commenced and all
revenue recognition criteria have been met.
    For Fiscal 2008 the Company earned $1.72 million for producer and service
fee revenues whereas for Fiscal 2007 the Company recorded producer and service
fees revenue of $1.09 million and $0.01 million for the feature films
Outlander and Slevin respectively.
    For Fiscal 2008 music and royalty revenues (including new starting
Q3 2008 royalties earned from Bulldog franchisees) declined 2% to $0.86
million (Fiscal 2007: $0.88 million) while new media revenues were $0.65
million (Fiscal 2007: $0.44 million). Rental revenues were $0.38 million
(Fiscal 2007: $0.35 million) from the rental of studio and office facilities
to third parties from the Company's Electropolis subsidiary and from rental of
currently unused office space in the Company's headquarters in Halifax, Nova
Scotia.

    Gross Margin

    Gross margin for Fiscal 2008 was $17.30 million, an increase of 78% in
absolute dollars compared to $9.73 million for Fiscal 2007, but at an overall
33% of revenue represents a slight decline in percentage compared to 37% of
revenue for Fiscal 2007. The margin percentage is down due to the delivery of
slightly lower margin revenue mix for production in Fiscal 2008 as compared to
2007.

    Operating Expenses

    Operating expenses for Fiscal 2008 were $16.56 million compared to
$8.35 million for Fiscal 2007, an increase of 98%. The increase for
Fiscal 2008 is mainly due to a 67% increase in SG&A to $12.23 million up from
$7.34 million for Fiscal 2007 and a $2.78 million impairment recorded on
certain investments in film and television programs. SG&A costs have increased
as a result of the Company's growth and continuing to add key personnel and
expanding facilities as a result of increased activities and increased
regulatory requirements as a public company, plus the addition of 210 days of
Studio B as of December 4, 2007 and 103 days of activity for Bulldog as of
March 20, 2008. For Fiscal 2008, included in Operating Expenses is $1.12
million for amortization of acquired library versus $0.61 million for Fiscal
2007.

    Impairment of Certain Investments in Film and Television Programs

    During Q4 2008 and for Fiscal 2008 the Company recorded an impairment of
certain investments in film and television programs of $2.78 million. The
breakdown was $2.20 million related to an impairment on the feature film Shake
Hands With the Devil. The remaining $0.58 million was recorded on a few minor
television shows with no one show being more than $0.25 million.
    Management recognizes that the Company is in the business of producing
film and television programs and as such is by nature of the industry exposed
to certain risks which are detailed in the "Risk Assessment" section of the
fiscal 2008 MD&A. The Company has used this exceptional item to move forward
policy changes and enhancements and will continue to evaluate its policy for
investments in productions to ensure the Company's focus remains on its core
strengths of children's, youth, and family productions. While risks are always
present, these changes will serve to help mitigate the risks and focus the
ongoing "green light" process for productions of the Company.

    Adjusted EBITDA and EBITDA

    In Fiscal 2008 Adjusted EBITDA (for 2008, the Adjusted EBITDA calculation
includes the adding back of the impairment of $2.78 million as, in
Management's view, this is an exceptional item) was $5.92 million, a 32%
improvement as compared to the EBITDA of $4.50 million for Fiscal 2007. This
was adjusted because in Management's view it represents a better comparison to
2007 and more closely approximates normal recurring operating EBITDA with
2007. For Fiscal 2008 compared to Fiscal 2007 changes were due to the increase
in gross margin dollars of $7.57 million, adding back an increase of non-cash
stock-based compensation expense of $0.53 million, and offset by the increase
in SG&A, net of income from strategic investments of $6.68 million, for a
positive total dollar change of $1.42 million.
    The full audited financial statements and MD&A will be filed on SEDAR at
www.sedar.com.

    About DHX Media Ltd.

    DHX Media Ltd. is a leading international producer and distributor of
television programming and interactive content with an emphasis on children,
family and youth markets. DHX Media Ltd. shares trade on AIM and are listed on
the TSX, the Toronto Stock Exchange. DHX Media's production companies, Decode
Entertainment, Halifax Film and Studio B Productions, are the producers or
co-producers of 14 original television series and theatrical releases
currently commissioned for production and maintain a growing library of 2,200
half-hours of mostly children and youth-oriented television productions.
www.dhxmedia.com

    Disclaimer

    Certain statements herein may constitute forward-looking statements,
including those identified by the expressions "may", "will", "should",
"could", "anticipate", "believe", "plan", "estimate", "potential", "expect",
"intend" and similar expressions to the extent they relate to the Company or
its Management. These statements reflect the Company's current expectations
and are based on information currently available to Management. These
forward-looking statements are subject to a number of risks, uncertainties,
assumptions and other factors that could cause actual results or events to
differ materially from current expectations, including the matters discussed
under "Risk Factors" contained in the Company's prospectus dated May 12, 2006.
These forward-looking statements are made as of the date hereof, and the
Company assumes no obligation to update or revise them to reflect new events
or circumstances.
    %SEDAR: 00023380E




For further information:

For further information: DHX Media Ltd.: David A. Regan, EVP, Corporate
Development & IR, (902) 423-0260; AIM Nominated Advisors: Grant Thornton
Corporate Finance: Gerry Beaney; Troy MacDonald; +44 (0) 20 7383 5100

Organization Profile

DHX Media Ltd.

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