INC.L Regulatory News (INC)

16 Mar 2007 07:01

Avanti Screenmedia Group PLC16 March 2007 AVANTI SCREENMEDIA GROUP PLC INTERIM RESULTS 6 MONTHS TO 31 DECEMBER 2006 16 March 2007 Avanti Screenmedia Group Plc, suppliers of satellite media andtelecommunications services, announces its Interim Results for the 6 monthperiod ended 31 December 2006. Key points Proposed demerger • Announcement today of the proposed demerger of Communications andScreenmedia businesses to build long term shareholder value through greatermanagement focus• EGM for approval convened for 10 April 2007 and, subject to approval,admission to trading on AIM of the demerged Communications business, as AvantiCommunications Group, plc expected on 16 April 2007. Financial Highlights • Turnover of £4.9m (2005: £4.0m), up 22%;• Operating loss of £3.1m (2005: profit £0.1m);• Loss before tax of £2.9m (2005: profit £0.2m);• Cash of £18.1m (2005: £25.2m);• Approximately £5m (gross) raised in January 2007 by way of aninstitutional placing of 1,587,301 ordinary shares at a price of 315p per share. Other Highlights • Communications: on target in manufacturing Avanti's first satellitecalled "HYLAS" • Several new contracts for wholesale satellite capacity and managedservices to governmental projects or resellers; • Screenmedia pipeline strong with successful completion of Woolworthssecond phase 12 store pilot and a new large retailer progressing into a pilot. Commenting on the results, John Brackenbury CBE, Chairman said: "I am pleased to present our results for the six month period ended 31 December2006 and to be able to report further good progress in the development of bothAvanti's businesses. The announcement of the demerger of the Communications andScreenmedia businesses is an essential precursor to the continued successfuldevelopment of both businesses. Whilst the process of demerger has undoubtedlydominated management time for the last six months, the two companies will emergein April stronger, more focussed and better able to communicate their businessmodels and prospects to shareholders and customers alike." Enquiries: Avanti Screenmedia Group plc www.avanti-screenmedia.comDavid Williams, Chief Executive 0207 749 1600Gary Truman, Financial Director 0207 749 1600 SmithfieldJohn Kiely / Will Swan 0207 360 4900 INTERIM RESULTS Chairman's Statement I am pleased to present our results for the six month period ended 31 December2006 and to be able to report further progress in the development of bothAvanti's businesses. We decided to propose to shareholders that the demerger and admission to AIM ofour Communications business take place since the two businesses are different interms of their activities, cash flow profiles and scale. As such, it became moredifficult to manage the growth prospects of both businesses within one group.Both businesses are pioneering in new areas and so it is essential that they beled by focussed management teams with skills in the relevant industry areas. I am therefore pleased to announce that Gary Truman, currently group FinancialDirector, has decided to remain with the Screenmedia business and that, uponcompletion of the proposed demerger, will work in close partnership with StuartChambers, the proposed new Managing Director. Under the Chairmanship of MickDesmond, this team has then the right combination of skills to deliver itsbusiness plan. David Williams will lead the demerged Avanti Communications Groupplc as previously announced, joined by current Chief Technology Officer, DavidBestwick. A new finance director for Avanti Communications Group Plc has beenidentified and, subject to completion of contracts, we expect to announce thisappointment in the next few weeks. Results Given the proposed demerger, for the first time we have presented the results ofthe Screenmedia and Communications businesses separately. Overall the Group reported a loss before tax for the period of £2.9m of which a£1.4m loss is attributable to the Screenmedia business. Shareholders will beaware that the Screenmedia business has erratic revenue flows, with ourfinancial results typically dominated by the timing of just one or two largecontracts for network installation. Also, consultancy did not generate the usualnumber of significant invoices during the period due to an unusual pattern ofcontract milestones. The results for the period reflected these timing factors,however, during the half year period we have also reviewed our cost base inScreenmedia and efficiency gains, as a result of maturing technology, haveenabled us to reduce staff levels where appropriate. Screenmedia Screenmedia remains focussed on the retail and leisure sectors. Avanti's firstmajor success in the retail sector came during the period with a contractawarded for the first 200 SPAR stores. The SPAR Group has approximately 2,700stores and therefore our start point was on a comparatively small scale.However, the initial results have been good and Avanti is hopeful of extendingthe network considerably in the next six to twelve months. Our twelve storepilot project for Woolworths has ended with encouraging results and we arehopeful of further business. Furthermore, an additional retailer, one of thevery best names on the high street, commenced a pilot with Avanti in Decemberand the initial results are encouraging, suggesting in time a larger scale rollout. For competitive reasons we are not naming this customer at this time. We now have two of the country's largest retailers in or beyond pilot projectsand therefore the large installation contracts we are seeking are achievable.Our advertising sales business has been busy launching the SPAR proposition,amongst others, and is now also preparing for the launch of our sales campaignin relation to Premiership football in pubs in partnership with Setanta Sports.Finally, Screenmedia's pub business is poised for another phase of growth withthe imminent release of a new high end audio-visual management product called Genie 3. Communications Our Communications business continues to develop and, as such, we have investedheavily in the management of our satellite procurement contract during theperiod. While we were able to generate a sale in connection with HYLAS capacityat the end of June 2006, future revenues from HYLAS will only be taken toprofits after the launch of the satellite. We are therefore now seeking to builda large order book of revenue through the sale of long term transponder leases.The current consultancy and satellite network services sales activities aregrowing with significant contract wins announced during the period. However, asrevenues are taken over the life of the contract, little of this income has beenrecognised during this half year. Outlook The Screenmedia business now has the position it needs in the retail sector toflourish. Our retail pipeline is strong and shows that Screenmedia is, albeitlater than hoped for, beginning to achieve its objectives in the retail sectorand we expect significant contract wins in the future. In Communications, we are finding early demand for HYLAS capacity is strong andthe launch of our network services products into the market has been wellreceived. We believe the value of our strategic assets created will bedemonstrated as the team builds the order book of revenue. We remain excited about the future prospects of both Screenmedia andCommunications, and look forward to communicating more clearly the merits of theindividual businesses after completion of the demerger. FEJG Brackenbury, CBEChairman16 March 2007 Consolidated Profit and Loss Account For the six months ended 31 December 2006 Note Screenmedia Comms Total Screenmedia Comms Total Screenmedia Comms Total Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Audited Audited Audited 6 months 6 months 6 months 6 months 6 months 6 months Year Year Year ended ended ended ended ended ended ended ended ended 31 31 31 31 31 31 30 30 30 December December December December December December June June June 2006 2006 2006 2005 2005 2005 2006 2006 2006 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Turnover 3,336 1,539 4,875 854 3,147 4,001 3,132 9,720 12,852 Cost of sales (2,407) (1,658) (4,065) (601) (266) (867) (2,256) (1,124) (3,380) --------- -------- -------- -------- -------- --------- -------- ------- ------- Gross profit 929 (119) 810 253 2,881 3,134 876 8,596 9,472 Administrative expenses (2,321) (1,595) (3,916) (2,190) (817) (3,007) (3,957) (2,848) (6,805) --------- -------- -------- -------- -------- --------- -------- ------- ------- Operating (loss)/profit (1,392) (1,714) (3,106) (1,937) 2,064 127 (3,081) 5,748 2,667 Interest receivable - 320 320 (1) 140 139 17 578 595 Interest payable (40) (71) (111) (51) (28) (79) (121) (68) (189) --------- -------- -------- -------- -------- --------- -------- ------- ------- (Loss)/ Profit before taxation (1,432) (1,465) (2,897) (1,989) 2,176 187 (3,185) 6,258 3,073 Taxation - - - - - - - (513) (513) --------- -------- -------- -------- -------- --------- -------- ------- ------- (Loss)/Profit after taxation (1,432) (1,465) (2,897) (1,989) 2,176 187 (3,185) 5,745 2,560 ========= ======== ======== ======== ======== ========= ======== ======= ======= Earnings per share Basic (loss)/earnings per share 3 (12.65)p 1.24p 13.57p ======== ========= ======= Diluted (loss)/earnings per share 3 (11.54)p 1.14p 12.31p ======== ========= ======= Consolidated Balance Sheet at 31 December 2006 Note Screenmedia Comms Total Screenmedia Comms Total Screenmedia Comms Total Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Audited Audited Audited As at As at As at As at As at As at As at As at As at 31 31 31 31 31 31 30 30 30 December December December December December December June June June 2006 2006 2006 2005 2005 2005 2006 2006 2006 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Fixed assets Tangible 4,411 11,803 16,214 2,754 1,303 4,057 3,006 10,296 13,302 assets Intangible assets - goodwill 1,969 - 1,969 1,766 7 1,773 1,969 - 1,969 -------- -------- -------- --------- -------- --------- -------- ------- ------- 6,380 11,803 18,183 4,520 1,310 5,830 4,975 10,296 15,271 Current assets Stocks 346 21 367 112 - 112 505 - 505 Debtors 26,538 5,555 32,093 25,329 7,856 33,185 26,005 14,879 40,884 Cash at bank and in hand 119 17,959 18,078 4,020 21,194 25,214 628 11,531 12,159 -------- -------- -------- --------- -------- --------- -------- ------- ------- 27,003 23,535 50,538 29,461 29,050 58,511 27,138 26,410 53,548 Creditors: Amounts falling due within one year (4,703) (28,037) (32,740) (2,492) (26,057) (28,549) (2,310) (27,711) (30,021) -------- -------- -------- --------- -------- --------- -------- ------- ------- Net current assets 22,300 (4,502) 17,798 26,969 2,993 29,962 24,828 (1,301) 23,527 -------- -------- -------- --------- -------- --------- -------- ------- ------- Total assets less current liabilities 28,680 7,301 35,981 31,489 4,303 35,792 29,803 8,995 38,798 Creditors: Amounts falling due after more than one year (327) (793) (1,120) (512) (411) (923) (154) (887) (1,041) Provision for liabilities and charges - (513) (513) - - - - (513) (513) -------- -------- -------- --------- -------- --------- -------- ------- ------- Net assets 28,353 5,995 34,348 30,977 3,892 34,869 29,649 7,595 37,244 ======== ======== ======== ========= ======== ========= ======== ======= ======= Capital and reserves Called up share capital 229 223 228 Share premium account 31,781 31,781 31,781 Profit and loss account 2,338 2,865 5,235 Shareholders' funds 34,348 34,869 37,244 ======== ========= ======= Consolidated Cash Flow Statement For the six months ended 31 December 2006 Screenmedia Comms Total Screenmedia Comms Total Screenmedia Comms Total Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Audited Audited Audited 6 months 6 months 6 months 6 months 6 months 6 months year year year ended ended ended ended ended ended ended ended ended 31 31 31 31 31 31 30 30 30 December December December December December December June June June 2006 2006 2006 2005 2005 2005 2006 2006 2006 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Net cash inflow from operating activities 1,264 8,416 9,680 (1,077) (1,528) (2,605) (3,535) (2,433) (5,968) Returns on investments and servicing of finance Interest received - 320 320 (1) 140 139 (17) 578 595 Interest paid (40) (71) (111) (51) (28) (79) (121) (68) (189) -------- -------- -------- -------- -------- --------- -------- ------- ------- Net cash outflow for returns on investments and servicing of finance (40) 249 209 (52) 112 60 (104) 510 405 Taxation - - - 8 (8) - - - - Capital expenditure and financial investments Purchase of tangible fixed assets (1,897) (1,795) (3,692) (577) (410) (987) (1,369) (9,655) (11,023) Disposal of tangible - - - - - - - - - fixed assets -------- -------- -------- -------- -------- --------- -------- ------- ------- Net cash (outflow)/ inflow for capital expenditure and financial investment (1,897) (1,795) (3,693) (577) (410) (987) (1,369) (9,655) (11,023) Net cash inflow before financing (673) 6,870 6,197 (1,698) (1,833) (3,532) (5,009) (11,578) (16,587) Financing Repayment of existing loans and overdrafts (140) (56) (196) (906) (564) (1,470) (112) - (112) - - - - - - (18) 90 72 New finance leases - - - 267 - 267 289 794 1,083 Issue of ordinary share capital - - - 24,404 - 24,404 24,500 - 24,500 Intercompany movement 348 (348) - (20,778) 20,778 - (22,299) 22,299 - Capital element of finance lease payments 95 (37) 58 (157) - (157) (384) - (384) -------- -------- -------- -------- -------- --------- -------- ------- ------- Net cash (outflow)/ inflow from financing 303 (441) (138) 2,830 20,213 23,044 1,976 23,182 25,158 -------- -------- -------- -------- -------- --------- -------- ------- ------- (Decrease)/Inc rease in cash (370) 6,429 6,059 1,132 18,380 19,512 (3,032) 8,572 ======== ======== ======== ======== ======== ========= ======== ======= ======= Notes to the Consolidated Cash Flow Statement For the six months ended 31 December 2006 Screenmedia Comms Total Screenmedia Comms Total Screenmedia Comms Total Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Audited Audited Audited 6 months 6 months 6 months 6 months 6 months 6 months year year year ended ended ended ended ended ended ended ended ended 31 31 31 31 31 31 30 30 30 December December December December December December June June June 2006 2006 2006 2005 2005 2005 2006 2006 2006 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 (a) Reconciliation of operating profit to net cash inflow from operating activities Operating profit (1,393) (1,714) (3,106) (1,938) 2,064 126 (3,062) 5,728 2,666 Depreciation 493 289 781 454 207 661 944 465 1,409 Amortisation of - - - (198) - (198) (397) - (397) goodwill Loss on disposal of - - - - - - - - - tangible fixed assets Decrease/(increase) 159 (21) 138 (41) 38 (3) (434) 38 (396) in stock Decrease/(increase) (123) 10,082 9,958 (477) (3,107) (3,584) (197) (10,463)(10,660) in debtors (Decrease)/increase 2,128 (219) 1,909 1,123 (730) 393 (369) 1,779 1,410 in creditors -------- -------- -------- --------- -------- --------- -------- ------- ------- Net cash inflow 1,264 8,416 9,680 (1,077) (1,528) (2,605) (3,515) (2,453) (5,968) from operating ======== ======== ======== ========= ======== ========= ======== ======= ======= activities Notes to the Consolidated Cash Flow Statement For the six months ended 31 December 2006 Total Total Total Unaudited Unaudited Audited 6 Months 6 months year ended ended ended 31 31 30 December December June 2006 2005 2006 £'000 £'000 £'000 (b) Reconciliation of net cash flow to movement in net debt Increase in cash in 6,059 19,512 8,572 the period Cash inflow/(outflow) from 56 218 40 increase in debt --------- --------- --------- Change in net debt resulting from cash flows 6,115 19,730 8,612 Net movement in finance leases (58) (267) (699) --------- --------- --------- Movement in funds/(net debt) in the period 6,057 19,463 7,913 Funds/(net debt) at start of 9,966 2,052 2,053 period --------- --------- --------- Funds/(net debt) at close of 16,023 21,515 9,966 period ========= ========= ========= Audited Cash Total 1 July Flow 31 December 2006 2006 £'000 £'000 £'000 (c) Analysis of changes in net debt Cash at bank and 12,159 5,919 18,078 in hand Overdrafts (140) 140 - --------- --------- --------- 12,019 6,059 18,078 Debt due after one year (122) - (122) Debt due within one year (401) 56 (345) Finance leases (1,530) (58) (1,588) --------- --------- --------- Total 9,966 6,057 16,023 ========= ========= ========= Notes to the Interim Report For the six months ended 31 December 2006 1 Presentation of results The financial information contained in the Interim Report does not constitutestatutory accounts as defined in section 240 of the Companies Act 1985. Thecomparative financial information for the year ended 30 June 2006 is an abridgedversion of the Group's published financial statements for that year, whichcontained an unqualified audit report and which have been filed with theRegistrar of Companies. The Group announced on 13 December 2006, that it was proposing to demerge itssatellite networks business. Accordingly, the Group's results and financialposition have been split for all relevant periods between the Screenmedia andCommunications businesses for the purpose of this report. The composition of Avanti Communications Group (the "Communications Group")following the proposed demerger will be a holding company, Avanti CommunicationsGroup plc, and, its subsidiary undertakings Avanti Communications InfrastructureLimited, Avanti Communications Limited and Avanti Space Limited, and AvantiBroadband Limited, which is currently a subsidiary of Avanti Screenmedia Groupplc and will become a subsidiary of Avanti Communications Infrastructure Limitedprior to the demerger. The Avanti Screenmedia Group plc (the "ScreenmediaGroup") will comprise the remaining Group companies. The comparative net assets for the interim period ended 31 December 2005 and theyear ended 30 June 2006 agree with the published statements. However, individualbalances vary because the relevant inter-company balances were fully eliminatedon consolidation, but it is necessary to disclose inter-company balances betweenthe Communications Group and Screenmedia Group for the purposes of these interimfinancial statements to provide users with respective financial positions ofeach of the Communications Group and the Screenmedia Group. The balance sheet for each of Communications Group and the Screenmedia Group isan aggregation of the appropriate companies down to net asset level. As this isan aggregation, rather than a consolidation, shareholders' funds are not splitbetween the two businesses. 2 Accounting policies The interim financial statements have been prepared on the basis of theaccounting policies set out in the year ended 30 June 2006 financial statementsof Avanti Screenmedia Group plc. The requirements of FRS20 will apply for the first time to the company's annualaccounts for the year ended 30 June 2007 and therefore in the normal course ofevents there would be a profit and loss account charge attributable to theseinterim results for the six month period to 31 December 2006. However, in viewof the uncertainties surrounding the precise terms and effect of the potentialchanges to the share option arrangements as part of the demerger proposals, itis not possible at this time to determine with any reasonable accuracy thequantum of any charge for the six months to 31 December 2006. Consequently, noaccount has been taken of FRS20 in these interim results although the auditedaccounts to 30 June 2007 will include the appropriate charge for the wholeperiod. 3 Basic and diluted earnings per share The calculation of basic and diluted earnings/(loss) per share is based on theearnings/(loss) attributable to ordinary shareholders, divided by the weightedaverage numbers of shares in issue during the period. 6 months 6 months Year ended ended ended 31 December 31 December 30 June 2006 2005 2006 Computation of basis earnings/(loss) per share Net profit/(loss) (£2,897,228) £187,870 £2,558,266 Weighted average number of shares outstanding 22,912,009 15,164,338 18,855,333 Basic earnings/(loss) per share (12.65)p 1.24p 13.57p Computation of diluted earnings/(loss) per share Net profit/(loss) (£2,897,228) £187,870 £2,558,266 Weighted average number of shares outstanding 25,103,244 16,477,890 20,783,106 Basic earnings/(loss) per share (11.54)p 1.14p 12.31p Notes to the Interim Report For the six months ended 31 December 2006 4 Reconciliation of shareholders' funds The reconciliation of movements in shareholders' funds is as follows: Unaudited Unaudited Audited 6 months 6 months year to to ended 31 December 31 December 30 June 2006 2005 2006 £'000 £'000 £'000 Opening shareholders' funds 37,245 10,292 10,292 (Loss)/profit for the period (2,897) 187 2,558 New share issues - 24,390 24,394 --------- -------- -------- Closing shareholders' funds 34,348 34,869 37,244 ========= ======== ======== 5 Post balance sheet event On 9 January 2007, Avanti Screenmedia Group plc issued 1,587,301 Ordinary Sharesof £0.01 each, at an issue price of £3.15 per share. £3.5 million of the £5million gross proceeds were allocated to Avanti Screenmedia Group, with theremaining £1.5 million allocated to the Communications Group. Independent Review Report to Avanti Screenmedia Group plc Introduction We have been instructed by the company to review the financial information setout on pages 2 to 6 and we have read the other information contained in theinterim report and considered whether it contains any apparent misstatements ormaterial inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The accountingpolicies and presentation applied to the interim figures should be consistentwith those applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board. A review consists principally of makingenquiries of group management and applying analytical procedures to thefinancial information and underlying financial data and based thereon, assessingwhether the accounting policies and presentation have been consistently appliedunless otherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance with AuditingStandards and therefore provides a lower level of assurance than an audit.Accordingly we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial statements as presented for the six months ended31 December 2006. Kingston Smith LLPChartered Accountants Devonshire House60 Goswell RoadLondonEC1M 7AD Date: 16 March 2007 This information is provided by RNS The company news service from the London Stock Exchange