TIDMPKP
RNS Number : 1842E
Photon Kathaas Productions Ltd
04 April 2011
Photon Kathaas Productions
Year end results
Chennai, 4 April 2011. Photon Kathaas Productions Ltd. (AIM:
PKP, "PKP"), the South Indian film company, has published its
results for the year to 31 December 2010.
Highlights
-- Admitted to AIM market on 4 November 2010 raising
approximately US$2.4 m.
-- Photon Kathaas Music label launched in December 2010, to
capitalise on the popularity of soundtracks and ring tones amongst
Indian film audiences.
-- Recently released film Nadunisi Naaygal already secured
significant contracted revenues.
-- Four more films in production.
Venkat Somasundaram, PKP Chief Executive said:
"In barely a year we have laid the foundations for a studio-led
film production company - positioned in one of the most vibrant
cinema-going countries in the world - secured a listing of its
shares in London and launched a music label business. Our first
film has also resulted in significant revenues already.
"With our first mover advantage and four films under production,
we are well positioned to become a market leader in the South
Indian film industry and are looking forward to 2011 and 2012 with
increasing confidence."
Enquiries
Photon Kathaas
Michael Rosenberg + 44 (0)20 7938 4026
Venkat Somasundaram, Chief Executive +65 6224 4991
Reshma Ghatala, Head of Marketing +91 44 2820 2988
Seymour Pierce Limited 020 7107 8000
Nandita Sahgal/Tom Sheldon (Corporate
Finance)
Laetitia MacManus (Corporate Broking)
College Hill 020 7457 2020
Adrian Duffield/Jon Davies
About Photon Kathaas Productions
Photon Kathaas Productions is the first film company
specifically created to make and distribute films of different
genres to a primarily South Indian audience, speaking the languages
of Telugu, Tamil, Kannada and Malayalam.
PKP benefits from a special creative relationship with its chief
creative officer, Gautham Vasudev Menon. Gautham is one of the
leading directors and producers in South Indian cinema. He has been
involved in nine films to date, not only as a director but also as
a screenplay writer, an executive producer and a producer. His
earlier films include: Minnale (2000), Rehna He Tera Dile Mein
(2001), Kaaka Kaaka (2003), Gharshana (2004), Vettaiyadu Vellaiyadi
(2006), Pachaikili Muthucharam (2007) and Vaaranam Aayiram
(2008).
A. R. Rahman is PKP's creative adviser. He is an Indian film
composer, record producer, musician and singer and is credited for
totally overhauling the style in which music is made in India. A.
R. Rahman has won two Academy Awards (Slumdog Millionaire), 25
Filmfare Awards, four Indian National Film Awards, a Bafta Award,
two Golden Globes and two Grammy Awards.
CHAIRMAN'S STATEMENT
PKP was incorporated on 17 November 2009, as a Singapore
registered company to produce and co-produce South Indian films
primarily targeting South Indian audiences.
It is the first South Indian film company specifically created
to produce and co-produce South Indian language films with its
shares traded on a major international stock exchange. It produces
films predominantly in the South Indian languages of Telugu, Tamil,
Kannada and Malayalam.
For the majority of 2010, PKP was an unlisted company. It was
admitted to AIM on 4 November 2010, having raised approximately US$
2.4m. The financial results for the year 2010, therefore, reflect
in the main the costs of the listing process with relatively small
revenues arising from the production of films. Administration
expenses have been deliberately kept at a very low level, a policy
which will continue through 2011.
Despite the considerable management time invested in the listing
process, the Company successfully initiated a number of projects
and had a number of films in pre-production prior to the year end.
The full impact of those productions will be realised during the
financial year ending 2011.
The Accounts for the year, show revenues of US$ 200,176, cost of
sales of US$ 166,670 and administrative costs of US$ 337,956,
resulting in a loss before tax of US$ 304,450.
Production Schedule
At the time of listing PKP had five films under production. The
first one of these, "Nadunisi Naaygal", which is a small budget
Tamil film, with total production costs of approximately US$ 0.9m
and directed by Gautham Vasudev Menon, was released on 18 February
2011.
The TV rights for this project were sold prior to release at a
price of approximately $422,000. The other four films ("Veppam",
"Azhagar Samiyin Kuthirai", "Thanga Meengal" and the Hindi remake
of "Vinnay Thaandi Vaarivaya") are in various stages of production,
all are expected to be released in the first half of this financial
year.
Launch of Photon Kathaas Music
During the year, PKP also launched its own music label "Photon
Kathaas Music" ("PKM") primarily to promote its own movies'
soundtracks and associated products (such as ring tones), but also
to acquire and market music properties from other productions. The
creation of PKM is in line with the Company's strategy of capturing
revenue opportunities at multiple points across the entire value
chain associated with film production, from the box office to music
rights and merchandising.
It enables PKP to capitalise on the popularity of soundtracks
and ring tones amongst Indian film audiences and also to have much
greater involvement in the music marketing process which is a key
component in the commercial success of PKP's films.
Industry outlook
In 2009, 60% of the total films produced in India were in the
South Indian languages and about half of the country's cinema
screens were located in South India. The Directors believe that,
even though the South Indian Film Industry was valued at
approximately US$ 374m (INR 17.3bn) in 2009, the South Indian Film
Industry remains fragmented with inefficient processes and less
than effective exploitation of Intellectual Property Rights.
Between 2009 and 2013, the total Indian film industry is
expected to grow at a CAGR of 11.6% to US$ 4.0bn (INR 185bn) by
2013. The Directors believe that growth in the South Indian Film
Industry will follow similar patterns over the same period.
By launching South India's first studio-led corporate model, the
Board believes the Company is well positioned to become a market
leader in the South Indian Film Industry. PKP will not only benefit
from the expected growth in the South Indian Film Industry, but by
creating a brand synonymous with high quality film content it will
act as a "magnet" for consolidating and attracting talent across
the industry, which will lead to the better exploitation of its
films' intellectual property rights.
STRATEGIC OVERVIEW
First mover advantage in a fragmented but large and growing
market
South Indian films play a significant role in the Indian film
industry, accounting for 60% of the total 1,300 films produced in
India in 2009, with South India accounting for around 50% of the
total number of cinema screens in the country.
PKP is the first South Indian film company specifically created
to produce and co-produce South Indian language films to be traded
on a major international stock exchange. It is also the first South
Indian film company to adopt a studio-led corporate model, which
provides the Company with significant first mover advantage which
will enable PKP to become a market leader.
The business aims to use this studio approach to consolidate and
capture the growth of the fragmented South Indian film industry, to
attract industry talent and to create a brand synonymous with high
quality content.
Focus on content production and ownership
By producing a diverse portfolio of movies across different
genres, languages and budgets, PKP will build a proprietary library
of film content based on a diverse portfolio of movies of different
languages, genres and budgets.
As the Group possesses its own content library, PKP will be able
to secure more favorable marketing and distribution arrangements
and to have greater control over exploitation of its Intellectual
Property Rights. This will provide PKP with more constant returns
and improved margins on second window sales i.e. subsequent
revenues after the initial release of a film.
Scope for efficiency gains and intellectual property profit
opportunities
PKP expects to achieve operational efficiencies as a result of
the simultaneous production of bilingual films (and resultant
economies of scale), through entering partnership agreements with
distributors and equipment providers, and by securing talent
agreements with key members of cast and crew and through obtaining
competitive terms from service providers.
The management will seek to exploit the intellectual property
rights of its movie portfolio across a wide range of revenue
streams including mobile ringtones, ring-back tones, wallpapers,
clips, trailers, SMS-based interactivity, pay-per-view, video on
demand and film merchandise. A strategy evidenced with the launch
of PKP's own music label Photon Kathaas Music in December 2010.
OPERATING REVIEW
Films released since the reporting date
Nadunisi Naaygal
This is a small budget Tamil film directed by Gautham Vasudev
Menon and co-produced by PKP together with R. S. Infotainment and
Escape Artistes. It is a psychological thriller film and stars
Sameera Reddy. The film was released on 18 February 2011, at a
total cost of approximately US$ 900,000 and has already recouped a
significant percentage of its cost from sales to date.
TV rights have been sold for approximately US$ 422,000,
international theatrical rights for US$ 60,000 and dubbing rights
(in other Indian languages) for a further US$ 70,000.
Films under production
Veppam
A small budget Tamil film with a total cost of approximately US$
600,000 was directed by Anjana Ali Khan and co-produced by PKP,
together with R. S. Infotainment and Escape Artistes. This film is
now complete, and its release is scheduled for early May 2011.
In advance of the release of Veppam, PKP has invested in a major
promotional campaign which included the launch of an official
trailer, soundtrack and a music video directed by Gautham on 31
December 2010. This was followed up with a preview of the music
video being shown at leading multiplexes in Chennai during the
Tamil holiday week of 14-21 January 2011.
TV rights for Veppam have already been sold for US$ 180,000 and
Telugu dubbing rights for US$ 55,000.
Azhagar Samiyin Kuthurai
A small budget Tamil film directed by Susindran in co-production
with Escape Artistes. The film is nearing completion and is
expected to be released mid-April with a total production cost of
approximately US$ 1.0 m. PKP is a minority investor in this
project.
Thanga Meengal
This is a small budget Tamil film directed by Ram and is a solo
production of PKP with a total production cost of US$ 520,000. The
first schedule of the production is complete with the movie
expected to be ready for release by June/July 2011.
Vinnai Thaandi Vauuvaayaa
Pre-production of this Hindi co-production together with Fox
Star India is complete and three songs have been composed by A. R.
Rahman. Production is to commence from 4 April 2011. This is a
remake in Hindi of a Tamil/Telugu film (directed by Gautham Vasudev
Menon) and is expected to be ready for release in September 2011.
This will be a larger production with total production cost of this
film expected to be approximately US$ 4.0 m.
Future pipeline
A number of other projects are at various stages of discussion
including a Tamil/Telugu bilingual film to be directed by Gautham
Vasudev Menon, a small budget Tamil film by Priva V and a medium
budget Tamil/Telugu bilingual.
Music Label
In December 2010, PKP launched its own music label - Photon
Kathaas Music - to capitalise on the popularity of soundtracks and
ring tones amongst Indian film audiences.
Soundtracks and their associated specially-made videos are an
important ingredient in the marketing and commercial success of
Indian films. Apart from soundtrack sales on CDs, new audio
products such as downloads, caller tunes and ring tones can
generate substantial revenues for producers.
PKP's chief creative officer, the film director Gautham Vasudev
Menon, is noted for his use of high-quality music across his films.
PKP's creative adviser, A.R. Rahman, is the double-Oscar winning
composer of the Slumdog Millionaire soundtrack.
Through PKM, PKP aims to widen the scope of its pioneering
studio model devoted to the commercial and critical success of
South Indian language films and their associated revenue lines.
PKP has acquired the music rights of a Tamil film titled
Kandhein and has tied up with Hungama - the leading mobile content
delivery platform - to deliver its music across new media and
mobile delivery channels.
The soundtrack for Veppam, composed by Joshua Sridhar, is being
distributed by PKM in association with Sony Music. PKP has launched
a campaign to promote both the soundtrack and the movie, including
screening of the trailer and audio promos across theatres, radio
campaigns, and appearances by the cast and musicians at leading
music stores and joint promotion along with Nadunisi Naigal.
OUTLOOK
PKP with its first mover advantage of a studio-led corporate
model is well positioned to become a market leader in the South
Indian Film Industry.
Projects that were in production as at the reporting date are
being completed, and are due for release in the first half of 2011.
The Company has a number of new projects at various stages of
pre-production which should ensure that 2011 be a year of growth
for the Company.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2010
For the period
31 December ended 31 December
Notes 2010 2009
US $ US $
CONTINUING OPERATIONS
Revenue 200,176 -
Cost of sales (166,670) -
Gross profit 33,506 -
Administrative expenses (337,956) (1,981)
Loss before tax 4 (304,450) (1,981)
Income tax expense (226)
------------ -------------------
Loss for the period attributable
to the owners of the parent (304,676) (1,981)
Other comprehensive income
Foreign exchange translation
differences (39,419) -
Total comprehensive loss for
the period attributable to
the owners of the parent (344,095) (1,981)
============ ===================
Loss per share
(a) Basic 5 (0.031) (0.020)
(b) Diluted 5 (0.031) (0.020)
============ ===================
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 DECEMBER 2010
31 December 31 December
Notes 2010 2009
US $ US $
ASSETS
Non-current assets
Property, plant and equipment 2,608 -
Intangible assets 11,655 -
Other non-current assets 22,897 -
------------ ------------
Total non-current assets 37,160 -
------------ ------------
Current assets
Trade receivables 38,512 -
Other current assets 16,350 -
Inventories 473,948 -
Cash and cash equivalents 1,116,254 100
------------ ------------
Total current assets 1,645,064 100
Total Assets 1,682,224 100
============ ============
LIABILITIES AND EQUITY
SHAREHOLDERS' EQUITY
Share capital 2,3 1,345,306 100
Retained earnings (306,657) (1,981)
Foreign exchange reserve (39,419) -
Other reserves 2,632 -
------------ ------------
Total Shareholders' equity 1,001,862 (1,881)
------------ ------------
LIABILITIES
Non-current liabilities
Deferred tax liability 226 -
------------ ------------
226 -
Current liabilities
Trade and other payables 680,136 1,981
------------ ------------
680,136 1,981
Total Liabilities 680,362 1,981
Total Equity and Liabilities 1,682,224 100
============ ============
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2010
Foreign Total
Share Retained exchange Other Shareholders'
capital earnings reserve reserves equity
US $ US $ US $ US $ US $
Date of
incorporation
17 November
2009 - - - - -
Loss for the
period - (1,981) - - (1,981)
Other
comprehensive
income for the
period - - - - -
------------ ---------- --------- --------- --------------
Total
comprehensive
income for
the period - (1,981) - - (1,981)
Initial issue
of share
capital 100 - - - 100
------------ ---------- --------- --------- --------------
Balance at 1
January 2010 100 (1,981) - - (1,881)
------------ ---------- --------- --------- --------------
Loss for the
year - (304,676) - - (304,676)
Other
comprehensive
income for
the year - - (39,419) - (39,419)
Total
comprehensive
income for
the year - (304,676) (39,419) - (344,095)
Issue of share
capital 2,414,509 - - - 2,414,509
Share issue
expenses (1,069,303) - - - (1,069,303)
Share based
payments -
options - - - 2,632 2,632
Balance at 31
December
2010 1,345,306 (306,657) (39,419) 2,632 1,001,862
============ ========== ========= ========= ==============
CONSOLIDATED STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED 31 DECEMBER 2010
For the period
ended
31 December 2010 31 December 2009
US $ US $
Cashflows from operating activities
Loss before tax (304,450) (1,981)
----------------- -----------------
Adjustments for:
Foreign exchange gain (20,673)
Depreciation of property,
plant and equipment 75 -
Amortisation of
intangible assets 1,655 -
Share based payment
expense 2,632 -
Increase in receivables (39,870) -
Increase in inventory (501,160) -
Increase in trade and
other payables 702,450 1,981
Increase in prepayments
and advances (16,350) -
Increase in other
non-current assets (24,468) -
----------------- -----------------
Net cash used in operating activities (200,159) -
Cash flow from investing activities
Purchase of Intangible assets (13,310) -
Purchase of property, plant and
equipment (2,683) -
----------------- -----------------
Net cash used in investing activities (15,993) -
Cash flow from financing activities
Proceeds from issue of capital 2,414,509 100
Share issue expenses (1,069,303) -
Net proceeds from financing activities 1,345,206 100
Net increase in cash and cash
equivalents 1,129,054 100
Cash and cash equivalents at the
beginning of the period 100 -
Effect of foreign exchange rate changes (12,900) -
----------------- -----------------
Cash and cash equivalents at the end
of the period 1,116,254 100
================= =================
NOTES TO THE ACCOUNTS
1. profile and BAsis of preparation
Photon Kathaas Productions Limited ("PKP" or "the Company") is a
Singapore registered company. The Company's registered office is
situated at 31, Cantonment Road, Singapore 089747.
The principal activities of the Company and its subsidiaries
(the "Group") are those relating to the business of production and
co-production of films primarily targeted at the South Indian
audience of varying genre, language and budget.
The financial information for the periods ended 31 December 2010
and 31 December 2009 have been prepared in accordance with
International Financial Reporting Standards (IFRS). The financial
information set out herein is based on the transactions of the
Group which consists of the Company and its subsidiaries, Photon
Kathaas Production Private Limited, India and Photon Kathaas
International Productions Limited, Singapore.
The preliminary announcement for the year ended 31 December 2010
were approved and authorised for issue by the board of directors on
1 April 2011. The financial information set out in this preliminary
announcement does not constitute audited financial statements for
the year ended 31 December 2010 but is derived from those
statements upon which the Company's auditors have given an
unqualified report.
2. Share Capital
PKP which is incorporated in Singapore is not required to have
authorised share capital under the national jurisdiction. There is
also no concept of a par value for the shares. For all matters
submitted to vote in the shareholders meeting, every holder of the
equity shares, as reflected in the records of the company on the
date of the shareholders meeting has one vote in respect of each
share held. All shares are equally eligible to receive dividends
and the repayment of capital in the event of liquidation of
companies.
On 4 November 2010, the shares of the company were listed on the
AIM market of the London Stock Exchange. The listing price was at
US$ 0.49 per share. A total of 4,894,301 shares were offered to
public comprising of 23% of the extended equity base. Out of this,
the promoters also contributed to 207,640 shares constituting 1% of
the extended equity base.
Issued, paid up and allotted Share Capital:
Issued, allotted and fully paid Number of shares US $
Subscribers shares 10,000 100
Allotment of shares on 26 April
2010 1,088,900 10,889
Allotment of shares on 17 September
2010 401,800 4,018
Allotment of shares on 17 September
2010 139,409 1,394
1,640,109 16,401
------------------------------------- ----------------- ----------
Split ratio of 10:1 on 17 September
2010 16,401,090 16,401
Allotment of shares on 4 November
2010 4,894,301 2,398,208
As at 31 December 2010 21,295,391 2,414,609
===================================== ================= ==========
The Company on 2 November 2010 approved an Employee Stock Option
Plan (ESOP). The scheme is monitored by the company based on the
recommendations of the Remuneration Committee. The ESOP pool is 10%
of the enhanced share capital post the listing. Accordingly, the
total number of options under the pool is 2,129,539.
3. SHARE ISSUE EXPENSES
Share issue expenses amounting to US$ 1,069,303 were incurred in
respect of the placing of the ordinary shares of the company on the
Alternative Investment Market (AIM) and include professional
advisors fees and other costs. This includes US$ 74,931 payable
towards commission on the funds raised, against which US$ 35,431 is
settled against issue of ordinary shares at the IPO listing price
of US$ 0.49 per share (72,308 ordinary shares) and the balance US$
39,500 is paid by cash.
4. Loss before tax
Loss before tax for the period has been arrived at after
charging / (crediting):
Group Group
31 December 2010 31 December 2009
US$ US$
Depreciation of property, plant 75 -
and equipment
Amortisation of intangible 1,655 -
assets
Net foreign exchange gains (20,673) -
5. LOSS PER SHARE
(a) Basic
Basic loss per share is calculated by dividing the profit
attributable to equity holders of the company by the weighted
average number of ordinary shares in issue during the year.
31 December 2010 31 December 2009
US$ US$
Loss attributable to equity
holders of the company (304,676) (1,981)
----------------- -----------------
Weighted average number
of ordinary shares in issue 9,907,674 100,000
================= =================
(b) Diluted
Diluted loss earnings per share is calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. The company
has dilutive potential ordinary shares in the form of stock
options.
31 December 2010 31 December 2009
US$ US$
Loss attributable to equity
holders of the company (304,676) (1,981)
----------------- -----------------
Weighted average number
of ordinary shares in issue 9,907,674 100,000
================= =================
The 2009 weighted average number of ordinary shares in issue has
been retrospectively stated for the share split in 2010 (note
2).
The Group has made a loss in the year, so the share options
outstanding are anti-dilutive. As a result, the Group's dilutive
Loss Per Share (LPS) is the same as the basic LPS.
6. EVENTS AFTER THE REPORTING PERIOD DATE
Pursuant to the Company's listing arrangements and as stated in
the Admission Document dated 3 November 2010 a total of 68,071 new
Ordinary Shares were issued on 17 February 2011 by the Company to
Michael Rosenberg, Non-executive Chairman, Ramanujam TST, Chief
Financial Officer and Nathalie Schwarz, Non-executive Director. In
accordance with the terms of their service contracts, Michael
Rosenberg, Ramanujam TST and Nathalie Schwarz have agreed to take
new Ordinary Shares in the Company in lieu of cash against
Director's fees payable to them, as set out in the Admission
Document. These Ordinary Shares have been allotted to them at an
issue price of US$0.49 per share. Following the above issue of
shares, Michael Rosenberg was allotted a total of 24,257 Ordinary
Shares, Ramanujam TST was allotted a total of 34,920 Ordinary
Shares and Nathalie Schwarz was allotted a total of 8,894 Ordinary
Shares. Post the issues, the Company has a total of 21,363,462 (31
December 2010 - 21,295,391) Ordinary Shares in issue.
7. Annual General Meeting ('AGM') and Posting of Annual
Report
Copies of the Annual Report & Accounts together with the
Notice and Notes of the 2010 AGM will be issued to all shareholders
in due course.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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