BKN International A.G.
AIM : BKN

May 12, 2005 02:02 ET

BKN International A.G.-Interim Results for the six months to 31 March 2005

LONDON, UNITED KINGDOM--(CCNMatthews - May 12, 2005) - BKN International A.G. ("BKN" or "the Company"), a global animation company engaged in the distribution and marketing of animated children's television programmes and related consumer products, today reports its Interim Results for the six months ended 31 March 2005.

Highlights

- Turnover increased to EUR 5.543 million, an increase of 101% from the EUR 2.759 million in the first half of fiscal 2004

- Television revenues increased 143% to EUR 3.778 million from EUR 1.555 million and consumer brands increased 47% to EUR 1.765 million from EUR 1.204 million in the first half of fiscal 2004. The ratio between television and consumer brands sales is 68% to 32% and BKN expects a 60/40 balance for the full year

- Profit before tax increased 248% to EUR 1.024 million from EUR 294,000 in the first half of fiscal 2004

- Net income increased 250% to EUR 1.024 million from EUR 292,000 in the first half of fiscal 2004

- Earnings per share increased 133% to EUR 0.07 per share from EUR 0.03 per share in the first half of fiscal 2004

- EBITDA increased to EUR 2.980 million or 82% from EUR 1.641 million in the first half of fiscal 2004

- Cash generated from operations increased to EUR 2.615 million or 322% from EUR 620,000 in the first half of fiscal 2004

Commenting on the Results, Allen Bohbot, Chairman and Chief Executive Officer of BKN International AG, said: "The Company now has five major new properties in various phases of development and production including Legend of the Dragon (autumn 2005), Kong - King of Atlantis and Kong - the animated series (autumn 2005), Ali Baba and the Forty Thieves - the Lost Scimitar of Arabia (spring 2006), Shanghai Tiger (fall 2006) and Triple Threat from Outer Space (fall 2006).

"Major customers now include prestigious names such as Nickelodeon (Latin America), BBC (United Kingdom), Warner Brothers Home Entertainment (worldwide ex. US), Super RTL (Germany), RTVE (Spain), Cartoon Network (United Kingdom), Jetix (United States), ToonMax Media and Entertainment (China), Asian World Enterprises (worldwide) and GoodTimes Entertainment (United States).

"The visibility over the next 18-24 months is good and the outlook for BKN is strong."



For further information:

BKN International AG

Allen Bohbot, Chairman & CEO Tel: +44 (0) 20 7269 8680
allen.bohbot@bknkids.com http://www.bknkids.com


Panmure Gordon & Co.

Richard Swindells, Corporate Finance Tel: +44 (0) 20 7459 3600
richard.swindells@durlacher.com http://www.durlacher.com


Media enquiries:
Abchurch

Henry Harrison-Topham / Heather Salmond Tel: +44 (0) 20 7398 7700
henry.ht@abchurch-group.com http://www.abchurch-group.com


Chairman and Chief Executive Officer's Statement

We are pleased to report our financial results for the half-year ended 31 March 2005 including a presentation on the current state of trading and outlook.

BKN International AG ("BKN" or the "Company") was founded on 15 October 1999 and registered in Cologne on 26 November 1999. BKN is engaged in the distribution and marketing of animated children's television programs and marketing of related consumer products (licensing and merchandising) in all forms. The Company is a global animation company that has been listed on the Deutsche Boerse of the Frankfurt Stock Exchange since March 2000 and the AIM segment of the London Stock Exchange since December 2003.

The group consists of BKN International AG, the parent company in Germany, with an operating trading company in the U.K. entitled BKN New Media Ltd, one principal trading company in the U.S. entitled BKN New Media, Inc and an operating trading company in Singapore entitled BKN New Media Pte Ltd.

The accompanying unaudited financial statements to this Consolidated Report of the Management Board, presented in accordance with U.S. generally accepted accounting principles, reflect the actual results of operations, financial position and cash flows of the Company for the six month period ended 31 March, 2005 and the corresponding periods as shown. The Company intends to adopt International Accounting Standards beginning with the fiscal 2005 full year audit.

The Interim Announcement, which has been neither audited nor reviewed by the auditors, has been prepared on the basis of the accounting policies set out in the Annual Report and Accounts for the 12 month period ended 30 September 2004 which contained an unqualified auditor's report.

State of Trading and Outlook

New Film Projects

- Peter Jackson, Director of the Lord of the Rings trilogy, has announced that his next project will be a remake of the famous King Kong, produced by Universal Studios ("Universal"). The release date is expected to be in December 2005 and it is anticipated that it will be a major Christmas feature. BKN owns an animated version of King Kong and has reached deals with Warner Brothers Home Entertainment for worldwide distribution except the United States and with GoodTimes Entertainment exclusively for the United States to distribute the Kong-King of Atlantis feature on DVD effective Autumn 2005, thereby taking advantage of the "buzz" created by the Universal theatrical feature.

- Legend of the Dragon has been well received by the market and sales in the 2004 financial year achieved approximately EUR 3.5 million, ahead of the budgeted EUR 2.6 million. Sales to date have equalled total production costs and, therefore, the property has generated revenue to cover the production costs within 12 months of delivery. BKN owns all intellectual property rights, globally and in perpetuity, and management is excited about the upcoming market launch on television, DVD and in the shops in late 2005/early 2006.

- The Company has commenced production on a feature film entitled Ali Baba and the Forty Thieves - The Lost Scimitar of Arabia. This animated direct-to-DVD film is scheduled to be completed this year with the marketing launch planned for Spring 2006.

- Shanghai Tiger was recently launched at the MIP Convention in Cannes. The Company aims to launch this properly when it is completed in September 2006.

- Triple Threat from Outer Space will be unveiled at the New York Licensing Show in June 2005. It is planned to be completed and launched in September 2006.

Asian and Chinese Strategy

- The Company believes that it has a real opportunity to expand its business operations in Asia and is of the opinion that the strength and quality of its titles, coupled with its management expertise, will allow it to create meaningful revenues and new properties for global distribution. The Company further believes that the Asian markets have been underserved by large Western media companies and wants to be at the forefront of what it believes will be an industry expansion in the near future.

- The Company has chosen Singapore as its hub because it believes it is likely to provide effective copyright protection and because it has a pro-Western approach. The Company believes that Asia and, within 12-24 months, mainland China will be major markets for its products. The recently announced memorandum of understanding with ToonMax TV, the leading children's TV network in China should add a great deal of value to the Company over the next 5 to 10 years. The Company intends to produce new series and to distribute the existing catalogue series in China, as well as to have an option to acquire an equity stake in ToonMax TV at an appropriate time.

- Legend of the Dragon has already been licensed in such key markets as India, Singapore, Indonesia, Malaysia and China and the Directors anticipate signing further licence agreements in the near future.

- Recently the Company entered into a co-production contract with Dream Forest Animation Pte Ltd, a Singapore based production company, to provide production services on the Shanghai Tiger property. This will be the first production of the Company that will take place, in part, in Singapore

Key Customers

The Company works internationally with major broadcasters, video distributors and third party licensees. Some examples include:



Customer Name Medium Property


Nickelodeon Latin America Television Legend of the Dragon

BBC United Kingdom Television Legend of the
Dragon, UBOS

Warner Bros Home Video Kong: King of
Entertainment Worldwide Atlantis

Super RTL Germany Television Legend of the Dragon
Kong: King of
Atlantis
Ali Baba and the
Forty Thieves

GoodTimes Entertainment U.S Video Kong: King of
Atlantis

RTVE Spain Television Legend of the Dragon
UBOS

Planeta Spain PC games and Legend of the Dragon
mobile phone
games

Asian World Enterprises Master Toy Legend of the Dragon
Worldwide

Hasbro Inc. Worldwide Video Now Legend of the Dragon
portable
video player

Cartoon Network U.K. Television Kong: The Animated
Series
Kong: King of
Atlantis

Jetix USA Television Kong: The Animated
Series Kong: King
of Atlantis


Key Properties

The Company has many diversified properties, including a substantial back catalogue of over 50 titles and more than 1,500 episodes. As such, it is not dependent on any single property. Examples of the most recent titles and those in production or to be produced include:



- Legend of the Dragon Fall 2005 marketing launch

- Kong: King of Atlantis Fall 2005 marketing launch

- Ali Baba and the Forty Thieves Spring 2006 marketing launch

- Shanghai Tiger Fall 2006 marketing launch

- Triple Threat from Outer Space Fall 2006 marketing launch


Outlook

- Our balance sheet is strong, costs are well under control, the intellectual property asset is steady and management is optimistic that fiscal 2005 and 2006 will continue to yield positive operating financial results.

- The Company is experiencing a period of growth and profitability. The markets are steadily improving and the Company's products have been well received.



Allen Bohbot
Chairman & CEO
BKN International AG
12 May 2005



Consolidated Balance Sheet
(in thousands of EUR)
As at As at
31 March 2005 30 Sept 2004
Assets:
Current Assets:
Cash and cash equivalents 474 2,220
Accounts receivable, trade 2,265 1,870
Receivable from related party 0 -
Work in progress 0 -
Taxes receivable 43 15
Other current assets 1,744 1,722
Deferred charges 316 342
--------------------------------------------------------------------
Total Current Assets 4,842 6,169
Property, equipment and leasehold
improvements, net 72 70
Programming rights 18,656 16,056
Other intangible assets, net 0 -
Goodwill, net 0 -
Non current deferred tax asset 0 -
Other non current assets 217 218
--------------------------------------------------------------------
--------------------------------------------------------------------
Total Assets 23,787 22,513
--------------------------------------------------------------------
--------------------------------------------------------------------

Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable 808 201
Accrued expenses 700 1,012
Bank overdraft and other loans 0 -
Taxes payable 0 -
Other current liabilities 0 -
Advanced payments 0 -
--------------------------------------------------------------------
Total Current Liabilities 1,508 1,213

Long Term Payables 5,022 5,025
--------------------------------------------------------------------
--------------------------------------------------------------------

Total Long Term Liabilities 5,022 5,025

Stockholders' Equity:

Common Stock (no par value) 15,012 15,012
Additional paid-in capital 70,102 70,418
Retained earnings (69,006) (70,696)
Net income for the period 1,024 1,690
Other comprehensive income/(loss) 125 121
--------------------------------------------------------------------
--------------------------------------------------------------------

Total Stockholders' Equity 17,257 16,275
--------------------------------------------------------------------
--------------------------------------------------------------------

Total Liabilities and Stockholders' Equity 23,787 22,513
--------------------------------------------------------------------
--------------------------------------------------------------------



Consolidated Statements of Operations
(in thousands of EUR)

Six months Six months
to 31 Mar 2005 to 31 Mar 2004
--------------------------------------------------------------------
--------------------------------------------------------------------
Revenues
Television - Catalogue 3,778 1,555
Consumer Brands - Catalogue 1,765 1,204
--------------------------------------------------------------------
Total Revenues 5,543 2,759

Expenses
Depreciation amortisation and Goodwill 1,714 1,280
Producer fees and other direct operating
costs 65 32
Salaries and employee benefits 812 343
General and administrative 2,047 743
Less capitalised costs (361) -
--------------------------------------------------------------------
Total Expenses 4,277 2,398

Operating Income (Loss) 1,266 361

Other Income / (Expenses)
Interest income / (costs) (120) (123)
Miscellaneous / Extraordinary income /
(expense) (122) 56
--------------------------------------------------------------------

Income / (Loss) before provision for income
tax 1,024 294

Provision for income tax - 2

--------------------------------------------------------------------
--------------------------------------------------------------------
Net income / (Loss) 1,024 292
--------------------------------------------------------------------
--------------------------------------------------------------------

Net Income per share (Basic) 0.07 0.03

Weighted average shares in issue
(Basic) 15,012,487 11,693,369

Number of employees 24 16



Consolidated Statements of Cash Flows
(in thousands of EUR)

Six months to Six months to
31 Mar 2005 31 Mar 2004

---------------------------------------------------------------------
---------------------------------------------------------------------

Net Income 1,024 292
Depreciation and amortisation 1,714 1,280
Accounts receivable (395) 140
Work in Progress 0 100
Tax receivable (28) 8
Other current assets (22) (139)
Other non-current assets 1 59
Accounts payable 607 (739)
Accrued expenses and reserves (312) (410)
Taxes payable 0 29
Deferred charges 26 0
Long term payables operating activities 0 0
Other current liabilities 0 0
---------------------------------------------------------------------
Net cash generated by operating activities 2,615 620

Cash flow from investing activities
Programming rights (4,306) (3,931)
Property, equipment and leasehold improvement (16) (42)
Other intangible assets 0 (48)
---------------------------------------------------------------------
---------------------------------------------------------------------
Net cash used in investing activities (4,322) (4,021)

Cash flow from financing activities
Proceeds from issuance of share capital (46) 5,279
Short term debt 0 1,070
Long term payable financing activity (3) (1,679)
Comprehensive income/(loss) 10 120
---------------------------------------------------------------------
---------------------------------------------------------------------
Net cash provided by financing activities (39) 4,790
---------------------------------------------------------------------
---------------------------------------------------------------------

Net increase/(decrease) in cash and cash
equivalents (1,746) 1,389
Cash and cash equivalents at beginning
of period 2,220 26
---------------------------------------------------------------------
---------------------------------------------------------------------

Cash and cash equivalents at end of period 474 1,415
---------------------------------------------------------------------
---------------------------------------------------------------------


Copies of the interim financial statement have been posted at the Company's website (www.bknkids.com) and at the website of the Deutsche Boerse. Further copies are available from the Company's Registered Office in Germany at Im Mediapark 8 50670 Koln Germany and in the United Kingdom at BKN New Media Ltd 77 Kingsway London WC2B 6SR.

Contact Information