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AIM and TSX ticker: "DHX"
DHX Media Ltd. ("DHX Media" or the "Company") (AIM & TSX ticker: "DHX"), a leading independent international producer and distributor of mainly children's television programming and interactive content, announces its unaudited consolidated interim results for the three month period ended March 31, 2009.
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Highlights of Q3 2009 Results:
(All amounts expressed in Canadian dollars)
- Revenue of $12.1 million and $50.4 million for the three and nine
months ended March 31, 2009 ("Q3 2009" and "Nine Months 2009"
respectively) , a decrease of 36% and an increase of 30%, respectively
(Q3 2008: $18.8 million, Nine Months 2008: $38.8 million);
- Gross profit of $5.0 million and $16.7 million for Q3 2009 and Nine
Months 2009, a decrease of 14% and an increase of 33%, respectively
(Q3 2008: $5.8 million, Nine Months 2008: $12.6 million);
- EBITDA(1) of $1.6 million and $6.5 million for Q3 2009 and Nine Months
2009, a decrease of 41% and an increase of 33% (Q3 2008: $2.7 million,
Nine Months 2008: $4.9 million);
- Net income of $0.44 million and $0.65 million for Q3 2009 and Nine
Months 2009, a decrease of 50% and 54%, respectively (Q3 2008: $0.88
million, Nine Months 2008: $1.4 million);
- EPS of $0.01 and $0.02 for Q3 2009 and Nine Months 2009(Q3 2008: $0.02,
Nine Months 2008: $0.04);
(1) EBITDA represents net earnings (loss) of the Company before
amortization expense, interest and other income (expense),
non-controlling interest, equity income (loss), development expenses
and stock-based compensation expense.
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Michael Donovan, Chairman and CEO, commented, "The financial results for Q3 2009 were in line with management expectations for the quarter, however, down compared to Q3 2008 as the timing of actual deliveries of proprietary productions are uneven throughout quarterly periods. We are pleased to see the continued improvement of a 30% increase when comparing revenue for the nine-months ended March 31, 2009 to the nine months ended March 31, 2008. The underlying business continues to perform well with several significant international sales having been made at strong prices."
Operating Review
DHX continued to deliver on its strategic objectives including:
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- January 26, 2009: Announced the commissioning of the teen live-action
comedy series That's So Weird! Consisting of 13 half-hour episodes, the
series will air on YTV in Canada.
- March 19, 2009: Announced the entry into a normal course issuer bid
("NCIB") through the facilities of the Toronto Stock Exchange, allowing
the Company to purchase, in aggregate, up to 2,841,913 DHX Common
Shares in the period up to March 22, 2010, subject to the requirements
of the Toronto Stock Exchange.
- March 26, 2009: Announced the issuance of 219,802 common shares to key
employees pursuant to a performance-based agreement, as approved by
shareholders.
- March 31, 2009: Entered into an automatic share purchase plan, allowing
the Company's designated broker, GMP Securities L.P., to make purchases
under the Company's NCIB at any time, including during regulatory and
self-imposed blackout periods.
Announcements since Q3 2009:
- April 29, 2009: Announced six new international sales of its hit
live-action youth series The Latest Buzz.
- May 14, 2009: Announced completion of the successful earn-out
associated with the December 3, 2007 acquisition of Studio B
Productions Inc.
Financial Results
(expressed in Canadian dollars)
-------------------------------------------------------------------------
Three Months Nine Months
Ended March 31, Ended March 31,
---------------------------------------
2009 2008 2009 2008
---------------------------------------
$000 $000 $000 $000
(except (except (except (except
per per per per
share share share share
data) data) data) data)
---------------------------------------
Consolidated Statements of Income
and Comprehensive Income Data:(1)
Revenues 12,061 18,827 50,445 38,796
Direct production costs and
amortization of film and
television programs produced 7,060 12,991 33,718 26,180
---------------------------------------
Gross margin 5,001 5,836 16,727 12,616
---------------------------------------
Selling, general, and
administrative 3,546 3,306 10,809 8,113
Income before the following
and discontinued operations 1,323 1,987 5,553 3,532
Loss from strategic investments (6) (10) (18) (18)
Costs associated with
uncompleted transactions - - (1,144) -
Interest and other (expenses), net (666) (575) (1,924) (1,305)
Provision for income taxes 190 520 780 815
Net income and comprehensive
income before discontinued
operations 461 883 1,686 1,394
Discontinued operations, net of
income taxes (17) (7) (1,039) (7)
Net income and comprehensive
income 444 876 647 1,387
Basic earnings per common share
before discontinued operations 0.01 0.02 0.04 0.04
Fully diluted earnings per
common share before discontinued
operations 0.01 0.02 0.04 0.04
Basic earnings per common share 0.01 0.02 0.02 0.04
Fully diluted earnings per
common share 0.01 0.02 0.02 0.04
Weighted average common shares
outstanding
Basic 42,846 42,620 42,820 37,818
Fully Diluted 42,846 42,620 42,826 37,818
---------------------------------------
As at As at
March 31, June 30,
2009 2008
$000 $000
-------------------
Consolidated Balance Sheet
Data:
Cash, restricted cash and
short-term investments 8,153 9,570
Investment in film and
television programs 37,715 49,981
Total assets 157,239 143,974
Total debts 96,773 85,781
Shareholder equity 60,467 58,193
-------------------------------------------------------------------------
(1) The financial information for the three months ended March 31, 2009
in the table includes full quarterly results for Halifax Film,
Decode, Studio B, and imX. The financial information for the nine
months ended March 31, 2009 in the table includes full results for
Halifax Film, Decode, and Studio B, but only 254 days of activity for
imX. The three months ended March 31, 2008 includes full quarterly
results for Halifax Film, Decode, and Studio B, but no activity for
imX. The nine months ended March 31, 2008 includes results for
Halifax Film, Decode, 118 days of activity for Studio B, but no
activity for imX.
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Revenues
Revenues for Q3 2009 were $12.06 million, down from $18.83 million for Q3 2008, a decrease of 36%. The decrease in Q3 2009 was generally due to lower deliveries of proprietary programs versus Q3 2008. Proprietary deliveries are seasonal and Q3 2008 was an extremely robust quarter for deliveries. Deliveries for Q3 2009 were generally in line with Management's expectations.
Proprietary production revenues: Proprietary production revenues for Q3 2009 of $6.10 million were down 54% compared to $13.36 million for Q3 2008. The decrease included a 53% decrease to $3.66 million (Q3 2008-$7.80 million) in proprietary production revenue for the Halifax Film division (generally due to fewer scheduled deliveries and specifically no deliveries in Q3 2009 of The Guard versus $4.20 million-12 half-hours deliveries on Season I in Q3 2008), a 60% decrease to $1.71 million for Q3 2009 (Q3 2008-$4.31 million) for the Decode division (generally due to fewer scheduled deliveries), and the inclusion of $0.73 million, a full quarter of activity (Q3 2008-$1.25 million), for the Studio B division.
For Q3 2009 the Company recognized $6.10 million - 41.0 half-hours of proprietary film and television program production revenue, a 48% decrease over the 78.5 half-hours for Q3 2008, where the programs have been delivered and the license periods have commenced.
In addition, in Q3 2009 the Company delivered in total an additional 18 half-hours made up of: $1.10 million - 8 half-hours of Latest Buzz Season III, $0.15 million - 5 half-hours of Super Why (CBC) Season I, and $0.04 million - 5 half-hours of Poppets Town Season I where the license periods had not yet commenced by March 31, 2009, and therefore the revenue recognition criteria had not been met to recognize in Q3 2009. The license periods are scheduled to commence in future quarters and will be recognized in the corresponding quarter. In summary, total deliveries in Q3 2009 were 59 half-hours made up of: 41 half-hours (proprietary television recognizable) and 18 half-hours (proprietary television not recognizable).
Producer and service fee revenues: For Q3 2009 the Company earned $1.33 million for producer and service fee revenues whereas for Q3 2008 the Company recorded $0.72 million for producer and service fees revenue.
Distribution revenues: For Q3 2009 distribution revenues were down modestly 11% to $3.96 million from $4.43 million for Q3 2008. Given the current economic climate Management is very pleased with the Q3 2009 results. (see "Outlook" section of the Q3 2009 MD&A for further details).
Music and royalty revenues: For Q3 2009 music and royalty revenues increased 30% to $0.26 million (Q3 2008-$0.20 million) while new media revenues decreased in Q3 2009 to $0.01 million (Q3 2008-$0.07 million). These revenue streams have remained in line with Management's expectations.
Gross Margin
Gross margin for Q3 2009 was $5.00 million a decrease in absolute dollars of 32% compared to $5.84 million for Q3 2008. The overall margin at 41% of revenue for Q3 2009 was above Management's expectations and was a result of unusually high margins (66%) on distribution revenues for Q3 2009 due to an increased number of sales on titles with lower net book values and an increase in rental revenues.
EBITDA
In Q3 2009 EBITDA was $1.62 million (including $0.01 million loss from strategic investments), a 39% decrease as compared to $2.67 million (including $0.01 million loss from strategic investments) for Q3 2008.
As at March 31, 2009, DHX reported cash, restricted cash, and short-term investments of $8.15 million and working capital of $16.7million.
The Company's full financial statements and MD&A can be found on SEDAR at www.sedar.com as well as the Company's website (www.dhxmedia.com).
About DHX Media Ltd.
DHX Media Ltd. is a leading international producer and distributor of television programming and interactive content with an emphasis on children, family and youth markets. DHX Media Ltd. shares trade on AIM and are listed on the TSX, the Toronto Stock Exchange. DHX Media's production companies, Decode Entertainment, Halifax Film, Studio B Productions and imX Communications, are the producers or co-producers of 14 original television series and theatrical releases currently commissioned for production and maintain a growing library of over 2,200 half-hours of mostly children and youth-oriented television productions. www.dhxmedia.com
Disclaimer
This press release contains forward looking statements with respect to the Company. Although the Company believes that the expectations reflected in such forward looking statements are reasonable, such statements involve risks and uncertainties and are based on information currently available to the Company. Actual results may differ materially from those expressed or implied by such forward looking statements. Factors that could cause actual results or events to differ materially from current expectations, among other things, include risks related to market factors, customer contract interpretation, application of accounting policies and principles, and production related risks, and other factors discussed in materials filed with applicable securities regulatory authorities from time to time including matters discussed under "Risk Factors" in the Company's short form prospectus dated November 7, 2007 and in the Company's Amended Annual Information Form incorporated by reference therein. These forward-looking statements are made as of the date hereof, and the Company assumes no obligation to update or revise them to reflect new events or circumstances.
%SEDAR: 00023380E
SOURCE: DHX MEDIA LTD.
DHX Media Ltd.: David A. Regan - EVP, Corporate Development & IR, (902) 423-0260; AIM Nominated Advisors: Grant Thornton UK LLP: Gerry Beaney, Troy MacDonald, +44 (0) 20 7383 5100
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