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Press release from CNW Group

DHX Media reports 1st quarter results

Monday, December 12, 2011

DHX Media reports 1st quarter results07:00 EST Monday, December 12, 2011REVENUE AND EBITDA INCREASE www.dhxmedia.comTSX: DHXHALIFAX, Dec. 12, 2011 /CNW/ - DHX Media Ltd. ("DHX Media" or the "Company") (TSX: DHX), a leading independent international producer, distributor and licensor of mainly children's entertainment content, is pleased to announce its audited financial results for the quarter ended September 30, 2011.Highlights of Q1 2012 Results:(All amounts in Canadian dollars)Revenues of $16.9 million, up 39% from $12.2 million for Q1 2010;Gross margin was $5.1 million, an increase in absolute dollars of 4% compared to $4.9 million for Q1 2011;EBITDA1 of $1.7 million, an increase of 1% from $1.6 million for Q1 2011;  andNet income of $0.3 million, compared to $0.4 million for Q1 2011, a decrease of $0.1 million in absolute dollars, or consistent on an earnings per share basis at $0.01 vs. $0.01 for Q1 2011.1 EBITDA represents income of the Company before amortization, interest and other income (expense), taxes, non-controlling interest, equity income (loss), development expenses, stock-based compensation expense, and other one-time adjustments. (See Q1 2012 MD&A definition of EBITDA for full details).Michael Donovan, Chairman and CEO, DHX Media commented, "We are pleased with the Company's continued quarter over quarter revenue growth.  While this quarter's revenue mix resulted in a lower than usual gross margin, we fully anticipate achieving our target full year gross margin range as stated in the outlook section of our Q1 2012 MD&A."Consolidated Statements of Income and Comprehensive Income Data Three Months EndedThree Months Ended      September 30, 2011September 30, 2010 ($000)($000) (except per share data)(except per share data)Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) Data:1  IFRSIFRSRevenues………………………………………………………………………......16,944 12,227Direct costs and amortization of film and television produced……………….(11,844)(7,310)Gross margin2……………………………..………………………………….......5,100 4,917Selling, general, and administrative……………………………..……………..(3,668)(3,423)Impairment in value of certain investment in film and television programs…(135)(100)Share of loss of associates……………………………………………………...(19)(71)Amortization, finance and other income (expenses), net……….……………(797)(681)Provision for income taxes…………………………………………………........(163)(213)Net income…………………………………………………………………….......318 429Cumulative translation income………………………………………………......867 54Change in fair value of available for sale investments……….………………13 (10)Comprehensive income……………………………………………………….....1,198 473Basic earnings per common share…………………………………………….0.01 0.01Diluted earnings per common share…………………………………………..0.01 0.01Weighted average common shares outstanding (expressed in thousands)    Basic…………………………………………………………………………......61,465 61,627  Diluted……………………………………………………………………….......61,535 62,033RevenuesProprietary production revenues: Proprietary production revenues for Q1 2012 of $4.20 million decreased slightly by 4% compared to $4.37 million for Q1 2011. The overall decrease was made up of a 30% decrease to $0.95 million (Q1 2011-$1.36 million) in DHX Halifax, a 190% increase to $2.64 million for Q1 2012 (Q1 2011-$0.91 million) for DHX Toronto, and a 69% decrease to $0.61 million for DHX Vancouver (Q1 2011-$1.97 million).For Q1 2012, the Company added 33 half-hours to the library. The breakdown for Q1 2012 is 15.0 half-hours - $4.20 million of proprietary film and television program production revenue versus the 29.0 half-hours for Q1 2011, where the programs have been delivered and the license periods have commenced for consolidated entities and 18 half-hours in intellectual property ("IP") rights for third party produced titles (no half-hours in Q1 2011).Producer and service fee revenues: For Q1 2012, the Company earned $6.40 million for producer and service fee revenues, an increase of 164% versus the $2.42 million for Q1 2011. DHX Vancouver earned $2.13 million (Q1 2011-$1.30 million) and DHX Wildbrain earned $4.27 million for Q1 2012 (Q1 2011-$1.12 million).Distribution revenues: For Q1 2012, distribution revenues were down 54% to $1.37 million from $2.95 million for Q1 2011, generally due to timing of license periods for existing contracts on hand. For Q1 2012, the Company recognized revenue on several contracts throughout its existing library and delivered episodes of newer titles. Some of the more significant sales were on the following titles: Dirtgirlworld Season 1, Animal Mechanicals Seasons 1-4, Save Ums! Seasons 1-2, Super Why! Season 1, Kid vs. Kat Seasons 1-2, Bo on the Go! Seasons 1-3, and How to be Indie Seasons 1-2.Music and M&L royalty revenues: For Q1 2012, music, M&L, and royalty revenues increased 15% to $2.51 million (Q1 2011-$2.19 million). Overall, music, M&L, and royalty revenues were up 15% due specifically to increases in Yo Gabba Gabba royalties. Traditional DHX music, M&L, and royalty revenues was up 108% to $0.27 million for Q1 2012 (Q1 2011-$0.13 million). Gross Yo Gabba Gabba revenues were $1.11 million based on timing of actual shows for Yo Gabba Gabba Live! versus Q1 2011 ($1.95 million) and $1.13 million, up considerably over Q1 2011 ($0.13 million), for other M&L. This is generally due to the inclusion of an entire quarter of activity for Q1 2012 versus only 16 days for Q1 2011.New Media Revenues: For Q1 2012, new media revenues increased 1,217% to $2.37 million (Q1 2011-$0.18 million) including $1.90 million for UMIGO (you make it go) (Q1 2011-nil) and $0.47 million, up 161%, (Q1 2011-$0.18 million) for other new media projects.Rental revenues: For Q1 2012, rental revenues were $0.09 million, down 25% from Q1 2011 of $0.12 million, as a result of lower rental revenues of studio and office facilities to third parties of the Company's DHX Halifax Children's Studio and rental of office and equipment of the Company's Toronto, Ontario office.Gross Margin Gross margin for Q1 2012 was $5.10 million, an increase in absolute dollars of 4% compared to $4.92 million for Q1 2011.  The overall margin at 30% of revenue for Q1 2012 was at the low end, but in line with Management's Q1 2012 expectations based on Q1 2012 scheduled revenue mix. Specifically, it is as a result of the higher weighting of producer fees and service revenues scheduled and delivered in the quarter as compared to other higher margin revenue streams and upon the adoption of IFRS, specifically the changes to consolidation, as certain production and service revenues are fully consolidated and shown gross under IFRS that were previously shown as net revenue amounts using the equity method. The resulting effect is an increase to revenue and direct production costs, but no net increase to gross margin dollars. Therefore, when the gross margin is calculated it results in the same gross margin dollar amount but a lower gross margin percentage. The Company expects this to smooth out somewhat over the remainder of Fiscal 2012 and for the gross margin percentage to increase to or near its recent historic averages.SG&A costs SG&A costs for Q1 2012 were up 7% at $3.67 million compared to $3.42 million for Q1 2011. Specifically, SG&A costs (excluding DHX Wildbrain) for DHX Toronto, DHX Vancouver, and DHX Halifax were $2.50 million (Q1 2011-$3.14 million) and SG&A costs for DHX Wildbrain for Q1 2012 were $1.17 million (Q1 2011-$0.28 million, however, was for only 16 days activity). Management was very pleased that SG&A costs for Q1 2012 (excluding DHX Wildbrain) at $2.50 million as these were down 20% (well ahead of Management's expectations of a 5% reduction) as compared to Q1 2011.EBITDAFor Q1 2012, EBITDA was $1.66 million, up $0.02 million or 1% over $1.64 million for Q1 2011. For Q1 2012, this increase was due to the increase in gross margin dollars of $0.18 million and a positive change of $0.09 million for non-cash stock based compensation, offset by an increase in SG&A of $0.25 million.DHX Media's complete financial statements are available at www.dhxmedia.com or on www.sedar.com.About DHX Media Ltd.DHX Media, together with its subsidiary, W!LDBRAIN Entertainment, is a leading international family entertainment rights creation and management company with three-award-winning production facilities, worldwide distribution and a global consumer products business.  DHX Media has produced over 40 original television series and maintains a library of over 2,500 half-hours of animation and live-action programming.  DHX Media has offices in Toronto, Halifax, Vancouver, Los Angeles and London.  DHX Media is listed on the TSX (Toronto Stock Exchange).www.dhxmedia.comDisclaimerThis 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 April 9, 2010 and in the Company's 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.For further information: Enquiries: David A. Regan - EVP, Corporate Development & IR       +1 902-423-0260