INC.L Regulatory News (INC)

27 Mar 2008 07:00

Avanti Screenmedia Group PLC27 March 2008 27 March 2008 Avanti Screenmedia Group plc ("Avanti" or "the Company") (AIM: ASG.L) Unaudited Interim Results Avanti Screenmedia Group plc, the AIM listed leading digital screen mediaspecialist, announces interim results for the six months ended 31st December2007. KEY POINTS • Turnover for the 6 months ended 31st December 2007 was £2.64m (like-for-like turnover 2006: £1.25m); • Operating Loss for the period was £2.39m (like-for-like loss 2006: £2.68m); • Successful fundraising of £1.14m during 6 months under review; • Booked advertising sales increased by 145%; • New account wins, including the showcase mall at Bluewater; • Extension and restructuring of key mall contracts with The Mall Corporation, Land Securities plc and Tates Limited; and • Implementation of new financial model now adopted for the Company's key customers Simon Rees, CEO, commented: "Despite a challenging trading period, the Company has made a strong start tothe new financial year, and the results for six months to 31st December 2007reflect the beginnings of the positive implementation of Avanti's new strategy. "Transforming from its technology heritage, the Company is now trulyestablishing itself as the lead digital solutions provider within the widerretail media environment. Our focus is on growing our client base, generatingadvertising and promotional sales (locally, regionally and nationally),strengthening of relations with existing clients, introducing new dynamiccreative executions, all against the backdrop of controlling our costs. Ourability to draw on a range of technological, distribution and creativeinnovations through in-house development and strategic partnerships is key toour growth in the future. The Company has now established a robust client base,including 3 of the 5 premier malls in the UK and one of the largestindependently owned mall portfolios, The Mall Corporation. I am proud of theexceptional effort every member of my team has made over the past six months andlook forward to continued progress and future success." 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 CHAIRMANS REPORT Introduction I am pleased to present our results for the six months ending 31st December2007. Avanti is a leader in the out-of-home digital communications sector, offeringdigital communication solutions to retail, leisure and shopping mallenvironments for advertising, sponsorship, product promotion and customerentertainment. Financial Our financial performance for the first six months of this financial yearreflects a significant shift in the Company's approach and performance. TheCompany has implemented a new financial model in the acquisition of retailestates and engaged in a significant restructure of costs post the demerger fromthe communications business in April 2007. Like-for-like turnover rose by 112% to £2.64m (2006: £1.25m) largely due to thegreater emphasis on advertising sales, in particular an extremely successfulimplementation of the Premier League bar advertising campaign for Setanta andour progress from our new local sales division which has delivered over £1.0m ofcontracted revenues since August. For clearer comparison, the previous year's figures included certain one-offpayments, which increased revenues by some £2.1m and operating profits by£1.3m.These payments, related to the Spar contract and the termination ofcertain leisure contracts. The continuing level of losses were in line with our expectations, arising as aresult of the restructuring costs incurred in implementing the Company's newstrategy. We announced in at the AGM in early February that the Company' iscontinuing to seek further capital, and some progress has been made in thisregard. Operating costs and working capital are strictly controlled, whichmeans that the Company's short term funding requirement has been reduced to lessthan £1.0m. Monthly operating costs have been more than halved since thedemerger in April. Some further efficiencies will be achieved in the secondhalf. At the same time the board is continuing to identify significant marketopportunities which, if they are to be exploited fully for the benefit of theCompany and shareholders, will require further capital investment in sales,marketing and product development. New Strategy Following Simon Rees' appointment as CEO in June 2007, the implementation of anew strategy for Avanti has commenced, and is already having a positive impactboth financially and operationally. This has involved the repositioning of theCompany's offering, a shift in resource to frontline sales, the establishment ofa local advertising sales team, the successful renegotiation and extension ofall major existing client contracts, and the reduction of costs across theCompany. While the Board is confident that the successful implementation of this strategywill deliver medium to long-term growth for Avanti and its shareholders, theshort term prospects are also dependent upon a number of factors. These includethe prevailing general economic conditions, securing sufficient working capitalfor the Company's working requirements and for the on-going development andexpansion of the business, notably in sales, marketing and the development ofour creative offering. New Contracts Over the first six months of this financial year the Company announced that ithad renegotiated a number of its onerous contracts: • The Mall Corporation, which owns and operates 23 shopping malls nationwide, extended its contract for a further three year period, to 2011; • Land Securities plc signed new five year contracts (to 2012) with three of its existing malls, including Victoria Place and Clapham Stop Shop; • Our Regent Inns (Walkabout Bars) contract was renegotiated for the remaining two year period, reducing financial guarantees by circa 60%; and • Tates Limited, who manage over 200 Spar stores, extended its contract for a further two years until 31 December 2010. We have a strong new business pipeline, and during the period the Company won anumber of new prestigious contracts including: • Inventive Leisure Ltd to supply 54 Revolution Vodka Bars with screen-based advertising; • The Good Time Pub Company Ltd to supply its Genie 3 DJ-based bar entertainment system to 6 sites; and • The iconic Bluewater shopping centre. During the period the Company restructured and expanded its advertising salesoffering, quickly delivering an improved performance, also helped by the newSetanta pubs contract for the Premier Football League in both England and Wales.Advertising revenues for the first 6 months increased by 145 percent. over theprevious period (2007: £1.5m 2006: £0.6m), with a number of new householdbrand names including Estee Lauder, Nikon, T Mobile, Camelot, Nokia, Nivea,Audi, Lucozade, Burger King, O2, Guinness and Lynx promoting across our estates.Importantly, many of these are repeating for multiple campaigns. Funding The Company raised a total of £1.14m through equity placings and convertibleloans during the 6 months to 31st December 2007. The Board has been seeking to secure short term-funding since the tradingstatement of 6th August, and continues to explore potential sources ofadditional finance to take advantage of certain new opportunities to support thedevelopment of the business. The Company requires further immediate funding andthe directors are currently exploring ways in which funding can be achieved. Outlook We have reported previously that market conditions remain challenging.Nevertheless with a much improved business base, over the coming months Avantilooks forward to continuing the progress made with its new strategy. Mick Desmond Chairman Consolidated Income Statement For the six months ended 31st December 2007 As restated under IFRS 6 months 6 months 12 months ended ended ended 31.12.07 31.12.06 30.06.07 Unaudited Unaudited AuditedContinuing operations £ £ £ Revenue 2,637,498 3,335,950 4,543,061Cost of sales (2,261,240) (2,407,443) (4,517,564) Gross profit 376,258 928,507 25,497Operating expenses (2,841,223) (2,321,143) (5,166,979)Exceptional item - - (505,663) (Loss) from operations (2,464,965) (1,392,636) (5,647,145) Finance income - - 15,620Finance expense (81,395) (39,864) (73,923) (Loss) on Ordinary Activities before taxation (2,546,360) (1,432,500) (5,705,448) Taxation - - - (Loss) for the period attributable from continuingoperations (2,546,360) (1,432,500) (5,705,448) Discontinued Operations(Loss) for the period from discontinued operations - (1,464,728) (24,925,256) Attributable to:Equity holders of the parent (2,546,360) (2,897,228) (30,630,704) Earnings per share for continuing operationsBasic (loss) per share (see note 3) (8.47p) (6.25p) (23.88p)Diluted (loss) per share (see note 3) (8.47p) (6.25p) (23.88p) Consolidated Unaudited Balance Sheet as at 31st December 2007 As restated under IFRS 6 months 6 months 12 months ended ended ended 31.12.07 31.12.06 30.06.07 Unaudited Unaudited Audited £ £ £AssetsNon Current AssetsProperty, Plant & Equipment 3,514,914 16,214,029 4,105,047Goodwill 1,965,119 1,969,047 1,965,119 5,480,033 18,183,076 6,070,166 Current AssetsInventories 120,495 367,617 244,853Trade & other receivables 2,035,485 6,037,615 1,589,525Cash & short term deposits 772,148 18,077,694 821,544 Total Current Assets 2,928,128 24,482,926 2,655,922 Total Assets 8,408,161 42,666,002 8,726,088 Liabilities and Equity Trade and other payables 3,995,566 6,684,121 2,978,690 Non current liabilities 545,711 1,120,487 100,974 Equity attributable to equity holders ofthe parent companyShare capital 409,861 228,905 257,235Share premium 37,317,111 31,781,174 36,777,767Capital redemption reserve 12,758 - 12,758Share based payment reserve 271,818 - 196,967Retained earnings (34,144,664) 2,851,315 (31,598,303) Shareholders' Funds 8,408,161 42,666,002 8,726,088 Consolidated Unaudited Statement of Changes in Equity Share Share Other P&L a/c Total Capital Premium Reserves Reserves Reserves2007 £ £ £ £ £ At 30th June 2007 (Audited) 257,235 36,777,767 209,725 (31,598,303) 5,646,424 (Loss) for the period - - - (2,546,360) (2,546,360) Share Issue 152,626 - - - 152,626 Premium on shares issued - 539,343 - - 539,343 Share based payments - - 74,851 - 74,851 At 31st December 2007 (Unaudited) 409,861 37,317,110 284,576 (34,144,663) 3,866,884 Share Share Other P&L a/c Total Capital Premium Reserves Reserves Reserves2006 £ £ £ £ £ At 30th June 2006 (Audited) 228,115 31,781,174 - 5,748,541 37,757,830 (Loss) for the period - - - (2,897,226) (2,897,226) Share Issue 790 - - - 790At 31st December 2006 (Unaudited) 228,905 31,781,174 - 2,851,315 34,861,394 Consolidated Unaudited Cash Flow For the six months ended 31st December 2007 6 months 6 months 12 months ended ended ended 31.12.07 31.12.06 30.06.07 Unaudited Unaudited Audited £ £ £Cash flow from operating activities(Loss) from operations before taxation (2,464,965) (3,106,484) (30,978,277)Depreciation and amortisation of non-current assets 815,228 781,137 1,285,459Share based payments 74,851 - 122,596(Increase)/Decrease in stock 124,358 137,739 (260,503)(Increase)/Decrease in trade and other receivables (445,960) 9,958,793 15,406,503Increase/(Decrease) in trade and other payables 947,876 1,909,000 (1,723,599)Cash generated from operations (948,612) 9,680,185 (16,147,821)Interest received 83 320,495 482,193Interest paid (81,478) (111,239) (134,620)Net cash (used in)/generated by operating activities (1,030,007) 9,889,441 (15,800,248) Cash flow from investing activitiesPayments for property, plant and equipment (120,227) (3,692,803) (585,994)Net cash used in investing activities (120,227) (3,692,803) (585,994) Cash flow from financing activitiesProceeds from borrowing 425,000 - -Proceeds from equity issue 691,970 - 4,971,000Movement in finance leases (152,965) 58,346 153,323Repayment of existing loans and overdrafts (100,000) (195,819) -Net cash generated by/(used in) financing activities 864,005 (137,473) 5,124,323 Net (decrease)/increase in cash and cash equivalents (286,229) 6,059,165 (11,261,919) Cash and cash equivalents at the beginning of the 756,610 12,018,529 12,018,529financial year Cash and cash equivalents at the end of the financial 470,381 18,077,694 756,610year Represented by:Cash and short term deposits 772,148 18,077,694 821,544Loans and Overdrafts (301,767) - (64,934) 470,381 18,077,694 756,610 Notes to the Interim Report For the six months ended 31st December 2007 1. The financial information contained in the Interim Report does notconstitute statutory accounts as defined in section 240 of the Companies Act1985. The comparative financial information for the period ended 30th June 2007is an abridged version of the group's published financial statements for thatyear, which contained an unqualified audit report and which has been filed withthe Registrar of Companies. 2. The accounting policies used are those that will be adopted in thefinancial statements for the year ending 30th June 2008 and no changes arerequired to the accounting policies presented in the last published financialstatements to 30th June 2007 as a result of the adoption to IFRS. Therefore, noreconciliation statement has been prepared. The Directors are currently engaged in raising further funds for the group. Theyare confident that their efforts will be successful and accordingly theseinterim financial statements have been prepared on the going concern basis. 3. The calculation of basic and diluted loss per share is based on the lossattributable to ordinary shareholders, divided by the weighted average numbersof shares in issue during the period. 6 months ended 6 months ended 12 months ended 31.12.07 31.12.06 30.06.07ContinuingComputation of diluted and basic loss per share Net loss £2,546,360 £1,432,500 £5,705,448Weighted average number of shares outstanding 30,053,905 22,912,009 23,891,900Basic loss per share 8.47p 6.25p 23.88p DisposalsComputation of diluted and basic loss per share Net loss - £1,464,728 £24,925,256Weighted average number of shares outstanding - 22,912,009 23,891,900Basic loss per share - 6.39p 104.33p There is no dilution to the basic loss per share in the current year arising from the share optionsin issue. The diluted weighted average number of shares outstanding was 32,360,937 4. All revenue for the six months to 31 December 2007 was derived fromthe provision of screen media and related advertising services within the UnitedKingdom. Consequently the group considers that it only has one business segmentand one geographical segment. Revenue 6 Months 6 Months 12 months ended ended ended 30.06.07 Audited 31.12.07 31.12.06 Unaudited Unaudited £ £ £ Screen media 2,637,498 3,335,950 4,543,061 Consultancy (discontinued) - 1,538,929 2,107,410 Consolidated revenue 2,637,498 4,874,879 6,650,471 6 Months 6 Months 12 months ended ended ended 30.06.07 Audited 31.12.07 31.12.06 Unaudited Unaudited Segment results £ £ £ Screen media (2,546,360) (1,183,380) (5,299,572) Consultancy (discontinued) - (1,713,848) (25,331,132) (Loss) for the period (2,546,360) (2,897,228) (30,630,704) 5 Property, plant and equipment The book value of these assets increased by £225,157 and depreciation of£815,292 was charged in the 6 months ended 31 December 2007. 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