INC.L Regulatory News (INC)

21 Feb 2006 07:01

Avanti Screenmedia Group PLC21 February 2006 AVANTI SCREENMEDIA GROUP PLC INTERIM RESULTS 6 MONTHS TO 31 DECEMBER 2005 Avanti Screenmedia Group Plc ("ASG"), suppliers of satellite media andtelecommunications services, announces its Interim Results for the 6 monthperiod ended 31 December 2005. Key Points • Turnover of £4.0m (2004: £3.5m), up 14%; • Net Profit before tax of £188,000 (2004: £287,000); • Award by OFCOM of an exclusive authorisation to operate satellites at 33.5degreesW, enabling Avanti to enter the highly lucrative satellite operator business, one of just eight such operators in Europe; • Award of a Euro 34m (£23.1m) contract from European Space Agency to co-fund ASG's first satellite; • Continuing good progress in development of screenmedia business - new networks built and signed with bar network airtime fully sold out for the first time in November; • Launch of broadband business with significant contract wins. Commenting on the results, John Brackenbury CBE, Chairman said: "I am delighted to present our results for the 6 month period ended 31 December2005 and to be able to report further good progress in the development ofAvanti's business. In the most significant half in our history Avanti continuedto build on its success and market leadership in the emerging screenmediamarket. However in securing the authorisation to use 3.6Ghz of radio frequencyfor the operation of satellites at the 33.5degreesW position (which offersexcellent European coverage) and financing the first satellite we have laid thefoundations for what should be a much larger business in the future". Financial Highlights • Turnover of £4.0m (2004: £3.5m), up 14%; • Operating profit of £126,000 (2004: £292,000); • Profit before tax of £188,000 (2004: £287,000) despite significant investment for growth; • Net cash increased to £21.5m (2004: £2.9m); • £25m raised in November 2005 by way of an institutional placing of 10,000,000 ordinary shares at a price of 250p per share; • Award of a Euro 34m (£23.1m) contract from European Space Agency to co-fund ASG's first satellite. Other Highlights • Authority from OFCOM to operate satellites using 3.6 Ghz at Ku and Ka band at 33.5degreesW; • MVN (music video channel) product successfully introduced into independent hair salon sector with over 50 contracts signed; • Several significant existing pub and bar clients renewed and extended contracts; • Deployment in 21 malls for The Mall Corporation completed and a new contract won for Meadowhall. • Good progress made in a significant retail pilot project; • Pub and bar network airtime was fully sold out for the first time ever in November; • Good progress made in retail screenmedia pipeline; • Significant new Networks business won for broadband product with West Midlands Networking Company and European Commission. Enquiries: Avanti Screenmedia Group plc www.avanti-screenmedia.comDavid Williams, Chief Executive 0207 749 1600Gary Truman, Financial Director 0207 749 1600 Binns & Co PR 020 7786 9600Peter Binns 07768 392 582Paul McManus 07980 541 893 INTERIM RESULTS Introduction "I am delighted to present our results for the 6 month period ended 31 December2005 and to be able to report further progress in the development of Avanti'sbusiness as it matures into a broader based satellite media andtelecommunication company. In the most significant period in our history, bygaining the authorisation to use 3.6Ghz of radio frequency for the operation ofsatellites at the 33.5degreesW position (which offers excellent Europeancoverage), together with securing financing for our first satellite, we havelaid the foundations for what should be a much larger business in the future. Iknow that this element of our business is unfamiliar to some shareholders, but Iam confident that they will come to appreciate its exciting magnitude in duecourse as we begin to exploit its opportunities. At the same time Avanticontinued to build on its success and market leadership in the emergingscreenmedia market. Reflecting the changes brought about by our entry into the satellite operatorbusiness, we restructured the management team in December, creating twodivisions incorporating the nine previous departments: the Media Division andthe Networks Division. Media includes all screenmedia network and media sales,and creative activities. The Networks division includes network operations forthe media business plus broadband network operations, sales, the satelliteoperations and sales group. We have invested heavily during the period in our emerging Networks Division,total group headcount was 99 on 31st December 2005 (31st December 2004 - 53).We also grew further our capacity to deliver large scale screenmediadeployments. Notwithstanding this investment for the future, I am happy toreport that we remained profitable with a net profit for the period of £188,000. Avanti is delivering profits in its Media and Networks business, and hascreated exceptional future value in becoming one of just eight broadcastsatellite operators in Europe. We are confident in our ability to achieve ourexpectations during the full year. We significantly strengthened our Board during the period with the appointmentof three new Non-Executive Directors. I am delighted to welcome to the Board,William Wyatt of Caledonia Investments, Mick Desmond, formerly CEO of ITVBroadcasting, and David G. Williams who has been chairman and chief executive ofmany large retail businesses and is currently an operating partner with DukeStreet Capital together with other non-executive directorships amongst his otherappointments". FEJG Brackenbury, CBEChairman Summary of Avanti's business "Avanti operates two divisions: Media and Networks. In Media, Avanti installsand runs television channels for retailers, pubs and malls at or close to thepoint of sale. Retailers use these channels to entertain and inform customers,build brand, promote products and generate new sources of advertising revenues. Avanti is the clear market leader in Europe in this emerging media sector.In Networks, Avanti provides a satellite broadband internet access product.Networks also manages the new satellite operator business. Media In our Media Division, we have improved the quality of our leisure and mallestates during the period and successfully concluded the first phase of our mostsuccessful retail projects to date. During this period, the MVN music video channel product was successfullyintroduced into the independent hair salon sector with over 50 contracts signedin the first three months of marketing. We are targeting the installation of100 such sites by March this year, whereupon we will begin to sell advertising.Our most successful high street retail pilot to date has progressed to thesecond pilot phase, deploying further stores in the next few months in anencouraging sign of acceptance in the retail sector. Several significant existing pub and bar clients renewed and extended contractsand we have submitted proposals in response to tenders for several hundredinstallations of the MVN Genie product. Deployment of a very complexinstallation programme in 21 shopping malls for The Mall Corporation wascompleted to the client's satisfaction and a new contract was won fromMeadowhall Centre Limited, the operator of one of the top 6 shopping malls inthe UK. In a positive sign of the increasing acceptance of our medium, air time in ourpub and bar network was fully sold out for the first time ever in November. Our pipeline is very strong. As we have found historically, working withretail operators, our trading year is heavily biased towards the January to Junehalf as decisions are frequently deferred beyond the busy Christmas period. Weare confident that the new business we have been negotiating will be concludedduring our second half. The management structure was reorganised to bring new focus to quality ofservice and to free up my time to pursue some of the longer term strategicdevelopments. The Media Division is now run by Stuart Chambers, MD Media whohas over 20 years experience in the sales promotion industry and some sevenyears experience in pioneering the use of video at the point of sale. Networks In Networks, we made our first large broadband sales, most significantly to theWest Midlands Networking Company. In August 2005, Avanti won the exclusive right to use the orbital position at33.5degreesW to operate satellites at Ku and Ka band. The financing for theconstruction element of this project has been raised and the construction ofAvanti's first satellite has commenced with its launch due in 2008. Avanti willuse this satellite to provide broadband and television services in Europe. Weare one of only eight companies in Europe with such capabilities. Following the award in August of authority from OFCOM to operate satellites, webegan the task of project managing the construction of our first satellite, dueto be launched in 2008. The satellite will have the equivalent of 40 32Mhztransponders and will have a life of at least 15 years. The current marketprice in Europe for a transponder varies, depending on several factors, fromapproximately Euro 1 million per annum to Euro 4 million per annum. We intendto take advantage of the significant potential of this asset by exploringpossible opportunities to pre-sell a proportion of capacity. The orbitalposition we have has far greater capacity than that consumed by the firstsatellite and there are plans for further projects. This commercial opportunity,and the highly advanced technology we are using to fill it, is available to usin part because of the contract from the European Space Agency, the value ofwhich ASG shareholders will see recorded in the balance sheet when the satellitelaunches. Matthew O'Connor now runs the Network Division as MD Networks. Matthew has overtwenty years experience of running large scale telecoms businesses, includingthe role of Managing Director of Telewest's profitable Wholesale division. There are strong synergies between the two businesses in terms of i) managementskills; ii) technology employed; and iii) opportunities for cross selling,especially in "triple play services" ( that is; video, data, VOIP). Current trading and future prospects Current trading is good and, given the range of contracts under negotiation, weremain positive as to the outlook for the business. The ownership of bothsatellite networks with enormous potential capacity and content offer veryinteresting future opportunities." DJ Williams 21 February 2006Chief Executive INTERIM RESULTS GROUP PROFIT AND LOSS ACCOUNTfor the 6 month period ended 31st December 2005 Notes Unaudited Unaudited Audited 6 months 6 months 12 months to 31/12/05 to 31/12/04 to 30/06/05 £'000 £'000 £'000 Turnover 4,001 3,513 8,440Cost of sales (867) (1,841) (3,277) Gross Profit 3,134 1,672 5,163 Administration expenses (3,008) (1,380) (3,233) Operating Profit 126 292 1,930 Interest receivable 140 39 80Interest payable (78) (44) (110) Profit on Ordinary Activities before Taxation 188 287 1,900 Tax on profit on ordinary activities - - 83 Profit after taxation 188 287 1,983 Earnings per Share Basic earnings per share 3 1.24p 2.92p 18.25p Diluted earnings per share 3 1.14p 2.64p 16.34p INTERIM RESULTS GROUP BALANCE SHEETat 31st December 2005 Notes Unaudited Unaudited Audited At 31/12/05 At 31/12/04 At 30/06/05 £'000 £'000 £'000 £'000 £'000 £'000Fixed AssetsTangible Assets 4,057 2,096 3,538Intangible Assets - Goodwill 1,987 29 2,015 - Negative 2 (214) (683) (441) Goodwill 5,830 1,442 5,112 Current AssetsStocks 112 133 109Debtors 8,694 3,976 5,367Cash at bank and in hand 25,214 4,575 4,292 34,020 8,684 9,768Creditors: Amounts falling due within oneyear (4,059) (2,260) (3,754) Net Current Assets 29,961 6,424 6,014 35,791 7,866 11,126 Creditors: Amounts falling due after (922) (553) (835) one year Net Assets 34,869 7,313 10,291 Capital and ReservesCalled up Share Capital 223 116 123Share Premium Account 31,781 6,216 7,491Profit and Loss Account 2,865 981 2,677 Shareholders' Funds 34,869 7,313 10,291 INTERIM RESULTS GROUP CASH FLOW STATEMENTat 31st December 2005 Unaudited Unaudited Audited 6 months 6 months 12 months to 31/12/05 to 31/12/04 to 30/06/05 £'000 £'000 £'000 Net cash outflow from operating activities (2,605) (1,097) (756)Returns on investments and servicing of finance 61 (5) (31)Taxation - - 83Capital expenditure and financial investment (987) (697) (1,234)Investment in subsidiary undertaking - - (542) Net cash outflow before financing (3,531) (1,799) (2,480)Financing 23,044 5,736 6,409 Increase in cash 19,513 3,937 3,929 Reconciliation of Operating Profit to Net Cash(Outflow)/Inflow from Operating Activities Operating profit 126 292 1,931Depreciation 661 267 839Amortisation of goodwill (198) (240) (444)Loss of disposal of tangible assets - (2) -(Increase) in stocks (3) 20 44(Increase) in debtors (3,584) (1,946) (4,072)Increase in creditors 393 512 946 (2,605) (1,097) (756) Reconciliation of Movement of Funds / (Net Debt) Funds / (Net Debt) at start of period 2,052 (947) (947)Increase / (Decrease) in cash 19,513 3,937 3,929Cash inflow from increase in loans 218 21 30Cash inflow from increase in finance lease (267) (144) (960)obligations Funds at close of period 21,516 2,867 2,052 Analysis of Funds Cash at Bank and in Hand 25,214 4,575 4,292Bank overdrafts (2,254) (869) (845) 22,960 3,706 3,447 Bank loans due within one year (92) (300) (222)Bank loans due within one year (411) (374) (341)Finance leases and hire purchase agreements (941) (165) (832) Funds at close of period 21,516 2,867 2,052 Notes to the unaudited Interim Results for the 6 months ended 31st December 2005 1. Presentation of results This interim statement was approved by the directors on 17th February 2006. The financial information contained in the interim statement does not constitutestatutory accounts as defined in section 240 of the Companies Act 1985. Thecomparative financial information for the year ended 30th June 2005 is anabridged version of the group's published financial statements for that year,which contained an unqualified audit report. The interim results have been prepared using accounting policies and practicesconsistent with those adopted in the 2005 Report and Accounts but have not beenaudited. 2. Negative goodwill written back Negative goodwill arising on the acquisition of Translucis Holdings Limited isbeing amortised over a period of 36 months from 1st June 2003 and is beingmatched to the depreciation of the revalued assets from which it arose. 3. Basic and diluted earnings per share The calculation of the basic and diluted earnings per share is based on theearnings attributable to ordinary shareholders, divided by the weighted averagenumber of shares in issue during the period. 4. Reconciliation of shareholders funds The reconciliation of movements in shareholders' funds is as follows: £'000 Shareholders' funds at 30th June 2005 10,291 Premium on shares issued during period 24,290Increase in share capital 100Profit for the period 188 Shareholders' funds at 31st December 2005 34,869 This information is provided by RNS The company news service from the London Stock Exchange