AIM and TSX: DHX
HALIFAX, Nov. 15 /CNW/ - DHX Media Ltd. ("DHX Media" or the "Company")
(AIM & TSX ticker: "DHX"), a leading independent international producer and
distributor of television programming and interactive content, announces its
unaudited consolidated interim results for the first quarter ended
September 30, 2007 (a copy of which are available on SEDAR at www.sedar.com).
(All amounts expressed in Canadian dollars)
- Revenues of $10.7 million for the third quarter ended
September 30, 2007 an increase of 233% (Q1 2007 - $3.2 million);
- Gross profit of $3.3 million, an increase of 206% over the same
period (Q1 2007 - $1.1 million);
- Net income for the three months ended September 30, 2007 increased
by $577,000 to $375,000 (Q1 2006 - net loss of $202,000);
- EBITDA(1) increased by 1,295% for Q1 2008 to $1.1 million from
$80,000 in Q1 2007;
- The number of delivered half-hours of production for which revenue
was recognized increased 369% to 61 from 13 in the same period of
2006. Revenue of $1.6 million recognized during Q1 2008 related
to half-hours of production that were delivered in Q4 2007 but for
which their license periods had not commenced by June 30, 2007;
- Completed a bought deal equity issue for gross proceeds of
$17.46 million on November 13, 2007.
Michael Donovan, Chairman and CEO, commented,
"We are very pleased to announce continued year-over-year quarterly growth
for this the historically slowest quarter of our delivery cycle and continued
delivery on our strategy. During the quarter the Company recognized the
revenue associated with 61 half-hours of production, adding greatly to our
current library. Also, we were pleased to have announced four distribution and
licensing deals, including worldwide television and home entertainment
distribution rights to Turner Broadcasting's My Spy Family and the assignment
of a merchandising and licensing sub-licensee in the U.K. for Franny's Feet.
Furthermore, DHX Media now has a solid financial footing thanks to the
strength of our operations, the recently announced $70 million production and
operating revolving credit facility and the bought deal equity issue completed
on 13 November 2007 for gross proceeds of $17.5 million. We intend to use this
healthy capitalization base to leverage growth across our four strategic
drivers, namely increasing merchandising & licensing revenue, expanding the
television and film library, leveraging our international distribution
capabilities and exploiting new content platforms."
DHX continued to deliver on its strategic objectives during the first
quarter of fiscal 2008. The Company recognized revenue for a record
61 half-hours of production during the quarter though 22 of those relate to
half-hours of production that were delivered to broadcasters in fiscal 2007
but for which license periods commenced only after June 30, 2007.
The Company's distribution group made a number of notable third party
rights acquisitions during the quarter, including the worldwide television and
home entertainment distribution rights to Turner Broadcasting's My Spy Family.
This rights acquisition from a third party represents just one of many
successes in leveraging the Company's distribution capabilities. The
assignment of a sub-licensee in the UK for Franny's Feet also demonstrates
momentum for the Company's merchandising and licensing strategy.
The Company, as previously announced, also completed a licensing sale of
254 thirty minute episodes of the hit Canadian comedy show, "This Hour Has
22 Minutes". This sale is for exclusive specialty television broadcast and
non-exclusive broadband rights for Canada for approximately three years. Also
under the agreement, DHX Media grants the same rights for all new seasons of
the show that may be produced. This is the first licensing deal of the
properties acquired in December of 2006 and provides further evidence of
DHX Media's ability to exploit rights across multiple platforms by leveraging
its existing distribution capabilities.
Revenues for Q1 2008 were $10.7 million, up from $3.2 million for Q1 2007,
an increase of 233%. The increase was generally due to increases in the
Company's production revenue category. The Company benefited from previous
fiscal 2007 deliveries in the amount of $1.6 million in proprietary production
revenues where the license periods commenced in Q1 2008.
The Company expects double digit revenue growth for the remainder of
fiscal 2008 as some of the license periods for the Company's past television
deliveries are scheduled to commence during fiscal 2008 and will have at that
time met all revenue recognition criteria.
Proprietary production revenues for Q1 2008 of $8.8 million were up 652%
over the $1.2 million for Q1 2007 representing 61 half-hours of proprietary
film and television programming, an increase of 369% over the 13 half-hours
for Q1 2007. In addition, as of Q1 2008 the Company has to date delivered
$2.7 million in potential revenue from 37 half-hours of proprietary television
programs, where the license periods had not yet commenced by September 30,
2007, and therefore the revenue recognition criteria have not been met to
recognize their associated revenue in Q1 2008. These license periods are
scheduled to commence throughout fiscal 2008 and 2009 and will be recognized
in the corresponding quarters, when the license periods have commenced and all
revenue recognition criteria have been met.
Distribution revenues for Q1 2008 were up 11% to $1.4 million (Q1 2007 -
$1.3 million). For Q1 2008 the Company recognized revenue on several contracts
throughout its existing library and delivered episodes of newer titles.
Music and royalty revenues for Q1 2008 dropped slightly to $159,000
(Q1 2007 - $245,000) while new media revenues were in line with Q1 2007 at
$192,000 (Q1 2007 - $196,000).
Financing activity during the quarter included securing a $70 million
production and operating revolving credit facility.
Based on the momentum of the Company's first quarter earnings and the
strength of its balance sheet, the Company anticipates year-over-year organic
growth to continue, particularly in the proprietary production and
distribution segments. The Company's production revenues are generally lowest
in the first fiscal half, as deliveries are typically contracted with the
primary broadcasters early in the calendar year within the Canadian television
industry. Currently, there are 50 half-hours of production scheduled for
delivery in the second fiscal quarter of 2008 for which license periods will
commence prior to January 1, 2008.
Furthermore, the Company expects to increase the number of proprietary
productions this fiscal period over the corresponding period in 2007, with a
view to growing our library and continuing to deliver bottom-line growth and
improved margins. It also anticipates further growth from our additional
strategic value drivers of merchandising and licensing and new content
platform exploitation into the third and fourth fiscal quarters of 2008. Our
business model gives us the ability to produce audience-winning programming
while minimizing financial risk and retaining the maximum exploitation rights
associated with a production for the generation of multiple revenue streams.
Management intends to continue exploiting this model in order to grow
profitably and add to its library of completed productions.
As detailed in the MD&A, for the remainder of the first half of 2008 the
Company is expecting further distribution revenue penetration on a number of
additional titles in the current slate and from the library representing
expected double-digit growth, perhaps in the range of 10-30% over the
distribution totals for the first half of fiscal 2007. For fiscal 2008 other
revenues, including music and royalty and new media revenues, are expected to
have moderate growth.
For fiscal 2008 the Company has over 200 half-hours of contracted
proprietary programs (plus 50-100 half-hours of additional potential
proprietary programs currently in negotiation with various broadcasters), made
up of over 15 different episodic television series, which are scheduled for
delivery and for the license periods to commence. Having recognized
61 half-hours of proprietary programs as production revenues in Q1 2008, the
Company is well on its way to its projected number of half-hours. For the
first half of 2008, the Company also expects double-digit production revenue
growth, perhaps in the 10-40% range, as some of the Company's Q3 and Q4 2007
television deliveries are simply awaiting their license periods to commence.
With the proceeds of the Company's November 13, 2007 equity issuance in
hand, management remains focused on increasing shareholder value through
further organic growth and acquisitions. The Company intends to use the net
proceeds of the equity issue for possible future acquisitions. In particular,
the Company believes it is well on its way to carrying forward its strategic
initiatives, including revenue growth in production and distribution,
increasing profitability, expanding the Company's presence in international
markets, leveraging the Company's experience to focus on children, youth, and
family content and merchandising, and undertaking further potential
Please also see the 'Outlook' section of the MD&A for more detailed
information. The full financial statements and MD&A can be found below and are
also available on SEDAR at www.sedar.com.
About DHX Media
DHX Media Ltd. is a leading international producer and distributor of film
and television programming and interactive content with an emphasis on
children, family and youth markets. DHX Media Ltd. shares are listed on the
Alternative Investment Market of the London Stock Exchange, AIM, and the
Toronto Stock Exchange, TSX. DHX Media's production companies, Decode
Entertainment and Halifax Film, are the producers or co-producers of
14 original television series and theatrical releases currently commissioned
for production and maintain a growing library of over 1,750 half-hours of
mostly children and youth-oriented television productions. www.dhxmedia.com
This press release contains forward looking statements with respect to the
Company. Although the Company believes that the expectations reflected in such
forward looking statements are reasonable, such statements involve risks and
uncertainties and are based on information currently available to the Company.
Actual results may differ materially from those expressed or implied by such
forward looking statements. Factors that could cause actual results or events
to differ materially from current expectations, among other things, include
risks related to market factors, customer contract interpretation, application
of accounting policies and principles, and production related risks, and other
factors discussed in materials filed with applicable securities regulatory
authorities from time to time including matters discussed under "Risk Factors"
in the Company's short form prospectus dated November 7, 2007 and in the
Company's Amended Annual Information Form incorporated by reference therein.
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
(1) EBITDA represents net earnings (loss) of the Company before
amortization expense, interest income (expense), non-controlling
interest, equity income (loss), development expenses and stock-based
For further information:
For further information: DHX Media Ltd.: Dana Landry, Chief Financial
Officer, (902) 423-0260; David A. Regan, EVP, Corporate Development & IR,
(902) 423-0260; AIM Nominated Advisors: Canaccord Adams Limited: Neil Johnson,
+44 (0) 20 7050 6500; Erin Needra, +44 (0) 20 7050 6500