IME.L Regulatory News (IME)

21st April 2016 

IMMEDIA GROUP PLC

Preliminary Statement of Results for the year ended 31 December 2015

Immedia Group Plc (AIM: IME) ("Immedia" or the "Group") a premier supplier of digital music, entertainment and commerce channels to leading brands, today announces its preliminary financial results for the year ended 31 December 2015.

Overview

· Diversification into new non-retail corporate markets

· New sectors added in 2015

· Significant investment in studio and IT technology

· Re-classification of Audioboom investment

· Cash used to repay debt

· Significant new client win post year-end

Financial Summary

Bruno Brookes, Chief Executive of Immedia, said: 

 "During a challenging 2015 we took the opportunity to diversify our client base through expanding our channel development to audiences beyond retail, including workforce, fans and education, which led to a significant client win with BT's network business Openreach.

Although retail remains a core sector for Immedia, as shown by our recently announced contract with SUBWAY®, our investment in multifunctional app technology hosted on Immedia's Dreamstream platform means we can reach any audience at any time, in any place.

We are engaging new clients across all our sectors and expect to provide you with positive news in the coming months. The Board is confident that the Group is well positioned to capitalise on our first to market solutions in the short to mid-term."

Enquiries:

Chairman's Statement

As indicated in the trading update of 24 March, 2016, Immedia broke even at the "Profit from Operations" level, for the year ended 31 December 2015.

On revenue of £2,366,293 (2014: £2,578,740), down 8% on the previous year, the Group delivered EBITDA of £54,767 (2014: £204,307) and profit before tax of £5,379 (2014: £150,930) which translates to pre-tax earnings per share of 0.04p, compared to 1.1p in 2014.

Cash generated from operating activities has been strong with a £311,104 year-on-year uplift, although the balance sheet has seen the impact of a decline in the valuation of the strategic investment in Audioboom and of deferred tax assets.

Immedia reduced debt by £111,586 and the Group is now debt free, save for £8,771 of lease liabilities.

The current year has started well with the announcement of a five-year contract to supply SUBWAY® with branded in-store music and the renewal of the contract with BT Group plc for its Openreach service.

Geoff Howard-Spink

Chairman

Chief Executive's Review

Results

I am pleased to present our full year results for the financial year ended 31 December 2015. The Group produced a small profit before tax of £5,379 on revenues of £2,366,393. However, the Group made a total comprehensive loss of £446,881, after a deferred tax charge of £100,060 and the fair value adjustment of our strategic investment in the AIM-quoted audio social media platform company, Audioboom Group plc (AIM: BOOM) leading to a loss on this investment of £352,200.

Following reassessment by the Board, the investment in Audioboom has been reclassified as available for sale as this more appropriately reflects our reason for making the investment; this will move any future volatility in valuation of the investment from the Profit and Loss account directly to Reserves.

Cash generated from operations was strong with a £311,104 year on year uplift; debt was reduced by £111,586 (and by year end was just £8,771). Net funds (i.e. cash less debt) increased by £140,676.

Across the year, we made good progress in our new business development to offset the expired contract with Lloyds Banking Group plc. This included a contract to launch a channel for BT's Openreach business.

The business

We have long been known as a 'music to retail' business when in fact the core strength of Immedia is everything in radio production and technology for delivery to hard-to-reach audiences. Our AV technology and original concepts have provided our clients with innovative ways in which to capture the imagination of their core audiences.

As we have expanded our channel development to audiences other than retail, we have recognised the opportunity to win new contracts and provide channels in three other key audience strands including workforce, fans, and education.

Using our multifunctional app technology hosted on Immedia's Dreamstream platform, we are able to reach audiences at any time, in any place. We are engaging new clients in all of these sectors and expect to provide you with positive news in the coming months.

Immedia is an established production company with a reputation for delivering excellent services to some of the UK's most celebrated brands. My aim remains to build a substantially profitable business for all shareholders.

Current trading and future prospects

On 15 April we announced a substantial five year contract with the European Independent Purchasing Company Limited ("EIPC"), a non-profit making organisation owned by SUBWAY® franchisees, to provide language specific in-store music and marketing channels called SUBWAY® Radio to SUBWAY® restaurants in seven international territories. We have since launched the UK/Ireland service providing hardware, music and marketing content. The contract win has already opened a new opportunity for another international retail business relationship.

Audio is the new 'sweet spot' in the digital world. In the first three months of 2016, I have been extremely encouraged by an unprecedented number of strong and relevant opportunities who want to work with Immedia. We will keep shareholders informed of any developments as the year progresses.

Bruno Brookes

Chief Executive

Financial Review

Group trading results

2015 was a challenging year during which the directors guided the business through transition to important new sectors of operation thus diversifying the base from which current and future activity derives. The year-on-year net reduction in revenues of 8.2% nevertheless includes positive progress made towards replacing business from Lloyds Banking Group plc, a significant customer whose contract expired in 2015. Further developments made in the second half of 2015 are expected to continue positive progress in the strategic evolution of the business through 2016.

Whilst changes within the mix of services delivered to customers and continued competition on pricing have contributed to reduced gross profit percentages in 2015, we expect growth in our new and proprietary services to help counter the effects of margin erosion.

New revenue streams originally developed and trialled during 2014 have proved successful in 2015 and as a result our expanded capabilities in new methods of communication with much wider customer audiences (including corporates in a number of non-retail sectors) will contribute positively to our plans for expansion with a broader mix of new customers.

Consolidated balance sheet and cash flows

Following reassessment by the board, the Group's investment in Audioboom Group plc has been reclassified as available for sale as this more appropriately reflects our reason for making the investment, and which requires revised presentation of fair value gains or losses through the Consolidated Statement of Other Comprehensive Income instead of the Profit or Loss account (although there is no net change to shareholders' equity as a result). Details of restatement of 2014 profit before tax and earnings per share are given in note 2 to these financial statements. The effect of the change is to move any volatility in valuation of the investment from the profit and loss account directly to reserves (see statement of changes in equity).

In 2015 we generated cash flows of £263,320 from operating activities (an improvement of £311,104 on 2014) of which we used £121,749 to invest in studio and IT equipment, improved internal systems and the upgrading of our website. We repaid £111,586 of loans and borrowings and ended the year with cash balances up £29,090 at £353,435. Net funds improved by 69% on 2014, up from £203,988 to £344,664 at 31 December 2015.

Charles Barker-Benfield

Finance Director

Consolidated statement of profit or loss

for the year ended 31 December 2015

Consolidated statement of profit or loss and other comprehensive income

for the year ended 31 December 2015

Consolidated balance sheet

At 31 December 2015

Consolidated statement of changes in equity

Consolidated statement of cash flows

for the year ended 31 December 2015

Notes

The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in section 435 of the Companies Act 2006.

The financial information for the year ended 31 December 2014 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified and did not contain a statement under either Section 498 (2) or Section 498 (3) of the Companies Act 2006 and did not include references to any matters to which the auditor drew attention by way of emphasis.

The statutory accounts for the year ended 31 December 2015 have not yet been delivered to the Registrar of Companies, nor have the auditors yet reported on them.

The 2015 accounts will be delivered to the registrar of companies following the Company's Annual General Meeting. The Annual Report and Notice of Annual General Meeting will be posted to the shareholders by 16 May 2016 and will be made available on the Company's website (www.immediaplc.com) at that time.

This preliminary announcement was approved by the Board on 20 April 2016.

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 consolidated financial statements of the Company as at and for the year ended 31 December 2015 comprise the Company and its subsidiaries (together referred to as the "Group"). The Group is involved in marketing and communication services through the provision of interactive digital channels using music, radio and screen-based media to provide brand conversation and engaging entertainment. It also supplies, installs and maintains the equipment required to deliver these services.

2 Basis of preparation

The consolidated financial statements have been prepared and approved by the directors in accordance with International Financial Reporting Standards as adopted by the EU ("Adopted IFRSs").

The Directors have decided it is more appropriate to classify the Company's investment in Audioboom Plc as available-for-sale (see note 6) and have restated the 2014 fair value gains which are now disclosed, together with fair value losses arising in 2015, in the Consolidated Statement of Other Comprehensive Income. The effect of the restatement has been to change the 2014 profit before tax in the Consolidated Statement of Profit or Loss from £668,130 to £150,930 and to change the net fair value gain on available for sale assets in the Consolidated Statement of Profit or Loss and Other Comprehensive Income from £Nil to £517,200. The total comprehensive income for 2014 remains unchanged at £430,890. Earnings per share (eps) for 2014 have been restated following the removal from the calculation of the net fair value gain of £517,200 and are based on the after tax loss of £86,310. Basic eps is thus restated from 3.14 pence to (0.63) pence loss and diluted eps from 3.02 pence to (0.63) pence loss.

Other changes in presentation comprise the classification of available for sale assets with non-current assets in the Consolidated and Company Balance Sheets. Deferred taxation (see note 5) has been restated on a net basis and is classified with non-current assets in the Consolidated and Company Balance Sheets. An investment valuation reserve has been included in Equity (see Consolidated Statement of Changes in Equity and note 6). Intercompany liabilities have been classified as current liabilities in the Company Balance Sheet.

2 Basis of preparation (continued)

The Directors have considered the Group's prospects for winning new business and reviewed a range of possible outcomes when reviewing forecasts of future cash flows of the Group. On the basis of current financial projections prepared to 30 June 2017, recent news of new contracts won and of contract renewals, and continuing improvements in the management of costs, 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.

3 Tax expense

4 Loss per share

5 Deferred tax assets and liabilities

Deferred taxes arising from temporary differences and unused tax losses are summarised as follows:

The deferred tax asset arising in respect of temporary differences between capital allowances and depreciation of £63,000 (2014: asset of £48,000) has not been recognised.

The residual trading losses carried forward of £1,667,000 create a potential deferred tax asset of £333,000 (2014: £356,000) of which £60,700 remains recognised in 2015 (£160,760 remained recognised in 2014). The balance has not been recognised as there is uncertainty over when these amounts will be utilised.

In addition, within the parent company, a deferred tax liability of £103,440 was recognised in 2014 on gains from financial assets classified as available for sale. A deferred tax asset of £103,440 was also recognised in respect of residual losses which will be utilised upon realisation of this gain. These amounts have both been reduced by £70,440 to £33,000 in 2015 following losses from financial assets available for sale, with a net total of £Nil (2014: £Nil).

The movements on deferred tax arising from valuation changes in available for sale assets and related losses have been offset within the Consolidated Statement of Other Comprehensive Income.

6 Available for sale 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.

At 31 December 2015 the investment has been designated as available-for-sale with fair value changes recognised in other comprehensive income. At 31 December 2015 the fair value of the investment was £255,000 (31 December 2014: £607,200) with a fair value loss in 2015 of £ (352,200) recognised in other comprehensive income (2014: profit £517,200).

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 £172,500.