DHX Media Q2 Net Income Up 349% Before Discontinued Operations



    www.dhxmedia.com
    AIM and TSX: DHX

    HALIFAX, Feb. 16 /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
unaudited financial results for the three months ended December 31, 2008.

    
    Highlights of Q2 2009 Results:
    (All amounts in Canadian dollars)

    - Revenues increase to $21.5 million, up from $9.3 million in Q2 2008, an
      increase of 131%;

    - Net income before discontinued operations of $0.62 million, an increase
      of 349% from $0.14 million in Q2 2008;

    - Net loss of $0.33 million ($0.01 per share), down from a net income of
      $0.14 million for Q2 2008 ($0.00 per share);

    - EBITDA(1) of $2.9 million, a 190% improvement as compared to the
      EBITDA of $1.0 million for Q2 2008;

    - Expenses associated with the uncompleted transaction with Entertainment
      One resulted in a one-time charge of $1.1 million; and

    - 80 half-hours of recognized television program production, an increase
      of 44% from 55.5 in Q2 2008.

    (1) EBITDA represents net earnings (loss) of the Company before
        amortization expense, interest and other income (expense), non-
        controlling interest, equity income (loss), development
        expenses,stock-based compensation expense and one-time charges.
    

    Michael Donovan, Chairman and CEO, DHX Media commented, "We are again
pleased to announce exceptional year-over-year growth in quarterly revenue,
EBITDA, gross margin , and net income before discontinued operations for our
second quarter of fiscal 2009. Our 80 half-hours of TV program deliveries
illustrates the execution of our content aggregation strategy. Additionally,
our results from this quarter show that the business continues to grow and
generate positive cash flows and our strong balance sheet and growing cash of
$12 million dollars positions us well in the current economic downturn."

    
    Consolidated Statements of Income and Comprehensive Income Data

    -------------------------------------------------------------------------
                                        Three Months Ended  Six Months Ended
                                           December 31,       December 31,
                                        -------------------------------------
                                           2008     2007      2008      2007
                                        -------------------------------------
                                           $000     $000      $000      $000
                                        (except  (except   (except   (except
                                            per      per       per       per
                                          share    share     share     share
                                           data)    data)     data)     data)
                                        -------------------------------------
    Consolidated Statements of Income
     and Comprehensive Income Data:(1)

    Revenues                             21,514    9,307    38,385    19,969
    Direct production costs and
     amortization of film and
     television programs produced        14,781    5,833    26,658    13,189
                                        -------------------------------------
    Gross margin                          6,733    3,474    11,727     6,780
                                        -------------------------------------
    Selling, general, and
     administrative                       3,923    2,485     7,262     4,808
    Income before the following and
     discontinued operations              2,724      649     4,230     1,544
    Loss from strategic investments         (85)     (99)      (13)       (8)
    Costs associated with uncompleted
     transactions                        (1,144)       -    (1,144)        -
    Interest and other (expenses), net     (635)    (344)   (1,258)     (730)
    Provision for income taxes              245       70       590       295
    Net income and comprehensive
     income before discontinued
     operations                             615      137     1,225       511
    Discontinued operations, net of
     income taxes                          (943)       -    (1,023)        -
    Net income (loss) and comprehensive
     income (loss)                         (328)     137       202       511
    Basic earnings per common share
     before discontinued operations        0.01     0.00      0.03      0.01
    Fully diluted earnings per common
     share before discontinued
     operations                            0.01     0.00      0.03      0.01
    Basic earnings (loss) per common
     share                                (0.01)    0.00      0.00      0.01
    Fully diluted earnings (loss)
     per common share                     (0.01)    0.00      0.00      0.01
    Weighted average common shares
     outstanding
      Basic                              42,834   38,029    42,834    35,430
      Fully Diluted                      42,834   44,439    42,834    39,864
                                        -------------------------------------


                                           As at December 31,  As at June 30,
                                                        2008            2008
                                                        $000            $000
                                           ----------------------------------
    Consolidated Balance Sheet Data:

    Cash, restricted cash and short-term
     investments                                      12,009           9,570
    Investment in film and television programs        39,871          49,981
    Total assets                                     155,202         143,974
    Total debts                                       96,231          85,781
    Shareholder equity                                58,971          58,193
    -------------------------------------------------------------------------

    
    Revenues

    Revenues for Q2 2009 were $21.51 million, up from $9.31 million for Q2
2008, an increase of 131%. The increase was generally due to increases in the
Company's production and production service fee revenue categories. Management
was especially pleased with the growth and sees this growth as validation of
the Company's business model.
    Proprietary production revenues for Q2 2009 of $16.84 million were up
168% over the $6.28 million for Q2 2008. The increase included a 262% increase
to $11.07 million (Q2 2008-$3.06 million) in proprietary production revenue
for the Halifax Film division, a 44% increase to $3.78 million for Q2 2009 (Q2
2008-$2.62 million) for the Decode division, and the inclusion of $1.99
million a full quarter of activity (Q2 2008-$0.60 million for 28 days of
activity) for the Studio B division.
    For Q2 2009 the Company recognized $16.84 million, 80.0 half-hours of
proprietary film and television program production revenue, a 44% increase
over the 55.5 half-hours for Q2 2008, where the programs have been delivered
and the license periods have commenced.
    For Q2 2009 the Company earned $2.29 million for producer and service fee
revenues compared to $0.30 million for Q2 2008. For Q2 2009 distribution
revenues were down 15% to $2.10 million from $2.47 million for Q2 2008. For Q2
2009 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: Chop Socky Chooks Season I,
The Latest Buzz Seasons I and II, Bo on the Go! Seasons I and II, The Mighty
Jungle Season I, Animal Mechanicals Seasons I and II, Super Why Season I, and
Kid vs. Kat Season I.
    For Q2 2009 music and royalty revenues increased 111% to $0.19 million
(Q2 2008-$0.09 million) while new media revenues decreased in Q2 2009 to $0.03
million (Q2 2008-$0.11 million).
    For Q2 2009 rental revenues were $0.06 million (Q2 2008-$0.06 million)
from the rental of studio and office facilities to third parties as a result
of 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 Q2 2009 was $6.74 million an increase in absolute
dollars of 94% compared to $3.47 million for Q2 2008. The overall margin at
31% of revenue was down compared to 37% of revenue for Q2 2008 as the Company
has delivered a mix of production and production service revenues with
slightly lower margins as compared to Q2 2008.

    Operating Expenses

    Operating expenses for Q2 2009 were $4.01 million compared to $2.82
million for Q2 2008, an increase of 43%. The increase for Q2 2009 is mainly
due to a 58% increase in SG&A to $3.92 million up from $2.48 million for Q2
2008. SG&A costs have increased as a result of the addition of Studio B and
imX and the Company's growth and continuing to add key personnel and expanding
facilities as a result of increased activities and increased regulatory
requirements from being public. For Q2 2009, included in Operating Expenses is
$0.05 million for amortization of acquired library versus $0.30 million for Q2
2008.

    Costs Associated with Uncompleted Transaction

    For Q2 2009 the Company recorded costs associated with uncompleted
transactions of $1.14 million (see "Cost Associated with Uncompleted
Transactions" section of the Q2 2009 MD&A for further information).

    Discontinued Operations

    The Company recorded a loss on discontinued operations of $0.94 million
for Q2 2009 (Q2 2008-nil) (see "Discontinued Operations" section of the Q2
2009 MD&A for further details).

    EBITDA

    In Q2 2009 EBITDA was $2.93 million (including $0.09 million loss from
strategic investments), a 190% in total increase as compared to $1.01 million
(including $0.10 million loss from strategic investments) for Q2 2008. The
growth in EBITDA for Q2 2009 was due to the increase in gross margin dollars
of $3.26 million, adding back an increase of non-cash stock-based compensation
expense of $0.08 million, and offset by the increase in SG&A, net of income
from strategic investments of $1.42 million, for a positive total dollar
change of $1.92 million.

    The full unaudited financial statements and MD&A will be filed on SEDAR
at www.sedar.com and will be available on the Company's website
www.dhxmedia.com. The Company's income statement, balance sheet, cashflow
statement and notes from the unaudited financial statements are attached
below.

    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, Studio B Productions and imX Communications, are
the producers or co-producers of 16 original television series and theatrical
releases currently commissioned for production and maintain a growing library
of over 2,200 half-hours of mostly children and youth-oriented television
productions. www.dhxmedia.com

    Disclaimer

    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 or circumstances.
    %SEDAR: 00023380E




For further information:

For further information: DHX Media Ltd.: David A. Regan - EVP, Corporate
Development & IR, +1 902-423-0260; AIM Nominated Advisers: Grant Thornton
Corporate Finance: Gerry Beaney, Troy MacDonald, +44 (0) 20 7383 5100

Organization Profile

DHX Media Ltd.

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