RDF Media’s fortunes have faltered since the BBC’s and ITV’s suspension of business with the TV production group, following last year’s controversy surrounding the editing of a clip of the Queen, which forced the resignation of chief creative director Stephen Lambert.

Results for the year to January, reflecting a turbulent year, revealed a reduction in pre-tax profits to £2m (2007: £6.2m), resulting in a dividend cut to 0.5p (2007: 3p). Planned investments that ‘ran ahead of lower than anticipated revenues’ in the UK production division resulted in a £5.8m increase in overheads to £26m and a sharp rise in year-end debt to £13.7m (2007: £0.2m).

However, the diversified group still achieved 21.5% growth in revenues to £120.6m, with the US division performing strongly, as did the intellectual property division, whose turnover grew by 147% to £9.2m.

While the company will not comment on talks regarding a cash offer to take the company private (by chief executive David Frank and largest shareholder John de Mol, of Endemol fame), broker Altium believes a formal bid will emerge.

Setting a 150p price target for RDF, Altium forecasts growth in revenues for 2009 to £128m, although earnings should reduce to 10.5p (2007: 14.8p) due to an increase in the number of shares in issue following the exercising of options. Based on those estimates, RDF trades on a forward multiple of just 12.1 and should offer a degree of bid excitement. Speculative buy.

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RDF Media	AIM	£49.88m	115.00p	0.00p
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