BOOMERANG PLUS PLC 
By Business Review
Financial Review
As highlighted in our 2011 preliminary results statement released in September, the Group has had a strong first half of the year. Headline revenues have been resilient during the period at £16m (2011 - £16.3m), with the reductions arising from S4C's reduced funding being largely offset by increases in organic Network and AFP programming as well as the first full six month contribution by Oxford Scientific Films acquired in June 2011.
The Group's key performance indicators are gross profit, adjusted earnings before interest, tax, depreciation and amortisation ("adjusted EBITDA**") and adjusted operating profit.
Gross profit increased by 14.1% to £2.83m (2011 - £2.48m) due to the accelerating contribution from our higher gross margin Network and AFP programming businesses. Gross profit margin also expanded 16.5% during the period to 17.7% (2011 - 15.2%), despite continued downward pressure on overall programme budgets.
Adjusted EBITDA** increased by 10.6% to £1.36 million (2011 - £1.23 million).
During the year the Group continued the restructuring and relocation of its businesses, including relocating Oxford Scientific Films to new premises in Warwick Street, London and the merger of Mwnci and Boomerang's in-house facilities to create Gorilla, the Group's post production and facilities business. Following the implementation of IFRS 3 - Business Combinations, professional fees in respect of acquisitions have been expensed in the current period.
The above factors contributed to an increase in adjusted operating profits* of 8% to £0.95 million (2011 - £0.88 million).
The Group's substantial capital expenditure programme of recent years is now past its peak and capital expenditure reduced to £0.32 million (2010 - £0.82 million) in the period to 30 November 2011. Finance lease repayments during the period were £0.30 million (2010 - £0.29 million). The acquisition of Oxford Scientific Films resulted in a net cash inflow of £0.18m and was by means of the purchase of assets and certain liabilities including £0.30 million in respect of a substantial back catalogue. Therefore, cash and cash equivalents increased 8% to £4.06 million as of 30 November 2011 (2010 - £3.76 million).
At 30 November 2011 the Group had net assets of £10 million (2010 - £9.53 million). The Group has considerable headroom within its current bank facilities together with long-term relationships with its key customers. Due to the nature of the Group's business, management has good visibility over its pipeline of productions for the foreseeable future, which is fully funded by its customers. The Group's forecasts and projections show that the Group should be able to operate within the level of its current facility.
* adjusted for professional fees in relation to corporate transactions (2011 - £0.11m, 2010 - 0.01m), reorganisation costs (2011 - £0.06m, 2010 - £nil), and amortisation of intangible assets arising on business acquisitions (2011 - £0.01m, 2010 - £0.01m).
**adjusted operating profit as defined above before depreciation (2011 - £0.39m, 2010 - £0.34m) and other amortisation (2011 - £0.02m, 2010 - £0.01m).
Operations
The Group continued to produce a strong, multi-genre portfolio of multi-platform content for our broadcast and corporate customers during the period.
Organic Network commissions during the period included the third series of "Road to London 2012: That Paralympic Show", a multi-platform magazine series covering the run up to the London 2012 Paralympic Games, and we are currently in production of series 4. We are currently in production of "Tales of Friendship with Winnie the Pooh" a 72 x 5 minutes order for Disney Junior EMEA, which coincides with a book of the same name. Other Disney work included interstitial productions for Disney 365 on Cars 2 and Epic Mickey.
AFP commissions during the period included a series of BT Documentary films featuring their sponsored Paralympic athletes including Oscar Pistorius; a high volume digital marketing campaign for Bacardi Brands Global for a new Rum called Bacardi Oakheart; athird year producing Relentless Freeze, Europe's biggest Snow and Music Festival held annually in Battersea Power Station; major live OB surfing events for Quiksilver including World Tour events Quiksilver Pro France and Roxy Pro Biarritz; and a third season of Nissan/Sony Playstation GT Academy, the virtual-to-reality motor racing competition, once again hosted by F1 luminaries Eddie Jordan and Johnny Herbert and filmed across Australia, New Zealand, Europe and the UK, including for the first time a series for the USA market.
Complementing this organic success the newly acquired Oxford Scientific Films ("OSF") added to the existing Indus Fims creates a substantial and growing Factual division. Indus has been very busy during the period with exciting new commissions for the BBC and paid development for Channel 4. They are about to deliver a six-part series for BBC2 exploring the challenges facing the UK fishing industry and are filming an observational series about how London feeds itself, also for BBC2. Indus has also recently opened an office in Bristol with new Executive Producer Lucy Carter on board.
OSF delivered its first 3D production, Meerkats 3D to Sky and National Geographic. The film aired in November 2011 in the UK and is about to be released theatrically into museums worldwide. A second 3D natural history film is in development with the same partners. The second season of Fatal Attractions aired to strong ratings on Animal Planet in the US and an uplift order for a further 6 episodes has been received. Rory McGrath's Pub Dig, a new 4 part series blending history with archaeology and comedy went into production for History UK and Channel 5. OSF received its first orders from BBC1 for a broadcast pilot for a new medical series called How to Beat.... featuring Harley Street doctors Dr Jack Kreindler and Professor Greg Whyte; and a high end science series. OSF is currently in pre-production on a high end archaeology special for Channel 4 and Terra Mater; and a pilot for a new series for Animal Planet US.
Boomerang has also produced a range of multi-genre programming for the local Welsh Broadcasters, S4C and BBC Wales, during the period. These include the "Stwnsh" and "Cyw" children's services; drama series "Teulu"; factual entertainment series "Cariad@Iaith", "Gwlad Beirdd", "Llais i Gymru", "Wales on Wheels", "Only Boys Aloud 2" and "3Lle"; entertainmment series "Seren Rhos" and "Noson"; factual series "Arts Review of the Year" and "Iris Prze"; music series "Bandit" and "Nodyn"; youth series "Gofod"; the Royal Welsh show and sports series "Ras i Lundain" amongst others.
Post-production and facilities
On 5 September 2011, the Group announced that its post-production subsidiary, Mwnci, had rebranded as Gorilla and expanded to incorporate all of the Group's in-house facilities. Gorilla will now be providing studios, dubbing, grading, graphics and outside broadcast facilities to programme makers and producers in addition to increasing its established range of editing services. Gorilla will be one of the biggest facilities companies outside London and the largest in Wales.
Gorilla acquired Bait Studio Limited during the period and is investing further to create a substantial graphics and VFX business.
Talent management
The joint investment into Harlequin Agency Limited, through a 50% joint venture with Bryn Terfel, will lead to a significant increase in scale of our talent business and we have transferred the trade of our existing Boom Talent to Harlequin in order to maximise cost synergies and growth opportunities.
Segmental Information
As the majority of the Group's facilities will no longer be fully integrated in the future, the Group anticipates making segmental disclosures in its account for the year ended 31 May 2012.
Outlook
The acquisition of Oxford Scientific Films together with organic growth in Network and AFP productions have all contributed to diversifying the Group's customer base and widening its intellectual product base. This will continue to drive further growth in an increasingly global market and provide us with opportunities to increase our gross profit margins.
The Group's pipeline of productions for the 2012 calendar year remains in line with the Board's expectations and shows further diversification of our customer base. This will both mitigate the impact of S4C's reduced programming budgets following the Government's Comprehensive Spending Review and deliver long term-term benefits to the Group. We will continue to drive organic growth and look for further acquisitions that can add value for shareholders in the rapidly-changing media marketplace.
Huw Eurig Davies | Mark Fenwick |
Chief Executive Officer | Finance Director |
28 February 2012 | 28 February 2012 |
