IME.L Regulatory News (IME)

29 September 2016

IMMEDIA GROUP PLC

(AIM: IME)

("Immedia" or the "Group")

INTERIM RESULTS 2016

Immedia (AIM: IME), a supplier of multi-media content and digital solutions for leading brands and global businesses, announces its interim results for the six months ended 30 June 2016.

Key points:

· Total comprehensive loss reduced to £0.09 million (H1 2015: £0.14 million) on reduced revenue of £1.06 million, (H1 2015: £1.37 million)

· Further 12 month contract with BT signed in March for Reach 365, a 24/7 radio station for Openreach engineers delivered through Immedia's innovative mobile app 

· Subway® contract signed in April making Subway® Radio available to franchisees in the UK and Republic of Ireland, France, Germany, The Netherlands, Finland and Sweden:- highly successful initial roll-out with over 1500 stores signed up in the first 10 weeks- Subway® Radio subsequently made mandatory in UK and Ireland

· New senior management appointed within the business

· Proven offering with clear focus on new business development in line with strategy.

Post the period end

· Acquisition of AVC Immedia completed in September 2016, strengthening the Group's combined product and service offering, with new client opportunities in our target sectors

· Significant contract win announced with a major UK retailer

· Advanced discussions for new channel launches with two other major brands

Bruno Brookes, CEO of Immedia, said:

"We now have an impressive combination of digital services, supporting an even stronger range of multi-media audience engagement tools for clients in our primary target sectors of retail, workforce, sport and education. Following the acquisition of AVC Immedia, we are also developing an exciting new generation of services for a combined pipeline of prospects.

"Whilst the expiry of some long term contracts, such as Lloyds Bank, has affected the first half of the year, we expect revenue in the second half of the year to improve, even before the addition of AVC Immedia. As I have stated previously, enquiry levels in the existing Immedia business are strong, as they are in AVC Immedia, and the Board is confident that the outlook for the business is positive."

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This announcement contains information which, prior to its disclosure, was inside information for the purposes of the Market Abuse Regulation.

About Immedia Group Plc - www.immediaplc.com

Immedia Group Plc is a multi-media content and digital solutions provider to global businesses and organisations, who are investing in internal and/or Brand communications. Our interactive audio - visual channels deliver original and relevant content, via Immedia's Dreamstream platform, to a client's workforce and its customer base. Each channel is supported with powerful data analytics tools, which monitor audience activity and provide data to enable us to enhance audience engagement.

The Group also creates original video content, 3D & 4D animation, app and web development, as well as supplying and installing Audio Visual equipment. Immedia's clients include, amongst others, HSBC, Subway Europe, Superdrug, BT Openreach, O2, FIFA, Shell and BP.

Financial Highlights

CHIEF EXECUTIVE'S REVIEW

The financial results for the first half of 2016 reflect mixed fortunes of the Group. Whilst contracts with Lloyds Bank and Game expired we have since made excellent progress with our strategy to launch new channels to a broader client base within four strategic business sectors: retail, workforce, sport and education. We are at various stages of business development in all of these sectors.

As the digital landscape continues to evolve, brands and businesses are seeking to establish every opportunity to communicate with their audiences in the most cost effective and engaging way. As content is king and relevance is key, Immedia has evolved its delivery to spaces and places, together with rapid developments to its mobile offering. I firmly believe this to be one of our most innovative and exciting areas of growth.

Results

Revenue reduced to £1,055,464 (H1 2015: £1,373,657), a decrease of 23% on the corresponding period in 2015, generating EBITDA of £15,671 (H1 2015: £116,418). These reductions resulted from the expiration of our contracts with Game and Lloyds Banking Group (in June 2015) and a slower than anticipated conversion of our new business pipeline.

The Company has net cash of £0.34 million at the period end.

Immedia's investment in Audioboom Group plc, the social media platform business, (AIM: BOOM), showed significant fluctuations in value during the period. In accordance with our IFRS accounting regime, a loss on revaluation of investments of £82,500 has been reported in the period (H1 2015: restated loss of £239,700). Cumulatively, the Group remains in profit on its investment.

Operations

We have created a stronger and broader product and service offering over the last 18 months and our strategy is firmly fixed in the four key areas of business mentioned earlier.

We have recently appointed Steve King as COO to strengthen our operations in readiness for growth. Steve is a media executive with over 20 years of board level experience and a proven track record in the radio business.  Steve was formerly Regional Managing Director (North West and Midlands) of Bauer Media.

In March 2016, the Group successfully renewed its ground-breaking contract with BT Group plc for the supply of Reach 365, an interactive, real time, digital radio channel available to the 30,000 employees in its local network business, Openreach, using Immedia's mobile audio streaming platform. This highly scalable white label streaming platform enables large, geographically dispersed companies to engage directly with their employees and customers, using dedicated audio content streamed directly to their buildings, mobile phones and other devices.

The Group's most notable achievement in H1 was the launch of SUBWAY® Radio. In April we secured a major five-year contract to supply branded in-store music and marketing channels known as SUBWAY® Radio to franchisees in the UK and Republic of Ireland, France, Germany, The Netherlands, Finland and Sweden. The Group is also providing in-store equipment. Immedia has designed and delivered country specific versions of SUBWAY® Radio. Each of these channels, delivered via Immedia's Dreamstream™ network, features a mixture of relevant music, branding and 'on-air' SUBWAY® marketing messages to tie in with national and regional campaigns.

SUBWAY® Radio has been adopted rapidly in a number of European territories. In the 10 weeks from launch to the end of H1, over 1500 stores were connected. Following the highly successful rollout subscription to the service for franchisees in the UK and Ireland is now mandatory. Rollouts of separate channels continue in Germany, the Netherlands, Finland and Sweden with new territories in development.

Post-period end, we announced that our contract with Arcadia Group Ltd will expire in December 2016. We have also announced this week that we have signed a significant three year contract with a major UK retailer, which commences next month. We believe that the combination of this new contract and the better than expected take-up by Subway franchisees and other strong pipeline prospects will more than offset losses in the period.

Post-period end

Acquisition

Earlier this month, we were delighted to announce the post period end acquisition of the business and certain assets of AVC Media Enterprises Ltd and AVC Media Holdings Ltd (now AVC Immedia), based in Aberdeen, for a cash consideration of £200,000. AVC Immedia is a media and communications business and digital technology specialist, supplying a range of services that include audio visual solutions, video conferencing, event production/management, video and 3D animation, web and graphic design and App development. The business is active in many sectors but is particularly well known in oil & gas, sport and tourism. Its past and current clients include leading brands and global businesses such as FA, FIFA, Shell, BP, Aker, SKY and BT Sport.

AVC Immedia has already secured new contracts with FIFA since its acquisition and the Board looks forward to delivering further progress reports on this new addition to the Group.

Significant contract win

The Group was very pleased to announce the signing of a significant three year contract with a major UK retailer this week, which commences next month. We believe that the combination of this new contract and the better than expected take-up by Subway franchisees and other strong pipeline prospects will more than offset losses in the period.

We announced that our contract with Arcadia Group Ltd will expire in December 2016.

Outlook

Immedia is in advanced discussions with a number of significant UK retailers and organisations who are keen to develop branded communications channels, one of which we have signed this week. AVC Immedia is already contributing to the Group's revenue. In addition to the recently announced FIFA contracts, it is working on a 3D animation project for New York based SAFWAY on a two year contract as well as other animation projects with Technip and Oceaneering. We are also working with TOTAL, William Grant & Sons, The Wood Group and Maersk on audio visual projects.

The Board anticipates that revenue from our existing business will be stronger in the second half of the year and this will be augmented by the addition of AVC Immedia. We are managing costs carefully as we integrate the businesses to develop a combined offering to a wider range of both existing and prospective clients.

I believe that Immedia's new offering is "timely", as businesses and organisations actively seek to engage with key audiences using a broad range of digital content solutions. We have built an impressive portfolio of products and services which are benefitting new business development. Given the success of Reach 365 and SUBWAY® Radio and the current pipeline, the Board is confident of delivering significant progress in the short to mid-term.

Bruno Brookes

Chief Executive

Consolidated statement of profit or loss

Consolidated statement of profit or loss and other comprehensive income

Consolidated balance sheet

Consolidated statement of changes in equity

Consolidated statement of changes in equity continued

Consolidated statement of cash flows

Notes to the condensed consolidated interim financial statements

1. Reporting entity

Immedia Group Plc (the "Company") is a company incorporated and domiciled in the United Kingdom. The address of the Company's registered office and its principal place of business is 7-9 The Broadway, Newbury, Berkshire RG14 1AS.

The condensed consolidated interim financial statements of the Company as at and for the half year ended 30 June 2016 comprise the Company and its subsidiaries (together referred to as the "Group"). The financial information set out in this interim report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The Group's statutory financial statements for the year ended 31 December 2015 have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain a statement under Section 498(2) of the Companies Act 2006. The consolidated financial statements of the Group as at and for the year ended 31 December 2015 are available at http://www.immediaplc.com/plc/annual-reports/

The Group primarily is involved in marketing and communication services through music, radio and screen based media together with the supply, installation and maintenance of associated equipment.

2. Basis of preparation

These consolidated financial statements for the half year ended 30 June 2016 are unaudited. They have been prepared and approved by the directors following the recognition and measurement principles of International Financial Reporting Standards as adopted by the EU ("Adopted IFRSs"); they do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 December 2015.

The unaudited financial statements for the comparative period of six months to 30 June 2015 have been restated to include the effect of restatements in the audited accounts to 31 December 2015. These included the reclassification of the investment in Audioboom Plc as available-for-sale, which resulted in the 2015 fair value losses being disclosed in the Consolidated Statement of Other Comprehensive Income.

The effect of the restatement has been to change the loss before tax in the Consolidated Statement of Profit or Loss for the six months to 30 June 2015 from £ (144,392) to a profit of £95,308 and to change the net fair value loss on available for sale assets in the Consolidated Statement of Profit or Loss and Other Comprehensive Income from £Nil to £(239,700). The total comprehensive income for the six months to 30 June 2015 remains unchanged at a loss of £(144,392). Earnings per share (eps) for the six months to 30 June 2015 have been restated following the removal from the calculation of the net fair value loss of £239,700 and are based on the after tax profit of £95,308. Basic eps is restated from (1.052) pence loss to 0.69 pence earnings and diluted eps from (1.052) pence loss to 0.68 pence earnings.

Other changes in presentation comprise the classification of available for sale assets with non-current assets in the Consolidated Balance Sheet. Deferred taxation has been restated on a net basis and is classified with non-current assets in the Consolidated Balance Sheet. An investment valuation reserve has been included in Equity (see Consolidated Statement of Changes in Equity).

On the basis of current financial projections prepared up to the end of 2017, recent news of new contracts and of contract renewals, continuing improvements in management of costs, and ongoing availability of facilities, the Directors are satisfied that the Group has adequate resources to continue in operation for the foreseeable future and consequently the financial statements have been prepared on the going concern basis.

The interim financial statements were approved by the Board of Directors on 28 September 2016.

Notes to the condensed consolidated interim financial statements continued

3. Significant accounting policies

The accounting policies set out in detail in note 3 of the Group's consolidated financial statements to 31 December 2015 have been applied consistently to these unaudited financial statements to 30 June 2016, including:

(a) Revenue

Revenue represents the amounts receivable by the Group for the provision of its goods and services, excluding value added tax. Revenue from production services comprise the broadcasting of live and as live radio programmes to customers' premises using appropriate technologies, together with the production of advertising content for use in those programmes. Revenue from these services is billed on time based subscriptions and recognised on the date of broadcast. Revenue from equipment sales is recognised on the earlier of date of delivery and configuration, or when risk and rewards pass to the customer; revenue from content delivery and equipment maintenance services is billed on time based subscriptions and is recognised monthly on completion.

To the extent that invoices are raised to a different pattern than revenue recognition described above, appropriate adjustments are made through deferred and accrued income to account for revenue when the underlying service has been performed or goods have been transferred to the customer.

(b) Financial instruments: financial assets

Investments other than investments in subsidiaries are classified as either held-for-trading or as available-for-sale at initial recognition and this designation is re-evaluated at each period end date. At the period end date all such investments are classified as available-for-sale.

Available-for-sale investments are initially measured at fair value, which ordinarily equates to cost, including transaction costs. At subsequent reporting dates available-for-sale investments are measured at fair value or at cost where fair value is not readily measurable.

Gains and losses arising from changes in fair value are recognised in other comprehensive income and taken to the investment revaluation reserve until the investment is disposed of or is determined to be impaired, at which time the accumulated fair value adjustments recognised in equity are included in the statement of profit or loss as 'gains and losses from investments'.

4. Income tax credit in the statement of profit or loss

The utilisation of historic tax losses and excess management charges is expected to eliminate all potential tax charges for the period to 30 June 2016 (in 2015 the deferred tax expense arose from the reduction in value of deferred tax assets following losses from financial assets available for sale during the year).  

Notes to the condensed consolidated interim financial statements continued

5. Property, plant and equipment

6. Intangible assets

There were no indications of impairment of intangible assets at 30 June 2016 and the annual impairment tests will be carried out at the year end.

7. Inventories

8. Trade and other receivables

At 30 June 2016 trade receivables are shown after a provision for impairment of £3,580 (30 June 2015: £3,580; 31 December 2015: £3,580) arising from slow moving debts and disputed charges.

(i) At 30 June 2016 the total of trade receivables past due, net of provision for impairment, was as follows:

(i) Cash collections for debts over 3 months past due improved in the third quarter of 2016.

9. Other short term financial assets

In March 2014 the Group invested £90,000 in the purchase of 6,000,000 shares in Audioboom Group plc, an AIM-quoted audio social media platform, as part of the Group's strategy to broaden its digital marketing and communications services.

The investment has been designated as available-for-sale with fair value changes recognised in other comprehensive income (see note 3(b) above). At 30 June 2016 the fair value of the investment was £172,500 with a current period fair value loss of £82,500 recognised in other comprehensive income (30 June 2015 fair value £367,500 with fair value loss of £239,700 recognised in other comprehensive income; 31 December 2015 fair value £255,000 with fair value loss of £352,200 recognised in other comprehensive income).

As at the date of approval of this report, the investment represents c.1.12% of Audioboom Group plc's shares in issue and has a fair value of £150,000.

Notes to the condensed consolidated interim financial statements continued

10. Cash and cash equivalents

Cash and cash equivalents comprise cash balances and short-term call deposits.

11. Share Capital

There are no restrictions on the transfer of shares in Immedia Group Plc. All shares carry equal voting rights.

12. Borrowings

(i) In 2015 a two-year loan arranged with HSBC Bank Plc to part finance the conversion of ground floor space into offices in the Newbury studios building was fully repaid. The loan was secured by floating charge on the assets of Immedia Broadcast Limited.

(ii) The Group has an invoice financing facility with HSBC Invoice Financing (UK) Limited under which advances up to £250,000 are secured by debenture on Immedia Broadcast Limited's assets. There were no borrowings under this facility at 30 June 2016 (30 June and 31 December 2015: £nil).

Notes to the condensed consolidated interim financial statements continued

13. Finance lease arrangements

Certain equipment supplied to customers under contract was financed under finance lease arrangements with Aurora Leasing Limited under which advances were secured by debenture on Immedia Broadcast Limited's assets. The lease agreement was fully repaid at the end of its three-year term in March 2016. The equipment supplied was recognised as a sale in accordance with the Group's revenue recognition accounting policy as detailed in note 3(a) above; there are therefore no assets held under finance lease within Property, plant and equipment (note 5).

Future minimum finance lease payments were as follows:

The lease agreement included fixed payments and a purchase option which was exercised at the end of the three-year lease term. The agreement was non-cancellable and did not contain any further restrictions.

Notes to the condensed consolidated interim financial statements continued

14. Trade and other payables

(i) At 30 June 2016 there were Euro denominated liabilities totalling €330 (30 June 2015: €670; 31 December 2015: €nil).

(ii) Included within Non-trade payables and accrued expenses are uninvoiced charges for servicing, maintenance and licensing costs for the Group's music and radio networks, plus accruals for legal and professional fees.

15. Earnings per share

The basic and diluted earnings per share are calculated using the after tax loss attributable to equity shareholders for the financial period of £11,575 (30 June 2015: restated profit £95,308; 31 December 2015: loss £94,681) divided by the weighted average number of Ordinary shares in issue in each of the relevant periods: 30 June 2016: 13,724,470 shares (30 June and 31 December 2015: 13,724,470 shares). For the period to 30 June 2016 and the year to 31 December 2015, and in accordance with IAS 33, the diluted loss per share is stated as the same amount as basic as there is no dilutive effect.

The weighted number of shares used for the diluted earnings per share is calculated after reflecting the outstanding share options at the period end.

In accordance with Rule 26 of the AIM Rules for Companies, this interim financial statement will be available on the company's website at www.immediaplc.com/plc/annual-reports/