INC.L Regulatory News (INC)

6 Dec 2007 07:00

Avanti Screenmedia Group PLC06 December 2007 6 December 2007 Avanti Screenmedia Group plc ("Avanti" or the "Company") (AIM: ASG.L) Preliminary Results for the year ended 30 June 2007 Avanti Screenmedia Group plc, the AIM listed leading digital screen mediaspecialist, announces preliminary results for the year ended 30 June 2007. KEY POINTS • Demerger of networks business completed in April 2007; • Turnover increased by 45% (2007 - £4.54m, 2006 - £3.13m)*; • Operating Loss increased to £5.6m (2006: £3.3m)*; • New CEO, Simon Rees, appointed in June 2007; • New strategy implemented; • Successful fundraising in October 2007; • Strong pipeline of national advertising sales; and • Extension of key Mall contracts. * Based on continuing operations Simon Rees, CEO of Avanti Screenmedia Group plc, commented: "Results for the year under review reflect a difficult period where managementfocus was diverted into the de-merger of the two businesses, away from the dailyneeds of a young company operating in a relatively new media sector. Since thede-merger, the business has identified and started to implement a new strategy,concentrating on client acquisition, sales generation, and the strengthening ofrelations with existing clients. Five months into the new financial year, theCompany is making good progress." -ends- Enquiries: Avanti Screenmedia Group plc 020 7902 2345Simon Rees, CEO Charles Stanley Securities 020 7149 6000Nominated AdviserRussell Cook/Freddy Crossley Bishopsgate Communications Limited 020 7562 3350Jenni Herbert/Louise Cook CHAIRMANS REPORT Introduction I am pleased to present our results for the year ending 30 June 2007. Avanti is a leader in the out-of-home digital sector, building digital screennetworks in retail, leisure and shopping mall environments for advertising,product promotion and customer entertainment. The key event that dominated our year was the demerger of Avanti CommunicationsGroup plc ("Avanti Communications"), the Company's networks business, which wascompleted on the 16 April. There is no longer any corporate connection betweenthe two companies. The board of Avanti was restructured upon the demerger with departing directors,David Williams, David Bestwick, William Wyatt and Alan Foster, whom we thank fortheir efforts for the Company, and new directors Stuart Chambers and myself asthe new Chairman. Avanti Communications had consumed an increasingly significant proportion ofexecutive management time, resulting in less focus on the media business, whichhad also experienced delays in signing new retail contracts which were notfinalised until early 2007. In June the Company completed the necessary move from its old premises in NorthLondon to Ludgate House, Blackfriars which again caused disruption, but on apositive note this resulted in easier access for our sales team to advertisingagencies in the West End, and provided a more suitable environment for ourbusiness. As a result of the above, and the relatively new nature of our client contracts,advertising revenues have suffered during the year with the mall businessachieving low national sales, and the leisure medium having lower year-on-yearsales, mainly as a result of the World Cup activity in the previous year. Thefinancial position has been exacerbated by the onerous terms of certain clientcontracts that were previously entered into, geared to delivering critical masson the back of generating robust advertising revenues. The advertisinggenerated to date has not achieved such equilibrium and therefore following thedemerger the management of the Company has embarked on a strategy to turn thecompany into profitability. Forward Strategy We are pleased to announce that we have secured the appointment of Simon Rees asour new CEO, taking up his role in mid June 2007. Simon was formerly ChiefExecutive of WPP's media company MindShare UK. The benefits of his appointment are already beginning to be felt by the Company.Avanti has embarked on a new strategy; renegotiating and extending existingcontracts; maximising advertising revenue streams across existing mediums;reducing overhead expenditure; and ensuring that the existing business enjoysthe requisite focus whilst at the same time exploring new businessopportunities. Dividend The Board concludes that it would not be appropriate to recommend payment of adividend. Outlook I would like to thank the staff of Avanti for their exceptional hard work anddedication. The implementation of the new strategy and cost reductions havealready shown significant effects in the current financial year and our strategywill be to continue this process accordingly. The fundraisings have given us thefinancing platform and stability to continue improving trading efficiencies andincreasing sales. I believe we have made good progress this year and lookforward to reporting further progress in 2008. Mick DesmondChairman CHIEF EXECUTIVE'S REPORT Summary of Avanti's business Media Avanti is a UK leader in the provision of screenmedia services, whereby itbuilds satellite or terrestrial content distribution and screen networks,creates channel strategies, makes video content and sells media space. Clientsuse this service to entertain customers, build their brand, promote products andsell advertising at, or close to, the point of sale. The Company supplies these services primarily to three core sectors: Leisure,Retail and Shopping Malls. Leisure Avanti supplies pop music video channels to pubs and clubs, and during the yearlaunched Genie 3TM, a video DJ system which enables bar managers to take controlof and customise their audio visual entertainment. Avanti also sellsadvertising on these channels; clients are attracted to Avanti's ability todeliver their message to an elusive 18-30 demograph, which is not typically alarge consumer of media and therefore hard for advertisers to reach. The Setanta Sports contract for advertising on the English and ScottishPremiership football channels into pubs in the UK was announced in September2006 and has shown early promise. Avanti has exclusive rights to selladvertising on this channel. In addition Setanta Sports have also won therights for the FA Cup and England matches for which Avanti is seeking a similararrangement. Retail Avanti completed the roll-out to 200 Spar stores in March 2007 and, to date,Spar have experienced significant increases in like for like sales in thesestores. Whilst it is early days Avanti has booked advertising revenues with anumber of major brands across the network including Coca Cola, Walkers, and theGuardian newspaper. In addition Avanti are looking to increase the estate withfurther stores from Spar and other convenience retailers. Avanti also signed a one year contract with Marks and Spencer Group PLC ("M&S").Following a successful three month trial in four M&S London Flagship storesusing interactive touch screen kiosks, it has been agreed to expand to a further40 stores. The kiosks assist customers in the selection of all M&S wines.Located within the wine section, they allow consumers the potential to selectadditional food purchases recommended by the kiosks. The kiosks have alsoattracted considerable interest from other retailers and we expect furthercontracts in the next financial year. The Company also signed an advertising contract with Electric Health Media (EHM)Limited. EHM offers patient information and advertising on screens in NHS Trusthospitals and GP surgeries throughout England. The contract gives Avanti therights to sell local advertising for EHM on their current portfolio of 150screens, which EHM expect to expand to 350 screens by spring 2008. Shopping Malls Avanti operates the country's largest shopping mall screenmedia networkinstalled in 33 malls with an audience of over 400 million visits per annum.The channels provide a combination of information, entertainment and productpromotion and offer advertisers an opportunity to create a call to action closeto the point of sale, directing customers' shopping journeys and influencingbehaviour. The shopping mall medium is still relatively new for nationaladvertising. To address this market Avanti has established a commission-onlylocal sales force which is beginning to generate revenues across this network. Current Trading The Company is now re-focussed on generating new business, deliveringadvertising sales and servicing its client base. The Company has made a strong start to the new financial year on a number offronts. It has extended its contract with its largest client, The MallCorporation, for a further three years; and has successfully established itslocal sales team, which is already generating significant (gross) advertisingrevenues. National advertising sales across the Company are performing strongly during thefirst three months of the current financial year. Booked (gross) advertisingsales for the current financial year have already exceeded those achieved forthe entire 12 months to 30 June 2007. The last few weeks have seen a softeningof the retail markets as we approach the busy Christmas period but it is tooearly to say whether this will impact on the excellent progress that Avanti hasmade so far this year. Simon Rees Chief Executive CONSOLIDATED PROFIT AND LOSS ACCOUNT Unaudited Audited Year ended Year ended 30 June 2007 30 June 2006 (As restated) £ £ TurnoverContinuing operations 4,543,061 3,131,770Disposals 2,107,410 9,719,928 6,650,471 12,851,698Cost of salesContinuing operations (4,517,564) (2,256,213)Disposals (1,971,767) (1,124,179) (6,489,331) (3,380,392)Gross ProfitContinuing operations 25,497 875,557Disposals 135,643 8,595,749 161,140 9,471,306Administrative expensesContinuing operations (5,166,979) (4,192,502)Disposals (2,480,104) (2,686,744) (7,647,083) (6,879,246)Exceptional ItemDemerger Costs (505,663) -Intercompany balances written off on demerger (22,986,671) - (31,139,417) (6,879,246) Operating (Loss) / ProfitContinuing operations (5,647,144) (3,316,945)Disposals (25,331,132) 5,909,005 (30,978,277) 2,592,061 Interest receivable and similar income 482,193 594,531Interest payable and similar charges (134,620) (189,398) (Loss) / Profit on Ordinary Activities before (30,630,704) 2,997,194Taxation Taxation - - Retained (Loss) / Profit transferred to Reserves (30,630,704) 2,997,194 Basic (loss) / earnings per shareContinuing operations (23.88)p (18.25)pDisposals (104.33)p 34.14p Diluted (loss) / earnings per shareContinuing operations (23.88)p (18.25)pDisposals (104.33)p 53.04p CONSOLIDATED BALANCE SHEET Unaudited Audited As at As at 30 June 30 June 2007 2006 (As restated) £ £ Fixed AssetsTangible assets 4,105,047 13,302,364Intangible assets 1,965,119 1,969,047 6,070,166 15,271,411Current AssetsStock of goods for resale 244,853 505,356Debtors 1,589,525 16,026,904Cash at bank and in hand 821,544 12,158,864 2,655,922 28,691,124 Creditors: amounts falling due within one (2,978,690) (5,164,134)year Net current (liabilities) / assets (322,768) 23,526,990 Total assets less current liabilities 5,747,398 38,798,401 Creditors: amounts falling due after one (100,974) (1,040,571)year Net assets 5,646,424 37,757,830 Capital and ReservesCalled up share capital 257,235 228,115Share premium account 36,777,767 31,781,174Capital redemption reserve 12,758 -Share based payment reserve 196,967 74,371Profit and loss account (31,598,303) 5,674,170 5,646,424 37,757,830 CONSOLIDATED CASH FLOW STATEMENT Unaudited Audited Year ended Year ended 30 June 2007 30 June 2006 £ £ Net cash outflow from operating activities (16,270,418) (6,042,873) Returns on investments and servicing of financeInterest received 482,193 594,531Interest paid (134,620) (189,398) Net cash outflow from returns on investments and (15,922,846) (5,637,740)servicing of finance Capital expenditure and investmentPayments to acquire tangible fixed assets (585,994) (11,023,270) Net cash outflow from capital expenditure and (585,994) (11,023,270)financial investment Net cash outflow before financing (16,508,840) (16,661,010) FinancingIssue of ordinary share capital 4,971,000 24,500,000Share based payments 122,596 74,371New loans - 71,522New finance leases and hire purchase obligations 309,955 1,082,675Capital element of finance lease and hire purchase (156,632) (384,092)paymentsCapital element of loan repayments - (111,916) Net cash inflow from financing 5,246,919 25,232,560 (Decrease) / Increase in cash (11,261,921) 8,571,550 NOTES TO THE ACCOUNTS 1. Presentation of results This Preliminary Statement was approved by the directors on 5 December 2007. The results have been prepared using accounting policies and practicesconsistent with those adopted in the 2007 Report and Accounts but have not beenaudited. The audited results of Avanti Screenmedia Group plc for the twelve months ended30th June 2006 have been filed with the Registrar of the Companies and on whichthe auditors gave an unqualified audit opinion. The financial information contained in this Preliminary Statement does notconstitute statutory accounts as defined by Section 240 of the Companies Act1985. Basis of Consolidation The Group financial statements consolidate the financial statements of thecompany and of its subsidiary undertakings. Whilst upon the acquisition of abusiness, fair values are attributed to the Group's share of the net tangibleassets and where the cost of acquisition (being the fair value of the purchaseconsideration and the expenses of the acquisition) exceeds the fair valuesattributable to such net assets, the difference is treated as purchasedgoodwill. Intercompany loan written off on Demerger As part of the demerger Avanti Screenmedia Group plc waived the repayment ofintercompany loans from companies within Avanti Communications Group plc. 2 Turnover Turnover represents net invoiced sales of services provided and goods sold, netof value added tax. Turnover for the year ended 30th June 2007 was split betweenthe two divisions as follows : 2007 £m 2006 £mTurnover from continuing Media operations 4.543 3.132Turnover from discontinued Network operations 2.107 * 9.720 Of the total turnover for the Networks business, the group derived £2.107million(2006 - £4.320m) from European markets outside the United Kingdom. In view ofthe nature of the business, the Directors do not consider a geographicalanalysis of results to be relevant. * Note the figures relates to the period to the 31st March 2007 as aresult of the demerger. 3 Earnings per share The calculation of the basic and diluted (loss) / earnings per share is based onthe earnings attributable to ordinary shareholders, divided by the weightedaverage number of shares in issue during the year. Year ended Year ended 30 June 2007 30 June 2006 £ £Computation of basic (loss) / earnings Continuing Disposals Continuing Disposalsper share Net (loss) / profit (5,705,448) (24,925,256) (3,441,061) 6,438,254 Weighted average number of shares 23,891,900 23,891,000 18,855,333 18,855,333outstanding Basic (loss) / earnings per share (23.88)p (104.33)p (18.25)p 34.14p Computation of diluted earnings per share Net (loss) / profit (5,705,448) (24,925,256) (3,441,061) 6,438,254 Weighted average number of shares 23,891,900 23,891,900 18,855,333 12,138,947outstanding Diluted (loss) / earnings per share (23.88)p (104.33)p (18.25)p 53.04p There is no dilution to the basic loss per share in the current year arisingfrom the share options in issue. 4 Reconciliation of operating (loss) / profit to net cash flows from operating activities 30 June 30 June 2007 2006 £ £ Operating (loss) / profit (30,978,277) 2,592,061 Depreciation 1,285,459 1,408,519 Amortisation of intangible fixed assets - (397,047) (Decrease) in stock (260,503) (396,600) Decrease / (Increase) in debtors 15,406,503 (10,659,976) (Decrease)/ Increase in creditors (1,723,599) 1,410,170 Net cash (outflow) from operating (16,270,417) (6,042,873) activities 5 Analysis of net funds /(debt) 30 June Other 30 June 2006 Cash flow movements 2007 £ £ £ £ Cash at bank and in hand 12,158,864 (11,261,919) (75,401) 821,544 Bank overdraft (140,335) - 75,401 (64,934) Loans due within one year (121,516) - 121,516 - Loans due after one year (401,423) - 401,423 - Finance leases and hire purchase agreements (1,530,250) 309,955 602,111 (618,184) 9,965,340 (10,951,964) 1,125,050 138,426 6 Post Balance Sheet Events The Company announced on 21 September 2007 that it had raised a minimum of£680,000 by way of convertible loans and a conditional placing of new OrdinaryShares. This total was subsequently increased to £785,485. Charles StanleySecurities and Seymour Pierce have, on behalf of the Company, completed aconditional placing (the "Placing") of 6,578,366 new Ordinary Shares of 1p each(the "Placing Shares") at a price of 7 pence per Placing Share withinstitutional and other investors to raise approximately £460,485. The Board isalso pleased to announce that it has secured a further £325,000 through CUL, inaddition to the £100,000 announced on 4 September 2007. The Company obtainedshareholder approval of certain resolutions at an extraordinary general meetingto held on 18 October 2007 (the "EGM"). Admission of the Placing Shares totrading on AIM occurred on 19 October 2007. The convertible loans carry aninterest rate of 10% and are converted / repaid at a conversion price of 8.375pence per share on or before 21 March 2008. This information is provided by RNS The company news service from the London Stock Exchange