DHX Media reports record full-year results

    AIM and TSX: DHX

HALIFAX, Sept. 29 /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, is pleased to announce its audited financial results for the year ended June 30, 2009.

    Highlights of Fiscal 2009 Results:

    (All amounts in Canadian dollars)

    -   Revenues increased 18% to $62.0 million, up from $52.4 million in
        fiscal 2008;

    -   Gross profit increased 33% to $22.8 million, up from $17.2 million in

    -   EBITDA(1) increased 61% to $9.8 million, up from $6.1 million for
        fiscal 2008;

    -   Net income before discontinued operations was $1.8 million ($0.04 per
        share), a significant increase from a loss of $0.9 million ($0.02 per
        share) in fiscal 2008;

    -   Net income was $0.4 million ($0.01 per share) (net of a $1.5 million
        loss from discontinued operations and one-time cost associated with
        abandoned transactions of $1.4 million), an improvement over the loss
        of $1.0 million for 2008 ($0.03 per share); and

    -   Television production deliveries totaled 226.5 half-hours, a decrease
        of 3% from 233.5 in 2008.

Michael Donovan, Chairman and CEO, DHX Media commented, "Our continuing profitable growth again highlights the effectiveness of our content aggregation strategy. Our strengthening margins for 2009 have driven revenue and EBITDA to record levels, and demonstrate the success of both our acquisitions and organic production growth. We are extremely pleased to announce such strong results in spite of the hardened economic conditions over the past year."

    Consolidated Statements of Income and Comprehensive Income Data
                                                    Year Ended June 30,
                                            2009          2008          2007
                                           ($000)        ($000)        ($000)

                                     (except per   (except per   (except per
                                      share data)   share data)   share data)
    Consolidated Statements of
     Income and Comprehensive
     Income Data:(1)

    Revenues.......................       61,969        52,379        25,971
    Direct production costs and
     amortization of film and
     television produced...........       39,168        35,145        16,273
    Gross margin...................       22,801        17,234         9,734
    Selling, general, and
     administrative................       14,001        12,045         7,341
    Impairment in value of certain
     investment in film and
     television programs...........          494         2,782             -
    Income before the following and
     discontinued operations.......        7,145           960         1,381
    Income (loss) from strategic
     investments...................          122           (59)        1,737
    Costs associated with abandoned
     transactions..................       (1,360)         (104)         (288)
    Amortization, interest and
     other (expenses), net.........       (2,689)       (1,646)       (1,039)
    Provision for income taxes.....        1,375            40           590
    Net income (loss) and
     comprehensive income (loss)
     before discontinued operations        1,843          (889)        1,201
    Discontinued operations, net
     of income tax.................       (1,468)         (141)            -
    Net income (loss) and
     comprehensive income (loss)...          375        (1,030)        1,201
    Basic earnings (loss) before
     discontinued operations per
     common share..................         0.04         (0.02)         0.04
    Diluted earnings (loss) before
     discontinued operations per
     common share..................         0.04         (0.02)         0.03
    Basic earnings (loss) per
     common share..................         0.01         (0.03)         0.04
    Diluted earnings (loss) per
     common share..................         0.01         (0.03)         0.03
    Weighted average common shares
      Basic........................       43,066        39,039        32,699
      Diluted......................       43,096        39,039        35,733

    Consolidated Balance Sheet Data:
    Cash, restricted cash and
     short-term investments........       11,086         9,570         5,779
    Investment in film and
     television programs...........       35,827        49,981        47,025
    Total assets...................      148,803       143,976       103,005
    Total liabilites...............       88,253        85,783        61,544
    Shareholders' equity...........       60,550        58,193        41,461


    (1) EBITDA represents net income of the Company before amortization,
        interest and other income (expense), taxes, non-controlling interest,
        equity income, development expenses, stock-based compensation
        expense, costs associated with abandoned transactions, and impairment
        in value of certain investment in film and television programs.


Revenues for Fiscal 2009 were $62.0 million, up from $52.4 million for Fiscal 2008, an increase of 18%. The increase was generally due to increases in the Company's proprietary production and producer service fee revenue categories. Management was especially pleased with the growth given the general downturn in the overall economic climate over the past year and sees it as validation of the Company's business model.

Proprietary production revenues for Fiscal 2009 of $39.4 million were up 15% over the $34.3 million for Fiscal 2008.

For Fiscal 2009 the Company recognized $39.4 million of proprietary film and television program production revenue (226.5 half-hours), where the programs have been delivered and the license periods have commenced.

In addition, by June 30, 2009 the Company delivered 26 half-hours of Latest Buzz Season III and 8 half-hours of Super Why (CBC) Season I, for which the license periods had not yet commenced by June 30, 2009, and therefore the revenue recognition criteria had not been met to recognize in Fiscal 2009. The license periods are scheduled to commence in Fiscal 2010 and will be recognized in the corresponding quarter, when the license periods have commenced and all revenue recognition criteria have been met.

For Fiscal 2009 distribution revenues were down by 16% to $12.4 million from $14.7 million for Fiscal 2008. Some of the more significant sales were on the following titles: Chop Socky Chooks Season I, The Latest Buzz Seasons I, II, and III, Bo on the Go! Seasons I and II, The Mighty Jungle Season II, Animal Mechanicals Seasons I and II, Super Why Season I, Kid vs. Kat Season I, and Martha Speaks Season I. Management was very pleased with the Q4 2009 and overall performance of its distribution activities for Fiscal 2009 given the economic climate over the past year.

For Fiscal 2009 the Company earned $7.3 million for producer and service fee revenues, up substantially over $1.7 million for Fiscal 2008.

For Fiscal 2009 music and royalty revenues increased 155% to $2.0 million (Fiscal 2008-$0.8 million). For Fiscal 2009 $0.7 million related to the recognition of the minimum guarantee from the Hasbro Franny's Feet Merchandising and Licensing deal that has been put on indefinite hold. New media revenues decreased in Fiscal 2009 to $0.2 million (Fiscal 2008-$0.6 million).

Gross Margin

Gross margin for Fiscal 2009 was $22.8 million, an increase in absolute dollars of 33% compared to $17.2 million for Fiscal 2008. The overall margin at 37% of revenue was up over the 33% overall margin for Fiscal 2008.

Operating Expenses

Operating expenses for Fiscal 2009 were $15.7 million compared to $16.3 million for Fiscal 2008, a decrease of 4%. In Fiscal 2009, SG&A increased 17% to $14.0 million from $12.0 million for Fiscal 2008. SG&A costs have increased as a result of the addition of Studio B and imX (amounting to approximately $2 million of the increase) and the Company's revenue growth. Operating expenses for Fiscal 2009, as a percentage of revenues, at 25% are improving compared to Fiscal 2008 at 31%.


In Fiscal 2009 EBITDA was $9.8 million, a 61% increase as compared to $6.1 million for Fiscal 2008. For Fiscal 2009 this was due to the increase in gross margin dollars of $5.6 million, adding back an increase of non-cash stock-based compensation expense of $0.1 million, and offset by the increase in SG&A, net of income from strategic investments, of $1.8 million, for a positive total dollar change of $3.9 million.

    Impairment in Value of Certain Investments in Film and Television

During Q4 and for Fiscal 2009 the Company recorded an impairment in value of certain investment in film and television programs of $0.5 million ($2.8 million for Fiscal 2008).

Discontinued Operations

The Company recorded a loss on discontinued operations, net of income tax, of $1.5 million for Fiscal 2009 (Fiscal 2008-$0.1 million). In December 2008, the Company decided to dispose of its Bulldog subsidiary due to a slow down in franchisee opportunities resulting from the global economic slowdown. The Company decided the working capital required in achieving break even and profitability was significant and was sufficiently pushed forward due to the current economic climate. Given that the remainder of the Company's subsidiaries are generating positive cash flow, the Company felt it was prudent to not fund losses of Bulldog. The Company is exploring its options for a potential sale or wind up and will report on its final determination in the coming quarters.

    Costs Associated with Abandoned Transactions, Equity Income, and Non-
    Controlling Interest

For Fiscal 2009 the Company recorded a charge for the costs associated with abandoned transactions of $1.4 million (Fiscal 2008-$0.1 million), approximately $1.2 million of which related to the cancellation of a reverse-takeover transaction.

DHX Media's complete financial statements are available at www.dhxmedia.com or on 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, 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


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, (902) 423-0260; AIM Nominated Advisers: Grant Thornton Corporate Finance: Gerry Beaney, Troy MacDonald, +44 (0) 20 7383 5100

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