“We are using our pan-European channel network to generate new revenue streams for the company. One such initiative this year has been the formation of a new pop band called Ch!pz in conjunction with Glam Slam, the artist management company and EMI Music Publishing.”

As forecast last year, our home entertainment business has increased significantly on last year with 1.1 million units being shipped, up 60% on the year ended June 30, 2002. This is due to the resurgence of interest in Marvel titles such as Spiderman and
X-Men, as well as the leverage of Buena Vista Home Entertainment (BVHE), one of the world’s leading distributors of video and DVD products. Based on the success of BVHE in distributing our home entertainment products since they took over the previous agreement with Fox Entertainment in May, we concluded a new three-year agreement with BVHE to distribute Power Rangers and a number of our Marvel properties on video and DVD.

We also concluded an agency agreement with Disney Consumer Products (DCP), one of the world leaders in children’s licensing, to represent Power Rangers. The deal is for three years commencing October 1, 2003 and provides for a minimum guaranteed level of performance to be achieved by DCP in each year of the deal term. Our consumer products staff will now focus on other core in-house properties such as Princess Sissi, Tofu Family and Gadget and the Gadgetinis as well as third party properties airing on our channels such as Totally Spies, Tutenstein, PUCCA and Shin chan. The successful launch of PUCCA has opened up new relationships for us with creative companies in Korea.

Power Rangers continues to perform strongly and is now enjoying its tenth season in Europe, with almost 500 episodes produced to date. Cumulative worldwide merchandising sales are in excess of $8 billion and, in the US, the property has earned the honour of best selling action figure brand of all time6. It also currently ranks as the number one action brand in the UK and, in celebration of this success, we have launched an integrated marketing campaign across Europe featuring programme distribution, channels and online alongside our consumer products activities.

We are using our pan-European channel network to generate new revenue streams for the company. One such initiative this year has been the formation of a new pop band called Ch!pz which was created following an audition of over 8,000 teenagers in conjunction with Glam Slam, the artist management company, and EMI Music Publishing. The band has released two singles in the Netherlands this year, both singles have reached number one in the charts and achieved platinum and gold status, respectively. We are aiming to release an album in January as well as break the band into new markets. This will expand our current music activities which are primarily focused on compilation albums.

We also restructured our German operations during the period, relocating our consumer products business from Cologne to Munich, where our channel & online operations are based. This resulted in $250,000 of one-off costs during the period but is expected to lead to operating efficiencies in future fiscal years.