- Revenue decreased by €29.5[1] million to €136.9 million. This was in line with management's expectations and the guidance given at the interim results
- The decline in revenue was primarily due to the effects of a limited number of previously announced deals, combined with adverse exchange rate movements
- EBITDA[2] was down €18.6 million at €50.8 million. The revenue impact was partially offset by a reduction in marketing, selling and distribution costs
- Operating profit was €12.7 million, a decline of €11.7 million. Lower amortisation costs further limited the impact of the revenue reduction
- Net profit attributable to shareholders was €20.1 million
- Diluted earnings per share were down 20.3 cents to 23.6 cents per share
- Channel subscribers increased 1.8 million to 52.3 million households
- Operating cash flow increased €11.1 million to €37.5 million

Amsterdam, The Netherlands and London, UK - Jetix Europe N.V. (Jetix Europe or the Company, "we", "our") (AMEX: JETIX; Reuters JETIX.AS; Bloomberg: JETIX.NA), one of Europe's leading integrated kids entertainment companies, today announced its financial results for the year ended September 30, 2008. Revenue decreased by €29.5 million to €136.9 million, compared with the year ended September 30, 2007. This was in line with management's expectations, and the guidance given at the interim results. The decline in revenue was primarily due to the effects of a limited number of previously announced deals, combined with an adverse movement in exchange rates. At exchange rates consistent with the prior year, revenue would have been €144.9 million. Operating profit was down €11.7 million, at €12.7 million. The decline in revenue was partially offset by a reduction in marketing, selling and distribution costs, as well as a decrease in amortisation costs. Net profit attributable to shareholders was €20.1 million. Operating cash flow increased by €11.1 million to €37.5 million. Subscribers increased by 1.8 million to 52.3 million at September 30, 2008.

Paul Taylor, Chief Executive Officer, said "Throughout this year we have continued to pursue our core strategy - creating the best kids entertainment content and delivering it whenever and wherever our audience wants to engage with it.

Our new programming team has made a strong start, commissioning two outstanding new co-productions. Their first, Jimmy Two-Shoes, continues Jetix's drive to create strong characters in shows which combine action with humour. The other, Kid vs. Kat, develops this further, and I am confident that both shows will prove popular. We have also increased the level of resources that we are investing in our creative development process, ensuring that our new team is well positioned to uncover the best ideas and grow them into our future hit franchises.

We have continued to strengthen our programming alliance with The Walt Disney Company (Disney). We collaborate closely on our long-term hit property, Power Rangers, and are co-producing its seventeenth season. We also have a new initiative with Disney's programming team to develop live-action series. This initiative has been given increased impetus with Disney's recently announced plans to launch a new channel, Disney XD, in the US. Disney has an impressive track record and we are uniquely placed in being able to access their expertise in this area.

Our programming alliance with Disney also benefits us in other areas. We have continued to air Disney content on a number of our channels, and in the US, Disney has been airing the second series of Pucca, one of the productions Jetix Europe developed.

We have renewed a number of major carriage deals this year, notably in Eastern Europe and with Canalsat in France. Following the Canalsat deal, we decided to restructure our French channel operations in order to take advantage of the economies of scale available from working more closely with Disney. This deal allows Jetix to continue to benefit from a profitable business in France, whilst limiting our risk and ensuring that we benefit from future revenue growth.

We are also realising synergy benefits with Disney in other areas. This year we signed an important deal which secures us access to Disney's new integrated sales structure. Disney-ABC-ESPN Television (DAET) has been created to pull together under one organisation sales of programming, channels and new media. DAET already services Jetix Europe's programme sales and this deal extends the relationship to include our channels and digital video content. I am confident that being presented alongside Disney's broad portfolio of products to their wide range of established contacts will ensure that we are able to maximise our revenue in these areas.

During the year we have also been investing in the development of our online and mobile businesses. We have redesigned our websites to take advantage of the opportunities presented by the latest developments in technology. Our new sites include a range of community features, such as avatars and loyalty rewards, as well as a new video-on-demand player and an improved games offering. The enhanced sites are currently being launched, offering our audience a new destination where they can be entertained and where they can engage and interact with our characters.

We continue to distribute our content through various third-party digital platforms. As the range of different distribution channels continues to increase, we are working to ensure that wherever kids search for entertainment, we are present. This year we have significantly increased our mobile distribution with a multi-territory deal with Orange, and we have recently launched a new service offering some of our content on a download-to-own basis through iTunes in the UK.

As a full service kids entertainment company, creating content and then delivering it through a broad range of different media, from television and online to consumer products, Jetix Europe is well positioned for the future. We will continue to pursue our core strategy, to leverage our relationship with Disney and to deliver the very best kids entertainment possible."

Dene Stratton, Chief Financial Officer, said "As expected, the results we are announcing today have been adversely affected by the impact of a limited number of specific deals, as well as exchange rate movements. However, I am pleased that the results are in line with our guidance, and that our strong focus on cost control is evident in reduced operating costs. We have achieved strong growth in operating cash flow and this year we generated €37.5 million of operating cash flow."


OPERATING REVIEW

Channels and Online

Subscribers increased by 1.8 million to 52.3 million households
New structure in France following multi-year distribution deal with Canalsat
DAET appointed to service the distribution of our channels
Major re-launch of Jetix branded websites
Online content distribution launched on iTunes

Despite the effects on revenue of a limited number of specific deals, the Channels and Online division has continued to expand and develop its operations. We have grown the number of households reached by our channels, enhanced the appeal of our content with further localisation and increased our investment in digital media. We have also agreed to be part of a new sales structure which leverages the strengths of our majority shareholder, Disney, and should ensure we maximise future revenues.

At the end of the period our channels reached 58 countries across Europe and the Middle East. We broadcast 15 separate channel feeds in 19 languages, and our 18 websites offer our audience the opportunity to interact directly with our content.

We have increased the number of subscribers to our television channels by 1.8 million, and we now reach 52.3 million households. We continued to achieve strong growth on our Central and Eastern European (CEE) channel feed, primarily serving Russia and Romania, which increased the number of households reached by over one million. Our Polish channel also performed well, increasing subscribers by 10%. These increases were partially offset by a reduction in the number of households reached by our channel in Turkey, as one of our distribution contracts came to an end. We do not expect this to have a significant financial impact. In France we saw strong subscriber growth of almost 20% as we continue to benefit from the increased carriage we secured following the merger of TPS and Canalsat.

We have continued to localise our presence in Eastern Europe with the addition of a Bulgarian language track to our CEE feed. Jetix is the first dedicated kids channel to broadcast a local language channel in this market, helping us to consolidate our position by securing new distribution and increasing the number of households we reach. In Serbia we have begun the process of localisation with the addition of Serbian subtitles. This has already delivered results through the renewal of our distribution contract with the local satellite television operator, SBB.

We continue to realise synergies with Disney. In France we secured a multi-year distribution agreement with Canalsat and, following this agreement, we have restructured our operations. We have licensed the operation of the Jetix channel in France to the local Disney channel operations, allowing us to take further advantage of the economies of scale available from working closely with Disney. This new structure ensures that Jetix Europe will continue to benefit from a profitable business in France.

Since the period end we have secured a multi-year distribution agreement in Eastern Europe with UPC to continue carriage of our channels on their platforms in five markets. UPC is one of our largest distributors in the region, and this deal covers Poland, Romania, Hungary, Slovakia and the Czech Republic. In Eastern Europe we have also renewed our distribution deal with NTV, our second largest distribution partner in Russia. In the UK we have recently exercised our option with Sky to extend carriage by two years to 2012. This secures our long-term distribution in one of Europe's key pay television markets.

In June we announced a fundamental change to the way we sell our channels and digital video content. We have signed a deal with Disney for Disney-ABC-ESPN Television (DAET) to service the distribution of our channels. This means that, since July 2008, Jetix Europe's channels and digital content have been presented to customers alongside the portfolio of Disney and ESPN channels, films and television programmes for which DAET is currently responsible. DAET already services Jetix Europe's programme distribution business. This new deal will allow Jetix Europe to benefit from DAET's distribution expertise and strong market presence across our key territories.

Advertising revenue grew strongly in Eastern Europe. In Russia, we more than doubled advertising revenue as we increased the scale of our business. Our Poland channel feed grew advertising revenue by 30%, whilst our Hungary, Czech, Slovakia channel feed achieved growth of more than 25%. In our more developed markets advertising growth was more constrained. Healthy growth in Italy, Spain and Scandinavia was more than offset by declines in The Netherlands and France. The reported advertising revenue in France was lower than the prior year as we no longer recognise advertising revenue following our restructuring[3]. In the UK, local currency advertising growth was negated by the decline in the UK pound against our reporting currency, the euro.

We are currently re-launching our Jetix branded websites. The sites have been redesigned to take advantage of the latest developments in technology. We have introduced a range of new features, including personalised avatars, new navigation tools, an enhanced loyalty scheme and improved interactive applications. We have also focused on improving our games offering, one of our most popular online activities, and we have invested in our video-on-demand player. This investment has been in both the infrastructure, with new underlying technology, and in content, where we have begun commissioning several series of shorts primarily for online distribution. Some of these series are based on our main television content, whilst others develop new characters, which if successful could inspire future television properties.

We are also distributing our content through online and mobile distribution platforms, allowing us to reach our audience whenever and wherever they would like to engage with our characters. Online video distribution continues to expand and we offer our content through a range of different providers covering a number of business models, including transactional video-on-demand, subscription services and download-to-own.

We have recently launched a range of our most popular series for sale on iTunes in the UK, and we have other video-on-demand deals in six countries. Our channels or content are also available on mobile phones, either through an aggregator or from a network operator. At present we have services reaching eight countries, including a multi-territory deal with Orange which has led the expansion of our mobile offering into Eastern Europe.

Programme Distribution

Strong sales from Power Rangers and Yin Yang Yo!
Second series of Pucca delivered to US alliance partners
Five new series commissioned or acquired
165 new episodes delivered
Programme pipeline of 95 episodes

The majority of our programme distribution revenue comes from programme sales to third-party free-to-air broadcasters, which is serviced by DAET. These sales are predominantly denominated in US dollars and so have been impacted by the fall in the US dollar against the euro through the period. Revenue has also been affected by a reduced volume of episodes supplied outside of Europe and a production commissioned in the prior year from our Israel operation which was not repeated this year. However, the success of the original Israeli series has led to a new series being commissioned, which we will be delivering next year.

Our third-party programme sales were led by Power Rangers, which again sold in most major markets. Yin Yang Yo!, the latest co-production from the Jetix programming alliance with Disney also sold well, as did our recent acquisitions Captain Flamingo and Iggy Arbuckle. These shows continued to deliver strong audiences, ranking as one of the top two shows with kids in their timeslots in the major European markets in which they aired.

We have supplied a second series of Pucca to Disney ABC Television Group, our Jetix alliance partner in the US. The show airs in the Jetix programming block on Toon Disney and has continued to perform well, ranking as one of their top ten series. As we only acquire US rights on an opportunistic basis, the volume of programming we have supplied is lower than in the previous year, and we do not expect further sales in the near future.

During the year we have secured five new series. Through our global programming alliance with Disney we have commissioned a new series of Power Rangers. This will be the seventeenth season in Europe, highlighting the on-going attractiveness of this property. We have commissioned two new co-productions, Jimmy Two-Shoes and Kid vs Kat.

Jimmy Two-Shoes is the first commission from our new programming team and it is being produced by Breakthrough Animation in Canada. It follows the adventures of fourteen-year-old Jimmy after he falls into the weird world of Miseryville. We are pleased that in the recent Mipcom Junior television programming market Jimmy Two-Shoes was the most viewed show by potential buyers. This is the highest ever ranking for a new Jetix show and was achieved against a field of more than 1,000 other titles. Kid vs. Kat will be produced by Studio B, which also produced Pucca for us. It follows the exaggerated conflicts between a malevolent cat with extra-terrestrial links and the beleaguered ten-year-old boy to whom it has taken a demented dislike.

We have also acquired two new series from Cookie Jar Entertainment, Magi-Nation and World of Quest. Magi-Nation is a new action-adventure series set in an ancient magical world and World of Quest is a fantasy action-comedy following Prince Nestor on his quest against the evil Lord Spite.

During the year we have taken delivery of 165 new episodes of programming. This includes episodes from each of our major sources of programming. We have received new episodes from series co-produced through our programming alliance with Disney, Power Rangers and Yin Yang Yo!; new episodes from Jetix Europe co-productions Pucca, Combo Ninos and Kid vs. Kat, and new content from our acquired series Captain Flamingo, Urban Vermin, Magi-Nation and World of Quest.

At the end of the period we had 95 episodes in production.