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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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X-Phonics | LSE:XPH | London | Ordinary Share | GB00B0DG1X47 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 0.40 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
RNS Number:0264Z X-Phonics plc 27 June 2007 X-Phonics Plc (or "the Group") Interim Results for the six months ending 31 March 2007 27 June 2007 * New bands and artists signed including the Attic Lights * Profitable relationship secured with Universal/Island Records * Fall in cost of sales 27% and overheads down 40% on same period last year * Group loss before interest, exceptional items and tax #305,355 (2006: #464,473) * Cash balance at end of period #339,642 (#103,516) Chairman Robin Davies said: "This is the first full period since the appointment of John McLaughlin as our Managing Director in August 2006 following he acquisition of White Noise Music Limited., a business through which John had been developing musical talent. During the latter part of 2006 the Group signed a number of bands including The Attic Lights, The Poems and writers and performers Robert Hodgens and Maeve O'Boyle. The bands and writers have continued to be developed and all have made progress. We are confident that good choices have been made and are now seeing levels of interest from both the market and the music industry confirming our judgment." Chairman's Statement I am pleased to announce the results of our trading activities for the six month ending 31st March 2007. This is the first interim period report since the appointment of John McLaughlin as our Managing Director in August 2006 following the acquisition of White Noise Music Limited, a business through which John had been developing musical talent. During the latter part of 2006, a number of bands were signed to the Group, amongst them, Attic Lights, The Poems and writers and performers including Robert Hodgens and Maeve O'Boyle. The bands and writers have continued to be developed and all have made good progress. We are confident that good choices have been made and are seeing levels of interest from both the market and the music industry itself confirming this. Financial Report The nature of the projects that have been contracted and that are being developed will lead to rather uncertain and 'lumpy' revenues for the time being. For example, although discussions were well progressed with regards to licensing Attic Lights to a major label at the period end, the Directors were of the opinion that revenue was not sufficiently certain to be included in these results. However, since the period end, the Group has agreed terms with Universal-Island whereby Attic Lights have been licensed to them in a five album deal worth potentially #1,500,000 in advances over the contract period as well as an ongoing royalty of up to 24% based upon net receipts from sales in worldwide territories to be exploited by Universal-Island. The initial advance and recording revenues received by the Group in respect of this contract total #240,000 with approximately 34% being passed onto the band. This is a very important first contract of this type for the Group which demonstrates that we now have the ability to find and secure acts, that with the appropriate amount of development and promotion, can be licensed to major record labels providing the opportunity of an initial cash advance and a share in the associated longer term revenues. Royalties from Attic Lights should be earned over the next 6 to 8 years. Cost of sales represent all costs associated with the signing and development of the bands and writers and are accounted for as they are incurred. Costs are only matched to revenues once the revenues are certain. Cost of sales in the period are lower by 27% at #99,926 (2006: #136,323) and relate to the bands and writers that are still in development and from which the Group expects to generate revenues in the future. Comparative costs from the previous year include the actual costs of work completed and sales invoiced, either in respect of the original bands that have not subsequently had their contracts extended, or in respect of video work which was not profitably managed. Overheads in the period at #217,792 (2006: #363,605) are 40% lower following the re-organisation described in the previous annual report and account for the 18 months ended 30 September 2006. These costs include some one-off costs associated with the move of the Group's offices to Chiswick in West London where it is now sharing facilities with other music related businesses and through which new business opportunities have been, or are being, developed. The Group has made a loss on ordinary activities before interest, exceptional items and taxation of #305,355 (2006: #464,473). At the end of the period the group held cash balances of #339,642 (2006: #103,516). Trading Update Record Label Activities Having developed the Attic Lights for a relatively short period, the Group is delighted to have secured a significant license deal with Universal-Island, which is currently the largest and most successful record label in the world. Universal-Island bid against a number of other major record labels and signed with the approval of Island Records President, the highly respected Nick Gatfield. The longer term value in this contract lies in the fact that Island Records have significant resource and influence through which it is able to break bands such as Attic Lights into the mainstream. Island has recently had success with The Fratellis, The Feeling and Amy Winehouse and it is this team that will now be working on the Attic Lights. This collaboration with Universal-Island has also paved the way for a continuing relationship and direct access for the Group and our other artists. The other significant signing in November 2006 was The Poems who recently returned from supporting the Magic Numbers to great reviews. Their profile continues to improve through touring and from additional success with their music being used on US television programs such as Greys Anatomy and the Ghost Whisperer. This improved US profile is important in helping to promote the band in the UK where we are shortly to release a 4 track EP and are organising their first headline tour of Scotland. With the increased awareness of major record labels resulting from the Attic Lights contract we have confidence in the longer term success of the Poems. It is worth noting that the Group owns a large percentage of The Poems publishing having signed Robert Hodgens, the main writer for the band, as a writer. Our youngest artist, Maeve O'Boyle continues to attract critical acclaim as we work in building her profile. She has just finished a tour of Scotland and Ireland supporting one of Ireland's biggest folk stars, Eleanor McEvoy, and we are very pleased with the prospect of a 23 date tour in conjunction with Beanscene, the new and exciting coffee and music experience, where Maeve will be selling an acoustic version of her album pre-empting the release of the full album early next year. We plan to release 2 singles along with this acoustic record in late summer and mid-winter, which we expect will create a real buzz around this young and extremely talented artist. The Group expects to sign a number of young artists working with them to produce records that can then be sold through a partnership with Beanscene. This is an interesting area of development for the Group made possible by our ability to produce records at low cost and then distribute them using a distribution channel that is fast becoming an alternative to the high street retail chains. Despite the fact the Liz McClarnon was ultimately unsuccessful in mounting a Eurovision challenge we continue to work with Liz and once her new album is recorded we hope to be able to identify a joint venture partner through whom we would promote the album. The Group had hoped to compete successfully in bidding for the recording rights to Echo & The Bunnymen which were ultimately won with a strong bid from Warner Brother's Records. Despite this our Managing Director John McLaughlin was appointed Executive Producer to their latest recording and, as a consequence, a share of the production revenues will be transferred to the Group once the record is on sale. Not only are there high hopes for the record sales, there is an amount of kudos that results for X-Phonics association with Echo & The Bunnymen. Glasgow continues to be a hot bed of developing musical talent and a number of projects have been identified which are expected to provide revenue opportunities for the Group in future years. A good example of this is Urbnri, a "street" based band whose publishing rights have been secured by the Group and who are currently putting the finishing touches to their debut album. We expect some exciting developments in the promotion of this band and are also working with Chris Van der Kyle, the video gaming developer, with a view to the band's music and songs being used on a new video game. There is further evidence of the development in our marketing and promotional capability with our work for the BBC TV project 'Power to the People'. The band that was formed as part of the programme 'The Zimmers' was marketed and released by our record label under the guidance of Neil Reed. The results of this project have given us a worldwide platform. With some 3.2 million views of the X-Phonics edited promotion 'My Generation' on 'YouTube' alone and an estimated 100 million people worldwide seeing or hearing the band. The single was released in early June and entered the UK Top 40 at number 26. As a result of this chart success the Zimmers were then asked to appear on the Jay Leno show in the United States where they appeared before a TV audience of 15 million. With internet releases worldwide and physical releases scheduled in USA and Benelux to date the future looks bright for The Zimmers. A follow up to the original documentary is scheduled for Sunday 8th July at 10:00 pm with the world premier of 'The Zimmers - From Carehomes to Clooney' which will further help promote the Group. Music Publishing In addition to owning the publishing for Roberts Hodgens and our earlier roster of writers, the Group has worked on a number of projects where the intention is to secure longer term revenues through the exploitation of music that has mass appeal. Our existing catalogue continues to gain modest revenues worldwide. European Artists such as Katerine (Universal) and Reborn (EMI) have provided X-Phonics Publishing with some success during 2007 with revenues resulting from record sales and performances. This year we have written and produced a new version of "Swing Low" for the English Rugby Football Union to be used as part of their 2007 Rugby World Cup campaign. We have also been commissioned to write an anthem to replace "Flower of Scotland" for the Scottish Rugby Football Union, again with the 2007 Rugby World Cup in mind, although in this case, it is being written with a view to having much broader and national appeal. Both of these releases are expected to have an enduring attraction and to be of interest to some of the larger brand companies who are involved in advertising around national sporting events. Music Publishing is an important area for the group to develop and we are constantly looking for opportunities and ways in which we can extract maximum value from our initiatives. It is often the case that, having agreed a partnership with a larger record label to exploit some of our music, we are constrained to working to their timescales. As an example, although recording of "Sleep Easy Baby" (an album of lullabies) was completed in late 2006 and licensed in early 2007, this is now expected to be released by EMI for the Christmas market in late 2007. Production Activities We continue to take an interest in Terminal Music Limited, a production facility in Glasgow in which we have an option to acquire 24.99%. Currently recording in the studio are a number of well known artists and bands in addition to some new artists with whom we are working with the intention of acting for them in some capacity. These include a band called Meladrone, an " indie" band with fantastic songs and a great look. The songs have been co-written or produced by John McLaughlin, Simon Perry (Archangel Music), Gordon Goudie and Ian McCulloch (Echo & The Bunnymen) and therefore come with a great pedigree. We are also working with Valentina Mitzkat who has been writing with Maeve O'Boyle and Robert Hodgens and is a very talented 21 year old from Austin, Texas with an incredible voice as well as being a talented pianist. Together we are developing a very original crossover sound for her record. Being involved in the Terminal Music studios provides an early opportunity to spot and begin working with unknown talent. It is this that is of particular interest to the major record labels, almost all of whom have had the chance to visit Glasgow and the studios when considering a bid for Attic Lights. Our video facility was restructured in mid 2006 in order to better balance the costs of production with the likely revenue opportunity. The facility is now housed in Chiswick where it can work much more efficiently and with the availability of freelance producer and directors, it is now being managed profitably. Recent projects, whilst modest in budget, represent a significant improvement in performance. Projects worked on in the last six months include corporate programmes for the Multiple Sclerosis Society and for Herstmonceux Castle, a conference facility for overseas students. We have also been commissioned to produce video programmes in support of the ITV Rugby World Cup theme, "World in Union" incorporating artists such as Katherine Jenkins and Andre Bochelli, and BBC2's ' Power to the People' documentary for the release of the Zimmers version of "My Generation". The level of activity has been increased significantly with the appointment of our new Managing Director. We have also benefited from a considerably improved profile and are now much better connected with people in the music industry with influence. When linked to the improved control over costs directly attributed to projects and the lower level of overhead we are confident of our future success and continue to seek opportunities through which we can increase shareholder value. Robin Davies Chairman 27 June 2007 Group Profit and Loss Account Six months Six months Eighteen month ended 31 March ended 31 March period ended 30 2007 2006 September 2006 Note (unaudited) (unaudited) (audited) # # # Turnover 12,362 35,455 124,539 Cost of sales (99,926) (136,323) (453,041) Gross loss (87,564) (100,868) (328,502) Administrative expenses (217,792) (363,605) (604,125) Operating loss (305,356) (464,473) (932,627) Exceptional items 2. - (121,581) - Interest receivable 5,022 1,229 1,459 Interest payable (1,017) (1,492) (4,995) Loss on ordinary activities before (301,351) (586,317) (936,163) taxation Tax on loss on ordinary activities - - - Loss for the period (301,351) (586,317) (936,163) Basic earnings per ordinary share 3. (0.5 pence) (1.8 pence) (2.92 pence) Basic earnings per ordinary share 3. (0.6 pence) (2.1 pence) (3.48 pence) All of the activities of the group are classed as continuing The group has no recognised gains or losses other than the results for the period as set out above. Balance Sheet 31 March 2007 31 March 2006 30 September 2006 (unaudited) (unaudited) (audited) # # # Fixed Assets Intangible assets 319,414 - 327,639 Tangible assets 82,002 94,647 78,642 401,416 94,647 406,281 Current assets Debtors 87,655 37,551 36,978 Cash at bank and in hand 339,642 103,516 752,473 427,297 141,067 789,451 Creditors: Amounts falling due within one year (113,410) (159,739) (202,505) Net current liabilities 313,887 (18,672) 586,946 Total assets less current liabilities 715,303 75,975 993,227 Creditors: Amounts falling due after more than (1,872) (4,750) (2,440) one year 713,431 71,225 990,787 Capital and reserves Called-up equity share capital 2,803,119 2,470,350 2,798,320 Share premium account 743,474 - 724,277 Merger reserve (738,578) (738,578) (738,578) Profit and loss account (2,094,584) (1,660,547) (1,793,232) Shareholders' funds 713,431 71,225 990,787 Cash Flow Statement Six months Six months ended Eighteen month ended 31 March 31 March 2006 period ended 30 2007 September 2006 (unaudited) (unaudited) (audited) # # # Net cash outflow from operating activities (417,692) (551,181) (886,732) Returns on investments and servicing of finance 4,005 (263) (15,442) Taxation (2,732) - 3,762 Capital expenditure (16,353) (60,255) (393,842) Cash (outflow)/inflow before financing (432,772) (611,699) (1,292,254) Financing: Issue of equity share capital 4,799 858,350 1,304,324 Share premium on issue of equity share capital 19,197 250,000 760,321 Share issue costs - (371,581) - Capital element of hire purchase (4,055) (1,657) (6,930) (Decrease)/increase in cash (412,831) 123,413 765,461 Reconciliation of operating loss to net cash Six months Six months ended Eighteen month (outflow)/inflow from operating activities ended 31 March 31 March 2006 period ended 30 2007 September2006 # # # Operating loss (305,355) (464,473) (932,627) Other credit charges - - 11,906 Amortisation 8,225 - 1,371 Depreciation 23,186 34,358 51,635 Decrease/(increase) in debtors (50,679) 35,421 10,734 Increase/(decrease) in creditors (93,069) (156,487) (29,751) Net cash (outflow)/inflow from operating (417,692) (551,181) (886,732) activities Reconciliation of net cash flow to movement in net debt Increase/(decrease) in cash in the (412,832) 123,412 765,461 period Cash outflow in respect of hire purchase and 4,055 1,657 6,930 finance lease Change in net debt (408,777) 125,069 772,391 New hire purchase agreement (10,193) - - Opening net (debt)/funds 745,413 (29,050) (26,978) Closing net (debt)/funds 326,443 96,019 745,413 Notes to the unaudited financial statements 1. The financial information included in this report does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The financial information for the period ended 30 September 2006 has been extracted from the statutory accounts for that period. The auditors' report on the full statutory accounts for the period ended 30 September 2006 was unqualified. The financial information for the six months ended 31 March 2006 and 31 March 2007 has not been audited. 2. Exceptional costs are made up of costs incurred in relation to the placing of 10,000,000 ordinary shares on AIM over and above the balance held in the share premium account. 3. The earnings per ordinary share have been calculated on the ordinary activities after taxation of #301,350 (31 March 2006 - #586,318, 30 September 2006 - #936,163) using the weighted average number of ordinary shares in issue during the period being 66,003,966 (31 March 2006 - 31,859,462, 30 September 2006 - 32,063,707). The weighted average number of diluted ordinary shares in issue during the period was 51,353,727 (31 March 2006 - 28,071,592, 30 September 2006 - 26,864,208). This information is provided by RNS The company news service from the London Stock Exchange END IR PUUQPQUPMGGQ
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