4 Dec 2008 10:56
4 December 2008
Avanti Screenmedia Group plc
("Avanti" or the "Company") (AIM: ASG.L)
Unaudited Preliminary Results for the year ended 30 June 2008
Avanti Screenmedia Group plc, the AIM listed leading digital screen media specialist, announces preliminary results for the year ended 30 June 2008.
KEY POINTS
Turnover down 5.6% at £4.29m (2007: £4.54m);
Like-for-like Turnover increased 176% at £4.29m (2007: £2.44m*);
Reduced operating loss of £5.1m (2007 continuing operations: loss £5.7m)
Like-for-like Operating loss for the year was £5.1m (2007: loss £7.0m*);
Loss per share of 14.0 pence (2007 continuing operations: loss 23.9 pence)
Total advertising sales of £2.9m (2007: £1.0m);
Renegotiation of certain contracts has reduced costs by approximately £250,000 per annum; and
Investment by Neo Media Group SA
* For comparison, 2007 figures included certain one-off payments totalling £2.1m which contributed £1.3m to operating profits
Simon Rees, CEO of Avanti Screenmedia Group plc, commented:
"I am pleased to report that although Avanti's performance for the year is on track, these figures do not reflect the full benefits of our strategy and overall effect of the cost savings, which will become more apparent in the current year's results.
"Our ability to draw on a range of technological, marketing and creative innovations through in-house development and strategic partnerships is key to our growth in the future. We now have an established and robust client base in shopping malls, retail and leisure. This, coupled with a motivated and highly experienced team and our new international partnership, indicates significant future progress."
-ENDS-
Enquiries:
Avanti Screenmedia Group plc 020 7902 2345
Simon Rees, CEO
Charles Stanley Securities 020 7149 6000
Nominated Adviser
Russell Cook/Freddy Crossley
Bishopsgate Communications Limited 020 7562 3350
Jenni Herbert/Siobhra Murphy
AVANTI SCREENMEDIA GROUP PLC
CHAIRMAN'S REPORT
Introduction
I am pleased to present the results for the year ending 30 June 2008.
Avanti is a leader in the out-of-home digital sector, developing and executing digital screen solutions in retail, shopping malls and leisure environments.
The Company has performed well in its first full year post demerger, and has implemented a new strategy led by Chief Executive Simon Rees.
Turnover for the period was down 5.6% at £4.29m (2007: £4.54m). However revenues in 2007 included certain one-off payments totalling £2.1m and which contributed £1.3m to the Company's operating profit for the year. These one-off payments related to various contracts entered into during 2006, including the five year contract with Tates Ltd to provide services to Tates' SPAR stores. There were no similar one off payments in the last financial year. If these one-off payments are excluded, like for like sales rose from £2.44m to £4.29m, an increase of 176%.
The Company has reported that the loss before tax for the year to 30 June 2008 was £5.07m, down from the £5.71m in 2007. However, if adjusted for the contribution of £1.3m from the one off contracts referred to above the operating loss for the year fell from £7.0m to £5.1m.
The Company has made significant progress by focusing its efforts on aggressive cost reduction, contract renegotiation, and advertising revenue generation. Although the full benefits of the reduced costs will not flow through to the bottom line until the current financial year, ending June 2009, the Company has increased its sales from advertising threefold despite worsening market conditions.
Funding
Despite difficult market conditions, the Company secured new funding of over £1.5m during the course of the year from both private and institutional investors. In particular the Board announced on 18 July 2008 that Neo Media Group SA ("Neo Media") had acquired a 29.9% shareholding through a subscription of new shares. The Company has announced subsequently that Neo Media has increased its investment in Avanti through a subscription of £1,300,000 in a convertible loan stock. This includes an announcement today that Neo Media has subscribed for a further £500,000 of loan stock, demonstrating its ongoing commitment to Avanti. Neo Media is one of Europe's leading digital out of home ("DOOH") media companies. The Board welcomes the support of Neo Media and we look forward to working with the international network of companies within the Neo Media group.
Dividend
The Board concludes that it would not be appropriate to recommend payment of a final dividend.
Outlook
Following the implementation of its new strategy the Company has made excellent progress on all fronts in this financial year, and I look forward to reporting further progress over the forthcoming year.
Mick Desmond
Chairman
CHIEF EXECUTIVE'S REPORT
Introduction
Despite a challenging trading period on all fronts, the Company has made a strong start under the new management team, and the results for year to 30 June 2008 do not yet truly reflect the positive implementation of Avanti's new strategy.
Business overview
At the beginning of the year we defined a clear strategy of cost reduction together with an emphasis on top line revenue growth, to give the Company a platform for an expansive growth strategy in 2008/09.
Revenue growth strategy
There has been a change in focus of strategy from in-house technology and support, to front-line revenue generation and showcase creative. Specifically, Avanti has recruited a local sales team leading to significant contracted revenues across its shopping mall network. In addition we have expanded our national and regional sales team leading to the significant increase in advertising across the networks in this financial year. Total advertising sales have moved from £960k to £2.9 million over the year. In addition we have an expanded new business team which is currently working on growing the client base, supported by the introduction of new creative initiatives, such as project 'Ava', a digital newscaster, in our shopping malls.
Cost reduction strategy
We have renegotiated contracts with our existing estate partnerships, The Mall Corporation, Land Securities plc and Tates Limited (SPAR TV), lengthening terms and reducing short term financial commitments. We have implemented a significant reduction of staff headcount including the outsourcing of our engineering and field support function which alone has saved £250k per annum. In addition following reductions in the number of employees we have also moved again to more cost effective premises, saving a further £300k per annum.
New capital
Significant management time and effort has been spent raising finance in difficult market conditions. During the course of the year we raised over £1.5m from both institutional and private investors in the form of loan notes and equity investment.
Outlook & Future prospects
Our financial results for the year are in line with management's expectations but do not reflect the full benefits of the strategy that has been described above. From a financial perspective, the effect of many of the savings will be shown in the current year's results.
The advertising sector is expected to face a downturn in 2009 with traditional media expected to experience the greatest fall. The Company has not yet experienced any significant decline in advertising revenues, but faced with the almost unmitigating poor economic news the Board is extremely cautious as to the prospects for 2009.
The Company's prospects for future growth have been enhanced significantly by our tie-up with Neo Media, Europe's leading out of home digital advertising company, operating in nine European markets and in Canada. Neo Media's investment secures a key foothold in the UK digital out of home market that is showing all the signs of making demonstrable growth. Neo Media has invested a total of £1.54m since the year end through a combination of convertible loan notes and equity share capital. We are pleased to announce today a further £500,000 of loan stock today demonstrating its ongoing commitment to Avanti. The Board believes that Neo Media offers the efficiency that scale can bring in technology, distribution software and the two way flow of new business leads. In parallel, Avanti's ability to draw on a range of technological, marketing and creative innovations through in-house development and strategic partnerships is key to our growth in the future. The Company has now established a robust client base in shopping malls, retail and leisure. This, coupled with a motivated and highly experienced team and our new international partnership, indicates significant future progress.
Simon Rees
Chief Executive Officer
| CONSOLIDATED INCOME STATEMENT | ||||
| Notes | Year ended30 June2008 | Year ended30 June2007 | ||
| (Unaudited) | (Restated) | |||
| Continuing operations | £ | £ | ||
| Revenue | 4,287,745 | 4,543,061 | ||
| Cost of sales | (4,038,416) | (4,517,564) | ||
| Gross Profit | 249,329 | 25,497 | ||
| Operating expenses | (5,151,058) | (5,166,979) | ||
| Exceptional item | - | (505,663) | ||
| Loss from operations | (4,901,729) | (5,647,145) | ||
| Finance income | 72 | 15,620 | ||
| Finance expense | (167,788) | (73,923) | ||
| Loss from operations before Taxation | (5,069,445) | (5,705,448) | ||
| Taxation | 3. | - | - | |
| Loss for period attributable from continuing operations | (5,069,445) | (5,705,448) | ||
| Discontinued Operations | ||||
| Loss for the period from discontinued operations | - | (24,925,256) | ||
| Attributable to Equity holders of the parent | (5,069,445) | (30,630,704) | ||
| Earnings per share for continuing operations | ||||
| Basic and diluted loss per share - continuing operations | 4. | (14.00)p | (23.88)p | |
| - discontinuing operations | 4. | - | (104.33)p | |
| - all operations | 4. | (14.00)p | (128.21)p |
| CONSOLIDATED BALANCE SHEET | ||||
| As at30 June2008(Unaudited) | As at30 June2007(Restated) | |||
| £ | £ | |||
| Assets | ||||
| Non Current Assets | ||||
| Property, Plant and Equipment | 2,896,593 | 4,105,047 | ||
| Goodwill | 1,965,119 | 1,965,119 | ||
| 4,861,712 | 6,070,166 | |||
| Current Assets | ||||
| Inventories | 108,958 | 244,853 | ||
| Trade & other receivables | 925,584 | 1,589,525 | ||
| Cash & short term deposits | 684,489 | 821,544 | ||
| Total Current Assets | 1,719,031 | 2,655,922 | ||
| Total Assets | 6,580,743 | 8,726,088 | ||
| Liabilities and Equity | ||||
| Trade and other payables | 3,973,208 | 2,978,690 | ||
| Convertible loans | 736,656 | - | ||
| Non current liabilities | 444,678 | 100,974 | ||
| Total liabilities | 5,154,542 | 3,079,664 | ||
| Equity attributable to equity holders of the parent company | ||||
| Share capital | 411,861 | 257,235 | ||
| Share premium | 37,317,111 | 36,777,767 | ||
| Capital redemption reserve | 12,758 | 12,758 | ||
| Share based payment reserve | 345,254 | 196,967 | ||
| Convertible loan reserve | 6,965 | - | ||
| Retained earnings | (36,667,748) | (31,598,303) | ||
| Total liabilities and equity | 6,580,743 | 8,726,088 |
| CONSOLIDATED CASH FLOW STATEMENT | ||||
| Year ended30 June2008 | Year ended30 June2007 | |||
| (Unaudited) | (Restated) | |||
| £ | £ | |||
| Cash flow from operating activities | ||||
| Loss from operations | (4,901,729) | (30,978,277) | ||
| Depreciation and amortisation of non-current assets | 1,661,099 | 1,285,459 | ||
| Share based payments | 148,287 | 122,596 | ||
| (Increase)/Decrease in stock | 135,895 | (260,503) | ||
| Decrease in trade and other receivables | 663,941 | 15,406,503 | ||
| Increase/(Decrease) in trade and other payables | 1,036,952 | (1,723,599) | ||
| Cash generated from operations | (1,255,555) | (16,147,821) | ||
| Interest received | 72 | 482,193 | ||
| Interest paid | (139,612) | (134,620) | ||
| Net cash used in operating activities | (1,395,095) | (15,800,248) | ||
| Cash flow from investing activities | ||||
| Payments for property, plant and equipment | (452,645) | (585,994) | ||
| Net cash used in investing activities | (452,645) | (585,994) | ||
| Cash flow from financing activities | ||||
| Proceeds from equity issue | 693,970 | 4,971,000 | ||
| Proceeds from borrowing | 743,621 | - | ||
| Movement in finance leases | (279,427) | 153,323 | ||
| Net cash generated by financing activities | 1,158,164 | 5,124,323 | ||
| Net decrease in cash and cash equivalents | (689,576) | (11,261,919) | ||
| Cash and cash equivalents at the beginning of the financial year | 756,610 | 12,018,529 | ||
| Cash and cash equivalents at the end of the financial year | 67,034 | 756,610 | ||
| Represented by: | ||||
| Cash and short term deposits | 684,489 | 821,544 | ||
| Loans and Overdrafts | (617,455) | (64,934) | ||
| 67,034 | 756,610 |
| CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | |||||||
| 2008 | Share | Share | Other | Retained | Total | ||
| Capital | Premium | Reserves | Earnings | Reserves | |||
| £ | £ | £ | £ | £ | |||
| At 1 July 2007 | 257,235 | 36,777,767 | 209,725 | (31,598,303) | 5,646,424 | ||
| Loss for the year | - | - | - | (5,069,445) | (5,069,445) | ||
| Share issue | 154,626 | - | - | - | 154,626 | ||
| Premium on shares issued | - | 539,344 | - | - | 539,344 | ||
| Share based payments | - | - | 148,287 | - | 148,287 | ||
| Issue of convertible notes | - | - | 6,965 | - | 6,965 | ||
| At 30th June 2008 | 411,861 | 37,317,111 | 364,977 | (36,667,748) | 1,426,201 | ||
| 2007 | |||||||
| At 1 July 2006 | 228,115 | 31,781,174 | 74,371 | 5,674,170 | 37,757,830 | ||
| Loss for the year | - | - | - | (30,630,704) | (30,630,704) | ||
| Disposal for demerger | - | - | - | (6,629,011) | (6,629,011) | ||
| Transfer to capital redemption fund | - | - | 12,758 | (12,758) | - | ||
| Share issue | 29,120 | - | - | - | 29,120 | ||
| Premium on shares issued | - | 4,996,593 | - | - | 4,996,593 | ||
| Share based payments | - | - | 122,596 | - | 122,596 | ||
| At 30th June 2007 | 257,235 | 36,777,767 | 209,725 | (31,598,303) | 5,646,424 | ||
NOTES TO THE UNAUDITED PRELIMINARY RESULTS
Accounting Policies
1. Basis of preparation
The financial information set out in this Preliminary Announcement does not constitute the Group's statutory financial statements for the years 2007 and 2008 within the meaning of the Companies Acts.. The preliminary results for the year ended 30 June 2008 are not audited accounts. They have been prepared using accounting policies and practices consistent with those which will be adopted in the 2008 Report and Financial Statements.
The results for the year ended 30 June 2007 have been restated in order to adopt International Financial Reporting Standards for the first time. The information for the year ended 30 June 2007 is based on the statutory financial statements for that year. No adjustments were necessary to restate the balance sheet, income statement or cashflow statement in accordance with IFRS at the date of transition at 1 July 2006, at 30 June 2007 or at 30 June 2008 and any changes are presentational only. The audit report for the year ended 30 June 2007 was unqualified and did not contain a statement under s237(2) or s237(3) of the Companies Act 1985.
2. Accounting convention
The financial statements have been prepared on the historical cost basis and are presented in £ sterling which is the functional currency of the Group, to the nearest £.
IFRS 1 permits those companies adopting IFRS for the first time to take certain exemptions from the full requirements of IFRS in the transition period. The Company has taken advantage of IFRS 3 "Business Combinations" - IFRS3 has not been retrospectively applied to acquisitions that took place prior to 1 July 2006.
3. Taxation
There was no charge to corporation tax in the year ended 30 June 2008 or the year ended 30 June 2007. A deferred tax asset has not been recognised on the grounds that sufficient profits to recover these losses cannot be foreseen with any certainty.
4. Loss per share
| 30 June2008 | 30 June2007 | ||
| pence | pence | ||
| Basic and diluted loss per share - continuing | 14.00 | 23.88 |
The calculation of the basic and diluted loss per share is based on the earnings attributable to ordinary shareholders, divided by the weighted average number of shares in issue during the year.
| 30 June2008 | 30 June2007 | ||
| £ | £ | ||
| Loss for the year attributable to equity holders of the parent company - continuing | 5,069,445 | 5,705,448 | |
| Weighted average number of ordinary shares for the purpose of basic and diluted earnings per share (all measures) | 36,198,907 | 23,891,900 |
There is no dilution to the basic loss per share in the current year arising from the share options and warrants in issue as they are antidilutive.
5. Cash and cash equivalents
For the purpose of the cash flow statement, cash and cash equivalents include cash in hand and at banks net of outstanding overdrafts.
Cash and cash equivalents at the end of the financial year as shown in the cash flow statement can be reconciled to the related items in the balance sheet as follows:
| 30 June2008 | 30 June2007 | ||
| £ | £ | ||
| Cash and bank balances | 684,489 | 821,544 | |
| Bank overdraft | (617,455) | (64,934) | |
| 67,034 | 756,610 |
6. Post Balance Sheet Events
The Company announced on 18 July 2008 that it has secured further funding from Neo Media and other investors through the issue of £400,000 of convertible loans carrying an annual interest rate of 10% percent and are due to be repaid or converted in 12 months. If converted, the New Convertible Loans carry a conversion price of 1p which will require the issue of up to 40.0 million new ordinary shares.
Neo Media a leading digital out of home ("DOOH") group with operations across Europe and Canada, subscribed for £300,000 of the New Convertible Loans. Avanti anticipates that it will work closely with Neo Media to broaden both its market penetration and product offering through clear synergies of expertise and opportunity. Neo Media is headquartered in Switzerland and currently operates in nine European countries, and in Canada, focusing on providing DOOH solutions to shopping centres, hypermarkets, retailers and exhibition centres. Through its investment in Avanti, Neo Media will obtain entry into the UK market and access to Avanti's significant client base.
The Company further announced on 22 August 2008 that Neo Media has subscribed for 17,636,363 new ordinary shares (the "Subscription Shares") at a price of 1.375p per share to raise a further £240,000, net of expenses. The Subscription Shares represented approximately 29.98 per cent. of the fully diluted share capital of the Company, as enlarged by the Subscription.
On 9 October the Company announced that Neo Media had subscribed for a further £500,000 of convertible loan notes. The loan notes carry an annual interest rate of 10% percent and are due to be repaid or converted in 12 months.
On the 4 December the Company announced Neo Media had subscribed for a further £500,000 of convertible loan notes which, in addition to Neo Media's 29.98 per cent shareholding, will, upon full conversion, give Neo Media a total aggregate shareholding of 112,636,363 ordinary shares.
7. Report Available
Copies of the financial statements for year ended 30 June 2008 will be available shortly from the Company's registered office and will be posted to shareholders and on the Company's website