Beyond International Limited Annual General Meeting 25 November 2011

Transcription

1 Beyond International Limited Annual General Meeting 25 November 2011

2 Review of Operations financial year ended 30 June 2011 Operating Profit and Loss Statement OPERATING PROFIT AND LOSS STATEMENT TWELVE MONTHS TO TWELVE MONTHS TO JUNE JUNE VARIANCE % $000 s $000 s $000 s REVENUE 82,242 78,961 3, % OPERATING EXPENSES 67,750 66,437 1, % FOREIGN EXCHANGE LOSS/(GAIN) % NORMALISED EBITDA 14,472 11,794 2, % DEPRECIATION & AMORTISATION 6,294 5, % NORMALISED EBIT 8,178 6,205 1, % INTEREST EXPENSE % NORMALISED OPERATING PROFIT BEFORE TAX SIGNIFICANT ONE-OFF COSTS 8,042 6,062 1, % 2,316-2, % TAX EXPENSE 479 1, % PROFIT AFTER TAX 5,247 5, % OUTSIDE EQUITY INTEREST % NET PROFIT 5,099 4, % EPS 8.67 cents 8.40 cents 0.27 cents 3.21% BIL AGM 25 November

3 Financial Performance for the 12-Month Period to 30 June Revenue for the year has increased by 4% from $ million to $ million with operating expenses increasing by $1.313 million or 2% year on year; Statutory profit after taxation is $5.099 million for the 2011 financial year an increase of 3.2% over the 2010 financial year; Earnings Per Share increased by 3.2% to 8.67 cents; In the 2011 financial year the Company has achieved a normalised operating profit before tax of $8.042 million before significant one off costs up $1.980 million or 33% on the previous financial year; There were significant one off costs in the current period totalling $2.316 million. These one off costs include the settlement with the receiver of Destra MP Pty Ltd for the purchase of the Magna Pacific business in the 2009 financial year and the write back of producer tax rebates booked in prior years; BIL AGM 25 November

4 Financial Performance for the 12-Month Period to 30 June Foreign exchange losses in 2011 totalled $20,000 compared to a foreign exchange loss of $730,000 in the prior year; Net cash flow from operating activities increased by 42% to $9,736,000 from $6,869,000 in 2010 with the final and interim dividend of $3,666,000 being paid during the year; The Company strengthened its Balance Sheet by increasing the cash balances from $1.432 million at June to $5.922 million at the 2011 reporting date; 36% of total group revenues are denominated in US$ compared to 38.5% in the previous year; and The Company has no bank debt. BIL AGM 25 November

5 Review of Group Operations by Segment for the 12-Month Period to June 2011 The below is an analysis of the performance of the segments in the 2011 financial year: FY Var Var % Revenue $ 0 00's $ 0 00's $ 000's TV Pr od u ction s & Cop yr ig ht 38,416 33,270 5,146 15% H o m e Ent er tai n me nt 28,429 30,188 (1,7 59 ) -6 % Dist ribut io n 15,298 15,548 (2 5 0 ) -2 % C or p o rat e 99 (4 5 ) % T o tal Re ve n u e 82,242 78,961 3,281 4% EBIT DA* Produ ction s & C opyrigh t 13,927 10,799 3,128 29% H o m e Ent er tai n me nt 4,162 4,911 (7 49 ) -1 5 % Dist ribut io n 1,614 1, % C or p o rat e (5,211) (4,6 68 ) (5 43 ) 12% F o re ig n Ex chan g e Gai n / (Lo ss) (20) (7 30 ) % EBIT DA 14,472 11,794 2,678 23% * E xcl ud ing sig n i fi can t o ne -o ff co sts o f $ 2, 316, 000 BIL AGM 25 November

6 Trading Update for the Four Months to 31 October 2011 Consolidated group revenues for the first four months of the financial year are marginally higher than for the corresponding period in Trading in each of the three operating segments are reviewed below:- Television Production Confirmed television production orders as at the end of October 2011 are 15% ahead of the amount secured at the corresponding date in the prior financial year. The production slate is nineteen individual programs with combined production budgets of approximately $40 million. No one program represents more than 15% of this total. Seventy per cent (70%) of the total slate (in value) has been commissioned by broadcasters in the United States (US) with the balance from Australian free to air networks, cable channels and sponsorship funding. BIL AGM 25 November

7 Television Production - Cont d The US production slate is made up of six different series being: Mythbusters - series 8; Taboo - series 7 and 8; Deadly Women - series 6; Monster Bug Wars - series 2; Behind Mansion Walls - series 2, and Killer Instinct - series 1. Eight separate programs make up the Australian broadcast component of the slate. These programs include: Hot Property - series 12; Selling Houses (Australia) - series 4; Toy Box - series 3; and Lab Rats - series 2. In addition five projects have been funded through advertising and sponsorship arrangements in Australia. BIL AGM 25 November

8 Television Production - Cont d Beyond s strategy as a content producer and owner is different from that of most large production companies operating in Australia. These production companies are subsidiaries of American or European media conglomerates that operate throughout the world. Their business model is to reproduce program formats owned by their foreign parent companies for the Australian market. Occasionally they will originate a format in Australia that can be reproduced in other parts of the world. In contrast the business strategy adopted by Beyond for the majority of its product is to create new programs that will initially be commissioned and produced for a significant market such as Australia or the USA and then be licensed (as a finished product) by Beyond to free to air television, cable, satellite broadcasters throughout the rest of the world. As a result of this strategy the company creates an ongoing revenue stream from licensing and ancillary exploitation of the programs it creates, produces and distributes. BIL AGM 25 November

9 Television Production - Cont d As broadcasting changes to cope with new challenges from internet-delivery services including on-demand programming, as well as a shift of advertising to the internet, television producers will find new opportunities to fund program production. Emerging internet services such as Youtube and Netflix have begun commissioning exclusive content for their viewers and consumers, and will create a new market for programming outside the existing television model. Beyond has traditionally worked with emerging distribution platforms such as cable and satellite television and will continue to look for opportunities in this developing landscape, and to build relationships with the new generation of program commissioners. BIL AGM 25 November

10 International Television Sales Revenue to the end of October is in line with the corresponding period in FY11 and the revenue for the first half of the financial year is expected to be higher than for the corresponding period to 31/12/10. The international market for finished products is currently robust and is driven by a proliferation of digital channels and new platforms that have a demand for quality product in high volume. To grow revenue we are continuing to focus on: Intensifying program acquisitions to acquire the international rights to new programs; Generating additional revenue streams for the existing catalogue through exploitation on new platforms; and Building on and finding new opportunities for existing brands such as Mythbusters, Deadly Women and Behind Mansion Walls. BIL AGM 25 November

11 International Television Sales - Cont d The most successful programs in the period are: Love It Or List It, Mythbusters, Stingers and Lab Rats Challenge. The free-to-air and subscription television model is changing, as existing broadcasters face more competition from new and emerging programming sources able to take audiences away from traditional viewing habits. TV distributors, used to selling programming exclusively to broadcasters, find themselves increasingly able to access online retail, Over The Top service providers and other programming aggregators who can directly access viewers and consumers. New channels to market are emerging as viewing habits evolve. Beyond Distribution is well positioned to capitalise on these developments, with a catalogue of broadly defined rights in programming which will allow it to establish itself as a digital distributor. With a catalogue of over 5,000 hours, Beyond Distribution is well positioned to exploit new platforms and delivery channels. BIL AGM 25 November

12 Home Entertainment Revenue for the period July October 2011 increased marginally compared to the previous corresponding period. The result to the end of October are due to the success of the Smurfs television series, the science fiction television series Sanctuary ; Man Vs. Wild and strong sales performance across the AETN International programs including History, Bio and Crime & Investigation Network television brands. In the quarter ending 30 September 2011, the Home Entertainment division increased its market share from 3.2% to 4.3% of the total market. The total market declined 16% in the quarter over the prior year. In the quarter ending 30 September 2011, the home entertainment division performed strongly within its strategic market categories. The business continues to gain market share in its target genres and as at 30 th September holds: - No.1 market share in stand up comedy; No.2 market share in factual television; No.2 market share in children s - up from No.3 market share in the prior year and; No.3 market share in documentaries. BIL AGM 25 November

13 Home Entertainment - cont d In the quarter ending 30 September 2011 the business was successful in securing the new children s television series Redakai ; the television series The Walking Dead and the fourteenth movie instalment of the children s brand Pokemon the Movie: Black and White. The Company continues to increase its presence on itunes and is engaged in discussions with various digital content platform providers. The Home Entertainment division continues to experience subdued retail trading conditions with our customers being cautious on levels of inventory held. Prevalent discounting continues across the category which will impact our product gross margins during the first half of the 2012 financial year. The Home Entertainment division at this time has not experienced the usual uplift in forward orders as we head into the important holiday season. Management anticipate subdued retail conditions to continue for the rest of the 2011 calendar year. BIL AGM 25 November

14 Home Entertainment - cont d The DVD market is facing changes with a slow shift in the viewing habits of consumers as they migrate from purchased or rented software like DVDs to programming delivered to the home by internet-enabled televisions, tablets and other devices. Over the next 3 to 5 years we believe that the rental DVD market will largely be replaced by a plethora of on-demand options of the kind provided by US download services like Netflix, Amazon and Vudu or ad-supported streaming services like Hulu. Existing DVD distributors will have to transition their businesses from physical goods to online delivery via stores, streaming services and on-demand providers. New opportunities will arise as increased online distribution opens markets directly to consumers. Beyond Home Entertainment is preparing for this evolution, and is evaluating a number of options to position itself in the new digital retail markets as they emerge. BIL AGM 25 November

15 Foreign Exchange The recent decline in the Australian dollar is forecast to have a negative impact resulting in unrealised foreign exchange losses due to the mark to market impact of foreign currency hedges. At the current exchange rate of A$0.98 the company expect to book an unrealised loss of $300,000 to $500,000- at 31 December Outlook to 31/12/11 The company expects revenues to increase marginally and EBIT (including unrealized foreign exchange) to be 3% to 8% higher for the six months to 31 December 2011 than for the corresponding period in the prior financial year. BIL AGM 25 November

16 Conclusion The company s primary focus is to organically grow its key business segments, with a particular focus on digital initiatives and expansion in each segment to take advantage of existing geographic strengths and opportunities. Surplus funds from operations are being accumulated to fund the acquisition of a complementary business where the Group can add value for shareholders. Mikael Borglund 25 th November 2011 BIL AGM 25 November

17 TOYBOX BIL AGM 25 November