IME.L Regulatory News (IME)

18 May 2007 07:01

Immedia Broadcasting plc18 May 2007 18 May 2007 IMMEDIA BROADCASTING PLC ("Immedia" or "the Company") Preliminary Results for the year ended 31 December 2006 Immedia Broadcasting Plc the UK's leading provider of live tailored radio andvideo for retail, announces its preliminary results for the year to 31 December2006. Financial highlights 2006 2005 Turnover £4.47m £3.08mOperating loss £(250)k £(1,072)kOperating profit before depreciation, amortisation, exceptional £643k £73kimpairment charge and interestLoss after tax £(231)k £(1,051)kBasic and diluted loss per share (1.87)p (9.43)pNet assets £2.00m £1.68m The 2006 results include the acquisition of The Cube Group of Companies Limitedand the one-off contribution to revenue and profit due to the previouslyannounced contract termination with Vitus Apotek. Operational Highlights • Acquisition of Cube completed and re-launch of broader offer in progress • Management team strengthened, with appointment of new Finance Director, Chief Operating Officer and Business & Legal Affairs Director • Impulse Network transfer from "free to retail" model to subscription model developing well Commenting on the results and prospects, Bruno Brookes, Chief Executive, said: "Over the past three years, Immedia has continued to provide a high qualitybroadcast service to a range of high street brands. The acquisition of Cube lastyear improved the company's market position by adding premium video content toour tailored radio broadcast offering. Despite the current challenges in the retail and advertising markets, we havedelivered a set of results in line with market expectations." For further information please contact: Immedia Broadcasting Plc Bruno Brookes - Chief Executive +44 (0) 1635 572 800 www.immediabroadcasting.com Hudson Sandler Nick Lyon / Amy Faulconbridge +44 (0) 20 7796 4133 Daniel Stewart & Company Plc Paul Shackleton / Stewart Dick +44(0) 20 7776 6550 www.danielstewart.co.uk Chairman's statement 2006 was a challenging year for both the UK retail sector and the advertisingmarket. Costs have been managed carefully and our focus on a subscription basedbusiness model has helped to drive sales. Turnover was up 48.7% to £4,472,225 (2005: £3,007,688) of which £762,031 wasattributable to The Cube Group of Companies ("Cube"), which was acquired inApril 2006. Encouragingly, organic revenue growth was some 23%. Profitability for the group at the operating profit before depreciation,amortisation, exceptional impairment charge and interest level continued toimprove and was £643,418 against £73,391 in 2005. The group operating lossbefore interest and tax was £249,600 compared to losses of £1,071,737 in 2005.Group losses on ordinary activities before tax reduced to £245,727 compared tolosses of £1,051,416 in the previous year. In the year to 31 December 2006, the acquisition of Cube enlarged Immedia'sservice offering and customer base. The management team was strengthened withFiona Ryder stepping up to the role of Chief Operating Officer and Ross Penneytaking on the role of Director of Business and Legal Affairs. CharlesBarker-Benfield joined the Board in May 2006 as Finance Director. In 2007 the group lost two contracts which will have an impact on turnover andprofit, but following cost reductions, the group will be in a good position tobenefit from new business. Furthermore, we are in discussions with a number ofnew and existing clients and feel confident that new business wins will help tooffset the shortfall. We believe retailers continue to be attracted by in-store media as a premiumtool to build relationships with both customers and staff. The group has ahealthy pipeline of opportunities with established brands in the retail sector.We remain positive about the outlook for 2007. Geoff Howard-SpinkChairman 17 May 2007 Chief Executive's Review I am pleased to present our results for the twelve-month period ended 31December 2006, and to report on Immedia's progress for the current year. Results for the year ended 31 December 2006 Despite the particularly challenging retail market, Immedia has continued toprogress during the year. Turnover was up 48.7% to £4,472,225 (2005: £3,007,688)including £762,031 (25.3%) from the Cube acquisition and operating profit beforedepreciation, amortisation, exceptional impairment charge and interest was up to£643,418 (2005: £73,391). The group operating loss was £249,600 (Cube loss£33,116) compared to losses of £1,071,737 in 2005. Losses on ordinaryactivities before tax reduced to £245,727 compared to £1,051,416 in the previousyear, including a one-off contribution due to the previously announced contracttermination with Vitus Apotek. A combination of carefully managed costs and increased revenues from thesubscription model have ensured that the group's results were broadly in linewith market expectations for the year to 31 December 2006. Acquisition of Cube Last year we acquired Cube, a leader in in-store TV. Whilst Cube is developingwell and has integrated successfully into the Immedia group, it hasunderperformed our initial expectations. This was due in part to a slower thanexpected uptake on planned installations for existing customers and a longerthan anticipated integration between the two companies. We believe Cube has a premium offering and is in a good position to attractfurther clients. We expect an improved performance over the current financialyear. Subscription Channels Following the successful launch and roll-out of IKEA Live! in 2005, Immediasigned a new contract in September 2006 to roll-out the station to all existingand future IKEA stores across the UK for another 3 years. HSBC Live! has also been a success with a further roll-out to 944 sites acrossthe UK by the end of 2007. Lloyds Pharmacy Live! continues to broadcast across 1,400 pharmacies in the UKand includes a mix of music and interactive live programming that entertains andraises awareness on a number of health matters for customers. In 2006, we launched trials of RadioVision, a combination of live radiosynchronized with tailored video content. RadioVision is a major advance in theprovision of in-store marketing and we are pleased to report that there has beenpositive interest from a range of major retailers. The acquisition of Cube meansthe group is now in a position to undertake more of the work for this servicein-house, particularly visual content creation, and to benefit from theextensive visual skills of the Cube team. Further to the announcement made on 17 April 2007 regarding the loss of twocontracts, we are disappointed, but remain confident these will be replaced withnew customers in due course. Management regularly reviews the pipeline ofopportunities whilst continuing to prudently manage the group's cost base.Furthermore, we are in ongoing negotiations to extend contracts with existingcustomers that have been impressed by the services provided by the group. Impulse Live! Network Last year, we presented our action plan to transfer the Impulse Live! networkfrom a "free to retail" model to a subscription model. As part of this action plan, from 11 April 2007 the Impulse Live! radio stationwas no longer broadcast to the independent stores that were receiving theservice free of charge. We expect this action to deliver annual savings ofapproximately £180,000 in maintenance and licensing costs. This is a positivestep towards increasing the profitability of our existing infrastructure, andhighlights the Company's focus on the subscription-based model. Emphasis isbeing placed on a mix of national advertising subscription and productionrevenue. Immedia is also developing a strategy to include local advertisingacross its remaining networks to the convenience sector. Outlook Over the past three years, Immedia has continued to provide a high qualitybroadcast service to a range of high street brands. The acquisition of Cubelast year added premium video content to our original tailored broadcastoffering. Following the integration of Cube, we are confident that the Companyhas a broader and more flexible offer. Despite the current challenges in the retail and advertising markets, we havedelivered a set of results in line with market expectations. The Company has ahealthy pipeline of new opportunities with a number of potential new clients,and we look forward to making further progress during 2007. Bruno BrookesChief Executive 17 May 2007 Consolidated Profit and Loss accountfor the year ended 31 December 2006 Note 2006 2005 £ £ TurnoverContinuing operations 3,710,194 3,007,688Acquisitions 762,031 - Group turnover 4 4,472,225 3,007,688 Cost of sales (1,958,973) (1,308,281) Gross profit 2,513,252 1,699,407Administrative expenses(including in 2005 an exceptional impairment charge of £445,849) (2,762,852) (2,771,144) Operating loss (249,600) (1,071,737)of which:Continuing operations (216,484) (1,071,737)Acquisitions (33,116) - Operating profit before depreciation, amortisation,exceptional impairment charge and interest 643,418 73,391Depreciation and amortisation (893,018) (699,279)Impairment charge - (445,849)Net interest receivable 3,873 20,321 Interest receivable and similar income 21,428 37,817Interest payable and similar charges (17,555) (17,496) Loss on ordinary activities before taxation (245,727) (1,051,416)Tax on loss on ordinary activities 3 14,488 - Loss for the financial year (231,239) (1,051,416) Loss per share - basic and diluted 5 (1.87) p (9.43) p The 2006 results include the acquisition of The Cube Group of Companies Limited. Consolidated statement of total recognised gains and lossesFor the year ended 31 December 2006 Note 2006 2005 £ £ Loss for the financial year (231,239) (1,051,416)Effect of adoption of FRS 25 on 1 January 2005 - (10,546) Total recognised gains and losses relating tothe financial year 15 (231,239) (1,061,962) There is no difference between the loss on ordinary activities before taxationand the retained loss for the financial years stated above, and their historicalcost equivalents. Consolidated Balance Sheetat 31 December 2006 Note 2006 2005 £ £Fixed assetsIntangible assets 7 1,658,216 36,637Tangible assets 8 561,687 1,155,712 2,219,903 1,192,349 Current assetsStock and work in progress 9 2,409 -Debtors 10 1,229,434 866,422Cash at bank and in hand 246,147 838,452 1,477,990 1,704,874Creditors: amounts falling due within one year 11 (1,698,811) (1,217,614) Net current (liabilities)/assets (220,821) 487,260 Total assets less current liabilities 1,999,082 1,679,609 Creditors: amounts falling due after more than one year 12 (3,187) - Net assets 1,995,895 1,679,609 Capital and reservesCalled up share capital 13 1,334,056 1,173,897Share premium account 14 3,525,727 3,390,411Merger reserve 14 2,245,333 2,245,333Shares to be issued 14 237,175 -Profit and loss account 14 (5,346,396) (5,130,032) Equity shareholders' funds 15 1,995,895 1,679,609 Consolidated Cash Flow Statement For the year ended 31 December 2006 Note 2006 2005 £ £ Cash inflow from operating activities 16 861,124 464,524 Return on investments & servicing of financeInterest received 21,428 37,817Interest paid (17,555) (17,496) Net cash inflow from return on investments & servicing of finance 3,873 20,321 TaxationCorporation tax paid (1,882) - Capital expenditure & financial investmentPayments to acquire tangible fixed assets (200,894) (473,978)Receipts from sales of tangible fixed assets - 500 Net cash outflow on capital expenditure and financial investment (200,894) (473,478) Acquisitions and disposalsPayments to acquire subsidiary 6 (1,280,969) -Net cash acquired with subsidiary 6 204,236 - Net cash outflow for acquisitions and disposals (1,076,733) - Net cash (outflow)/inflow before management of liquid resources and (414,512) 11,367financing Management of liquid resourcesCash withdrawn from short-term deposit 17 790,000 210,000 FinancingShare issue costs (taken against share premium account) - (10,498)Repayment of bank loans 17 (9,500) -Repayment of other loans 17 (175,000) (50,000)Repayment of leases 17 (4,932) -Proceeds of exercise of share options 14,875 -Purchase of own shares for Immedia Employee Benefit Trust - (6,865)Effect of adoption of FRS 25 on 1 January 2005 - 28,253 Net cash outflow from financing (174,557) (39,110) Increase in cash in the year 200,931 182,257 Reconciliation of net cash flow to movement in net fundsIncrease in cash in the year 200,931 182,257Net debt acquired on purchase of subsidiary 6 (33,314) -Cash outflow from decrease in liquid resources (790,000) (210,000)Revaluation of Other loans under FRS 25 13,367 -Cash outflow from decrease in debt 189,432 44,382 Movement in net funds (419,584) 16,639Net funds at 1 January 643,497 626,858 Net funds at 31 December 17 223,913 643,497 Notes to the preliminary results 1 Basis of preparation The financial information set out above does not constitute the company'sstatutory accounts for the years ended 31 December 2006 or 2005 but is derivedfrom those accounts. Statutory accounts for 2005 have been delivered to theregistrar of companies, and those for 2006 will be delivered in due course. Theauditors have reported on those accounts; their report was (i) unqualified, (ii)did not include a reference to any matters to which the auditors drew attentionby way of emphasis without qualifying their report and (iii) did not contain astatement under section 237(2) or (3) of the Companies Act 1985. The 2006accounts will be delivered to the registrar of companies following the company'sAnnual General Meeting. The Annual Report and Notice of Annual General Meetingwill be posted to the shareholders by 15 June 2007. This preliminaryannouncement was approved by the Board on 17 May 2007. 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. T This group reconstruction has been accounted for as a merger aspermitted by FRS 6 acquisitions and mergers. The Cube Group of Companies was acquired on 8 May 2006 and has been accountedfor by the acquisition method of accounting. 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 2006 the EBT held 213,500 shares (31 December 2005: 563,500shares) in Immedia Broadcasting Plc in trust for employees against the futureexercise of options granted under the Immedia EMI Share Option Scheme. UnderUITF abstract 38 - Accounting for Employee Share Option Trusts - the own sharesheld in the trust have been deducted from shareholders' funds (note 15). 3 Tax on loss on ordinary activities Analysis of charge in year 2006 2005 £ £UK Corporation taxAdjustments in respect of prior periods (14,488) - 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. The deferred tax assetarising in respect of timing differences between capital allowances anddepreciation of £270,000 (2005: asset of £211,000) has been added to (2005:added to) accumulated trading losses. The residual trading losses create adeferred tax asset of £611,000 (2005: £1,173,000) which has not been recogniseddue to the uncertainty of the timing of its eventual crystallisation. 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 2006 2006 2006 2005 2005 2005 £ £ £ £ £ £Region of destinationSales to third parties 3,504,889 967,336 4,472,225 2,283,603 724,085 3,007,688 Net assetsSegment net assets 1,871,184 125,749 1,996,933 817,509 257,100 1,074,609Unallocated net assets (1,038) 605,000 Total net assets 1,995,895 1,679,609 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 2006 Number 2005 Number Weighted average number of shares in issue 12,772,489 11,707,910Less weighted average number of own shares (383,747) (563,500) Weighted average number of shares in issue for basic loss per share 12,388,742 11,144,410 The basic and diluted loss per share are calculated using the loss for thefinancial period of £231,239 (2005: loss £1,051,416). The diluted loss per shareis calculated after reflecting the outstanding share options and conditionalissuable shares at the year end. In accordance with FRS 22 the diluted basicloss per share is stated as the same amount as basic as there is no dilutiveeffect. 6 Acquisition On 8 May 2006 the company completed its acquisition of The Cube Group ofCompanies Limited. The purchase consideration, which was satisfied in cash and in shares, waspayable partially on completion and partially on satisfactory completion ofcertain post acquisition performance criteria, as follows: Cash Shares Total £ £ £ConsiderationPaid on completion 800,000 326,531 1,126,531Other costs of acquisition 230,969 - 230,969 Conditional consideration paid after completion:Cash 250,000 - 250,000Shares to be issued - 237,175 237,175 Total consideration 1,280,969 563,706 1,844,675 Book value Fair value adjustments Net £ £ £Net assets acquiredTangible fixed assets 431,520 (361,999) 69,521Debtors 222,185 - 222,185Net cash 204,236 - 204,236Creditors payable within one year (313,496) - (313,496)Bank loans (23,604) (23,604)Obligations under finance leases (9,710) (9,710) Total net assets acquired 511,131 (361,999) 149,132 Goodwill arising on acquisition (note 7) 1,695,543 The consolidated results of The Cube Group of Companies Limited and its subsidiary Cube Music Limited, directly priorto and post acquisition were as follows: Year to 30 7 months to 8 8 months to 31 September 2005 May 2006 December 2006 £ £ £ Turnover 1,677,862 1,069,437 762,031 Operating profit/(loss) 157,660 6,474 (32,035) Interest receivable/(payable) (3,904) (1,167) (1,081) Profit/(loss) before taxation 153,756 5,307 (33,116) Taxation (16,315) - 14,488 Profit/(loss) after taxation 137,441 5,307 (18,628) The results to 30 September 2005 were unaudited. At acquisition, Cube Music Limited's accounts included its directors' historicrevaluation of its music video library within tangible fixed assets amounting to£362,000. This video library had zero historic cost and to align with groupaccounting policy has been adjusted to a notional value of £1 on acquisition. The goodwill arising on acquisition is being amortised over 20 years. 7 Intangible fixed assets Goodwill £CostAt beginning of year 109,900Acquisition (note 6) 1,695,543 At end of year 1,805,443 AmortisationAt beginning of year 73,263Charge for year 73,964 At end of year 147,227 Net book valueAt 31 December 2006 1,658,216 At 31 December 2005 36,637 8 Tangible fixed assets Plant and Fixtures & Network Total machinery fittings Equipment £ £ £ £CostAt beginning of year 615,366 245,852 2,378,993 3,240,211Acquisition 52,009 69,011 - 121,020Additions 8,365 27,132 165,397 200,894 Disposals - (6,375) (351,873) (358,248) At end of year 675,740 335,620 2,192,517 3,203,877 DepreciationAt beginning of year 441,317 153,773 1,489,409 2,084,499Acquisition 25,047 26,452 - 51,499Charge for year 127,089 67,732 624,233 819,054On disposals - (2,125) (310,737) (312,862) At end of year 593,453 245,832 1,802,905 2,642,190 Net book valueAt 31 December 2006 82,287 89,788 389,612 561,687 At 31 December 2005 174,049 92,079 889,584 1,155,712 The net book value of fixtures and fittings includes an amount of £3,036 (2005: £nil) in respect of assets held under finance leases. 9 Stocks 2006 2005 £ £ Work in progress 2,409 - 10 Debtors 2006 2005 £ £ Trade debtors 1,009,127 472,862Other debtors and prepayments 220,307 393,560 1,229,434 866,422 All debtors are due within one year. 11 Creditors: amounts falling due within one year 2006 2005 £ £ Bank overdrafts 3,352 6,588Bank loans (note 12) 10,917 -Other loans (note 12) - 188,367Obligations under finance leases 4,778 -Trade creditors 653,878 396,683Other taxation and social security 125,684 66,048Accruals and deferred income 900,202 559,928 1,698,811 1,217,614 Bank loans comprise two five-year term loans arranged with the Royal Bank ofScotland under the DTI sponsored small companies' loan guarantee scheme by CubeMusic Limited. Loan 1, originally for £50,000, has £6,667 outstanding whichwill be repaid in 2007 and carries a fixed interest rate of 9.4%. Loan 2,originally for £20,000, has £7,437 outstanding of which £4,250 will be repaid in2007 and £3,187 in 2008 and carries a fixed interest rate of 8.7%. The Other loans were unsecured and were repaid during 2006. They carried afixed interest rate of 8.0%. Finance leases are due within one year. 12 Creditors: amounts falling due after more than one year 2006 2005 £ £ Bank loans (see note 11) 3,187 - Analysis of debt: 2006 2005 £ £Falling due in one year or less, or on demand (see note 11)Bank loans 10,917 -Other loans - 188,367 Falling due between one and two years: (see note 11)Bank loans 3,187 -Other loans - - 14,104 188,367 13 Called up share capital 2006 2005 £ £Authorised36,000,000 Ordinary shares of 10 pence each 3,600,000 3,600,000 Allotted, called up and fully paid13,340,563 Ordinary shares of 10 pence each 1,334,056 1,170,791 Liabilities classified as shares - 3,106Shares classified in shareholders' funds 1,334,056 1,170,791 1,334,056 1,173,897 Movements in yearAt beginning of year 1,173,897 1,170,791Liabilities classified as shares (repaid)/reclassified (3,106) 3,1061,632,653 Ordinary shares of 10 pence each issued * 163,265 - At end of year 1,334,056 1,173,897 * These shares were issued at 20 pence each 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 10,000 3.75 penceImmedia EMI Share Option Scheme 29 Oct 2003 35,000 20 penceImmedia EMI Share Option Scheme 11 Dec 2003 90,000 110 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. 14 Share premium and reserves Share premium Shares to be Merger reserve Profit and account issued loss account £ £ £ £ At beginning of year 3,390,411 - 2,245,333 (5,130,032)Retained loss for the year - - - (231,239)Released on repayment of Other loan under FRS 25 (27,949) - - -New shares issued 163,265 - - -Conditional shares pending issue - 237,175 - -Proceeds from exercise of share options - - - 14,875 At end of year 3,525,727 237,175 2,245,333 (5,346,396) 15 Reconciliation of shareholders' funds 2006 2005 £ £ Opening shareholders' funds 1,679,609 2,725,753Loss for the financial year after taxation (231,239) (1,051,416)Issue of new shares 326,530 -Conditional shares 237,175 -Proceeds from exercise of share options 14,875 -Share issue costs - (10,498)Effect of adoption of FRS 25 on 1 January 2005 - 28,253 Released on repayment of Other loan under FRS 25 (31,055) (5,618)Purchase of own shares for Immedia Employee Benefit Trust - (6,865) Closing shareholders' funds 1,995,895 1,679,609 16 Reconciliation of operating loss to net cash flow from operating activities 2006 2005 £ £ Operating loss (249,600) (1,071,737)Depreciation, amortisation and impairment of tangible and intangible assets 893,018 1,145,128(Profit) on disposal of fixed assets - (500)(Increase) in stock and work in progress (2,409) -(Increase)/decrease in debtors (140,827) 259,182Increase in creditors 360,942 132,451 Net cash inflow from operating activities 861,124 464,524 17 Analysis of changes in net funds during the year Cash at bank Short-term Bank loans Other loans Obligations Total deposits under finance and in hand leases £ £ £ £ £ £ At beginning of year 41,864 790,000 - (188,367) - 643,497Acquisition (note 6) - - (23,604) - (9,710) (33,314)Net cash flow 200,931 (790,000) 9,500 175,000 4,932 (399,637)Revaluation of Other loans - - - 13,367 - 13,367 At end of year 242,795 - (14,104) - (4,778) 223,913 This information is provided by RNS The company news service from the London Stock Exchange