[August 10, 2017] |
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Kew Media Group Releases Financial Results for Second Quarter of 2017
Kew Media Group Inc. ("Kew Media" or the "Company") (TSX:KEW and KEW.WT)
today released its financial results for the three and six months ended
June 30, 2017 ("Q2 2017"). Kew Media's unaudited condensed interim
financial statements along with its Management's Discussion and Analysis
for the three and six-month periods ended June 30, 2017 are available on
the Company's website at http://www.kewmedia.com/financialinfo.php
and under the Company's profile at www.sedar.com.
Kew Media was created as a special purpose acquisition corporation
("SPAC") to acquire assets and operations in the entertainment
production and distribution business. Pursuant to its Qualifying
Acquisition ("QA"), Kew Media acquired all of the issued and outstanding
shares of each of Content Media Corporation ("CMC"), Architect Films
Inc., Bristow Global Media Inc., Frantic Films Corporation, Media
Headquarters Film & Television Inc. and Our House Media Inc. for total
consideration of approximately $121.8 million, including the assumption
of $57.0 million of borrowings.
Q2 2017 Highlights
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Revenue:
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$41.5 million
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Gross Profit:
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$9.5 million
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Adjusted EBITDA1:
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$0.5 million
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Net Loss:
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$1.1 million, or $0.10 per share
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Segmented Results:
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Production Distribution
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Revenue:
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$35.0 million $6.5 million
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Gross Profit:
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$7.6 million $1.9 million
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Operating Profit:
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$3.0 million ($0.1) million
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Overall, whilst the Production division has had a positive quarter, Kew
Media's Q2 2017 results reflect the seasonal nature of the Company's
business, under which the vast majority of revenue and profitability in
the Distribution segment are generated in the first and fourth quarters.
The Company believes this seasonality is typical of many production and
distribution companies and not particular to Kew Media. This seasonality
was disclosed in our 29 June 2017 news release and the trading results
have met our internal expectations.
Q2 2017 Production revenue of $35.0 million was derived from Kew Media's
broad portfolio of production companies and included contributions from
the following titles:
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Dance Moms for A&E in the U.S.
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Gladiators for Nelonen in Finland
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Home to Win for Shaw in Canada
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Canada: The Story of Us for CBC in Canada
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Hockey Wives for W Network in Canada
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Baroness von Sketch for CBC in Canada
Distribution revenue of $6.5 million in Q2 2017 was derived from Kew's
broad portfolio of films and television shows for distribution including
the following titles:
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19-2
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Heartland
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Line of Duty
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Life at These Speeds
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The Truth is in the Stars
Q2 2017 gross profit was $7.6 million from Production and $1.9 million
from Distribution, with segment gross margin percentages of 21.8% and
29.5% respectively. These margins were consistent with management's
expectations, given the broad portfolio in its Production segment and
diverse products in its Distribution segment.
Q2 2017 Adjusted EBITDA1 after non-controlling interests was
$0.5 million, and the net loss in the quarter was $1.1 million, or $0.10
per share.
The Company noted that its six-month financial results include the
results from operations of the companies acquired pursuant to its QA
from March 20, 2017, the date of completion of the QA, being a period of
three months and eleven days only. Further the Company has noted in its
MD&A a range of timing and seasonality issues related to its March and
June Interim Financial Statements. Readers of the Interim Financial
Statements and the MD&A are therefore cautioned about extrapolating the
results for the March 31 quarterly period, and or the June 30 quarterly
or six-month results, into annual expectations.
In order to give investors a better understanding of the Company's
performance inclusive of the assets acquired in the QA, the Company also
includes below unaudited pro forma results ("Pro Forma YTD Q2 2017")
that include the pro-forma results of operations of these assets from 1
January 2017, and therefore for the six-month period ended June 30,
2017. These accumulated and constructed results are based in part on a
news release dated 29 June 2017, which disclosed unaudited pro-forma
results for the first quarter of 2017 and the disclosures below should
be read in conjunction with that release.
Pro Forma YTD Q2 2017 Highlights
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Revenue:
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$122.6 million
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Gross Profit:
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$29.0 million
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Adjusted EBITDA1:
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$10.6 million
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Net Loss:
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$5.8 million
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Segmented Results:
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Production
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Distribution
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Revenue:
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$82.4 million
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$40.2 million
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Gross Profit:
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$18.4 million
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$10.6 million
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Operating Profit:
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$8.1 million
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$7.3 million
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"In the second quarter, management was focused on setting up the company
for future success," said Steven Silver, Chief Executive Officer of Kew
Media. "Internally, this meant the establishment of business practices
and controls that enable us to monitor and maximize returns from our new
assets. Externally, we are continuing to assess multiple opportunities
to acquire further media assets that will generate accretive returns.
Results in the first half of the year are consistent with the execution
of the investment strategy outlined in our prospectus dated February 10,
2017, and we continue to expect pro forma 2017 Adjusted EBITDA1
of approximately $19.1 million on the same basis as disclosed in the
prospectus."
Kew Media's balance sheet as at June 30, 2017 continued to be strong.
The Company had approximately $28.8 million in cash, with approximately
$21.5 million of available borrowings and shareholders' equity of $90.8
million. Subsequent to quarter-end, the Company closed a new five-year,
US$100 million credit facility, with an additional US$25 million
accordion feature. Accordingly, Kew Media is well positioned to
strategically add to its asset base and continues to assess a steady
pipeline of acquisition opportunities.
Conference Call A conference call for analysts and
interested listeners will be held Friday, August 11 at 10:00 a.m. (ET).
The dial-in numbers for participants are 416 981 9011 (from within
Canada), 800 749 1342 (from within North America), and 0800 496 0823
(other international callers). In the event of difficulty in accessing
the conference call with the above numbers, the backup numbers are 647
722 6867 in Canada and +44 203 300 0080 in the UK.
A replay of the call will be available until 11:59 pm ET, on September
10, 2017. To access the replay, call (416) 626 4100 or (800) 558 5253,
and enter reservation number 21856800. A transcript of the call will be
posted on the Company's website.
Forward-Looking Statements This news release may include
forward-looking statements. All such statements constitute forward
looking information within the meaning of securities law and are made
pursuant to the "safe harbour" provisions of applicable securities laws.
Forward-looking statements may include, but are not limited to,
statements about anticipated future events or results including comments
with respect to the Company's objectives and priorities for 2017 and
beyond, and strategies or further actions with respect to the Company,
its business operations, financial performance and condition.
Forward-looking statements are statements that are predictive in nature,
depend upon or refer to future events or conditions and are identified
by words such as "will", "expects", "anticipates", "intends", "plans",
"believes", "estimates" or similar expressions concerning matters that
are not historical facts. Such statements are based on current
expectations of the Company's management and inherently involve numerous
risks and uncertainties, known and unknown, including economic factors.
The forward-looking information contained in this news release is
presented for the purpose of assisting readers in understanding the
Company's business and strategic priorities and objectives as at the
periods indicated and may not be appropriate for other purposes. A
number of risks, uncertainties and other factors may cause actual
results to differ materially from the forward-looking statements
contained in this news release, including, among other factors, those
referenced in the section entitled "Risk Factors" in the Company's
annual information form for the year ended December 31, 2016, a copy of
which is available on the SEDAR website at www.sedar.com
under the Company's profile. Forward-looking statements contained in
this news release are not guarantees of future performance and, while
forward-looking statements are based on certain assumptions that the
Company considers reasonable, actual events and results could differ
materially from those expressed or implied by forward-looking statements
made by the Company. Readers are cautioned to consider these and other
factors carefully when making decisions with respect to the Company and
not place undue reliance on forward-looking statements. Circumstances
affecting the Company may change rapidly. Except as may be expressly
required by applicable law, Kew Media does not undertake any obligation
to update publicly or revise any such forward-looking statements,
whether as a result of new information, future events or otherwise.
Non-IFRS Measures This news release contains references
to certain measures that do not have a standardized meaning under
International Financial Reporting Standards ("IFRS") as prescribed by
the International Accounting Standards Board and are therefore unlikely
to be comparable to similar measures presented by other companies.
Rather, these measures are provided as additional information to
complement IFRS measures by providing a further understanding of
operations from management's perspective. Accordingly, non-IFRS measures
should not be considered in isolation nor as a substitute for analysis
of financial information reported under IFRS. The Company believes that
non-IFRS measures, specifically EBITDA and Adjusted EBITDA, are
frequently used by securities analysts, investors and other interested
parties as measures of financial performance and to provide supplemental
measures of operating performance and thus highlight trends that may not
otherwise be apparent when relying solely on IFRS financial measures.
Please see the Company's management's discussion and analysis for the
three and six months ended June 30, 2017 for a detailed description of
these measures and a reconciliation of these measures to the nearest
IFRS measure.
Accounting Constructs and Unaudited Status of Financial Information The
financial information included in this release related to the unaudited
pro-forma results for the three months ended 31 March, 2017, and
therefore incorporated into the unaudited pro-forma results for the six
months ended 30 June, 2017, are not required for any regulatory purpose
and are provided for additional shareholder guidance only. The
financial information for the three months ended 31 March, 2017, is
neither audited or IFRS audit reviewed. Where possible the
information has been constructed by management from available audited or
audit reviewed financial statements. Where no audited or audit
reviewed information has been available, additional management
accounting information has been utilised to construct the financial
information.
About Kew Media Group Inc. Kew Media is an independent
content company which recently acquired eleven best-in-class production
and distribution companies. With primary offices in London, Los Angeles,
New York and Toronto, the Kew Media companies develop, produce and
distribute multi-platform, mass-audience, returnable content for the
global market, across the following genres: factual, reality, lifestyle,
drama, comedy, documentary, variety and branded content. Kew Media
currently owns over 6,500 hours of premium content sold in over 150
countries on almost every available viewing platform. For more
information, please visit the Company's website at www.kewmedia.com.
1 Adjusted EBITDA is EBITDA excluding certain items to better
analyze trends in performance. These adjustments result in a truer
economic representation on a comparative basis. Adjusted EBITDA is
calculated as EBITDA excluding transaction costs, loss on change in fair
value of financial liabilities and the proportion of Adjusted EBITDA
attributable to non-controlling interests. See "Non-IFRS Measures" and
"Forward-Looking Statements" below in this press release.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170810006196/en/
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