Firm unveils Phillips? replacement along with board changes, new bank facilities and trading update.Entertainment Rights has announced Deborah Dugan has been appointed Chief Executive Officer, effective immediately. Dugan has served as President and CEO of Entertainment Rights North America since April 2007, prior to which she was president of Disney Publishing Worldwide, the world’s largest publisher of children’s books and magazines.
Dugan succeeds Nick Phillips who, as CEO, initiated a thorough review of the company’s operations and who, as announced last week, left the company on Friday.
Jane Smith, chief creative and commercial director has announced her departure from the Board with effect from today. Smith has been with Entertainment Rights since December 1999 and has played a key role in building the brand and content portfolio, including Postman Pat and Guess with Jess, to more than 3,600 hours.
The company has also announced that Paul Ashworth, ACA, Group Financial Controller, becomes Company Secretary in succession to Irvin Fishman with effect from today.
The company has also announced that it has agreed with HBOS, its principal lending bank, additional short term facilities of £13 million to cover potential cash flow shortfalls during the period to 28 February 2009. These facilities replace the short term increase in working capital facilities of up to £1 million announced at the time of the interim accounts on 31 October 2008. The Board continues to work closely with its bank towards securing new, longer term, funding arrangements to support the group past 28 February 2009.
The firm’s trading update said it remains too early to ascertain the likely pattern of Christmas trading, although initial indications are that shipments of goods will be later than anticipated and sales will be lower than expected.
However, work on mitigating actions including a cost reduction plan has advanced rapidly and it is intended that the company’s group payroll, which stood at 150 employees at the time of the interim announcement on 31 October, will be reduced to around 100 employees by 31 December 2008. The target of £5m annualised cost savings announced in the interim accounts will therefore have been achieved by the year end.
Following the news that Woolworths and Entertainment UK resolved to file petitions for administration in the High Court, the Board has reported that Entertainment UK was one of the largest customers of the company’s UK Home Entertainment division, and, at the present time, the Board estimates that despite the fact that the credit exposure has been actively managed over recent months it still owes the Company approximately £800,000.
The directors are actively seeking clarification as to the recoverability of this sum and the effect of the potential loss to the Company. Should the sum not be recoverable then the cash impact would be felt in spring 2009, and would be mitigated by savings in royalty payments to rights owners of £300,000 leaving a net exposure of approximately £500,000. The effect of Entertainment UK’s administration on trading for the remainder of the financial period is uncertain, although the Company is actively assisting other retailers who wish to replace the business which would otherwise be lost.
Rod Bransgrove, Chairman, said: “Our strengthened financial position, streamlined organisation and new management are all vital steps forward in restructuring the Company.
“Deborah Dugan is a highly distinguished Chief Executive whose industry knowledge and contacts will prove extremely effective in taking the Company forward. Deborah’s extensive global experience and her deep knowledge of the US entertainment business, our largest geographical market, position us well for growth.
“Together with our recently appointed Chief Financial Officer, Edward Knighton, I am confident that we now have the right executive team in place to take us to the next level.”
Nick Phillips, outgoing CEO, said: “I have completed the first stage of a restructuring plan which has involved an extension of banking facilities and a significant reduction in costs. I recognise that specific industry and turnaround skills will be required for the next phase of the recovery and am very pleased to hand over to Deborah Dugan as CEO.”
Deborah Dugan, CEO, added: “Despite a difficult global economy, I am confident about our prospects and the global potential of our portfolio. With some of the world’s most popular brands and new business partnerships in the pipeline, we are poised to maximise our opportunities. Our team is making excellent progress and I am excited by the challenge.”