AIM and TSX ticker: "DHX"
HALIFAX, Feb. 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 second quarter ended
December 31, 2007 (a copy of which are available on SEDAR at www.sedar.com).
(All amounts expressed in Canadian dollars)
- Record revenues of $9.8 million and $20.5 million for Q2 2008 and the
six months ended December 31, 2007, respectively, representing an
increase of 47% and 107% over the respective periods of last year
(Q2 2007: $6.7 million; and six months ended December 31, 2006:
- Gross profit of $3.5 million, an increase of 47% for Q2 2008 (Q2 2007:
- EBITDA(1) increased by 22% for Q2 2008 to $1.2 million up from $951,000
for Q2 2007;
- Net income of $137,000 and $511,000 for Q2 2008 and the six months
ended December 31, 2007, respectively, representing a decrease of
$97,000 and an increase of $479,000 over the respective periods of last
year (Q2 2007: $234,000; and six months ended December 31, 2006:
- Number of delivered half-hours of production for which revenue was
recognized increased 21% to 55.5 for Q2 2008 up from 46 for Q2 2007.
Michael Donovan, Chairman and CEO, commented, "We are again very pleased
to announce continued year-over-year quarterly growth for the second quarter
of 2008 while we continue to deliver on our strategy. During the quarter the
Company recognized the revenue associated with 55.5 half-hours of production
and $2.5 million in distribution deals. Also, we are pleased to have announced
the purchase of Studio B Productions which will allow DHX to benefit from
several new broadcaster relationships, expanded production capabilities and a
greater supply of children's programming from which we can generate future
distribution revenues. These strengths will contribute to each of 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 second
quarter of fiscal 2008. The Company recognized revenue for a record 55.5
half-hours of production during the quarter, with 14 of half-hours relating to
production that was delivered to broadcasters in fiscal 2007 and Q1 2008, but
for which license periods commenced during the second quarter.
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 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.
Revenues for Q2 2008 were $9.8 million, up from $6.7 million for Q2 2007
an increase of 47%. The increase was largely due to increases in revenue from
the Company's production and distribution division. The Company benefited from
previous fiscal 2007 deliveries in the amount of $350,000 in proprietary
production revenues where the license periods commenced in Q2 2008.
Proprietary production revenue for Q2 2008 was $6.4 million, up 83% over
the $3.5 million for Q2 2007. This represents 55.5 half-hours of proprietary
film and television programming, an increase of 21% over the 46 half-hours for
Q2 2007. In addition, as of Q2 2008 the Company has to date delivered
$3.8 million in potential revenue from 35 half-hours of proprietary television
programs, where the license periods had not yet commenced by December 31,
2007, and therefore the revenue recognition criteria have not been met to
recognize their associated revenue in Q2 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 Q2 2008 were up 21% to $2.5 million (Q2 2007 -
$2.0 million). As 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: This Hour Has
22 Minutes, Franny's Feet, Naturally Sadie, Urban Vermin, and Planet Sketch.
Six Months 2008 distribution revenues also included theatrical box office
revenues for the feature film Shake Hands With the Devil.
Music and royalty revenues for Q2 2008 dropped slightly to $92,000
(Q2 2007 - $136,000) while new media revenues were generally in line with Q2
2007 at $114,000 (Q2 2007 - $139,000).
Financing activity during the quarter included securing a maximum
authorized $70 million production and operating revolving credit facility (see
note 9 to unaudited consolidated interim financial statements for second
quarter ended December 31, 2007 for details).
Coming off Q2 2008 the Company's balance sheet remains strong and
Management believes the Company is in a solid position for the remainder of
Fiscal 2008. Management continues to focus on its core values and using its
strengths to take advantage of present opportunities and to create further
value for shareholders. With the proceeds of the Company's November 13, 2007
Unit Offering, which raised $17.6 million in gross proceeds (before expenses),
now at work, Management remains focused on increasing shareholder value
through further organic growth and acquisitions. The Company anticipates using
the proceeds of the Unit Offering to move forward on the acquisition front in
Fiscal 2008 and expects to be in a position to report on this in the coming
In particular, the Company believes it is well on its way to realizing its
contemplated strategic initiatives, including revenue growth in production and
distribution, increasing profitability metrics, 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 synergistic acquisitions. In this regard, for
Fiscal 2008, the Company remains focused on organic growth and growth through
acquisitions and is currently exploring a number of opportunities to expand
its revenue platform.
On August 10, 2007, the Company announced the licensing of distribution
rights to the first twelve seasons of This Hour Has 22 Minutes, representing
258 half-hours of the distribution rights package, to The Comedy Network in
Canada. This exhibits DHX's ability to exploit these rights across multiple
platforms by leveraging its existing distribution capabilities. In addition,
the Company has recorded $0.423 million in distribution revenue for this
licensing deal during the six month of 2008. The Company currently anticipates
revenues from this licensing deal of $1.0 million during Fiscal 2009.
The Company has delivered 116.5 half-hours year to date and is on target
to meeting its previously reported goal of over 200 half-hours of contracted
proprietary programs, made up of over 15 different episodic television series,
which are scheduled for delivery and for the license periods to commence. The
Company also has under negotiations with various broadcasters for 50-100
half-hours of additional potential proprietary programs which are possible for
For the remainder of 2008, the Company expects these deliveries along with
prior deliveries to represent double-digit production revenue growth, perhaps
in the 20-40% range, as some of the Company's previous quarter's television
deliveries are simply awaiting their license periods to commence.
Specifically, for Q3 2008, the Company has over 50 half-hours of contracted
proprietary programs which are scheduled for delivery and for the license
periods to commence. The Company's historic average production revenue value
(once the license period has commenced) per half-hour of television programs
is approximately $0.100-$0.175 million and Management anticipates the average
production revenue value per half-hour actually delivered with the license
periods commenced for the remainder of Fiscal 2008 to be in this range.
The Company is expecting between $2.0 to $4.0 million in producer and
service fee revenue as it benefits from the integration of the Studio B
acquisition, which is based on existing service contracts in progress for the
second half of Fiscal 2008. The Company expects a gross margin range of 15-25%
for this producer and service fee revenue.
The Company is also expecting, somewhat based on contracted sales
delivered and awaiting their licensing periods to commence (See "Critical
Accounting Policies-Revenue Recognition" section of the Q2 2008 MD&A for
further details), further distribution revenue penetration on a number of
additional titles in the current slate and from the library, during the
remainder of Fiscal 2008. This represents anticipated double-digit growth,
perhaps in the range of 20-40% over the distribution totals for the first half
of Fiscal 2008. For Fiscal 2008 other revenues, including music and royalty
and new media revenues, are expected to have moderate growth.
Further synergies from the recent acquisition of Decode and Studio B are
demonstrated through healthier gross margins as shown by the strong margin for
Q2 2008 of 35%. For Fiscal 2008, gross margin is expected to be in the 25-40%
range. For Fiscal 2008, Management expects the integration of Decode and
Studio B to continue to result in further synergies and revenue growth in all
In the last half of Fiscal 2008 and the first half of Fiscal 2009, the
Company anticipates some further revenue growth, specifically in the category
of music and royalty revenues, as it embarks upon its M&L relationships with
PLAYSKOOL, a division of Hasbro Inc., for the Company's preschool property
Franny's Feet and Alliance Atlantis on another preschool property Lunar Jim.
The Company is also focused on leveraging other existing proprietary
properties for additional M&L revenues.
The full financial statements and MD&A can be found below and are also
available 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 20 original television series and theatrical releases
currently commissioned for production and maintain a growing library of over
2,150 half-hours of mostly children and youth-oriented television productions.
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 and other income (expense), non-
controlling interest, equity income (loss), development expenses and
stock-based compensation expense.
For further information:
For further information: DHX Media, Canada: Dana Landry, Chief Financial
Officer, +1 902-423-0260; David A. Regan, EVP, Corporate Development & IR, +1
902-423-0260; AIM Nominated Advisors: Canaccord Adams Limited: Neil Johnson,
+44 (0) 20 7050 6500