HIT Entertainment PLC Reports Substantial Gains in Profit and Turnover in Preliminary Results for Year Ended July 31, 200129 Oct, 2001 By: Hive News
London-based childrens label HIT Entertainment PLC on Monday announced preliminary results for the fiscal yearended July 31, 2001, reporting that the period saw substantial growth in profit and turnover as well as the acquisition of Lyrick Studios for 189 million Pounds Sterling.
In addition, turnover grew by 153% to 52.3 million Pounds Sterling (2000: 20.7 million Pounds Sterling) with pre-tax profits (pre-exceptional and goodwill) up 53% to 7.5 million Pounds Sterling (2000: 4.9 million Pounds Sterling). EBITDA grew 125% to 16.4 million Pounds Sterling (2000: 7.3 millionPounds Sterling) and underlying earnings per share rose 24% to 4.2p.
The company says it's been management's objective to generate positive cash flow from operations, and this year, even after taking into account investment inprogrammes of 11.7 million Pounds Sterling, the company accomplished this objective and generated cash inflow of 5.6 million Pounds Sterling.Furthermore, HIT's results were achieved through a balanced portfolio, with no single property accounting for more than 35% of revenues, the company said. At the year end, excluding the outstanding $10 million loan note assumed as part of the Lyrick acquisition, net cash stood at 4.3 million Pounds Sterling.
In September the company adopted U.S. accounting guidelines relating to intellectual property. While this change resulted in anincreased amortisation charge of 3.6 million Pounds Sterling, the move, the company says, is evidence of the its commitment to follow best practice and also reflects the significant increase in U.S. activities. The average write downperiod for properties has now been reduced from more than 16 years to 5 years, the company said in a press release.
The company pointed to the particular success for Bob the Builder on television,video, and as a major consumer franchise. With the success of Bob and Barney, HIT boasts two of the most popular pre-school shows currently on air in the U.S. Having secured a broadcast commitment from PBS forAngelina Ballerina, HIT's best-selling children's publishing property, the company believes it will add a third hot property in the U.S. The company has also recently exchanged contracts for an all-rights acquisition of Pingu, a character withsignificant licensing potential, said the company.
To strengthen consumer awareness, HIT brought all of the enlarged company's properties and activities together under the HIT brand.focusing HIT as a major force in quality pre-school entertainment, controlling one of the strongest lineups of highly recognizable, pre-school characters.
A major success for HIT this year has been the significant market share achieved by the video division. In the U.S., HIT now supplies over 12% of the children's video market. Driven by the continued success of Barney, Bob the Builder and Kipper, and by its third-party catalog properties Veggie Tales and Wiggles, HIT anticipates further growth as properties such as Angelina Ballerina are launched over the comingyear. Furthermore, as a result of the infrastructure and relationships inherited from Lyrick, HIT is now able to sell directly to all key retailers in the U.S., giving HIT greater control of its properties. HIT's UK video division, now in its fourth year of operation, has a 20% share of the children's mid-tier market, twice what it was last year, and a close second to the BBC. International video activities continue to show strength with over 75 active licenses worldwide. The potential for home entertainment is enormous, the company believes, and extends to new formats such as DVD.