Preliminary Results
Immedia Broadcasting plc
18 May 2007
18 May 2007
IMMEDIA BROADCASTING PLC
('Immedia' or 'the Company')
Preliminary Results for the year ended 31 December 2006
Immedia Broadcasting Plc the UK's leading provider of live tailored radio and
video for retail, announces its preliminary results for the year to 31 December
2006.
Financial highlights
2006 2005
Turnover £4.47m £3.08m
Operating loss £(250)k £(1,072)k
Operating profit before depreciation, amortisation, exceptional £643k £73k
impairment charge and interest
Loss after tax £(231)k £(1,051)k
Basic and diluted loss per share (1.87)p (9.43)p
Net assets £2.00m £1.68m
The 2006 results include the acquisition of The Cube Group of Companies Limited
and the one-off contribution to revenue and profit due to the previously
announced contract termination with Vitus Apotek.
Operational Highlights
• Acquisition of Cube completed and re-launch of broader offer in progress
• Management team strengthened, with appointment of new Finance Director,
Chief Operating Officer and Business & Legal Affairs Director
• Impulse Network transfer from 'free to retail' model to subscription model
developing well
Commenting on the results and prospects, Bruno Brookes, Chief Executive, said:
'Over the past three years, Immedia has continued to provide a high quality
broadcast service to a range of high street brands. The acquisition of Cube last
year improved the company's market position by adding premium video content to
our tailored radio broadcast offering.
Despite the current challenges in the retail and advertising markets, we have
delivered a set of results in line with market expectations.'
For further information please contact:
Immedia Broadcasting Plc
Bruno Brookes - Chief Executive +44 (0) 1635 572 800
www.immediabroadcasting.com
Hudson Sandler
Nick Lyon / Amy Faulconbridge +44 (0) 20 7796 4133
Daniel Stewart & Company Plc
Paul Shackleton / Stewart Dick +44(0) 20 7776 6550
www.danielstewart.co.uk
Chairman's statement
2006 was a challenging year for both the UK retail sector and the advertising
market. Costs have been managed carefully and our focus on a subscription based
business model has helped to drive sales.
Turnover was up 48.7% to £4,472,225 (2005: £3,007,688) of which £762,031 was
attributable to The Cube Group of Companies ('Cube'), which was acquired in
April 2006. Encouragingly, organic revenue growth was some 23%.
Profitability for the group at the operating profit before depreciation,
amortisation, exceptional impairment charge and interest level continued to
improve and was £643,418 against £73,391 in 2005. The group operating loss
before interest and tax was £249,600 compared to losses of £1,071,737 in 2005.
Group losses on ordinary activities before tax reduced to £245,727 compared to
losses of £1,051,416 in the previous year.
In the year to 31 December 2006, the acquisition of Cube enlarged Immedia's
service offering and customer base. The management team was strengthened with
Fiona Ryder stepping up to the role of Chief Operating Officer and Ross Penney
taking on the role of Director of Business and Legal Affairs. Charles
Barker-Benfield joined the Board in May 2006 as Finance Director.
In 2007 the group lost two contracts which will have an impact on turnover and
profit, but following cost reductions, the group will be in a good position to
benefit from new business. Furthermore, we are in discussions with a number of
new and existing clients and feel confident that new business wins will help to
offset the shortfall.
We believe retailers continue to be attracted by in-store media as a premium
tool to build relationships with both customers and staff. The group has a
healthy pipeline of opportunities with established brands in the retail sector.
We remain positive about the outlook for 2007.
Geoff Howard-Spink
Chairman
17 May 2007
Chief Executive's Review
I am pleased to present our results for the twelve-month period ended 31
December 2006, and to report on Immedia's progress for the current year.
Results for the year ended 31 December 2006
Despite the particularly challenging retail market, Immedia has continued to
progress during the year. Turnover was up 48.7% to £4,472,225 (2005: £3,007,688)
including £762,031 (25.3%) from the Cube acquisition and operating profit before
depreciation, amortisation, exceptional impairment charge and interest was up to
£643,418 (2005: £73,391). The group operating loss was £249,600 (Cube loss
£33,116) compared to losses of £1,071,737 in 2005. Losses on ordinary
activities before tax reduced to £245,727 compared to £1,051,416 in the previous
year, including a one-off contribution due to the previously announced contract
termination with Vitus Apotek.
A combination of carefully managed costs and increased revenues from the
subscription model have ensured that the group's results were broadly in line
with market expectations for the year to 31 December 2006.
Acquisition of Cube
Last year we acquired Cube, a leader in in-store TV. Whilst Cube is developing
well and has integrated successfully into the Immedia group, it has
underperformed our initial expectations. This was due in part to a slower than
expected uptake on planned installations for existing customers and a longer
than anticipated integration between the two companies.
We believe Cube has a premium offering and is in a good position to attract
further clients. We expect an improved performance over the current financial
year.
Subscription Channels
Following the successful launch and roll-out of IKEA Live! in 2005, Immedia
signed a new contract in September 2006 to roll-out the station to all existing
and future IKEA stores across the UK for another 3 years.
HSBC Live! has also been a success with a further roll-out to 944 sites across
the UK by the end of 2007.
Lloyds Pharmacy Live! continues to broadcast across 1,400 pharmacies in the UK
and includes a mix of music and interactive live programming that entertains and
raises awareness on a number of health matters for customers.
In 2006, we launched trials of RadioVision, a combination of live radio
synchronized with tailored video content. RadioVision is a major advance in the
provision of in-store marketing and we are pleased to report that there has been
positive interest from a range of major retailers. The acquisition of Cube means
the group is now in a position to undertake more of the work for this service
in-house, particularly visual content creation, and to benefit from the
extensive visual skills of the Cube team.
Further to the announcement made on 17 April 2007 regarding the loss of two
contracts, we are disappointed, but remain confident these will be replaced with
new customers in due course. Management regularly reviews the pipeline of
opportunities whilst continuing to prudently manage the group's cost base.
Furthermore, we are in ongoing negotiations to extend contracts with existing
customers that have been impressed by the services provided by the group.
Impulse Live! Network
Last year, we presented our action plan to transfer the Impulse Live! network
from a 'free to retail' model to a subscription model.
As part of this action plan, from 11 April 2007 the Impulse Live! radio station
was no longer broadcast to the independent stores that were receiving the
service free of charge. We expect this action to deliver annual savings of
approximately £180,000 in maintenance and licensing costs. This is a positive
step towards increasing the profitability of our existing infrastructure, and
highlights the Company's focus on the subscription-based model. Emphasis is
being placed on a mix of national advertising subscription and production
revenue. Immedia is also developing a strategy to include local advertising
across its remaining networks to the convenience sector.
Outlook
Over the past three years, Immedia has continued to provide a high quality
broadcast service to a range of high street brands. The acquisition of Cube
last year added premium video content to our original tailored broadcast
offering. Following the integration of Cube, we are confident that the Company
has a broader and more flexible offer.
Despite the current challenges in the retail and advertising markets, we have
delivered a set of results in line with market expectations. The Company has a
healthy pipeline of new opportunities with a number of potential new clients,
and we look forward to making further progress during 2007.
Bruno Brookes
Chief Executive
17 May 2007
Consolidated Profit and Loss account
for the year ended 31 December 2006
Note 2006 2005
£ £
Turnover
Continuing operations 3,710,194 3,007,688
Acquisitions 762,031 -
Group turnover 4 4,472,225 3,007,688
Cost of sales (1,958,973) (1,308,281)
Gross profit 2,513,252 1,699,407
Administrative expenses
(including in 2005 an exceptional impairment charge of £445,849) (2,762,852) (2,771,144)
Operating loss (249,600) (1,071,737)
of which:
Continuing operations (216,484) (1,071,737)
Acquisitions (33,116) -
Operating profit before depreciation, amortisation,
exceptional impairment charge and interest 643,418 73,391
Depreciation and amortisation (893,018) (699,279)
Impairment charge - (445,849)
Net interest receivable 3,873 20,321
Interest receivable and similar income 21,428 37,817
Interest payable and similar charges (17,555) (17,496)
Loss on ordinary activities before taxation (245,727) (1,051,416)
Tax on loss on ordinary activities 3 14,488 -
Loss for the financial year (231,239) (1,051,416)
Loss per share - basic and diluted 5 (1.87) p (9.43) p
The 2006 results include the acquisition of The Cube Group of Companies Limited.
Consolidated statement of total recognised gains and losses
For the year ended 31 December 2006
Note 2006 2005
£ £
Loss for the financial year (231,239) (1,051,416)
Effect of adoption of FRS 25 on 1 January 2005 - (10,546)
Total recognised gains and losses relating to
the financial year 15 (231,239) (1,061,962)
There is no difference between the loss on ordinary activities before taxation
and the retained loss for the financial years stated above, and their historical
cost equivalents.
Consolidated Balance Sheet
at 31 December 2006
Note 2006 2005
£ £
Fixed assets
Intangible assets 7 1,658,216 36,637
Tangible assets 8 561,687 1,155,712
2,219,903 1,192,349
Current assets
Stock and work in progress 9 2,409 -
Debtors 10 1,229,434 866,422
Cash at bank and in hand 246,147 838,452
1,477,990 1,704,874
Creditors: amounts falling due within one year 11 (1,698,811) (1,217,614)
Net current (liabilities)/assets (220,821) 487,260
Total assets less current liabilities 1,999,082 1,679,609
Creditors: amounts falling due after more than one year 12 (3,187) -
Net assets 1,995,895 1,679,609
Capital and reserves
Called up share capital 13 1,334,056 1,173,897
Share premium account 14 3,525,727 3,390,411
Merger reserve 14 2,245,333 2,245,333
Shares to be issued 14 237,175 -
Profit and loss account 14 (5,346,396) (5,130,032)
Equity shareholders' funds 15 1,995,895 1,679,609
Consolidated Cash Flow Statement
For the year ended 31 December 2006
Note 2006 2005
£ £
Cash inflow from operating activities 16 861,124 464,524
Return on investments & servicing of finance
Interest received 21,428 37,817
Interest paid (17,555) (17,496)
Net cash inflow from return on investments & servicing of finance 3,873 20,321
Taxation
Corporation tax paid (1,882) -
Capital expenditure & financial investment
Payments to acquire tangible fixed assets (200,894) (473,978)
Receipts from sales of tangible fixed assets - 500
Net cash outflow on capital expenditure and financial investment (200,894) (473,478)
Acquisitions and disposals
Payments to acquire subsidiary 6 (1,280,969) -
Net cash acquired with subsidiary 6 204,236 -
Net cash outflow for acquisitions and disposals (1,076,733) -
Net cash (outflow)/inflow before management of liquid resources and (414,512) 11,367
financing
Management of liquid resources
Cash withdrawn from short-term deposit 17 790,000 210,000
Financing
Share issue costs (taken against share premium account) - (10,498)
Repayment of bank loans 17 (9,500) -
Repayment of other loans 17 (175,000) (50,000)
Repayment of leases 17 (4,932) -
Proceeds of exercise of share options 14,875 -
Purchase of own shares for Immedia Employee Benefit Trust - (6,865)
Effect of adoption of FRS 25 on 1 January 2005 - 28,253
Net cash outflow from financing (174,557) (39,110)
Increase in cash in the year 200,931 182,257
Reconciliation of net cash flow to movement in net funds
Increase in cash in the year 200,931 182,257
Net debt acquired on purchase of subsidiary 6 (33,314) -
Cash outflow from decrease in liquid resources (790,000) (210,000)
Revaluation of Other loans under FRS 25 13,367 -
Cash outflow from decrease in debt 189,432 44,382
Movement in net funds (419,584) 16,639
Net funds at 1 January 643,497 626,858
Net funds at 31 December 17 223,913 643,497
Notes to the preliminary results
1 Basis of preparation
The financial information set out above does not constitute the company's
statutory accounts for the years ended 31 December 2006 or 2005 but is derived
from those accounts. Statutory accounts for 2005 have been delivered to the
registrar of companies, and those for 2006 will be delivered in due course. The
auditors have reported on those accounts; their report was (i) unqualified, (ii)
did not include a reference to any matters to which the auditors drew attention
by way of emphasis without qualifying their report and (iii) did not contain a
statement under section 237(2) or (3) of the Companies Act 1985. The 2006
accounts will be delivered to the registrar of companies following the company's
Annual General Meeting. The Annual Report and Notice of Annual General Meeting
will be posted to the shareholders by 15 June 2007. This preliminary
announcement was approved by the Board on 17 May 2007.
Basis of consolidation: on 20 November 2003 a new holding company was brought
into the group. This was carried out by a share for share exchange and the
existing shareholders of Immedia Broadcast Limited received 1,000 10p Ordinary
shares in Immedia Broadcasting Plc for every share held. There was no cash
consideration. T This group reconstruction has been accounted for as a merger as
permitted by FRS 6 acquisitions and mergers.
The Cube Group of Companies was acquired on 8 May 2006 and has been accounted
for by the acquisition method of accounting.
2 Employee Benefit Trust
The Group operates an employee benefit trust (EBT) for the benefit of its
employees through Immedia Broadcasting Trustees Limited which acts as Trustee.
At 31 December 2006 the EBT held 213,500 shares (31 December 2005: 563,500
shares) in Immedia Broadcasting Plc in trust for employees against the future
exercise of options granted under the Immedia EMI Share Option Scheme. Under
UITF abstract 38 - Accounting for Employee Share Option Trusts - the own shares
held in the trust have been deducted from shareholders' funds (note 15).
3 Tax on loss on ordinary activities
Analysis of charge in year 2006 2005
£ £
UK Corporation tax
Adjustments in respect of prior periods (14,488) -
The charge for corporation tax is based on the loss for the year and takes into
account taxation deferred because of timing differences between the treatment of
certain items for taxation and accounting purposes. The deferred tax asset
arising in respect of timing differences between capital allowances and
depreciation of £270,000 (2005: asset of £211,000) has been added to (2005:
added to) accumulated trading losses. The residual trading losses create a
deferred tax asset of £611,000 (2005: £1,173,000) which has not been recognised
due to the uncertainty of the timing of its eventual crystallisation.
4 Turnover and segmental analysis
Turnover, which is stated net of value added tax, represents amounts invoiced to
third parties. All turnover arose from the group's principal activity of
marketing services.
Region of origin
All group activities originate in the United Kingdom.
United Kingdom Europe Total United Europe Total
Kingdom
2006 2006 2006 2005 2005 2005
£ £ £ £ £ £
Region of destination
Sales to third parties 3,504,889 967,336 4,472,225 2,283,603 724,085 3,007,688
Net assets
Segment net assets 1,871,184 125,749 1,996,933 817,509 257,100 1,074,609
Unallocated net assets (1,038) 605,000
Total net assets 1,995,895 1,679,609
The split of operating profit has not been provided as it is commercially
sensitive and in the view of the directors disclosure would be damaging to the
business.
5 Loss per share
2006 Number 2005 Number
Weighted average number of shares in issue 12,772,489 11,707,910
Less weighted average number of own shares (383,747) (563,500)
Weighted average number of shares in issue for basic loss per share 12,388,742 11,144,410
The basic and diluted loss per share are calculated using the loss for the
financial period of £231,239 (2005: loss £1,051,416). The diluted loss per share
is calculated after reflecting the outstanding share options and conditional
issuable shares at the year end. In accordance with FRS 22 the diluted basic
loss per share is stated as the same amount as basic as there is no dilutive
effect.
6 Acquisition
On 8 May 2006 the company completed its acquisition of The Cube Group of
Companies Limited.
The purchase consideration, which was satisfied in cash and in shares, was
payable partially on completion and partially on satisfactory completion of
certain post acquisition performance criteria, as follows:
Cash Shares Total
£ £ £
Consideration
Paid on completion 800,000 326,531 1,126,531
Other costs of acquisition 230,969 - 230,969
Conditional consideration paid after completion:
Cash 250,000 - 250,000
Shares to be issued - 237,175 237,175
Total consideration 1,280,969 563,706 1,844,675
Book value Fair value
adjustments Net
£ £ £
Net assets acquired
Tangible fixed assets 431,520 (361,999) 69,521
Debtors 222,185 - 222,185
Net cash 204,236 - 204,236
Creditors payable within one year (313,496) - (313,496)
Bank loans (23,604) (23,604)
Obligations under finance leases (9,710) (9,710)
Total net assets acquired 511,131 (361,999) 149,132
Goodwill arising on acquisition (note 7) 1,695,543
The consolidated results of The Cube Group of Companies Limited and its
subsidiary Cube Music Limited, directly prior
to and post acquisition were as follows:
Year to 30 7 months to 8 8 months to 31
September 2005 May 2006 December 2006
£ £ £
Turnover 1,677,862 1,069,437 762,031
Operating profit/(loss) 157,660 6,474 (32,035)
Interest receivable/(payable) (3,904) (1,167) (1,081)
Profit/(loss) before taxation 153,756 5,307 (33,116)
Taxation (16,315) - 14,488
Profit/(loss) after taxation 137,441 5,307 (18,628)
The results to 30 September 2005 were unaudited.
At acquisition, Cube Music Limited's accounts included its directors' historic
revaluation of its music video library within tangible fixed assets amounting to
£362,000. This video library had zero historic cost and to align with group
accounting policy has been adjusted to a notional value of £1 on acquisition.
The goodwill arising on acquisition is being amortised over 20 years.
7 Intangible fixed assets
Goodwill
£
Cost
At beginning of year 109,900
Acquisition (note 6) 1,695,543
At end of year 1,805,443
Amortisation
At beginning of year 73,263
Charge for year 73,964
At end of year 147,227
Net book value
At 31 December 2006 1,658,216
At 31 December 2005 36,637
8 Tangible fixed assets
Plant and Fixtures & Network Total
machinery fittings Equipment
£ £ £ £
Cost
At beginning of year 615,366 245,852 2,378,993 3,240,211
Acquisition 52,009 69,011 - 121,020
Additions 8,365 27,132 165,397 200,894
Disposals - (6,375) (351,873) (358,248)
At end of year 675,740 335,620 2,192,517 3,203,877
Depreciation
At beginning of year 441,317 153,773 1,489,409 2,084,499
Acquisition 25,047 26,452 - 51,499
Charge for year 127,089 67,732 624,233 819,054
On disposals - (2,125) (310,737) (312,862)
At end of year 593,453 245,832 1,802,905 2,642,190
Net book value
At 31 December 2006 82,287 89,788 389,612 561,687
At 31 December 2005 174,049 92,079 889,584 1,155,712
The net book value of fixtures and fittings includes an amount of £3,036 (2005:
£nil) in respect of assets held under finance leases.
9 Stocks
2006 2005
£ £
Work in progress 2,409 -
10 Debtors
2006 2005
£ £
Trade debtors 1,009,127 472,862
Other debtors and prepayments 220,307 393,560
1,229,434 866,422
All debtors are due within one year.
11 Creditors: amounts falling due within one year
2006 2005
£ £
Bank overdrafts 3,352 6,588
Bank loans (note 12) 10,917 -
Other loans (note 12) - 188,367
Obligations under finance leases 4,778 -
Trade creditors 653,878 396,683
Other taxation and social security 125,684 66,048
Accruals and deferred income 900,202 559,928
1,698,811 1,217,614
Bank loans comprise two five-year term loans arranged with the Royal Bank of
Scotland under the DTI sponsored small companies' loan guarantee scheme by Cube
Music Limited. Loan 1, originally for £50,000, has £6,667 outstanding which
will be repaid in 2007 and carries a fixed interest rate of 9.4%. Loan 2,
originally for £20,000, has £7,437 outstanding of which £4,250 will be repaid in
2007 and £3,187 in 2008 and carries a fixed interest rate of 8.7%.
The Other loans were unsecured and were repaid during 2006. They carried a
fixed interest rate of 8.0%. Finance leases are due within one year.
12 Creditors: amounts falling due after more than one year
2006 2005
£ £
Bank loans (see note 11) 3,187 -
Analysis of debt:
2006 2005
£ £
Falling due in one year or less, or on demand (see note 11)
Bank loans 10,917 -
Other loans - 188,367
Falling due between one and two years: (see note 11)
Bank loans 3,187 -
Other loans - -
14,104 188,367
13 Called up share capital
2006 2005
£ £
Authorised
36,000,000 Ordinary shares of 10 pence each 3,600,000 3,600,000
Allotted, called up and fully paid
13,340,563 Ordinary shares of 10 pence each 1,334,056 1,170,791
Liabilities classified as shares - 3,106
Shares classified in shareholders' funds 1,334,056 1,170,791
1,334,056 1,173,897
Movements in year
At beginning of year 1,173,897 1,170,791
Liabilities classified as shares (repaid)/reclassified (3,106) 3,106
1,632,653 Ordinary shares of 10 pence each issued * 163,265 -
At end of year 1,334,056 1,173,897
* These shares were issued at 20 pence each
Employee share options are outstanding as follows:
Option scheme Date of grant Number of shares Option price per share
Immedia EMI Share Option Scheme 27 Jan 2003 10,000 3.75 pence
Immedia EMI Share Option Scheme 29 Oct 2003 35,000 20 pence
Immedia EMI Share Option Scheme 11 Dec 2003 90,000 110 pence
Options granted to employees under the Immedia EMI Share Option Scheme are
exercisable at any time between 12 December 2003 and their expiry on the tenth
anniversary of the date of grant.
14 Share premium and reserves
Share premium Shares to be Merger reserve Profit and
account issued loss account
£ £ £ £
At beginning of year 3,390,411 - 2,245,333 (5,130,032)
Retained loss for the year - - - (231,239)
Released on repayment of Other loan under FRS 25 (27,949) - - -
New shares issued 163,265 - - -
Conditional shares pending issue - 237,175 - -
Proceeds from exercise of share options - - - 14,875
At end of year 3,525,727 237,175 2,245,333 (5,346,396)
15 Reconciliation of shareholders' funds
2006 2005
£ £
Opening shareholders' funds 1,679,609 2,725,753
Loss for the financial year after taxation (231,239) (1,051,416)
Issue of new shares 326,530 -
Conditional shares 237,175 -
Proceeds from exercise of share options 14,875 -
Share issue costs - (10,498)
Effect of adoption of FRS 25 on 1 January 2005 - 28,253
Released on repayment of Other loan under FRS 25 (31,055) (5,618)
Purchase of own shares for Immedia Employee Benefit Trust - (6,865)
Closing shareholders' funds 1,995,895 1,679,609
16 Reconciliation of operating loss to net cash flow from operating activities
2006 2005
£ £
Operating loss (249,600) (1,071,737)
Depreciation, amortisation and impairment of tangible and intangible assets 893,018 1,145,128
(Profit) on disposal of fixed assets - (500)
(Increase) in stock and work in progress (2,409) -
(Increase)/decrease in debtors (140,827) 259,182
Increase in creditors 360,942 132,451
Net cash inflow from operating activities 861,124 464,524
17 Analysis of changes in net funds during the year
Cash at bank Short-term Bank loans Other loans Obligations Total
deposits under finance
and in hand leases
£ £ £ £ £ £
At beginning of year 41,864 790,000 - (188,367) - 643,497
Acquisition (note 6) - - (23,604) - (9,710) (33,314)
Net cash flow 200,931 (790,000) 9,500 175,000 4,932 (399,637)
Revaluation of Other loans - - - 13,367 - 13,367
At end of year 242,795 - (14,104) - (4,778) 223,913
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