Half Yearly Report

 

TIDMLUD 
 
RNS Number : 5593T 
Ludorum PLC 
30 September 2010 
 

 
30 September 2010 
                          LUDORUM PLC INTERIM RESULTS 
Ludorum plc, the AIM-listed media investment company, today announces its 
results for the half year ended 30 June 2010. 
 
Highlights 
 
* Turnover generated in the period of GBP1.3m (2009: GBP940,000) an increase of 
38% 
* Consumer products revenues were GBP829,000 (2009: GBP140,000) an increase of 
492% 
* Gross profit of GBP670,000 (2009: GBP344,000) an increase of 95% 
* Chuggington has now been licensed for broadcast to 175 countries 
* Over 160 consumer products and home entertainment license agreements for 
Chuggington have been concluded throughout the world 
* Over 1 million books and 2 million units of the Chuggington die cast toy range 
sold to date 
* Exclusive launch agreed with Toys R Us for Autumn 2010 in the US 
* Global agreement reached with Mega Brands Inc for Chuggington construction 
rights 
 
 
Rob Lawes, Chief Executive Officer said: 
"The Company has continued in the half year to focus considerable creative and 
commercial attention on Chuggington and lay further the foundations for creating 
a major global franchise.    The property continues to be very well received in 
all media and approval from both parents and consumers has been very rewarding. 
 We are encouraged with our progress to date and believe that Chuggington is now 
well positioned to deliver real growth and value for our shareholders" 
 
 
Chief Executive's Review 
Overview 
Ludorum plc is an AIM-listed media investment company. The Group is focused on 
creating or acquiring and subsequently exploiting the rights for children's 
entertainment properties through both conventional media and new media channels. 
The Group has continued to make substantial progress with its first created 
property, Chuggington, securing broadcast in nearly all major worldwide markets. 
Alongside the successful broadcast placement we have continued to conclude a 
significant number of licences across home entertainment, consumer products and 
publishing. 
In Spring 2010, our master toy partner, RC2, launched their die-cast toy range 
at retail outlets in the UK and in several major international markets and the 
consumer response has been very encouraging, with over 2 million items sold over 
the last few months. 
We are very encouraged by Chuggington's early success, and have confidence that 
our first property will create material value for our shareholders. 
Chuggington 
Chuggington is a computer generated 3D series of 104 x 10" minute episodes and 
52 shorter mini-episodes, coupled with a fully immersive interactive website. 65 
episodes and 26 mini-episodes are complete, and the others are currently in 
production. The series follows the adventures of Wilson, Brewster and Koko, all 
trainee engines and each with their own unique personality and learning style. 
The series is set in a world much like our own with cities, villages and diverse 
cultures and geography. Entertainment and enjoyment is at the heart of 
Chuggington, but embedded within each story are important educational and 
developmental messages centred on learning and social-emotional development. The 
series offers an extensive range of destinations to explore and adventures 
through which children and parents can benefit from the underlying value of 
positive life-learning lessons. 
Broadcast 
We have concluded broadcast agreements with all leading broadcasters in their 
respective territories in 175 countries and the series has established a highly 
successful ratings record in several international markets including the UK (BBC 
- Cbeebies), Germany (Super RTL), France (TF1), Japan (Fuji -TV), Australia 
(ABC) and Canada (Treehouse).   In January 2010, Chuggington launched on the 
Disney Channel in North America and has been consistently aired six days a week. 
 Following the success of that launch, Disney has now acquired the second series 
of Chuggington.    The first series will also commence broadcast in Spain and 
Benelux in the first quarter of 2011. 
 
 
 
Consumer Products, Home Entertainment and Publishing 
The Company has concluded a number of agreements with leading home entertainment 
partners in key territories. These include 2entertain (UK), Universal Pictures 
(Germany), TF1 Vision (France), Fuji Group (Japan), Roadshow (Australia) Anchor 
Bay (USA) and Daewon in Korea. 
Learning Curve Brands, Inc, a division of RC2 and a leading global toy 
manufacturer based in the US, has been granted the master toy licence on a 
worldwide basis. Learning Curve is well advanced with its product plans with a 
substantial line of new and innovative toys with both on and offline 
applications. Learning Curve contributes to the animated production costs and 
will participate in the net profits of the property.    In the Spring of this 
year, Learning Curve launched the first phase of its die cast line in 18 
countries including the UK, Germany, France and Australia, the interactive toy 
line will commence distribution in the second half of this year, 
In addition to the Learning Curve master toy licence, the Company has to date 
entered into 160  consumer products agreements with leading organisations 
including Vtech, Hallmark, Crayola, Tomy and Ravensburger.   In the UK, there 
are now a total of 37 licence agreements in place covering a broad range of 
product categories including clothing, bedding, games and puzzles, bicycles, 
celebration cakes and greetings cards. Product under these arrangements will 
also start to roll-out in early 2011. 
Following the launch of Chuggington on the Disney Channel in the US, 16 licenses 
have been signed with leading companies in their respective categories.   A 
worldwide agreement has also been concluded with Mega Brands Inc for exclusive 
rights in proprietary construction toys.  An exclusive launch was also agreed 
with Toys R Us across the United States for Autumn 2010 with significant front 
of store presence across the country. 
The Company concluded a profit-share publishing agreement with Parragon Books 
Limited, a leading UK and international publisher.  Parragon will be the master 
publisher of Chuggington books in several key markets including UK, Australia, 
Germany, Scandinavia and Benelux and the Company is committed to producing a 
very broad range of high quality books across all categories. 
The first books launched in the UK in Marks and Spencer in July 2009 and 34 
titles will be released in 2010 across all categories and formats across all 
distribution channels.    To date, Parragon have sold over one million books and 
plans have been developed to extend the breadth of formats, price points and 
play patterns to ensure that all distribution channels and levels of demand 
continue to be serviced. 
The Company has also signed a major publishing agreement with Scholastic in the 
US and a launch of the first books is scheduled for Autumn 2010. 
The Company has appointed highly regarded agents in several international 
markets to represent certain categories of our business. To date we have 
concluded more than 50 licence agreements for territories outside the UK. 
Production 
The first series of 52 x 10 minute episodes was fully completed in January 2009. 
In February 2009 the Company entered into a new agreement with its production 
partner in Shanghai to produce a further 26 episodes (series 2) of which 13 new 
episodes have been delivered with the remaining 13 episodes due for delivery in 
October 2010.  The second series has been pre-sold to the BBC, Super RTL 
Germany, TFI France, ABC Australia and The Disney Channel in the US. The Company 
has commissioned a further 26 episodes which will be delivered in Winter 2011. 
In addition to the 10 minute series, the Company commissioned the production of 
39 x 4 minute mini episodes of Chuggington titled Badge Quest which will all 
have been delivered by the end of 2010.    These episodes focus on the 
underlying pro-social themes within the main series and offer broadcasters wider 
scheduling options as well as our DVD partners additional material and on-line 
content.  A further 13 mini episodes will be delivered at the end  of 2011 
providing a total of 52 x 4 minute shows to complement the title series and its 
worldwide visibility. 
Financial Review 
Ludorum generated revenues of GBP1.301m for the first six months of 2010 (2009: 
GBP0.940m), a 38% increase over the prior six months. Consumer product revenues 
represented 64% of revenues increasing by GBP0.689m to GBP0.829m (2009: 
GBP0.140m).   Broadcast revenues, which are recognised on license period start 
dates, represented 36% of revenues and reduced by GBP0.330m to GBP0.468m (2009: 
GBP0.798m).  The UK represented 31% of revenues, Europe 38%, Asia and 
Australasia 27% and Rest of World 4%.  All regions had double-digit revenue 
growth, lead by the UK with an 80% increase over the first six months of 2009. 
Gross profit increased from GBP0.344m to GBP0.670m, a 95% increase over the 
first six months of 2009.  Gross margins improved from 37% to 51%.  The margin 
improvement is largely related to programming amortisation costs being fixed at 
the same level for the comparable prior period and were therefore a smaller 
percentage of revenues. 
Total administrative costs, excluding costs attributed to the Incentive Option 
Plan, were GBP1.589m, an increase of GBP0.417m over the period to 30 June 2009. 
At the end of 2009 the Group opened a New York based marketing office to support 
and maximise the potential for Chuggington in North America; the incremental 
cost for this office during the period being GBP0.330m.  Excluding the costs of 
the New York office, underlying administrative costs increased GBP0.870m being a 
7% increase over the period to 30 June 2009. 
The operating loss for the six month period, excluding costs attributed to the 
incentive option plan, was GBP0.919m (GBP0.828m in the period to 30 June 2009). 
Capital expenditure on Chuggington during the period was GBP0.475m (GBP0.320m in 
the period to 30 June 2009) an increase of GBP0.155m.