PTCM.L Regulatory News (PTCM)

24 Jun 2005 08:00

Media Steps Group PLC24 June 2005 Press Release 24 June 2005 Media Steps Group Plc ("Media Steps" or "the Company") First day of dealings on the AIM market Media Steps Group Plc ("Media Steps" or "the Company"), a provider ofinnovative, patented outdoor advertising for stairways in public places, todayannounces the commencement of dealings of its Ordinary Shares on AIM. CorporateSynergy Plc is acting as Nominated Adviser and as Broker to the Company. Thestock market EPIC will be STEP.L. Placing Statistics Placing Price per Ordinary Share 6p Number of Placing Shares 25,000,000 Gross proceeds of the Placing receivable by the Company £1.5 million Proportion of Enlarged Issue Share Capital subject to the Placing 34.7 per cent Number of Ordinary Shares in issue at Admission 72,000,000 Market capitalisation at Admission at the Placing Price £4.3 million Tony Jansen, Managing Director of Media Steps, said: "We are delighted that theflotation of the Group has been completed successfully. The listing will enableus to take Media Steps to the next stage of its development and maximise themany opportunities we have with our existing site owners and will allow us tobegin the full roll out of our estate across the UK." For further information: Media Steps Group PlcTony Jansen, Managing Director Tel: +44 (0) 1234 828 811tony.jansen@mediasteps.co.uk www.mediasteps.co.uk Corporate SynergyJohn Prior Tel: +44 (0) 20 7626 2244jprior@corporatesynergy.co.uk www.corporatesynergy.co.uk Media enquiries:AbchurchHenry Harrison-Topham / Ariane Comstive Tel: +44 (0) 20 7398 7700henry.ht@abchurch-group.com www.abchurch-group.com INTRODUCTION The Company, through its principal operating subsidiary Media Steps, is abusiness that displays advertising on the stair-risers of individual steps,comprising flights of stairs in public places, either in the style of a posteror a repeating message. Each flight of stairs carrying such advertising site iscalled a PosterstepTM. The Company generates revenue by selling suchadvertising space and by production of the advertising medium. The advertising displayed on each PosterstepTM is reproduced on a series oftailor-made printed steel panels, one per step. Each printed panel is heldsecurely in place by the patented StepLokTM enabling regular copy changes, highquality reproduction and durability as well as complying with current health andsafety legislation. This unique system enables advertisers to change copy asoften as required. The Directors believe that the Group has the following key strengths: • an innovative enhancement to step advertising; • the patented StepLokTM, which conforms to current health and safety standards and enables regular copy changes; • current agreements with train operating companies giving the Group an existing estate of over 420 sites, with no minimum, guarantee or rental payment required and the Group is in negotiations with third parties which, if successful, would give rise to a further 1,190 sites. • considerable potential for growth of its estate in the UK, Europe and internationally through the entering into further agreements with shopping malls, exhibition halls, stadiums and further train operating companies; and • The ability to offer its clients an independent and bespoke service The Company has conditionally raised £1.5 million (before expenses) by way of aplacing of 25,000,000 Ordinary Shares, with institutional and other investorsand £330,000 (before expenses) by way of the issue of the Series B Loan Notes.The funds will primarily be used to expand the Group's marketing and salesoperations and to roll out and expand the Group's existing estate in the UK,Europe and internationally. THE BUSINESS Background Media Steps, the principal operating subsidiary of the Company, was founded inAugust 2003 by Roger Bateman, Anthony Jansen and Christopher Perry following atwo year product development period during which Roger Bateman applied for apatent of the StepLokTM. Media Steps has since assisted in the application forvarious patents covering the UK and a further 18 territories within Europe byway of European patent applications. Further StepLokTM patents are pending inthe US, South Africa and Australia. All of the IP Rights will be assigned tothe Company at Admission by way of the StepLokTM Assignment, further details ofwhich are set out in paragraph 8.1.4 of Part V of this Document. Since its formation Media Steps has achieved the following milestones: • surveyed 360 locations, comprising of over 2,100 potential advertising sites for the Group's PosterstepTM medium • created Media Steps' brand identity, logo, website and media pack; • completed research in association with an international corporate brand recall to its advertising medium • built and consolidated brand awareness with selected major outdoor advertisers, creative and planning agencies, and outdoor specialists; • initiated trial advertising campaigns on its estate for a number of clients including Direct Line, Ford, News International and Hoverspeed; • sold advertising sites to a number of advertisers including Prince, John Laing and Cannons Health Clubs. In November 2004 Media Steps entered into agreements, for a period of threeyears, with train operating companies Thameslink and Southern Trains, grantingthe Group its existing estate of 420 PosterstepTM sites. These agreements allowfor a net revenue sharing arrangement with the train operator with no minimum,guaranteed or rental payment required by Media Steps. Media Steps is currently in advanced negotiations with a number of other partiesincluding the owners of a national chain of shopping malls and therepresentatives of three large train operating companies. If all of thesenegotiations were successful, this would give Media Steps a further 1,190 sites. The Product StepLokTM was designed to conform with applicable health and safety requirementsand to provide a flexible solution to advertising on stairs including theability to make regular copy changes. The StepLokTM is manufactured out ofstainless steel and copy is digitally printed onto vinyl, mounted on steelpanels and laminated. The frames are securely fixed to the stair risers at eachlocation in accordance with an agreed installation programme and the printedsteel panels are inserted and locked in place. Manufacturing, installation, print production and copy changes are outsourcedunder close supervision and management by Media Steps. Media Steps' PosterstepTMsites are currently rented out using a rate card divided into three bands,dependent on the footfall at each location. To date, Media Steps' customer basehas been derived from a variety of sources. It is anticipated that theCompany's customer base will be primarily derived through the outdoor andcreative and planning agencies to whom Media Steps has paid and will continue topay an industry standard commission of between 15 and 20 per cent. forgenerating the end customer. Although Media Steps only signed agreements overits estate in November 2004, it has, by employing low levels of marketingactivity, installed approximately 60 PosterstepTM sites. Recent initial research by Retail Marketing In-Store Services Limited ("RMS") onbehalf of the Company shows that 42 per cent. of respondents recalled seeingadvertising at a sample of stations where Media Steps has a presence. At eachof the sample stations in the research the highest recall was for a brandadvertised on a PosterstepTM. In keeping with the Group's policy of ensuring that the StepLokTM and itsapplication conform with applicable legislation the Group has conducted a reviewof the DDA and the possible impact of the DDA on the Group's businessactivities. In particular, the Group has considered the possibility thatadvertisements on steps in public places may impact on the ability of thepartially sighted to use the staircases in such places. After consultation withlegal counsel, the Group is satisfied that it can work together with Proprietorsto ensure that all reasonable steps are taken to ensure that its business doesnot conflict with the duties of Proprietors under the DDA. The Patents StepLokTM is protected by a UK patent (granted on 20 July 2004) and a Europeanpatent (granted on 22 September 2004). There are patent applications pending inSouth Africa, Australia and the US. Roger Bateman is the named inventor and registered proprietor of each StepLokTMpatent and the pending StepLokTM applications. Mr Bateman has entered into theStepLokTM Assignment with the Company (further details of which are set out inthe prospectus) under which, as at the date of Admission, Mr Bateman willtransfer all the IP Rights to the Company. Each of the StepLokTM patents and applications contain the same main independentclaim, which is to a display device for displaying advertising material on astair tread riser, such device comprising a carrier plate to be attached to astair riser, an advertising plate adapted to be housed within this carrier, anda lockable end cap to prevent removal of the advertising plate. The StepLokTM patent applications also contain various other claims in relationto a retaining member to prevent the advertising plate sliding from side toside, retaining channels to accommodate the advertising plate, a carrier platewith countersunk holes for fixing such carrier plate so that the fixing heads donot protrude, and a lockable end cap. The StepLokTM patents contain variousexamples of the type of lockable end cap that may be used. The patent agents for Mr Bateman, have prepared a patent report for the Companyand have indicated that they believe there is no reason to suspect that thepending StepLokTM applications will not be granted. The patent agents have also informed the Directors of third party patents inrelation to advertising on steps. However the patent agents have opined that iflitigated, either the claims of the third parties, which might be claimed to beinfringed, would be held to be invalid as a result of prior art or the IP Rightswould be held not to infringe the third party patents. Media Steps (Sports) Limited Media Steps (Sports) was incorporated in July 2003 with a view to using StepLokTM in sports stadiums in the UK. In September 2003 it signed a five yearcontract with Wolverhampton Wanderers FC to utilise the staircases in its groundand has since signed similar contracts with Everton FC, Leicester City FC,Birmingham City FC and Leicester Tigers RC with no minimum guarantee or rentalpayment required. In January 2005 Media Steps (Sports) negotiated an initial 13 month agreementwith the Millennium Stadium in Wales subject to annual reviews thereafter. MediaSteps (Sports) is currently in negotiations to sign up two other well knownsports stadiums. Media Steps has an 85 per cent. shareholding in Media Steps (Sports), with theremaining 15 per cent. held by Mark Rose-Dennis, a director of Media Steps(Sports). Market dynamics Current Market The outdoor advertising market has grown steadily over the past ten years withconsiderable growth in the number of outdoor offerings. Gross revenues havegrown by over 30 per cent. Since 1998 and 2004 was a record year for outdooradvertising with the full twelve months showing revenues of over £847 million,equating to a 7.8 per cent. Increase on 2003, the last quarter amounting to £235million of the annual gross revenue. The Director's believe that the outdoor market is split into four segments:- • Roadside Encompasses phone kiosks, six sheet, forty eight sheet and ninety six sheet posters, and large format special builds through to banners; • Transport railway and underground networks, airports, buses, taxis and truck-sides; • Retail includes health and leisure centres, shopping malls, supermarkets, and petrol stations; and • Non Traditional Formats and Ambient including shop signs, washrooms, ticket media, petrol pumps and beer mats. The outdoor sector is dominated by Maiden, Viacom, JC Decaux and Clear Channel,who between them own the majority of the rights across the above segments. Overthe past 10 years, there has been considerable consolidation of media assets,which the Directors believe is likely to continue as media owners seekadditional revenue streams and an increase in market share. Outdoor advertising is generally purchased by specialist agencies with a numberof large companies accounting for a large proportion of the market, securingadvertising for major national and international companies and brands. Strategy The Directors believe that there is considerable potential to grow the Grouporganically. They believe that this can be done through the following means: • targeted marketing to specialist outdoor advertising agents, and the development of relationships with both planning and creative agencies and the advertisers themselves in order to increase the occupancy ratio of its estate. The Directors intend to increase the Group's marketing activities to expand and consolidate its profile to prospective buyers of its advertising space; • increasing the Group's estate in the United Kingdom through agreements with additional train operating companies, shopping malls, exhibition halls and stadia with a view to building coverage nationwide; and • rolling out the Media Steps' estate into Europe and internationally. Competition The Directors are aware of other companies that display advertising on steps inpublic places. The Directors however believe that there is no other companythat provides a system similar to the Company's StepLokTM which allows forregular easy copy changes and complies with current health and safety standards. FINANCIAL INFORMATION Financial Record The following table has been extracted, without adjustment from the Accountants'Report on Media Steps (UK) Limited as set out in Part IV of this Document.Investors should read the whole of this Document and not just rely on thesummarised information: 31 January 31 March 2005 2004 £ £ Turnover 69,605 35,795Gross Profit 24,874 26,187Operating Loss (247,131) (224,349)Loss on Ordinary Activities BeforeTaxation (252,234) (224,220) The turnover to date reflects the fact that the Group has expanded only lowlevels of marketing resource to attracting customers. The Directors believe thatfollowing the receipt of net proceeds from the Placing, the Group will be wellplaced to grow both its current estate and the proportion of it in active use. Directors Neil McClure ACA, Non-Executive Chairman, aged 51 Neil McClure qualified as a chartered accountant with Coopers and Lybrand andthen worked in corporate finance at Phillips & Drew before joining Saatchi &Saatchi as corporate finance director in 1985. Subsequently he has been adirector of a number of publicly quoted companies, principally in theadvertising and marketing service industries and is currently a non-executivedirector of Independent Media Support Group plc, non-executive chairman of AlanBrazil Leisure plc and chairman of Table Mountain Minerals plc. Anthony Jansen, Managing Director, aged 40 Anthony Jansen co-founded Media Steps in August 2003, prior to which he spentsixteen years working as a broker in the Lloyds insurance market with LloydThompson plc, where he was involved in the growth and expansion of the business,which, following a merger in 1997 with the JIB Group plc, became Jardine LloydThompson Group plc. Anthony left Jardine Lloyd Thompson Group plc in 2001 topursue other activities. Following Admission, Anthony will continue to beresponsible for the running of the Company's day to day affairs. James Farmer, Commercial Director, aged 38 James Farmer has been working for Media Steps since January 2004 and has spentover twenty years in the media industry. James' background is in radio and outof home television having been sales director of Invicta Radio plc, becomingstation director following the acquisition by Southern Radio plc continuing onin this role after the acquisition of Southern Radio plc by Capital Radio plc.He has specific expertise in launching new media products namely Metro (TrafficLink) in the UK and more recently Welcome Break and Toni & Guy television.James will be responsible for the sales and marketing of the Group's product tothe advertising industry. Roger Bateman, Technical Director, aged 58 Roger Bateman co-founded Media Steps with Anthony Jansen in August 2003 and wasresponsible for the design of the StepLokTM. Prior to joining Media Steps heworked in the exhibition industry with RCBS (UK) Limited providing printedcarpet tiles to exhibitors. Roger will be responsible for the design,installation and manufacture of the StepLokTM. Ian Russell FCCA, Finance Director and Company Secretary, aged 38 Ian Russell qualified as a certified accountant in 1991 with Wilkinson &Company, an accountancy practice based in Bedford becoming a partner in 1997.In 2002 Ian started his own practice, Russells (Accountants) Limited, which hewill continue to run following Admission. Ian will be responsible for theoverseeing the financial function of the Group and has committed to spend oneand a half days per week on the Group's affairs. Mike Cornwell, Non-Executive Director, aged 66 Mike has worked within the automotive glass industry for over 30 years, mostnotably as UK sales director of Autoglass where he was responsible forintroducing the insurance and fleet strategy leading to Autoglass becoming amajor player in the UK. Mike moved to a parent company, Belron International andcarried the insurance strategy into Belgium, Holland, France, Germany, Italy,Spain and Portugal. In addition, he worked with the growing markets of Canada,Australia and New Zealand adapting this successful strategy to meet local marketconditions. The Group operates out of its headquarters near Bedford and employs 7 people,including the four executive directors. - Ends - This information is provided by RNS The company news service from the London Stock Exchange