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FINAL RESULTS |
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FOR THE YEAR ENDED 31 DECEMBER 2010 |
Dori Media Group (“Dori Media”, “DMG”, the “Company” or the “Group”), the international media company active in the field of television, with a focus on production, distribution, broadcasting and merchandising of Telenovela and Drama, today announces its final results in accordance with International Financial Reporting Standards (IFRS) for the year ended 31 December 2010.
Full Year 2010
- Group Revenues US$47 million (2009: US$48.7 million)
- Gross Profit US$11.4 million (2009: US$15.4 million)
- EBITDA US$9.3 million (2009: US$12.2 million)
- Positive Operating Cash flow US$7.7 million (2009: US$5.6 million)
- Operating Loss US$3.2 million (2009: Operating Profit of US$1.6 million)
- Total Equity US$41.8 million (2009: US$46.4)
Second Half 2010
- Group Revenues US$20.7 million (2009: US$23.4 million)
- Gross Profit US$3.1 million (2009: US$7.2 million)
- EBITDA US$1.8 million (2009: US$5.8 million)
Operating Highlights
- 18% increase in revenues from TV channels (excluding revenues from Israeli cable network ‘HOT’) to US$8.2 million (US$7.0 million);
- 7% decrease in Telenovela broadcasting and format rights to US$12.2 million (US$13.1 million) following the postponement of a major revenue-generating production that was expected to be fully realized in 2010 as a result of scheduling issues and now is expected to be realized in 2011;
- Sales of new Telenovela and Drama content including the sale of ‘Split’ to 78 countries since its launch; sales of popular new cross platform 24/7 reality show ‘uMan’ to 23 countries including 11 territories in Western Europe following its instant success in Israel; sale of ‘Champs 12’, to 31 countries in total, including France, Spain, Portugal, Italy, Greece and Turkey and sale of cross platform Telenovela ‘Amanda O’ to 64 countries since its launch;
- In July 2010, Dori Media Spike (DMS) extended its agreement with ‘HOT’ to operate the ‘HOT’ premium movie channels until 2014, preceded by the signing in January 2011 of a three-year extension to its 'HOT' agreement to operate the general Entertainment Channels for another 3 years from 1 January 2011 until 2014. The transaction included the sale of a new series channel to 'YES', the leading DBS television provider in Israel. Combined with the movie channel agreement with ‘HOT’ in July, the extended agreements are expected to generate total revenues of between US$59 million and US$65 million over 3 years.
Recent Developments
- In February, DMG sold “uMan” to ITV Studios America in the US in collaboration with Indiemedia. The show was launched in Turkey in January 2011, in Italy it will be launched on the Italia 1 channel by Endemol Italy in April 2011, and the show is also expected to be launched in Portugal during the second half of 2011.
- The second series of “Split” has been sold to Turner Broadcasting System Latin America Inc., a Time Warner company, for its Boomerang channel in Latin America and Caribbean territories. Boomerang has the right to broadcast the second series’ 45 episodes in territories including Brazil, Chile, Argentina, Colombia, Mexico and Uruguay.
- Sales totaling to approximately US$7 million have been closed during the first three months of 2011. In addition there is a high visibility on an additional US$33 million of revenues for 2011 which are subject to completion of rendering of certain services by the Company.
Intended Delisting of Dori Media Group from London AIM Market
The Company also published a separate announcement today, April 14th, explaining that the Board of Directors of the Company, in a meeting held by it (the "Board Meeting") has proposed the delisting of the Company's Ordinary Shares from admission to trading on AIM. The delisting is subject to shareholder approval at the Extraordinary General Meeting (“EGM”), which is expected to be convened on May 12, 2011. The Circular covering the EGM and related materials will be delivered to all shareholders of the Company in due course and a further announcement will be made once these have been posted.
In making this decision, the Board of Directors has focused on the following key factors:
- in light of the limited trading in the Ordinary Shares, the tangible costs associated with maintaining the AIM quotation are disproportionately high when compared to the benefits and the Board of Directors considers that these funds could be better utilised in running the business;
- the management time and the legal and regulatory burden associated with maintaining the Company’s admission to trading on AIM is disproportionate to the benefits to the Company;
- the Company, like many other quoted AIM companies of its size, has a tightly held register of shareholders and suffers from a lack of liquidity for its Ordinary Shares. In practical terms, this results in a small free float and low trading volumes, which further reduces the demand for the Ordinary Shares;
- the Company believes that the valuation placed on it by the AIM market does not properly reflect its potential and by delisting it will be able to negotiate better terms as and when it wishes to raise further capital;
Consequently, the Board of Directors believes that a delisting is in the best interests of the shareholders generally (including, for these purposes, depositary interest holders) to seek Cancellation at the earliest opportunity.
On 13 April 2011, the Company received a letter from a member of the Company’s controlling shareholders’ group, who confirmed its intent in making a tender offer, by itself or together with other shareholders of the Company, for up to 2.7 million Ordinary Shares, if the Company’s shareholders approve the Cancellation at the EGM. The price of the tender offer, if made, would be 50 pence per Ordinary Share (the “Proposed Tender Offer Price”). The Proposed Tender Offer Price reflects a premium of approximately 13.6 per cent. to the closing middle market price of Ordinary Share on AIM on 13 April 2011, (being the date the Company received such a letter) and a premium of approximately 5 per cent. to the average closing middle market price of an Ordinary Share on AIM during the three month period ending on 13 April 2011. At this stage, there is no certainty that such a tender offer will be made.
On 13 April 2011, the Company received a further indication from certain members of its board of directors and other authorised participants of the Board Meeting, on their behalf and on behalf of their respective affiliates, and who hold in the aggregate approximately 75 per cent. of the Company's existing issued share capital, of their intention not to sell their Ordinary Shares as part of the aforesaid tender offer (if made).
Chief Executive Officer’s comments
Nadav Palti, President and CEO of Dori Media Group, commented: “Although we have continued to benefit from increasing activity and interest in Dori Media's programming and content, 2010 was a challenging year. A large portion of income generated from a major production that was expected to be fully realized in 2010 is now expected to be realized in 2011 as a result of scheduling issues experienced by a client. However, we are confident about our prospects for 2011, trading for the first three months of 2011 has been strong and our business operations are stable and cash generative.
“Our high quality, award winning productions which are also available across a wide variety of new media platforms continue to be in demand around the world. We recently sold “uMan” to ITV Studios America, Endemol Italy and the show was also launched in Turkey, as the flagship daily prime-time anchor program of new channel, TRT Okul. Our lucrative long-term partnerships also continued to flourish – we recently signed a three-year extension to our agreement with leading Israeli cable platform "HOT" to operate their Movie and general Entertainment Channels, generating a combined revenue between US$59 million and US$65 million over 3 years.
We are generating income from a variety of the most attractive growth markets in the world and the industry’s response to our cross-format productions so far in 2011 has been positive“
Chief Executive Officer’s Review
Operating Update
Excluding the impact of the ‘HOT' and ‘YES’ movie and general entertainment channels agreement on local revenues in Israel, international sales accounted for 54.8% of total sales in 2010, compared to the 48.1% contribution towards total revenues recorded during 2009. TV channel revenues, excluding ‘HOT’ increased by 18% to US$8.2 million for the period. The breakdown of international sales for the period is as follows:
- 30.9% (26.8% in 2009) generated in Europe, representing 17% of global sales excluding 'HOT' movie and general entertainment channels;
- 19.8% (26.6% in 2009) generated in Central and South America, representing 10.8% of global sales excluding 'HOT' movie and general entertainment channels;
- 49.3% generated in other territories mainly Asia (46.6% in 2009 – mainly from the Far East) representing 27% of global sales excluding 'HOT' movie and general entertainment channels;
A growing library of quality programming
Dori Media continued to invest in new TV series during 2010 and the Company now has a library of approximately 5,250 TV hours, more than 5,000 3 minute video clips, 120 - 9 minute webisodes and around 556 1-5 minute cellular episodes of Telenovelas and daily series
‘Split’, a teenage show that revolves around the lives of humans and vampires, has now been sold to 78 countries. ‘Split’ was originally produced for Israeli cable platform HOT’s VOD (Video on Demand) service. After only 3 months on-air, ‘Split’ episodes on HOT VOD generated a total of approximately 7,000,000 viewings. Approximately 90% of viewers watched all available episodes, reaching a record loyalty level. Furthermore, over 30% of households with VOD services watched ‘Split’. Following ‘Split's’ success on HOT VOD, the first season of 45 episodes (30 minutes each) has been successfully aired on Israel's leading channel for children and teenage audiences, ‘The Children Channel’. Following the show’s huge success on HOT VOD and on-line, both HOT and “The Children Channel” have decided to invest in producing a second season of ‘Split’, which also contains 45 episodes, each 30 minutes in length. The 2nd season, which has been produced by Dori Media Darset, was sold to Turner Broadcasting System Latin America Inc. at the end of 2010, and will be broadcast on its Boomerang channel in Latin America and the Caribbean territories at the end of 2010. Under the terms of the deal, Boomerang will have the right to broadcast the episodes to territories which include Brazil, Chile, Argentina, Colombia, Mexico and Uruguay.
‘Split’ has also been sold to the Philippines, the first country in Asia to acquire the daily drama. The move into Asia comes as ‘Split’ continues its success in Europe, having also been sold to Russia and Spain. The original TV series will be aired on free-to-air channels in all territories.
Following the successful Israeli launch of Cellcom and Dori Media’s new cross platform 24/7 reality show ‘uMan’ in July 2009, the show has now been sold to a total of 23 countries including Denmark, France, Italy, Germany, Greece, Norway, Spain, Sweden, and The Netherlands. ‘uMan’ is a reality show where every move of 8 contestants is filmed 24 hours a day for 21 days and all decisions regarding the lives of the contestants are voted for by viewers. ‘uMan’ became an instant success in Israel, where more than 7 million viewer votes were recorded in 21 days. During this period, out of Israel’s total population of 7 million people (600,000 of whom are teenagers), the on-line show had 700,000 unique users. “uMan” was recently sold to ITV Studios America and Endemol Italy and the show was also launched in Turkey, as the flagship daily prime-time anchor program of new channel, TRT Okul. ‘uMan’ was also sold to ‘Mega’ in 2010, the number one free-to-air TV channel in Greece and the channel plans to extend the format’s length to follow the show’s participants for a longer period of time with viewers also able to catch up on the day’s action on a daily TV show dedicated to ‘uMan’ on the ‘Mega’ channel.
“Ciega a Citas” (Date Blind), a co-production by Dori Media Contenidos and Rosstoc, won a coveted “Series and Soap Operas” “Rose d'Or” award in 2010. The “Rose d’Or” Festival, is the only global awards ceremony for television entertainment and is consequently regarded by the industry as its most prestigious award ceremony. The show has been sold to 33 countries since its launch in 2009. “Ciega a Citas” is a telenovela about a woman’s quest to find love before her sister’s imminent wedding, and the show also recently won the Argentores Award for best program in 2010 in Argentina. The show went on to be nominated for an International Emmy in the Telenovela category in 2010.
‘Champs 12’, a Football drama, which was sold to Caracol Television S.A. in Colombia even before its debut on Canal America in Argentina, has now been sold to 31 countries in total, including France, Spain, Portugal, Italy, Greece and Turkey. Exhibitions of ‘Champs 12’ in Italy already began to show new revenues from Ancillary business.
Dori Media’s hit comedy show ‘Lalola’, continues to perform well and has now been sold to more than 120 countries since its debut and is also locally produced in India, Turkey, Greece, Belgium, Spain, Portugal, Philippines, Chile, Vietnam, and Russia.
Strong long-term partnerships
Dori Media is very proud to have long-term partnerships with many leading global media companies. A summary of the main partnership agreements is provided below.
In June 2009, Dori Media Darset reached an agreement with Cellcom, the leading cellular operator in Israel, to produce ’uMan’ (named locally ‘Megudalim’ in Israel) a unique and innovative 24/7 cross-platform control game for mobile phones, internet and TV. ’uMan’ has become an instant success in Israel reflecting the potential of this innovative partnership.
Cellcom, Logia Mobile and Dori New Media have together presented "First Love" – an original interactive project of 150 short movies, documenting true love stories from young people between ages 16 to 20. Negotiations are underway with several international broadcasters interested in purchasing the “First Love” format.
In July 2010, Dori Media Spike (DMS) extended its agreement with Israeli cable platform ‘HOT’ to operate the ‘HOT’ premium movie channels for another 3 years from 1st January 2011 until 2014, generating revenues of between US$45 million and US$48 million over 3 years for DMG. DMS’s original agreement with ‘HOT’ was initiated in 2007. ‘HOT’ boasts subscriptions with the majority of Israeli households and under the agreement DMS retains the rights to produce and operate the existing ‘HOT’ premium movie channels and services. In January 2011, DMS signed a three-year extension to its general Entertainment Channels agreement with “HOT” for another 3 years from 1 January 2011 until 2014. The transaction included the sale of a new series channel to "YES", the leading DBS television provider in Israel. Combined with the movie channel agreement with ‘HOT’ in July, the extended agreements are expected to generate total revenues of between US$59 million and US$65 million over 3 years.
DMG is also 3 years into a 5-year output deal with Televisa to sell various titles to Televisa. Televisa is the largest media company in the Spanish world and a major player in the international entertainment business. The deal was signed for a consideration of approximately US$7.2 million with contractual options of US$2.3 million expected to increase the value of the deal to approximately US$9.5 million.
Financial Performance
Revenue
Dori Media recorded sales of US$47 million for the twelve months ended 31 December 2010, down 3% from US$48.7 million for the corresponding period of 2009.
The Group’s results were supported by the strong revenues generated by DMG’s TV channel businesses, which reported US$33.8 million of sales for the full year 2010, compared to US$34.4 million in 2009. The slight year on year decline reflected additional non-recurring revenues, which were generated as a result of a three year agreement with ”HOT”. This was offset by the strong performance of the TV Channels operated by Dori Media International (“DMI”). The channels (excluding revenue from Israeli cable network 'HOT') recorded an 18% year on year increase in sales, from US$7 million in 2009, to US$8.2 million for the full year 2010.
Telenovela broadcasting and format rights sales for the full year 2010 were down to US$12.2 million, compared to US$13.1 million in 2009, with revenues from broadcasting rights down to US$10.6 million from US$11.9 million in 2009. The decline is primarily related to scheduling issues experienced by the client, which resulted in delayed revenues and which are now planned to be fully realized during 2011. Broadcasting and format rights sales represented 26% of total revenues for the period, and the proportion remained stable compared to 2009.
Revenues from the ancillary business (merchandising & publishing, music, DVDs, CDs, videos and Live shows) declined year on year, from US$0.7 million for the full year 2009 to US$0.3 million in 2010. The decline was in line with expectations, as some major localizations of Dori Media content no longer generate royalties after a decrease in the number of exhibition appearances for certain shows. However, exhibitions of new formats have now commenced and include exhibitions and Licensing of shows including ‘Champs 12’ in Europe and ‘Split’ in both Europe and Latin America.
Other income (including TV and internet advertising) contributed 1% of total full year sales, and amounted to US$0.5 million for the full year 2010, compared to US$ 0.2 million reported in 2009. This is the result of an increase in Dori Media Ot’ client base driven by its high-quality subtitling, dubbing and format conversions.
Gross Margin
The Company recorded a gross profit of US$11.4 million for the full year, which represented a decline from US$15.4 million in 2009. The change reflected an increase in amortization, expenses relating to DMG’s Library and an additional impairment in the amount of US$1.16million.
Gross margin for the current reporting period was 24% decreasing from 32% in 2009 as anticipated as a result of lower revenues from broadcasting and format rights, increase in amortization and delays of income generation.
The cost of goods sold for the twelve months of 2010 increased to US$35.6 million compared to US$33.3 million in 2009. This increase can be mainly attributed to amortization charges related to DMG’s Library, as well as charges related to the set-up and depreciation of broadcasting rights.
Operating Expenses
Total operating expenses amounted to US$14.7 million for the full year, up from US$13.7 million in 2009. Total sales and marketing expenses were lower than expected, and declined by 7% from US$3.3 million in 2009 to US$3.1 million for the full year as a result of cost savings and efficiency during conventions, significantly lower merchandising commissions and decreased advertising and marketing expenses.
Whilst the overall sales and marketing costs decreased, sales commissions rose significantly year on year, from US$0.4 million in 2009 to US$1 million for the full year, as a result of initiatives with local partners.
Sales personnel salaries were reduced by 29% year on year, from US$0.8 million in 2009 to US$0.6 million in 2010, while PR expenses were reduced by 38% year-on-year to US$0.1 million.
Administration & General expenses were up by 11% year on year from US$10.4 million in 2009, to US$11.6 million in 2010. The main increase reflected provisions for bad debts of approximately US$1.5 million. Salaries and management fees were down from US$6 million in 2009, to US$5.8 million in 2010 – 2% decrease. The actual reduction in salaries and management fees of 7% was set off to 2% as a result of the fluctuations in the currency exchange rate between the US$ and the NIS of US$0.1 million, and US$0.2million of one-off options and equity provisions in Novebox. When excluding the year on year effects of the bad debts provision, the currency exchange rate movements and the impact of one-off options and equity provisions in Novebox, Administration & General expenses were down year on year from US$ 10.4 million in 2009, to US$ 9.8 million for the full year 2010.
Professional expenses, including legal fees, auditors remuneration and payments for other consultancy services increased by 12% from US$1.3 million in 2009 to US$1.5 million in 2010.
EBITDA
The Company recorded an EBITDA profit of US$9.3 million for the full year, compared to US$12.2 million in 2009. The decrease in EBITDA is mainly due to the postponement of a major revenue-generating production that was expected to be fully realized in 2010 as a result of scheduling issues. The EBITDA margin for the full year was 20%.
Income Tax
The Company reported total tax expenses of US$0.5 million for the full year. At the Group level, Dori Media recorded a net loss for the full year of 2010 but the Company is still subject to income tax charges as tax charges for each of DMG’s subsidiaries are calculated individually. Consequently, a loss result by one subsidiary cannot be offset by a profit from another for tax purposes. The Company is making efforts to address these tax issues and is expecting to have this issue resolved in the near future.
Cash Flow
Despite the predicted slowdown in activity during 2010, Dori Media’s cash flows remained positive, and facilitating strong cash generation and the financing of new productions and ventures. Operating cash inflow amounted to US$7.7 million for the year, compared to US$5.6 million in 2009. DMG’s cash flow, combined with the bank facilities available to the Company, enables it to continue to invest in new productions, often with other partners, and therefore to grow its new content inventory.
Report and Accounts
The Company’s Financial Report and Accounts are available on the Company’s website www.dorimedia.com.
Outlook
Early indications support the Management team’s belief that 2011 will prove to be a stronger year for Dori Media. Trading for the first three months of the year has been strong and the Company is witnessing positive response to many of its productions. The Company’s business operations remain stable and cash generative and Dori Media continues to have a strong balance sheet. Despite this, the Board considers the potential delisting to be in the best interests of the Company's and all of its shareholders.
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For further information on Dori Media Group, please visit our website on www.dorimedia.com or contact:
| Dori Media Group Ltd. | Shared Value Limited | ||||
| Nadav Palti, CEO & President | Mark Walter | ||||
| Tel: +972 3 7684000 | Investor & Media relations | ||||
| Tel. +44 (0) 20 7321 5010 | |||||
| Daniel Stewart & Company | |||||
| Paul Shackleton/Oliver Rigby | |||||
| Tel. +44 (0) 20 7776 6550 |
Dori Media Group is an international group of media companies, located in Israel, Switzerland, Argentina and the US. The group produces and distributes TV and New Media content, broadcasts various TV channels and operates video-content internet sites. The group owns approximately 5,250 TV hours, more than 5,000 clips of 3 minutes on average, 120 - 9 minute webisodes and around 556 1-5 minute cellular episodes of Telenovelas and daily series that it sells to a wide variety of audiences in more than 80 countries. It owns and operates two telenovela channels, Viva and Viva Platinum broadcasted on all Israeli multi-channel platforms and via the co-branded internet site offering telenovelas to Israeli surfers through Walla.com. Dori Media Paran and Dori Media Darset produce top-end series as well as daily dramas for the Israeli and international markets. Dori New Media develops and produces formats specially tailored for the internet and cellular platforms, and realizes new opportunities enabled by the new technologies. Dori Media Spike packages, produces and operates the main movie channels on the Israeli cable TV platform and general entertainment channels on all Israeli TV multi-channel platforms. In Indonesia and Malaysia, the company operates the Televiva Vision 2 channel that is devoted to telenovelas and Baby TV Vision 3 for toddlers, in addition to the Ginx gamers’ channel. Ginx is localized and broadcasted to Turkey as well. Novebox operates an ad-based VOD and SVOD commercial internet site targeted at the Hispanic and Latin American audience offering a variety of shows and movies. The group is traded on the London Stock Exchange where its symbol is DMG. For more information on Dori Media, visit our corporate website at http://www.dorimedia.com/.
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
| Year ended 31 December | ||||||||
| 2008 | 2009 | 2010 | ||||||
| Note | US$ '000*) | US$ '000*) | US$ '000*) | |||||
| Revenues | 17a | 50,427 | 48,716 | 47,023 | ||||
| Cost of revenues | 17b | 27,868 | 33,348 | 35,601 | ||||
| Gross profit | 22,559 | 15,368 | 11,422 | |||||
| Selling and marketing expenses | 17c | 4,826 | 3,323 | 3,082 | ||||
| General and administrative expenses | 17d | 11,163 | 10,401 | 11,580 | ||||
| Total operating expenses | 15,989 | 13,724 | 14,662 | |||||
| Operating profit (loss) | 6,570 | 1,644 | (3,240) | |||||
| Financial expenses, net | 17e | 822 | 638 | 817 | ||||
| Other income, net | (7) | - | - | |||||
| Profit (loss) before taxes on income | 5,755 | 1,006 | (4,057) | |||||
| Taxes on income | 14c | 2,365 | 1,669 | 532 | ||||
| Profit (loss) for the year from continuing operations | 3,390 | (663) | (4,589) | |||||
| Profit (loss) for the year from discontinued operations | 18 | 449 | (784) | - | ||||
| Profit (loss) for the year | 3,839 | (1,447) | (4,589) | |||||
| Other comprehensive income (loss): | ||||||||
| Currency translation adjustments of foreign operations | (87) | (466) | 146 | |||||
| Total comprehensive income (loss) | 3,752 | (1,913) | (4,443) | |||||
*) Except per share amounts.
The accompanying notes are an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
| Year ended 31 December | ||||||||
| 2008 | 2009 | 2010 | ||||||
| Note | US$ '000*) | US$ '000*) | US$ '000*) | |||||
| Profit (loss) attributable to: | ||||||||
| Equity holders of the parent | 3,203 | (2,593) | (5,421) | |||||
| Non-controlling interests | 636 | 1,146 | 832 | |||||
| 3,839 | (1,447) | (4,589) | ||||||
| Total comprehensive income (loss) attributable to: | ||||||||
| Equity holders of the parent | 3,116 | (3,173) | (4,993) | |||||
| Non-controlling interests | 636 | 1,260 | 550 | |||||
| 3,752 | (1,913) | (4,443) | ||||||
| Basic and diluted earnings (loss) per share: | 19 | |||||||
| From continuing operations attributable to equity holders of the parent | 0.12 | (0.07) | (0.17) | |||||
| From discontinued operations attributable to equity holders of the parent | 0.02 | (0.03) | - | |||||
| Profit (loss) attributable to equity holders of the parent | 0.14 | (0.10) | (0.17) | |||||
*) Except per share amounts.
The accompanying notes are an integral part of the consolidated financial statements.
CONSOLIDATED BALANCE SHEETS
| As of 31 December | ||||||||
| 2008 | 2009 | 2010 | ||||||
| Note | US$ '000 | US$ '000 | US$ '000 | |||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | 2,382 | 635 | 1,837 | |||||
| Trade receivables | 3 | 15,919 | 16,670 | 16,989 | ||||
| Other accounts receivable | 4 | 3,394 | 2,826 | 2,658 | ||||
| Broadcasting rights | 5 | 4,413 | 6,725 | 6,853 | ||||
| 26,108 | 26,856 | 28,337 | ||||||
| Assets classified as held for sale | 18 | - | 2,630 | - | ||||
| 26,108 | 29,486 | 28,337 | ||||||
| NON-CURRENT ASSETS: | ||||||||
| Investments in rights of TV series, net | 6 | 28,877 | 35,079 | 34,868 | ||||
| Intangible assets, net | 7 | 9,718 | 8,584 | 8,349 | ||||
| Property and equipment, net | 8 | 5,793 | 2,857 | 2,492 | ||||
| Other long-term assets | 1,081 | 128 | 128 | |||||
| Deferred tax assets | 14d | 2,214 | 2,908 | 4,241 | ||||
| 47,683 | 49,556 | 50,078 | ||||||
| Total assets | 73,791 | 79,042 | 78,415 | |||||
The accompanying notes are an integral part of the consolidated financial statements.
CONSOLIDATED BALANCE SHEETS
| As of 31 December | ||||||||
| 2008 | 2009 | 2010 | ||||||
| Note | US$ '000 | US$ '000 | US$ '000 | |||||
| LIABILITIES AND EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Credit from banks and current maturities of long-term loans | 9 | 14,789 | 10,084 | 11,606 | ||||
| Trade payables | 10 | 5,540 | 4,938 | 6,514 | ||||
| Current tax liability | 441 | 385 | 292 | |||||
| Other current liabilities | 11 | 5,856 | 3,758 | 4,992 | ||||
| 26,626 | 19,165 | 23,404 | ||||||
| Liabilities associated with assets held for sale | 18 | - | 1,780 | - | ||||
| 26,626 | 20,945 | 23,404 | ||||||
| LONG-TERM LIABILITIES: | ||||||||
| Bank loans | 12 | 99 | 5,348 | 5,635 | ||||
| Other long-term liabilities | 13 | 1,773 | 2,297 | 2,544 | ||||
| Deferred tax liabilities | 14d | 2,581 | 4,053 | 5,073 | ||||
| 4,453 | 11,698 | 13,252 | ||||||
| EQUITY: | 16 | |||||||
| Equity attributable to equity holders of the parent: | ||||||||
| Issued capital | 539 | 648 | 648 | |||||
| Share premium | 22,877 | 28,094 | 28,463 | |||||
| Warrants | - | 427 | 427 | |||||
| Foreign currency translation reserve | 273 | (307) | 121 | |||||
| Asset revaluation surplus | 695 | 695 | 695 | |||||
| Retained earnings | 17,612 | 15,019 | 9,598 | |||||
| 41,996 | 44,576 | 39,952 | ||||||
| Non-controlling interests | 716 | 1,823 | 1,807 | |||||
| Total equity | 42,712 | 46,399 | 41,759 | |||||
| Total liabilities and equity | 73,791 | 79,042 | 78,415 | |||||
The accompanying notes are an integral part of the consolidated financial statements.
| 13 April 2011 | ||||||
| Date of approval of the | Tamar Mozes-Borovitz | Nadav Palti | Moshe Pinto | |||
| financial statements |
Chairman of the Board
of Directors |
Director and
Chief Executive Officer |
Chief Financial Officer |
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
| Attributable to equity holders of the parent | ||||||||||||||||||
| Foreign | ||||||||||||||||||
| currency | Asset | Non- | ||||||||||||||||
| Issued | Share | translation | revaluation | Retained | controlling | Total | ||||||||||||
| capital | premium | Warrants | reserve | Surplus | earnings | Total | interests | equity | ||||||||||
| US$ '000 | US$ '000 | US$ '000 | US$ '000 | US$ '000 | US$ '000 | US$ '000 | US$ '000 | US$ '000 | ||||||||||
| Balance as of 1 January 2008 | 535 | 21,927 | - | 360 | 695 | 14,409 | 37,926 | 80 | 38,006 | |||||||||
| Total comprehensive income | - | - | - | (87) | - | 3,203 | 3,116 | 636 | 3,752 | |||||||||
| Exercise of options | 4 | 126 | - | - | - | - | 130 | - | 130 | |||||||||
| Cost of share-based payments | - | 796 | - | - | - | - | 796 | - | 796 | |||||||||
| Tax effect of share-based payments | - | 28 | - | - | - | - | 28 | - | 28 | |||||||||
| Balance as of 31 December 2008 | 539 | 22,877 | - | 273 | 695 | 17,612 | 41,996 | 716 | 42,712 | |||||||||
| Total comprehensive loss | - | - | - | (580) | - | (2,593) | (3,173) | 1,260 | (1,913) | |||||||||
| Dividend paid to minority shareholders | - | - | - | - | - | - | - | (153) | (153) | |||||||||
| Issuance of shares and warrants | 109 | 4,860 | 427 | - | - | - | 5,396 | - | 5,396 | |||||||||
| Cost of share-based payments | - | 357 | - | - | - | - | 357 | - | 357 | |||||||||
| Balance as of 31 December 2009 | 648 | 28,094 | 427 | (307) | 695 | 15,019 | 44,576 | 1,823 | 46,399 | |||||||||
| Total comprehensive loss | - | - | - | 428 | - | (5,421) | (4,993) | 550 | (4,443) | |||||||||
| Dividend paid to minority shareholders | - | - | - | - | - | - | - | (566) | (566) | |||||||||
| Embedded option in convertible loan from related parties | - | 90 | - | - | - | - | 90 | - | 90 | |||||||||
| Cost of share-based payments | - | 279 | - | - | - | - | 279 | - | 279 | |||||||||
| Balance as of 31 December 2010 | 648 | 28,463 | 427 | 121 | 695 | 9,598 | 39,952 | 1,807 | 41,759 | |||||||||
The accompanying notes are an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
Year ended 31 December | |||||||
| 2008 | 2009 | 2010 | ||||||
| Note | US$ '000 | US$ '000 | US$ '000 | |||||
| Cash flows from operating activities: | ||||||||
| Profit (loss) for the year | 3,839 | (1,447) | (4,589) | |||||
| Adjustments to reconcile profit (loss) to net cash provided by operating activities | (a) | 4,410 | 7,026 | 12,329 | ||||
| Net cash provided by operating activities | 8,249 | 5,579 | 7,740 | |||||
| Cash flows from investing activities: | ||||||||
| Proceeds from sale of jointly controlled entity | (c) | - | - | 842 | ||||
| Additions to intangible assets | (1,985) | (28) | (21) | |||||
| Additional consideration for acquisition of subsidiaries and jointly controlled entity | (1,350) | - | - | |||||
| Investments in rights of TV series | (13,269) | (13,468) | (8,550) | |||||
| Proceeds from sale of property and equipment | 19 | - | - | |||||
| Purchase of property and equipment | (923) | (324) | (267) | |||||
| Repayment of loans to jointly controlled entity and other | - | 956 | - | |||||
| Net cash used in investing activities | (17,508) | (12,864) | (7,996) | |||||
| Cash flows from financing activities: | ||||||||
| Dividend paid to minority shareholders | - | (153) | (566) | |||||
| Receipt of long-term loans | - | 4,977 | - | |||||
| Receipt of long-term loans and convertible loan from related parties | - | - | 1,007 | |||||
| Proceeds from issuance of shares and warrants, net of issuance costs | 130 | 5,396 | - | |||||
| Repayment of loans from banks and others | (552) | - | - | |||||
| Repayment of long-term production financing | (1,075) | (136) | (9) | |||||
| Short-term bank credit, net | 10,809 | (4,560) | 1,005 | |||||
| Net cash provided by financing activities | 9,312 | 5,524 | 1,437 | |||||
| Effect of exchange rate changes on cash and cash equivalents | 22 | 22 | 13 | |||||
| Increase (decrease) in cash and cash equivalents | 75 | (1,739) | 1,194 | |||||
| Cash and cash equivalents as of the beginning of the year | 2,307 | 2,382 | 643 | |||||
| Cash and cash equivalents as of the end of the year | 2,382 | 643 | 1,837 | |||||
The accompanying notes are an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Year ended 31 December | ||||||||
| 2008 | 2009 | 2010 | ||||||
| US$ '000 | US$ '000 | US$ '000 | ||||||
| (a) | Adjustments to reconcile profit (loss) to net cash provided by (used in) operating activities: | |||||||
| Income and expenses not involving cash flows: | ||||||||
| Cost of share-based payments | 796 | 357 | 279 | |||||
| Depreciation and amortization | 22,692 | 25,542 | 27,847 | |||||
| Increase in liability for production financing | 411 | 59 | - | |||||
| Deferred income taxes | 503 | 1,126 | (410) | |||||
| Gain on disposal of property and equipment | (7) | - | - | |||||
| Other | (44) | - | 62 | |||||
| Severance pay, net | (136) | 97 | - | |||||
| Changes in operating assets and liabilities: | ||||||||
| Increase in trade receivables | (374) | (1,151) | (10) | |||||
| Decrease in other accounts receivable | 233 | 393 | 217 | |||||
| Increase in broadcasting rights | (18,217) | (18,805) | (17,331) | |||||
| Increase (decrease) in trade payables | (1,591) | 373 | 1,586 | |||||
| Increase (decrease) in other current liabilities | 144 | (965) | 89 | |||||
| 4,410 | 7,026 | 12,329 | ||||||
| (b) | Supplemental disclosure of cash flows: | |||||||
| Cash paid during the year for: | ||||||||
| Interest | 684 | 548 | 745 | |||||
| Income taxes | 1,316 | 862 | 511 | |||||
The accompanying notes are an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Year ended 31 December | ||||||||
| 2008 | 2009 | 2010 | ||||||
| US$ '000 | US$ '000 | US$ '000 | ||||||
| (c) | Proceeds from sale of jointly controlled entity: | |||||||
| Working capital deficiency (excluding cash) | - | - | (1,118) | |||||
| Property and equipment | - | - | 2,392 | |||||
| Deferred tax liabilities | - | - | (361) | |||||
| Long-term liabilities | - | - | (71) | |||||
| - | - | 842 | ||||||
| (d) | Significant non-cash transactions: | |||||||
| Acquisition of rights in TV series on credit | 721 | 547 | (154) | |||||
| Acquisition of broadcasting rights | 1,624 | 512 | 242 | |||||
The accompanying notes are an integral part of the consolidated financial statements.
SUMMARIZED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
**The notes to the consolidated financial statements are summarized – but are available in full in the full annual accounts on Dori Media’s website at www.dorimedia.com.**
NOTE 1:- GENERAL
| a. | Company description: | ||
| The Company was incorporated on 14 February 1996 under the laws of Israel. The Company and its subsidiaries are engaged in the rights for purchase, production, license and distribution of content focusing on Drama and Telenovela TV series ("Telenovelas"), distribution of TV series sourced from third parties, broadcasting of dedicated niche TV channels for entertainment content, Drama and Telenovela, entertainment movie and series TV channels ("TV channels") and operating a video on demand website. In December 2009, the Company signed an agreement to sell its investment in Dori Media Central Studios S.A (see Note 18), and in 2010 it is no longer a part of the Compa | ny. | ||
| b. | Definitions: | ||
| In these financial statements: | |||
| The Company | - | Dori Media Group Ltd. ("DMG") | |||||
| The Group | - | Dori Media Group Ltd. and its investees. | |||||
| Subsidiaries | - | Entities that controlled by the Company (as defined in IAS 27 (2008)) and whose accounts are consolidated with those of the company. | |||||
| Jointly controlled entity | - | entity owned by various parties that have a contractual arrangement that establishes joint control over the activities of the entity and whose accounts are consolidated with those of the company using the proportionate consolidation method/ the accounting method. | |||||
| Investee | - | Subsidiary or jointly controlled entity. | |||||
| Related parties | - | As defined in IAS 24. |
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation of the financial statements:
|
The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards ("IFRS"). These standards comprise: |
||||
|
1. International Financial Reporting Standards (IFRS). |
||||
|
2. International Accounting Standards (IAS). |
||||
|
3. Interpretations issued by the IFRIC and by the SIC. |
Further details of the Significant Accounting Policies are available in the full annual accounts on Dori Media’s website at www.dorimedia.com.
NOTE 14:- TAXES ON INCOME
| a. | Tax laws applicable to the Company: | |
| In February 2008, the "Knesset" (Israeli parliament) passed an amendment to the Income Tax (Inflationary Adjustments) Law, 1985, which limits the scope of the law starting 2008 and thereafter. Starting 2008, the results for tax purposes will be measured in nominal values, excluding certain adjustments for changes in the Israeli CPI carried out in the period up to 31 December 2007. The amended law includes, inter alia, the elimination of the inflationary additions and deductions and the additional deduction for depreciation starting 2008. | ||
| b. | As part of the Group's reorganization, and in light of the Amendment of the Israeli Income Tax Ordinance in 2002, the Company reached an agreement with the Israeli Tax Authorities, with respect to profits derived by YDI Inc. In principle, the agreement provided for reduced taxation on the assessed assets of YDI Inc. In accordance with this agreement (dated 17 August 2003), YDI Inc.'s business assets were valued at approximately US$ 15 million ("the Revaluated Assets"). Furthermore, it was agreed that the Company will pay tax at the rate of 7.5% of its share in the Revaluated Assets, amounting to approximately US$ 1 million which was charged to expenses in 2003. In addition, the agreement laid down the transfer price to be applied by the Company on payments abroad with respect to the merchandising and the distribution of television series. | |
| With respect to the taxation of profits derived by DMI GmbH, DMI GmbH obtained a ruling from the cantonal tax authorities in Zurich. Based on this ruling, income generated from foreign sources is subject to a preferred tax rate of approximately 10.1% (overall tax burden including federal, cantonal and communal corporate income tax rate, calculated on net profit before taxes). Domestic income would be subject to ordinary and full taxation for cantonal and communal tax purposes, as well as for federal income tax purposes. | ||
| c. | Taxes on income (tax benefit) included in the statements of comprehensive income: | |
| Year ended 31 December | ||||||
| 2008 | 2009 | 2010 | ||||
| US$ '000 | US$ '000 | US$ '000 | ||||
| Continuing operations: | ||||||
| Current taxes | 1,264 | 543 | 815 | |||
| Deferred taxes | 1,254 | 930 | (293) | |||
| Taxes in respect of previous years | (153) | 196 | 10 | |||
| 2,365 | 1,669 | 532 | ||||
| Discontinued operations: | ||||||
| Current taxes | - | - | - | |||
| Deferred taxes | (199) | (38) | - | |||
| (199) | (38) | 532 | ||||
| Total | 2,166 | 1,631 | 532 | |||
d. Deferred taxes:
Significant components of the Group's deferred tax assets (liabilities) are as follows:
|
Investments in |
Tax loss carry |
Intangible |
Property and |
Others | Total | |||||||
| US$ '000 | US$ '000 | US$ '000 | US$ '000 | US$ '000 | US$ '000 | |||||||
| Balance as of 1 January 2008 | 786 | 781 | (282) | (646) | (16) | 623 | ||||||
| Amounts included in the statement of changes in equity | - | - | - | - | 28 | 28 | ||||||
| Amounts included in statement of comprehensive income | (113) | 1,283 | 42 | 16 | *) (2,283) | (1,055) | ||||||
| Currency translation differences | - | 41 | (9) | 2 | 26 | 60 | ||||||
| Balance as of 31 December 2008 | 673 | 2,105 | (249) | (628) | (2,245) | (344) | ||||||
| Amounts included in statement of comprehensive income | (26) | 1,298 | 30 | (13) | *) (2,219) | (930) | ||||||
| Deferred taxes related to discontinued operations **) | - | (363) | - | 561 | - | 198 | ||||||
| Currency translation differences | - | 91 | 10 | (4) | (166) | (69) | ||||||
| Balance as of 31 December 2009 | 647 | 3,131 | (209) | (84) | (4,630) | (1,145) | ||||||
| Amounts included in statement of comprehensive income | (150) | 823 | 4 | 41 | (425) | 293 | ||||||
| Currency translation differences | - | 119 | (13) | (3) | (83) | 20 | ||||||
| Balance as of 31 December 2010 | 497 | 4,073 | (218) | (46) | (5,138) | (832) |
*) Mainly due to temporary differences arising on recognition of certain revenues and expenses for tax purposes on cash basis.
**) See Note 18.
| e. | A reconciliation of theoretical tax expense assuming all income is taxed at the statutory rate applicable to the income of companies in Israel, and the actual tax expense is as follows: |
| Year ended 31 December | ||||||
| 2008 | 2009 | 2010 | ||||
| US$ '000 | US$ '000 | US$ '000 | ||||
| Profit (loss) before taxes on income | 5,755 | 1,006 | (4,057) | |||
| Provision at statutory rate - 27% (2008), 26% (2009) and 25% (2010) | 1,554 | 261 | (1,014) | |||
| Increase (decrease) in taxes resulting from: | ||||||
| Losses for which deferred taxes were not recorded in prior years | (50) | (195) | - | |||
| Non-deductible expenses | 244 | 252 | 40 | |||
| Different tax rates and changes in tax rates | 628 | 1,203 | 1,805 | |||
| Taxes in respect of previous years | (153) | 196 | 10 | |||
| Differences in measurement basis | - | - | (320) | |||
| Other | 142 | (48) | 11 | |||
| 2,365 | 1,669 | 532 | ||||
| f. | Carryforward losses for tax purposes: | ||
| The carryforward losses for tax purposes as of 31 December 2010 amount to approximately US$ 30,000 thousand (2009 - US$ 18,500 thousand, 2008 - US$ 7,500 thousand) mainly in Switzerland and in Israel. A deferred tax asset in respect of these losses is included in the balance sheet. | |||
| g. | Tax rates: | ||
|
Israel |
|||
| In July 2009, the Israeli Parliament (the Knesset) passed the Economic Efficiency Law (Amended Legislation for Implementing the Economic Plan for 2009 and 2010), which prescribes, among other things, gradual reduction in the Israeli corporate tax rate starting from 2011 to the following tax rates: 2011 - 24%, 2012 - 23%, 2013 - 22%, 2014 - 21%, 2015 - 20%, 2016 and thereafter - 1 | 8%. | ||
|
Switzerland |
|||
| See Note 14b | |||
| h. | Tax assessments: | ||
| The Company and the investees have received final assessments or assessments considered as final as detailed below: | |||
| Through the tax year | ||
| The Company | 2004 | |
| Davka *) | 2004 | |
| Dar | 2004 | |
| Darset | 2007 | |
| Paran | 2004 |
The other investees have not yet been assessed since their inception.
*) In December 2005, the Company signed a merger agreement with Davka, pursuant to which Davka merged into the Company. In December 2006, an approval for the merger was received from the Israeli Tax Authorities. As part of the approval, certain limitations were imposed on utilizing the carry forward losses, ownership and operating Davka's assets.
NOTE 16:- EQUITY
a. The share capital is composed as follows:
| As of 31 December | ||||||
| 2008 | 2009 | 2010 | ||||
| Number of shares | ||||||
| Authorized: | ||||||
| Ordinary shares of NIS 0.1 par value each | 40,000,000 | 40,000,000 | 40,000,000 | |||
Issued and fully paid:
| Ordinary shares of NIS 0.1 par value each | 23,141,727 | 27,388,072 | 27,388,072 |
| b. | During 2008, the Company issued 141,000 Ordinary shares, upon the exercise of options by directors, in accordance with the Dori Media Group Ltd. 2004 Share Option Plan, for a total consideration of US$ 130 thousand. | |
| On 6 June 2009, the Company issued to an institutional investor 670,323 Ordinary shares and warrants to purchase up to 479,763 Ordinary shares at an exercise price of NIS 7 (US $ 1.85) per share in consideration of £ 670 thousand (approximately US $ 1,100 thousand). The warrants are exercisable until June 2014. | ||
| On 9 July 2009, the Company issued 1,757,840 Ordinary shares at price £ 0.52 per share through an open offer in consideration of £ 914 thousand (approximately US$ 1,350 thousand) (net of issuance expenses in the amount of US $ 150 thousand). | ||
| On 27 July 2009, the Company issued to an institutional investor 1,818,182 Ordinary shares and warrants to purchase up to 479,763 Ordinary shares at an exercise price of NIS 7 ( US $ 1.85) per share in consideration of £ 1,818 thousand (approximately US$ 3 million) (net of issuance expenses in the amount of US $ 33 thousand). The warrants are exercisable until June 2014. | ||
| c. | Stock Option Plan: | |
| In September 2004, the Company authorized a Stock Option Plan for the issuance of options to purchase up to 2,000,000 Ordinary shares of the Company. The options granted under this Plan to employees and directors vest over periods of four and three years, respectively. The options are granted with an exercise price denominated in NIS and GBP and expire 10 years after the date of grant. The options to employees and directors in Israel are granted under sections 102 and 3(i) of Israel's Income Tax Ordinance. | ||
| The weighted average fair value of options granted by the Company in September 2004 under the 2004's share option plan was US$ 1.46 per share and was estimated based on the following data and assumptions: share price - US$ 2; exercise price - US$ 0.65; expected volatility - 25.6%; risk-free interest rate 4.9%; expected dividends - 0%, and expected average life of options - 3 years. | ||
| In 2005, the Company agreed to grant to the former CEO of DMI GmbH options to purchase 50,000 Ordinary shares of the Company. The options were subject to the achievement of certain profit targets. | ||
| 50% of the options were granted after the publication of the 2006 annual audited financial statements, and vested (see also b). The remaining options were forfeited in 2007 due to the termination of employment of the CEO. | ||
| On 15 March 2007, the Company granted share options for the purchase of 411,500 Ordinary shares to directors, officers and employees under the Company's 2004 Share Option Plan. | ||
| The weighted average fair value of options granted by the Company in March 2007 was US$ 1.74 per share and was estimated based on a pricing model ("Binomial Model") and on the following data and assumptions: share price - £ 1.62 (US$3.3); exercise price - £ 1.3933 (US$ 2.7); expected volatility - 47%; risk-free interest rate 4.9%; expected dividends - 0%, and expected average life of options - 4 years. | ||
| On 22 August 2007, the Company granted to the CEO of DMA Inc options to purchase 120,000 Ordinary shares of the Company. The options vest in three tranches, with each tranche (amounting to 40,000 shares) becoming exercisable provided that the sales targets for 2008, 2009 and 2010, as determined by the Company, are achieved. The options are exercisable for a period of 10 years from the grant date. The options were forfeited in 2009 due to the termination of the CEO of DMA. | ||
| The weighted average fair value of options granted by the Company in August 2007 was US$ 1.737 per share and was estimated based on a pricing model ("Binomial Model") and on the following data and assumptions: share price - £ 1.6975 (US$ 3.38); exercise price - £ 1.615 (US$ 3.216); expected volatility - 33%; risk-free interest rate 5.03%; expected dividends - 0%, and expected average life of options - 3 years. | ||
| Upon the acquisition of Paran in 2007 (see Note 22d), the Company granted share options for the purchase of 75,000 Ordinary shares to employees of Paran under the Company's 2004 Share Option Plan. | ||
| On 24 February 2008, the Company granted share options for the purchase of 447,375 Ordinary shares to directors, officers, employees and others under the Company's 2004 Share Option Plan. | ||
| The weighted average fair value of options granted by the Company in February 2008 was US$ 1.91 per share and was estimated based on a pricing model ("Binomial Model") and on the following data and assumptions: share price - £ 1.755 (US$3.45); exercise price - £ 1.755 (US$ 3.45); expected volatility – 43.48%; risk-free interest rate 4.7%; expected dividends - 0%, and expected average life of options - 3 years. | ||
| In August 2008, the Company authorized an increase in the option pool of 1,000,000 Ordinary shares of the Company. The Stock Option Plan was further amended to include Restricted Share Unit (RSUS). | ||
| On 21 August 2008, the Company granted to a Senior Advisor of Novebox (formerly: DMW) options to purchase 40,000 Ordinary shares of the Company at an exercise price of £ 1.035 (US$ 1.92). The options granted vest in 4 tranches, with each tranche (amounting to 10,000 shares) under the Company's 2004 Share Option Plan. The weighted average fair value of the options granted was US$ 1.2 per share. The options are exercisable for a period of 10 years from the grant date. | ||
| The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, share options during the year: | ||
| Year ended 31 December | ||||||||||||
| 2008 | 2009 | 2010 | ||||||||||
| Number | WAEP (US$) | Number | WAEP (US$) | Number | WAEP (US$) | |||||||
| Outstanding at beginning of year | 1,503,250 | 1.59 | 1,849,625 | 1.66 | 1,715,875 | 1.75 | ||||||
| Granted during the year | 487,375 | 3.27 | - | - | - | - | ||||||
| Exercised during the year *) | (141,000) | 0.84 | - | - | - | - | ||||||
| Forfeited during the year | - | - | (133,750) | 2.6 | (49,700) | 2.46 | ||||||
| Outstanding at end of year | 1,849,625 | 1.66 | 1,715,875 | 1.75 | 1,666,175 | 1.69 | ||||||
| Exercisable at end of year | 1,389,499 | 1.41 | 1,226,021 | 1.38 | 1,455,863 | 1.55 | ||||||
*) The weighted average share price at the date of exercise in 2008 was £ 1.584.
d. Convertible loans - see Note 13.
| e. | Nature and purpose of other reserves: | |||
| 1. | Asset revaluation surplus: | |||
| The asset revaluation surplus reflects the increase in the fair value of the identifiable net assets of the Company's interests in entities prior to the acquisition of the controlling interest. | ||||
| 2. | Foreign currency translation reserve: | |||
| The foreign currency translation reserve is used to record exchange rate differences arising from the translation to the U.S. dollar of the financial statements of those companies in the Group whose functional currency is not the U.S. dollar. | ||||
NOTE 17:- SUPPLEMENTARY INFORMATION TO THE STATEMENTS OF COMPREHENSIVE INCOME
| Year ended 31 December | ||||||||
| 2008 | 2009 | 2010 | ||||||
| US$ '000 | US$ '000 | US$ '000 | ||||||
| a. | Revenues: | |||||||
| Rights in TV series (*) | 20,355 | 13,795 | 12,716 | |||||
| Broadcasting TV channels | 29,726 | 34,402 | 33,795 | |||||
| Internet website | - | - | 42 | |||||
| Other | 346 | 519 | 470 | |||||
| 50,427 | 48,716 | 47,023 | ||||||
(*) Includes contract revenues from TV series in the amount of US$ 5,210 thousand and US $ 6,155 thousand in 2009 and 2010, respectively.
| Year ended 31 December | ||||||||
| 2008 | 2009 | 2010 | ||||||
| US$ '000 | US$ '000 | US$ '000 | ||||||
| b. | Cost of revenues: | |||||||
| Rights in TV series | 5,658 | 7,839 | 9,975 | |||||
| Broadcasting TV channels | 21,411 | 23,078 | 22,103 | |||||
| Internet website | 180 | 1,375 | 1,200 | |||||
| Other | 619 | 1,056 | 2,323 | |||||
| 27,868 | 33,348 | 35,601 | ||||||
| *) Included in cost of revenues: | ||||||||
| Amortization | 22,203 | 24,108 | 27,364 | |||||
| c. | Selling and marketing expenses: | |||||||
| Advertising and marketing expenses | 3,765 | 2,693 | 1,970 | |||||
| Commissions | 1,061 | 630 | 1,112 | |||||
| 4,826 | 3,323 | 3,082 | ||||||
| Year ended 31 December | ||||||||
| 2008 | 2009 | 2010 | ||||||
| US$ '000 | US$ '000 | US$ '000 | ||||||
| d. | General and administrative expenses: | |||||||
| Salaries and related benefits | 4,492 | 4,061 | 4,165 | |||||
| Management fees to related parties and others | 2,100 | 1,925 | 1,682 | |||||
| Rental fees and maintenance of offices | 1,453 | 1,513 | 1,501 | |||||
| Professional fees | 1,692 | 1,291 | 1,452 | |||||
| Depreciation and amortization | 399 | 508 | 382 | |||||
| Doubtful accounts and bad debts | - | 203 | 1,493 | |||||
| Travel expenses | 457 | 339 | 265 | |||||
| Others | 570 | 561 | 640 | |||||
| 11,163 | 10,401 | 11,580 | ||||||
| e. | Financial expenses, net: | |||||||
| Bank loans and overdrafts | 682 | 673 | 740 | |||||
| Income from deposits | (3) | - | - | |||||
| Other | 143 | (35) | 77 | |||||
| 822 | 638 | 817 | ||||||
NOTE 18:- DISCONTINUED OPERATIONS
On December 29, 2009, the Company signed an agreement to sell its 50% interest in DMCS, which operated TV production studios in Argentina, for US$ 850 thousand to the other 50% shareholder of DMCS and to another party. The sale was subject to approval by the Labor Ministry of Argentina, which approval was received in January 2010.
In accordance with IFRS 5, the assets and liabilities of DMCS were presented as assets and liabilities held for sale in the consolidated balance sheet, as of 31 December 2009.
The operating results of DMCS were presented as discontinued operations in the consolidated statement of comprehensive income for 2009 and 2008.
Composition of income and expenses related to discontinued operations:
| Year ended 31 December | ||||||
| 2008 | 2009 | 2010 | ||||
| US$'000 | US$'000 | US$'000 | ||||
| Revenues | 599 | 176 | - | |||
| Cost of revenues | (128) | (17) | - | |||
| Operating expenses | *) (211) | *) (123) | - | |||
| Financial expenses, net | (10) | - | - | |||
| Profit before tax | 250 | 36 | - | |||
| Tax benefit | 199 | - | - | |||
| Profit from discontinued operations | 449 | 36 | - | |||
| Impairment of goodwill recognized on remeasurement to fair value | - | (836) | - | |||
| Selling expenses | - | (22) | - | |||
| Tax benefit | - | 38 | - | |||
| Total profit (loss) from discontinued operations | 449 | (784) | - | |||
*) Includes depreciation in the amount of US $ 90 thousand.
Composition of main groups of assets and liabilities held for sale as of 31 December 2009:
| December 31, 2009 | ||
| US$'000 | ||
| Cash and cash equivalents | 8 | |
| Trade and other current receivables | 230 | |
| Property and equipment, net | 2,392 | |
| Total assets | 2,630 | |
| Trade and other payables | 1,048 | |
| Other long-term liabilities | 371 | |
| Deferred tax | 361 | |
| Total liabilities | 1,780 |
Composition of the net cash flows related to discontinued operations:
| Year ended 31 December | ||||||
| 2008 | 2009 | 2010 | ||||
| US$'000 | US$'000 | US$'000 | ||||
| Net cash flows from operating activities | (54) | 923 | - | |||
| Net cash flows from financing activities | 39 | (956) | - | |||
| Net cash flows from discontinued operations | (15) | (33) | - | |||
NOTE 19:- EARNINGS PER SHARE
The following reflects the income and share data used in the basic and diluted earnings per share computations:
| Year ended 31 December | ||||||
| 2008 | 2009 | 2010 | ||||
| US$ '000 | US$ '000 | US$ '000 | ||||
|
Profit (loss) for the year from continuing |
2,754 | (1,809) | (5,421) | |||
|
Profit import of assumed conversion of |
- | - | - | |||
|
Profit (loss) for the year from continuing |
2,754 | (1,809) | (5,421) | |||
|
Profit (loss) for the year from discontinued |
449 | (784) | - | |||
|
Weighted average number of Ordinary shares |
23,099,928 | 25,154,096 | 27,388,072 | |||
| Effect of dilution: | ||||||
| Share options | 467,201 | - | - | |||
| Convertible loans | - | - | - | |||
|
Adjusted weighted average number of |
23,567,129 | 25,154,096 | 27,388,072 | |||
Share options and convertible debt have not been included in the calculation of diluted earning per share in 2009 and 2010 because they are anti diluted.
NOTE 24:- SEGMENT INFORMATION
| a. | General: | |||
| 1. | The Group companies operate in three principal business segments: production, sale and distribution of TV series, broadcasting of TV channels and Commercial internet platform. | |||
| 2. | The segment's assets include all the operating assets which are used by the segment and are composed mainly of cash and cash equivalents, trade and other receivables, equipment and other assets. Most of the assets are attributed to a specific segment. | |||
| 3. | The segment's liabilities include all the operating liabilities that derive from the operating activities of the segment and are composed mainly of trade payables and other accounts payable. The segment's assets and liabilities do not include taxes on income. | |||
| 4. | As described in Note 18, in 2009 the Company signed an agreement to sell its 50% interest in DMCS. In prior years the results of DMCS which are presented as discontinued operations in the statement of comprehensive income, are included in the segment disclosures. | |||
| Year ended 31 December 2008 | ||||||||||||
|
Rights of |
Broadcasting |
Commercial |
Other | Adjustments |
Total |
|||||||
| US$ '000 | US$ '000 | US$ '000 | US$ '000 | US$ '000 | US$ '000 | |||||||
| Revenues: | ||||||||||||
| Sales to external customers | 20,355 | 29,726 | - | 945 | (599) | 50,427 | ||||||
| Inter-segment sales | 513 | - | - | 3,168 | (3,681) | - | ||||||
| Total revenues | 20,868 | 29,726 | - | 4,113 | (4,280) | 50,427 | ||||||
| Segment results | 5,354 | 4,583 | (502) | 700 | (2,058) | 8,077 | ||||||
| Unallocated expenses | (1,507) | |||||||||||
| Operating profit | 6,570 | |||||||||||
| Financial expenses, net | 822 | |||||||||||
| Other income, net | (7) | |||||||||||
| Taxes on income | 2,365 | |||||||||||
| Profit for the year from continuing operations | 3,390 | |||||||||||
| Assets and liabilities: | ||||||||||||
| Segment assets | 44,886 | 16,827 | 2,009 | 4,650 | 68,372 | |||||||
| Unallocated assets | 5,199 | |||||||||||
| Total assets | 73,571 | |||||||||||
| Segment liabilities | 14,542 | 9,104 | 260 | 1,118 | 25,024 | |||||||
| Unallocated liabilities | 5,835 | |||||||||||
| Total liabilities | 30,859 | |||||||||||
| Other segment information: | ||||||||||||
| Capital expenditure: | ||||||||||||
| Tangible fixed assets | 418 | 335 | - | 170 | 923 | |||||||
| Intangible assets | 13,051 | 20,485 | 1,340 | - | 34,876 | |||||||
| Depreciation and impairment | 321 | 305 | - | 168 | 794 | |||||||
| Amortization and impairment | 4,251 | 17,580 | 67 | - | 21,898 | |||||||
| Year ended 31 December 2009 | ||||||||||||
|
Rights of |
Broadcasting |
Commercial |
Other | Adjustments |
Total |
|||||||
| US$ '000 | US$ '000 | US$ '000 | US$ '000 | US$ '000 | US$ '000 | |||||||
| Revenues: | ||||||||||||
| Sales to external customers | 13,795 | 34,402 | - | 695 | (176) | 48,716 | ||||||
| Inter-segment sales | 94 | - | - | 3,036 | (3,130) | - | ||||||
| Total revenues | 13,889 | 34,402 | - | 3,731 | (3,306) | 48,716 | ||||||
| Segment results | 145 | 4,343 | (2,280) | 338 | (58) | 2,488 | ||||||
| Unallocated expenses | (844) | |||||||||||
| Operating profit | 1,644 | |||||||||||
| Financial expenses, net | 638 | |||||||||||
| Other income, net | - | |||||||||||
| Taxes on income | 1,669 | |||||||||||
| Loss for the year from continuing operations | (663) | |||||||||||
| Assets and liabilities: | ||||||||||||
| Segment assets | 47,049 | 20,937 | 1,795 | 3,527 | 73,308 | |||||||
| Unallocated assets | 5,434 | |||||||||||
| Total assets | 78,742 | |||||||||||
| Segment liabilities | 8,235 | 12,151 | 89 | 3,208 | 23,683 | |||||||
| Unallocated liabilities | 8,660 | |||||||||||
| Total liabilities | 32,343 | |||||||||||
| Other segment information: | ||||||||||||
| Capital expenditure: | ||||||||||||
| Tangible fixed assets | 147 | 118 | - | 59 | 324 | |||||||
| Intangible assets | 13,221 | 18,321 | - | - | 31,542 | |||||||
| Depreciation and impairment | 304 | 282 | - | 166 | 752 | |||||||
| Amortization and impairment | 7,368 | 16,186 | 400 | 836 | 24,790 | |||||||
| Year ended 31 December 2010 | ||||||||||||
|
Rights of |
Broadcasting |
Commercial |
Other | Adjustments |
Total |
|||||||
| US$ '000 | US$ '000 | US$ '000 | US$ '000 | US$ '000 | US$ '000 | |||||||
| Revenues: | ||||||||||||
| Sales to external customers | 12,716 | 33,795 | 42 | 470 | - | 47,023 | ||||||
| Inter-segment sales | 38 | - | - | 2,439 | (2,477) | - | ||||||
| Total revenues | 12,754 | 33,795 | 42 | 2,909 | (2,477) | 47,023 | ||||||
| Segment results | (3,348) | 3,387 | (2,096) | 177 | (312) | (2,192) | ||||||
| Unallocated expenses | (1,048) | |||||||||||
| Operating profit | (3,240) | |||||||||||
| Financial expenses, net | 817 | |||||||||||
| Other income, net | - | |||||||||||
| Taxes on income | (532) | |||||||||||
| Profit for the year | (4,589) | |||||||||||
| Loss for the year from continuing operations | (4,589) | |||||||||||
| Assets and liabilities: | ||||||||||||
| Segment assets | 45,827 | 21,427 | 3,003 | 1,145 | 71,402 | |||||||
| Unallocated assets | 7,013 | |||||||||||
| Total assets | 78,415 | |||||||||||
| Segment liabilities | (9,858) | (15,486) | (247) | (708) | (26,299) | |||||||
| Unallocated liabilities | (10,357) | |||||||||||
| Total liabilities | (36,656) | |||||||||||
| Other segment information: | ||||||||||||
| Capital expenditure: | ||||||||||||
| Tangible fixed assets | 230 | 75 | - | 117 | 422 | |||||||
| Intangible assets | 8,254 | 17,089 | - | 21 | 25,364 | |||||||
| Depreciation and impairment | 204 | 332 | - | 195 | 731 | |||||||
| Amortization and impairment | 9,666 | 17,050 | 400 | - | 27,116 | |||||||
| c. | Geographic information: | ||
| The following tables present revenues from external customers and non-current assets, based on geographical areas, for the years ended 31 December 2008, 2009 and 201 | 0. |
| Year ended 31 | Israel | Europe |
Central |
Asia | Other |
2008 |
||||||
| December 2008 | US$ '000 | US$ '000 | US$ '000 | US$ '000 | US$ '000 | US$ '000 | ||||||
| Sales to external customers | 31,099 | 7,390 | 6,632 | 4,470 | 836 | 50,427 |
| Israel | Switzerland | Argentina | Other |
2008 |
||||||
| US$ '000 | US$ '000 | US$ '000 | US$ '000 | US$ '000 | ||||||
| Non-current assets | 13,993 | 23,818 | 7,400 | 258 | 45,469 |
| Year ended 31 | Israel | Europe |
Central |
Asia | Other |
2009 |
||||||
| December 2009 | US$ '000 | US$ '000 | US$ '000 | US$ '000 | US$ '000 | US$ '000 | ||||||
| Sales to external customers | 38,468 | 2,747 | 2,725 | 4,446 | 330 | 48,716 |
| Israel | Switzerland | Argentina | Other |
2009 |
||||||
| US$ '000 | US$ '000 | US$ '000 | US$ '000 | US$ '000 | ||||||
| Non-current assets | 16,767 | 29,109 | 541 | 231 | 46,648 |
NOTE 24:- SEGMENT INFORMATION (Cont.)
| Year ended 31 | Israel | Europe |
Central |
Asia | Other |
2010 |
||||||
| December 2010 | US$ '000 | US$ '000 | US$ '000 | US$ '000 | US$ '000 | US$ '000 | ||||||
| Sales to external customers | 35,283 | 3,633 | 2,324 | 5,239 | 544 | 47,023 |
| Israel | Switzerland | Argentina | Other |
2010 |
||||||
| US$ '000 | US$ '000 | US$ '000 | US$ '000 | US$ '000 | ||||||
| Non-current assets | 19,216 | 25,267 | 1,148 | 206 | 45,837 |
Non-current assets include net investments in rights of television series, intangible assets, property and equipment and other long-term assets.
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