In this report we take a look at the activities and game plans of Canada’s public production companies.

In this report:

Alliance p. 40

Atlantis p. 42

Cinar p. 39

Coscient p. 40

Devine p. 42

Greenlight p. 43

Keystone p. 43

Malofilm p. 37

Nelvana p. 38

Paragon p. 40

Malofilm Communications has doubled in size in the past two years, a commendable turnaround engineered by company chairman and ceo Rene Malo.

During the period, revenues went from $19 million to $39 million. The Montreal-based company currently employs 120 including production subsidiary staff and multimedia and English-language distribution personnel based in Toronto.

Malofilm returned to active production in ’95 and expects this activity to represent between 10% and 20% (up from 5% in ’95) of overall revenues in the immediate future, says senior vp and cfo Stephen Takascy.

Malofilm’s 1996 first-quarter results (ended Dec. 31, 1995) include revenues of $12.1 million, up 38% over last year. Newly acquired children’s program producer Desclez Productions accounted for $2.7 million of the quarterly gains, while net profits for Malofilm were up 32% to $1.1 million in the period.

eps for the quarter is $0.17 compared to $0.20 last year, a good showing taking into account an increase of more than 50% in the weighed average number of outstanding shares following last October’s public offering (gross $13.2 million at $5 a share.)

The company has also secured a $10 million line of credit for general corporate purposes.

Malofilm is traded on the Toronto and Montreal Stock Exchanges. Malofilm stock price moved from $4-$4.50 last summer to $5 in October, peaking at just over $9 on the Montreal Stock Exchange in December. The current trading level is in the $7 range.

The number of outstanding shares almost doubled from 4.5 million shares to over eight million following the October issue. Malofilm’s market cap is in the order of $60 million while its public float is in the $40 million range, says Takascy.

‘Now we’ve overcome a barrier. The magic number for a lot of pension funds is $50 million. We have a lot more institutional investors now,’ he says.

Takascy says the 1996 first-quarter eps of $0.17 ‘is excellent.’

Malofilm’s aim is to produce two feature films in ’96, one in the $5 million range and the second over $10 million.

‘On feature films, as you know, we aim to sell the entire production budget less our producer’s fee and less the value of distribution rights in Canada,’ says Takascy. Risk-taking is a little higher, in the 20% range, on the company’s children’s production.

Projected sales and presale revenues from Desclez is between $8 million and $10 million in ’96 and $30 million by ’98.

Major production includes 156 15-minute episodes of the $10 million puppet/3D series Little Star, presold to tlc in the u.s. and Ravensburger in Germany. Turtle Island, a $10 million traditional animation series, and Mirob, a $4 million 3D series, are in development.

Megatoon Studio is projecting production revenues of $1 million this year and $2 million next, says Takascy.

Megatoon production includes Goferwinkle’s Adventure and the latest (fourth) Wallobee Jack installment; an i/cd-rom of Mighty Machines with a distribution option held by Disney; QuizzWhiz, a cd-rom game produced for Tiger Electronics; and Jersey Devil, a PlayStation entry for Sony and Crystal Dynamics. Six projects are in development.

Takascy says Desclez is evaluating various Megatoon projects for tv adaptation, including Wallobee Jack.

‘Malofilm is revamping its merchandising strategy. We bought back rights from Hasbro to Iris the Happy Professor, a character doll which sold 40,000 units last year. Desclez’s content is conceived with a merchandising strategy in mind,’ he says.

Takascy says more mergers and acquisitions will take place in Canada.

‘The big American players keep getting bigger. There’s more competition and less government support. We are not in the market for content or talent right now, but we are keeping our eyes open,’ he says.

In ’96, Malofilm is projecting steady eps growth in the 15% to 20% range, as well as a 15% growth in distribution. Video sell-through and international sales are the company’s fastest growth areas in distribution terms.

The theatrical outlook for ’96 includes multiple Genie Award winner Margaret’s Museum and Angels and Insects and some dozen or so potentially interesting releases from Samuel Goldwyn including American Buffalo, Reckless and Napoleon. Warriors of Waverly Street and Underworld are also on the menu.

Malofilm Distribution recently picked up international sales rights to an extended documentary package from Toronto’s Associated Producers.

Malofilm has opened a site on the Internet, //malo.com.