Imagesound Share Discussion Threads

[escondido] 05/10/2007 03:20

nice tip in moneyweek - pages 16/17

[jimiuk] 20/9/2007 15:27

pump and dump scam

[pre] 20/9/2007 09:16

Chart looking better by the day....strong business with the recent acquisition bolt on should see ISD on higher eps....

[pre] 19/9/2007 15:22

FD brought 250,000 at 13.25p....looks like a very wise move and fuels confidence imo:-0))

[pre] 19/9/2007 14:32

rising again i see....long may it continue....looks like the market is pricing this higher as current valuation looks cheap imo:-0)

[pre] 19/9/2007 14:32

rising again i see....long may it continue....looks like the market is pricing this higher as current valuation looks cheap imo:-0)

[pre] 18/9/2007 18:53

Graph looking extremely bullish....wouldn't surprise me if this breaks out tomorrow;-))

[pre] 17/9/2007 09:09

I see buyers are moving in this morning.....

[pre] 14/9/2007 18:42

every bit counts...another move up and chart looking bullish;-) nice weekend all...next week should be very interesting:-0))

[cyclingnut] 14/9/2007 16:30

easy pre a .025p increase is hardly worth £anking about!!

[pre] 14/9/2007 09:16

mm's on the bid first thing....uummmm:0)

[pre] 13/9/2007 17:18

well gentlemen....looks like the next leg up is about to commence...nice blue finish an buyers sneekily picking up stock:-0)

[cyclingnut] 11/9/2007 16:04

noone seems to give a *&*oss about this one.

[paulie1] 11/9/2007 13:44

me neither..... what your eckon on this one, the FD buys a load and nothing happens doesnt that show confidence

[cyclingnut] 11/9/2007 10:58

not very patient!!

[paulie1] 11/9/2007 09:56

i have followed some tips from there and depends how patient you are!!

[cyclingnut] 11/9/2007 09:22

does anyone know the pedigree of UK analyst....good,bad or indifferent record.

[pre] 11/9/2007 08:11

Interesting bit of the UK analyst tip:

...The shares trade on a forward multiple of just 5.3 which looks incredibly low and even better when compared to Avanti Screenmedia* which is still expected to be loss making in 2008. On a conservative multiple of just 10 times 2008 earnings we think the company should be trading at least around 23p which suggests 92% upside. BUY.

[paulie1] 10/9/2007 21:00

it was from uk.anaylist.com on thursday the aim newsletter buy at 12.2Buy Imagesound at 12.25p

A tip from The AIM & PLUS Newsletter

THE BUSINESS

Imagesound (ISD) profiles music and video media for retail and leisure outlets, and hotels. Walk into any high street store and you will notice that 99% of the time there is music playing. While some companies might just turn the radio on or put on the latest CD a lot of companies use services which specifically selects the music that they play in order to compliment their brand. Take a typical high street chain pub for example. On a Friday night people want to listen to upbeat music, maybe something that they can dance to. Some types of music are totally incompatible for this so Imagesound's service filters these out and leaves the customer with a perfect soundtrack for an evening out. The company has two divisions, Imagesound, which focuses on retail and leisure chains, and MusicStyling, which was acquired in May 2006 and concentrates on luxury hotels, and by luxury we mean 5 star and above.

When creating a new collection of music for a client Imagesound has to have an in depth knowledge of the brand and marketing mix so the content which they provide, is relevant. Using its proprietary software, ISM4 and experienced music and retail experts, the company can search through a database of thousands of songs in every style of music you can think of. When completed the bespoke collection is then allocated to a single outlet, groups of stores or even an entire global estate of hundreds of outlets. Regular updates of new music tracks are then provided via CD, by satellite broadcast or download via broadband. The company also provides advertising media although the aim of its service is to enhance the customer experience and not to distract from it. Imagesound would not provide advertising on cheap flights or travel insurance to a pub for example, although it would provide content related to current drinks promotions as this is a potentially enhancing service.

So what is the rationale behind this service and why couldn't the outlets do it themselves? In theory fitting the music to the brand will help companies enhance their customers' experiences in their outlet and by doing this it is hoped that they would spend more. Of course this could be done in-house by playing the radio or a CD but these are not specifically tailored to the company's needs. A compilation CD will always have several tracks that do not fit the customer profile. A selection of songs could be played on an i-pod or similar device, however public broadcast from these devices is illegal.

The company has a large blue chip client base with major names in the retail and leisure sectors. In fact on every high street it is more likely than not there will be an outlet that uses Imagesound's technology. In total the company provides its services to over 50 chains with over 16,000 individual outlets using its services. Superdrug and McDonald's were two of the company's first major customers back when it was founded in 1998 and they both still remain to this day.

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CURRENT TRADING

Over the years Imagesound has acquired several competitors and added to these recently in an exiting deal. The company bought TSC Music Systems for a total of £4.75 million in cash which will be funded by its existing bank facilities. TSC is a major supplier of music services to the fashion, retail, coffee chain, fast food and retail financial services sectors, and supplies over 3,500 outlets across the UK. Its customer base includes leading brands such as Orange, Starbucks, Caffe Nero and Alliance & Leicester. Over the past four years, the company has been managed by James Abdool, son of the company's founder and he has joined Imagesound's management team as retail sales director on completion of the transaction and will assume responsibility for the combined group's retail sales team.

Audited results for 2006 for TSC show turnover of £2.2 million, of which £1.3 million or 59% was recurring revenue, adjusted EBITDA of £0.6 million and a loss before tax of £68,000. The Imagesound directors anticipate that, excluding any costs associated with the integration, which will be minimal, the acquisition will be earnings enhancing in its first full year of contribution. The acquisition will also bring synergies in the form of lower staff costs and increased buying power for the group.

The company has also announced a positive trading statement for the first half of 2007 confirming that trading is in line with expectations. New contracts and service upgrades were secured in the first half with clients including include Wickes, Superdrug, Bon Marche, HBOS, Foot Locker, Richleys, Slug & Lettuce and Ha Ha.

Further progress has also been made by MusicStyling. New contract wins included properties within the Four Seasons and Radisson chains, and a major roll out across the Marriott estate. MusicStyling are due to open a new office in Vancouver in September 2007, to build on its position in the important American hotel market.


OPPORTUNITIES AND THREATS

There are and estimated 200,000 branded retail and leisure outlets in the UK that the company targets, of which it currently supplies around and this is expanding. The market for Imagesound's services are estimated to be worth around £250 million a year and also growing as companies try to build up their brands to differentiate themselves from competitors. The company is highly exposed to the UK retail sector which of late has seen trading that be described as, at best, flat. However Imagesound's customers are large established brands which tend to do better than others in such periods. The poor trading conditions can also be seen as an opportunity as companies spend more on trying to differentiate themselves from each other.

The market is relatively fragmented with Imagesound having ten direct competitors, two of which, Avanti Screenmedia* and Immedia, are also listed on AIM. Avanti Screenmedia* has had a torrid time recently with a profits warning following a recent de-merger. Over the past few years Imagesound has been acting as a consolidator in the market and since July 2004 has acquired six related companies. The most recent acquisition before TSC was of Impact Automedia and this business managed to payback in just 1 year. When it goes on the acquisition hunt Imagesound is really chasing a company's customers, but cost saving synergies are also a reason. Opportunities remain for further consolidation in the sector. All competitors apart from 1 supply fewer outlets than Imagesound and are targets for the company.

While the UK retail market is relatively mature there are still a large number of outlets that do not use a third party to provide their screen media and a number that do not use music at all. The company is targeting these sectors with their sales teams and in particular niche sectors are seen as a good opportunity for growth. While the blue-chips such as McDonalds and Superdrug remain the core business Imagesound sees room for growth in areas such as garden centres and financial institutions. International markets are also seen as a good opportunity for growth. The development of Imagesound's international distribution network has continued recently, with two distribution agreements signed in the first half of the year with partners in Spain, Portugal and Dubai. These partners have added 150 new international subscribers in the year to date. Additionally a supply contract has been signed with "Alshya' to supply the rapidly expanding Foot Locker stores across the Middle East and Asia.

The main threats for Imagesound that we can see are losing contracts to competitors and not being able to convert pilot schemes into sales. The issue about customers leaving is not really an issue about the quality of the product as all players in the market provide a good service. Costs however are an issue. Being one of the largest players in the market the company has more buying power than some competitors and customer renewal rates have been high in the past.

The company has a good rate of recurring revenues that come from its contracts which stood at 62% during calendar 2006. A good growth opportunity also comes from the MusicStyling business. Imagesound believes that there are no direct competitors in this division and is looking to expand worldwide. This market is potentially lucrative as the service demands fees of 8 or 9 times higher than for regular contracts due to the increased amount of work involved.

*The value of investments can go down as well as up. Investing in equities can lose you part or all of your capital. Smaller company shares can be relatively illiquid and thus hard to trade. And that makes such investments more of a high risk than larger company shares. Cornhill Asset Management Limited is an Appointed Representative of Argyle Investment Advisors Limited which is Authorised and regulated by the Financial Services Authority. UK-Analyst.com is owned by t1ps.com Ltd which is authorised and regulated by the FSA and can be contacted at 5-11 Worship Street, London EC2A 2BH or on 020 7562 3370.

VALUATION

The company will release its interim results on 10th September but we want to get in now before the market realises how grossly undervalued it is. In calendar 2007 the results should be weighted towards the second half due to timing of contracts. For calendar 2007 we expect revenues of £9.7 million, with EBITDA of £2.5 million and adjusted earnings of 1.8p per share. In 2008 revenues should rise to £12.8 million, EBITDA to £3.6 million and adjusted earnings to 2.3p. We estimate net debt to have increased to around £7 million due to the TSC acquisition but considering the forecast EBITDA figures the interest cover should be substantial. The shares trade on a forward multiple of just 5.3 which looks incredibly low and even better when compared to Avanti Screenmedia* which is still expected to be loss making in 2008. On a conservative multiple of just 10 times 2008 earnings we think the company should be trading at least around 23p which suggests 92% upside. BUY.

*Avanti Screenmedia is a corporate client of Rivington Street Holdings, the ultimate owner of UK- Analyst.com.
Key Data

EPIC: ISD
Market: AIM
Spread: 12.25p - 12p (2.04%)

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5

[paulie1] 10/9/2007 20:56

wow, right again down on results, from now i am not buying glad the FD pratt bought some surely must mean something, why do they drop on results all the time INFC comin up soon damn!!

[pre] 10/9/2007 18:17

Well..that's interesting FD has just snapped up 250,000 shares;-) bodes well imo,dyor;0-)

[cyclingnut] 10/9/2007 16:10

Looks like I was right about the director buys.

[cyclingnut] 10/9/2007 13:32

wonder if those two large trades are director buys?

[cyclingnut] 10/9/2007 09:46

hence why I never buy in pre results as they usually drop on the day results are announced!

[pre] 10/9/2007 09:44

Extracts from todays chairman's statement today confirms ISD have a stronger business imo:
Acquisition of TSC


....The acquisition of TSC offers significant benefits through improved efficiencies and economies of scale. The integration of TSC is progressing smoothly and on plan, and we expect to see a contribution from this business in the full year
results...


Outlook


Our market continues to offer attractive opportunities. The branded retail and
leisure sectors are large and expanding with over 200,000 targeted outlets in
the UK alone, of which only around 25% are using a third party music provider.
In addition, the supply side of the market is highly fragmented, with ten
identified direct competitors in the UK. Most of these are smaller operators and only one is of a comparable size to Imagesound.


We have shown with the recent acquisition of TSC and with our previous
acquisitions that we will continue to play a key role in the consolidation of
this market. Imagesound has a reshaped balance sheet and the necessary banking
facilities in place to enable the Group to continue to make acquisitions.


Trading since the half year end has continued in line with expectations, with
the anticipated uplift in business from TSC and the new MusicStyling clients
already coming through. With a strong pipeline of new opportunities both in the
UK and worldwide along with further upgrades and renewals from customers who
recognise the importance of controlling their retail environment, the Board
remains confident of meeting its expectations for the year as a whole.



Derek Mapp
Chairman
10 September 2007