IME.L Regulatory News (IME)

24 Mar 2005 07:01

Immedia Broadcasting plc24 March 2005 24 March 2005 IMMEDIA BROADCASTING PLC Preliminary Results for the year ended 31 December 2004 Immedia Broadcasting PLC ("Immedia"), the UK's leading provider of live tailoredradio for retail, announces its preliminary results for the year to 31 December2004. Highlights 2004 2003 Turnover £2.97m £1.88m Operating profit/(loss) before depreciation and amortisation, £138.2k £(17.7)kexceptional items and interest Loss after tax £(367.4)k £(679.1)k Basic loss per share (3.29)p (9.33)p Net assets £2.725m £3.093m Operating Highlights • Launched two new retail stations for Vitusapotek and Dixons• In addition trialed two live retail stations• Currently in talks with a number of major retailers which may result in pilots in the near future• Roll out of Impulse Live to 5,000 stores is ongoing. We have installed 3,700 so far, including 1,200 Spar stores• Signed agreement with Unique to outsource and grow media sales division• New product launch of Radiovision, bringing the two media together in-store Commenting on the results and prospects, Bruno Brookes, Chief Executive, said: "Immedia's unique offering presents a highly compelling business case toretailers and we believe we are well placed to significantly develop thebusiness further. The concept which Immedia created is just beginning to matureand opportunities to win contracts are healthier. Whilst we continue to focus onthe UK market, other opportunities are within reach in other territories.Current trading is good and we remain excited about our prospects." For further information please contact: Immedia Broadcasting Plc gcg hudson sandlerBruno Brookes - Chief Executive Nick Lyon / Andrew Hayes01635 572 800 020 7796 4133 Chairman's statement I am pleased to be able to report that the Company is now trading profitablybefore depreciation, amortisation and interest in its first year as a listedcompany. There is a full review of the business and of the sector in which Immedia isoperating in the CEO's Review below and I will not repeat what is in there. However, I believe it is important for shareholders to understand the twoimportant dynamics in the business that are covered in more depth in the CEO'sReport. Firstly, there is continuing interest from a number of major High Street namesin in-store media and in the unique Immedia solution. Secondly, we are also seeing a growing awareness amongst advertisers and theirmedia buying agencies of the sales effectiveness of the in-store media sectorand a willingness to move marketing funds into the sector. I believe these two dynamics combined provide a strong base from which theCompany can move forward in the coming year. Geoff Howard-SpinkNon-executive Chairman 23 March 2005 Chief Executive's Review I am pleased to present our results for the twelve month period ending 31December 2004 and to be able to report further progress in the development ofImmedia's business. The results represent our fourth year of growth and a move into tradingprofitability before depreciation, amortisation and interest. In the last year,there has been a greater opportunity for Immedia to grow its list of clients, asretailers and media buyers have improved their understanding of our strongoffering. Accordingly, we believe we have further reinforced Immedia's positionas market leader in the UK for the provision of live in-store radio stations.Immedia's radio stations continue to demonstrate their commercial effectivenessfor retailers, supported by impressive case studies that show excellent ROI foradvertisers. Media buying agencies are developing specialist 'out of home' mediabuying divisions to focus on this new media space. Trade suppliers haveincreasingly found their advertising campaigns effective, supported by credibleindependent research. This has resulted in the announcement of an exclusiveadvertising deal for the chocolate sector for 'Impulse Live'. New Product Development There is no doubt that as the 'out of home' digital media industry develops weare continuing to impress retailers with our key knowledge and understanding ofhow to engage audiences. This is quite simply due to high quality content,driven by experienced presenters with the 'common touch'. Immedia's knowledge inengaging audience stems from its experience in building similar audiences andloyalty in terrestrial radio, both in the BBC and commercial sector. We believethat our competitors (particularly in the plasma screen sector) areconcentrating too much on the 'technology' and less on what the in-store mediawill do to generate more value for the consumer and drive incremental sales.Whilst there has been considerable focus on screen networks like Tesco TV, thereis now a greater realisation that the live radio offering brings a human touchwhich looped adverts on a plasma screen simply cannot do. For this reason, Immedia have gone one step further to develop an additionalproduct known as Radiovision. Working with QM Group we have developed a uniqueoffering where radio works in unison with plasma screens in-store. Thisimpressive technology will see live in-store radio working alongside speciallyconsolidated video that can be instantly triggered by presenters when theyexplain product or services. Radiovision was launched at the Multi ChannelRetail show in London on the 15 March 2005. We are about to run our first trial with a major retailer, and have been askedto tender the Radiovision product for another. Immedia floated on AIM on the 12 December 2003 and the net proceeds from theadmission to AIM were used to: • continue rollout of the Impulse Live Network to Convenience and CTN sector;• provide working capital for the group;• repay certain outstanding loans and debts; and• acquire a business and certain assets from BBME. In total £2.46m of funds were used during the year, sourced from short-termdeposits (£2.2m) bank balances (£0.22m) and interest received (£0.04m). Thesewere used for capital expenditure (£1.17m), the repayment of other loans (£0.5m)and financing working capital growth through increased debtors (£0.53m) andpayment of creditors (£0.41m). Summary of Immedia's business Immedia is the market leader (by clients and sites installed) in the UK for theprovision of in-store Live Radio services. We develop an original new radiostation around the retailer's brand and personality, featuring live presenters,music to suit attitudinal mood, and information on product offerings and staffinitiatives. Each station is launched and broadcast from our studios in Newburyand broadcast live via encrypted satellite and/or broadband networks into theirstore estate. We provide a complete turnkey service, to include speakerinstallations and maintenance. All of the sound materials including adverts andfeatures are created in-house. Immedia also sells airtime on the radio stationsfor the retailer. Immedia recently announced its agreement with Unique Group todevelop the sales force to sell airtime on all of Immedia's radio stations. Immedia's model is dependant on a mixture of subscription fees from retailerstogether with advertising revenues. All of our current radio stations apart from'Impulse Live' rely on this revenue model. Impulse Live is now the largestin-store media network in the UK, with the service moving towards a presence in5,000 convenience stores (currently in 3,700 outlets) and which is wholly ownedby Immedia. The radio station broadcasts its tailored content to the conveniencestore sector. Since Immedia owns the entire network, it receives 100% of theairtime revenues. However, as the network grows with new convenience retailgroups, there is the opportunity to generate further subscription revenue forthe provision of 'traffic managed' specific content and branding. Spar was thefirst group to sign to this arrangement. We are confident that other convenienceretail groups will choose to join the Impulse network, as the 'traffic managed'network system is a more cost effective solution offering a superior product. Immedia Channels Impulse Live 'Impulse Live' was launched to the convenience sector in 2002. The radio networkis the largest in store media in the UK influencing 22 million visitors eachyear. The network includes Spar stores, Londis, Texaco, Star News, Mills Groupand many of the leading independents. Spar stores signed an exclusive contract to join the Impulse network, and therollout is continuing: currently 1,200 Spar stores receive Impulse Live. Over 100 household brands have advertised on the Impulse Channel, of which 60%re-book airtime campaigns. In-store advertising is a fast growing marketinginitiative and Immedia's radio stations such as Impulse Live communicate withcustomers at the point of purchase. Other bespoke Channels Dixons Live - Lloyds Pharmacy Live - Vitusapotek Idag - Iceland Live - IkeaLive. In May 2003 Immedia successfully rolled out Lloyds Pharmacy Live to 1,360 Lloydspharmacies across the UK. This year Immedia signed two new contracts with Dixons and Vitusapotek(Norwegian pharmaceutical retailer). The Company has also started a trial withIkea for Ikea Live in its stores. In addition, Immedia is currently in talks with a number of major retail clientswhich may result in pilots or roll-outs in the future. Current trading and future prospects Immedia's unique offering presents a highly compelling business case toretailers and we believe we are well placed to significantly develop thebusiness further. The concept which Immedia created is just beginning to matureand opportunities to win contracts are healthier. Whilst we continue to focus onthe UK market, other opportunities are within reach in other territories.Immedia has already proved its ability to launch stations in a foreign languagewith the success of Vitusapotek in Norway. Current trading is good and we remainexcited about our prospects. Bruno BrookesChief Executive 23 March 2005 Consolidated Profit and Loss accountfor the year ended 31 December 2004 Note 2004 2003 £ £ Turnover 4 2,969,651 1,877,345Cost of sales (1,342,677) (870,975) Gross profit 1,626,974 1,006,370Administrative expenses (2,032,957) (1,620,733) Operating loss (405,983) (614,363)Interest receivable and similar income 63,011 5,118Interest payable and similar charges (24,476) (69,647) Operating profit/(loss) before depreciation and amortisation, 138,174 (17,747)exceptional items and interestDepreciation and amortisation (544,157) (293,761)Exceptional items - (302,855)Net interest receivable/(payable) 38,535 (64,529) Loss on ordinary activities before taxation (367,448) (678,892)Tax on loss on ordinary activities - (192) Loss for the financial year (367,448) (679,084) Loss per share - basic 5 (3.29) p (9.33) p In the two years to 31 December 2004, the company made no acquisitions and hadno discontinued operations. There are no recognised gains or losses, other than the loss for the financialyear. Accordingly no statement of total recognised gains and losses is given. There is also no difference between the loss on ordinary activities beforetaxation and the retained loss for the financial years stated above, and theirhistorical cost equivalents. Consolidated Balance Sheetat 31 December 2004 2004 2003 £ £Fixed assetsIntangible assets 8 73,267 109,900Tangible assets 9 1,790,232 1,136,556 1,863,499 1,246,456 Current assetsStocks - 1,115Debtors 10 1,125,604 597,469Cash at bank and in hand 1,000,215 3,320,555 2,125,819 3,919,139Creditors: amounts falling due within one year 11 (1,053,565) (1,312,394) Net current assets 1,072,254 2,606,745 Total assets less current liabilities 2,935,753 3,853,201 Creditors: amounts falling due after more then one year 2 (200,000) (750,000)Provisions for liabilities and charges (10,000) (10,000) Net assets 2,725,753 3,093,201 Capital and reservesCalled up share capital 13 1,170,791 1,170,791Share premium account 14 3,372,960 3,372,960Merger reserve 14 2,245,333 2,245,333Profit and loss account 14 (4,063,331) (3,695,883) Equity shareholders' funds 15 2,725,753 3,093,201 Consolidated Cash Flow StatementFor the year ended 31 December 2004 Note 2004 2003 £ £ Cash outflow from operating activities 6 (789,491) (29,604) Return on investments & servicing of financeInterest received 63,011 5,118Interest paid (24,476) (69,647) Net cash inflow/(outflow) from returns on investments & servicing of 38,535 (64,529)finance TaxationCorporation tax paid - (192) Capital expenditure & financial investmentPayments to acquire tangible fixed assets (1,170,938) (926,477)Payments to acquire investments - (33,000)Receipts from sales of tangible fixed assets 815 1,210 Net cash outflow on capital expenditure (1,170,123) (958,267) Net cash outflow before management of liquid resources and financing (1,921,079) (1,052,592) Management of liquid resourcesCash withdrawn from/(placed on) short-term deposit 2,200,000 (3,200,000) FinancingNew other loans - 650,000Repayment of other loans (500,000) -Repayment of capital element of finance leases and hire purchase rentalpayments - (12,000) Issue of ordinary share capital - 3,782,051 Net cash (outflow)/inflow from financing (500,000) 4,420,051 (Decrease)/increase in cash in the year (221,079) 167,459 Reconciliation of net cash flow to movement in net debt(Decrease)/increase in cash in the year (221,079) 167,459Cash (outflow)/inflow from (decrease)/increase in liquid resources (2,200,000) 3,200,000Cash outflow/(inflow) from decrease/(increase) in debt 500,000 (650,000)Cash outflow from decrease in lease financing - 12,000 Movement in net (debt)/funds (1,921,079) 2,729,459Net funds/(debt) at 1 January 2,547,937 (181,522) Net funds at 31 December 7 626,858 2,547,937 Notes to the preliminary results 1 Basis of preparation The financial information set out above does not constitute the company'sstatutory accounts for the year ended 31 December 2004 (but is derived fromthose accounts, which cover the company's first financial year). Statutoryaccounts for 2003 for the company's trading subsidiary Immedia Broadcast Limitedhave been delivered to the registrar of companies: the auditors have reported onthose accounts; their reports were unqualified and did not contain statementsunder section 237 (2) or (3) of the Companies Act 1985. The 2004 accounts ofImmedia Broadcasting Plc will be delivered to the registrar of companiesfollowing the company's Annual General Meeting. The Annual Report and Notice ofAnnual General Meeting will be posted to the shareholders by 3 May 2005. Thispreliminary announcement was approved by the Board on 23 March 2005. Basis of consolidation: on 20 November 2003 a new holding company was broughtinto the group. This was carried out by a share for share exchange and theexisting shareholders of Immedia Broadcast Limited received 1,000 10p Ordinaryshares in Immedia Broadcasting Plc for every share held. There was no cashconsideration. This group reconstruction has been accounted for as a merger aspermitted by FRS 6 acquisitions and mergers. Following these principles theentities are combined. This transaction qualifies under section 131 of theCompanies Act 1985, which exempts the parties from creating share premium onthis transaction. The difference between the investment value carried inImmedia Broadcasting Plc and the capital base of Immedia Broadcast Limited istaken to a merger reserve. Under the merger method, subsidiaries acquired areincluded as if they had always been members of the group. 2 Employee Benefit Trust The Group operates an employee benefit trust (EBT) for the benefit of itsemployees through Immedia Broadcasting Trustees Limited which acts as Trustee.At 31 December 2004 and 2003 the EBT held 551,000 shares in Immedia BroadcastingPlc in trust for employees against the future exercise of options granted underthe Immedia EMI Share Option Scheme. Under UITF abstract 38 - Accounting forEmployee Share Option Trusts - the own shares held in the trust have beendeducted from shareholders' funds (note 15). 3 Taxation The charge for corporation tax is based on the loss for the year and takes intoaccount taxation deferred because of timing differences between the treatment ofcertain items for taxation and accounting purposes. Deferred tax is recognised,without discounting, in respect of all timing differences between the treatmentof certain items for taxation and accounting purposes which have arisen but notreversed by the balance sheet date, except as otherwise required by FRS 19. Notes (continued) 4 Turnover and segmental analysis Turnover, which is stated net of value added tax, represents amounts invoiced tothird parties. All turnover arose from the group's principal activity ofmarketing services. Region of origin All group activities originate in the United Kingdom. United Kingdom Europe Total United Europe Total Kingdom 2004 2004 2004 2003 2003 2003 £ £ £ £ £ £Region of destinationSales to third parties 2,390,938 578,713 2,969,651 1,877,345 - 1,877,345 Net assetsSegment net assets 1,843,200 175,010 2,018,210 589,672 - 589,672Unallocated net assets 707,543 2,503,529 Total net assets 2,725,753 3,093,201 The split of operating profit has not been provided as it is commerciallysensitive and in the view of the directors disclosure would be damaging to thebusiness. 5 Loss per share 2004 Number 2003 Number Weighted average number of shares in issue 11,707,910 7,829,951Less own shares (551,000) (551,000) Weighted average number of shares in issue for basic loss per share 11,156,910 7,278,951 The basic and diluted loss per share are calculated using the loss for thefinancial period of £367,448 (2003: loss £679,084). In accordance with FRS14the diluted basic loss per share is stated as the same amount as basic as thereis no dilutive effect. Notes (continued) 6 Reconciliation of operating loss to net cash flow fromoperating activities 2004 2003 £ £ Operating loss (405,983) (614,363)Depreciation of tangible and intangible assets 544,157 293,761Loss on disposal of fixed assets 8,923 1,212Decrease /(increase ) in stocks 1,115 (1,115)(Increase) in debtors (528,135) (378,478)(Decrease) increase in creditors (409,568) 669,379 Net cash outflow from operating activities (789,491) (29,604) 7 Analysis of changes in net funds during the year Cash at bank Short-term Other loans Total deposits and in hand £ £ £ £At beginning of year 97,937 3,200,000 (750,000) 2,547,937Net cash flow (221,079) (2,200,000) 500,000 (1,921,079) At end of year (123,142) 1,000,000 (250,000) 626,858 8 Intangible fixed assets Goodwill £CostAt beginning and end of year 109,900 AmortisationAt beginning of year -Charge for year 36,633 At end of year 36,633 Net book valueAt 31 December 2004 73,267 At 31 December 2003 109,900 Notes (continued) 9 Tangible fixed assets Plant and Fixtures & Network Total machinery fittings Equipment £ £ £ £ CostAt beginning of year 328,779 146,449 1,185,461 1,660,689Additions 239,144 69,343 862,451 1,170,938Disposals (1,790) (31,683) (16,859) (50,332) At end of year 566,133 184,109 2,031,053 2,781,295 DepreciationAt beginning of year 170,884 63,367 289,882 524,133Charge for year 127,089 54,404 326,031 507,524On disposals (1,790) (28,970) (9,834) (40,594) At end of year 296,183 88,801 606,079 991,063 Net book valueAt 31 December 2004 269,950 95,308 1,424,974 1,790,232 At 31 December 2003 157,895 83,082 895,579 1,136,556 10 Debtors 2004 2003 £ £ Trade debtors 837,809 352,566Taxation and social security - 98,378Other debtors and prepayments 287,795 146,525 1,125,604 597,469 All debtors are due within one year. Notes (continued) 11 Creditors: amounts falling due within one year 2004 2003 £ £ Bank overdrafts 123,357 22,618Other loans (note 12) 50,000 -Trade creditors 389,670 925,228Other taxation and social security 43,987 35,749Other creditors 3,603 1,691Accruals and deferred income 442,948 327,108 1,053,565 1,312,394 12 Creditors: amounts falling due after more then one year 2004 2003 £ £ Other loans 200,000 750,000 Other loans comprise unsecured convertible loan facilities aggregating £250,000granted on 30 September 2003. The loan facilities are wholly repayable on 19September 2006 or may be converted into an aggregate of 238,031 fully paidordinary shares. They carry a fixed interest rate of 8%. 2004 2003 £ £Other loans fall due:In one year or less, or on demand (note 11) 50,000 -Between one and two years 200,000 750,000 250,000 750,000 Notes (continued) 13 Called up share capital 2004 2003 £ £Authorised36,000,000 Ordinary shares of 10 pence each 3,600,000 3,600,000 Allotted, called up and fully paid11,707,910 Ordinary shares of 10 pence each 1,170,791 1,170,791 Employee share options are outstanding as follows:Option scheme Date of grant Number of shares Option price per share Immedia EMI Share Option Scheme 27 Jan 2003 430,000 3.75 penceImmedia EMI Share Option Scheme 29 Oct 2003 55,000 20 penceImmedia EMI Share Option Scheme 11 Dec 2003 250,000 110 pence Options granted to employees under the Immedia EMI Share Option Scheme areexercisable at any time between 12 December 2003 and their expiry on the tenthanniversary of the date of grant. Warrants and unsecured convertible loan notes are outstanding as follows: a) Warrants over 125,000 shares were granted on 2 December 2003 and areexercisable between the dates and at the exercise price shown under a) in thetable below; b) £250,000 unsecured convertible loan notes granted 30 September 2003 bearinginterest at 8% per annum, wholly repayable on 19 September 2005 or convertibleinto fully paid ordinary shares per b) in table below. Dates between which warrants are Number of shares Option or exercisable and unsecured loan conversion price notes are convertible per share a) Share warrants 02 Dec 2003 30 Oct 2005 125,000 91.912 pence b) Unsecured convertible loan notes 02 Dec 2003 19 Sep 2006 238,031 105.028 pence Notes (continued) 14 Share premium and reserves Share premium Merger reserve Profit and account loss account £ £ £ At beginning of year 3,372,960 2,245,333 (3,695,883)Retained loss for the year - - (367,448) At end of year 3,372,960 2,245,333 (4,063,331) 15 Reconciliation of shareholders' funds 2004 2003 £ £ Opening shareholders' funds 3,093,201 (2,983,799)Loss for the financial year after taxation (367,448) (679,084)New share capital issued - 1,170,791Share premium thereon (net of issue costs) - 3,372,960Merger reserve - 2,245,333Purchase of own shares for Immedia Employee Benefit Trust - (33,000) Closing shareholders' funds 2,725,753 3,093,201 Total issue costs taken to the share premium account in 2003 were £717,949. 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