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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Imagesound | LSE:ISD | London | Ordinary Share | GB0002632569 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 5.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
Hot Features
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RNS Number:1534P
Imagesound PLC
03 March 2008
3 March 2008
Imagesound plc
Preliminary Results for the year ended 31 December 2007
Imagesound plc (AIM: ISD.L), the UK's leading listed supplier of in-store music,
radio and TV services to the branded retail and leisure sectors, today announces
unaudited results for the year ended 31 December 2007.
Financial Highlights
* Revenue up 8% to £8.8m (2006: £8.2m); recurring revenues up 10%
* Adjusted* EBITDA up 38% to £2.3m (2006: £1.6m)
* Adjusted* EBITDA margin increased 6 percentage points to 26%
* Operating loss reduced by 36% to £0.7m (2006: £1.1m);
* Reported loss before tax £1.1m (2006: £0.8m)
* Adjusted* earnings per share up 45% to 1.81p (2006: 1.25p)
* (Loss)/profit per share of (1.25)p (2006: 0.26p)
* Cash from operations up to £1.5m (2006: £0.1m)
* Adjusted to exclude amortisation of intangible assets, non-recurring
expenditure, share based payments and tax
Operational Highlights
* Subscriber outlets increased to 17,800 sites/zones as at 31 December
2007 (2006: 13,383);
* Successful acquisition of TSC Music Systems Ltd in July 2007 for £4.75m,
adding new clients including Starbucks, Caffe Nero, Montblanc, Orange and
Alliance & Leicester;
* Major renewals and additional sites secured with Wickes, Superdrug, Bon
Marche, HBOS, Foot Locker, Phase 8 and Poundland;
* New contracts secured with Au Naturelle for 180 UK stores, Swarovski for
45 UK stores, Richleys for 28 UK stores, Slug & Lettuce for 92 venues and Ha
Ha bars for 27 sites;
* MusicStyling 175 site roll-out to Marriott and Rezidor chains completed
and continued work with Hyatt, Starwood and Marriott in luxury resort
market;
* Vancouver office open and fully operational to serve the North
American market;
* Three distribution agreements in European/Middle Eastern markets and 24/
7 multi-lingual hotline established to service the fully international
Imagesound client base;
* Transition of delivery system to web-based solution offering
efficiencies and cost savings;
* Strong pipeline of new customers both in the UK and internationally.
Derek Mapp, Chairman of Imagesound said:
"We have been encouraged by the performance of the Group throughout 2007, which
demonstrates that in spite of signs of toughening retail and leisure market
conditions, the Imagesound offering is considered to play an integral role for
our customers in controlling their selling environment, differentiating their
brand and providing the appropriate ambience for their retail and leisure
venues.
"The background music market remains ripe for consolidation, both in the UK and
internationally, and we believe we have both the management skills and financial
leverage to be able to continue to execute our strategy.
"I am pleased to report that trading in the first nine weeks of 2008 has been in
line with management expectations and this, coupled with our increasing base of
recurring UK and international revenues, provides us with confidence for the
coming year and beyond."
For further information:
Imagesound plc
Derek Mapp, Executive Chairman Tel: 01246 572 990
Collins Stewart
Seema Paterson/Lorraine Delannoy Tel: 020 7523 8350
Hogarth Partnership
James Longfield/Sarah Richardson Tel: 020 7357 9477
Notes to Editors
Imagesound is the UK's leading listed supplier of in-store music, radio and TV
services. It provides music and messaging services to over 50 leading branded
retail and leisure chains reaching over 17,000 subscriber outlets.
Customers include Superdrug, B&Q, Foot Locker, Carphone Warehouse, McDonald's,
Subway, Next, Focus, Starbucks, River Island, O'Neill's, Pizza Express, Hyatt,
Starwood, Marriott and JJB.
Imagesound recently celebrated its 10th Anniversary. During this time the
business has evolved from a small, UK based company, to an international player
with an impressive global client list. Imagesound floated on the AIM market of
the London Stock Exchange in August 2004. Since this time the Group has embarked
on an organic growth and acquisition strategy and has made six acquisitions in
the sector. The latest acquisition of TSC acquired in July 2007 was fully
integrated within 6 months, and added names such as Starbucks, Cafe Nero,
Alliance & Leicester and GAP to the client list.
Imagesound plc
(the "Company" or "Group")
Preliminary Results for the year ended 31 December 2007
Chairman's Statement
I am pleased to report that 2007 has been a further year of good progress at
Imagesound. We have continued our track record of growth both organically and
via an earnings enhancing acquisition. This year we made our largest acquisition
to date, TSC Music Systems Ltd, which was successfully integrated within six
months and has delivered significant benefits and synergies. Our international
business continues to expand and now represents 21% of overall revenue. This is
led by our MusicStyling.com offering to the luxury resort market, as well as new
initiatives across Europe and the Middle East where we have extended our core
brand by partnership.
Operating Review
UK
2007 proved to be a challenging year for many UK retailers and leisure
operators, as increasing pressure on consumer spending impacted the whole
sector. Despite this, Imagesound has continued to deliver growth, which
demonstrates that our offering is seen as a core part of our customers' strategy
to attract customers, control their own selling environment and differentiate
themselves from their competitors. We are pleased to report that subscriber
numbers at 31 December 2007 were 17,800, (December 2006: 13,383), as we have
continued to win further roll outs from existing customers, contracts from our
competitors, as well as acting as a consolidator in the market place, most
recently with the acquisition of TSC Music Systems Ltd in July 2007, which added
names such as Starbucks, Caffe Nero, Orange Retail and Alliance & Leicester to
our client list.
During 2007 we secured major renewals and additional sites with Wickes,
Superdrug, Bon Marche, HBOS, Foot Locker, Phase 8 and Poundland. We also won new
contracts with Au Naturelle, for 180 UK stores and Swarovski, the crystal
products retailer, for audio services to 45 UK stores. In addition new contracts
were won during the period with Richley's, for 28 UK stores, as well as the Slug
& Lettuce chain, rolling audio services to 92 bars, and Ha Ha Bars, where we
have rolled out to 27 UK-wide venues. The majority of our new and existing
contracts are for 3 years, which further improves visibility via an increased
recurring revenue stream.
In December 2007 we announced that we had been invited to roll-out a video
service for the new JJB concept store in the Trafford Centre, Manchester, which
involved the installation of 25 screens. Following the success of this concept
store, we have been contracted to install our audio visual offering in a further
two JJB stores, with the potential for full roll out to 80 stores across the UK
during 2008.
2007 has also seen a major advancement in our technology platform which enables
us to manage the transition from expensive satellite delivery of our services to
a network-based system, delivered via the internet. Building on the successful
delivery mechanism developed for MusicStyling, which is almost entirely
web-based, this network solution offers our clients enhanced functionality and
reliability, as well as cost savings, which further improves our competitive
position. During the year we took the decision to accelerate this transition and
announced our intention to terminate our contract with the Alcas satellite
system. Thus far we have transitioned a number of key contracts, including
Superdrug, Peacocks, Poundland, Bon Marche, Footlocker, McDonalds, Focus and BHS
onto a network solution. We anticipate that our remaining clients will move
across during 2008, which will further cement client relationships through our
quality and value proposition.
Acquisition of TSC
In July 2007 Imagesound announced the acquisition of TSC Music Systems Ltd, a
major supplier of music services to the branded fashion retail, coffee chain,
fast food and retail financial services sectors, for a total consideration of
£4.75m. The acquisition added an impressive blue chip customer base with leading
brands such as Orange Retail, Billabong, Mont Blanc, Starbucks, Caffe Nero,
Alliance & Leicester, Welcome Break and Gala.
This was Imagesound's largest acquisition to date and represented a major step
in our strategy to act as a consolidator in the background music sector. The
acquisition was fully integrated within six months and delivered significant
synergies, improved efficiencies and economies of scale. Since acquisition
Imagesound has continued to grow the business organically, with continued
roll-outs across Starbucks, Caffe Nero, Gala and Alliance & Leicester.
International
Our international business continues to make excellent progress. This is led by
MusicStyling.com, the world leading provider of highly bespoke localised music
content to the international luxury hotel, spa and resort industry, which has
continued its impressive growth in the year and now has an annual recurring
revenue run rate of approximately £1m. MusicStyling accounts for 1,700 music
zones in 447 hotels in 75 countries around the world. The 175 site roll-out to
the Marriott and Rezidor chains announced at the interim results has now been
completed and the pipeline remains strong for future opportunities in this
premium space, where we are by far the largest supplier. Additional sites have
been secured within the Marriott, Hyatt and Starwood chains, where we are the
partner of choice for any new openings.
This market leading presence has been strengthened by the opening of a new sales
office in Vancouver during the year, which serves as a hub to the North American
market. The sales office is now fully operational and well positioned to take
advantage of this vast marketplace. In order to better service the international
client base, Imagesound has introduced a 24/7 multilingual helpline facility for
all worldwide assistance calls, which has received a very positive reception.
Imagesound is now a truly international company. Building on the international
success of MusicStyling, the Group has been able to tap into other markets where
the background music sector remains less developed than in the UK. The core
Imagesound brand now operates internationally via three partnerships, all of
which are progressing well.
During the first half we entered into a distribution partnership agreement in
Spain/Portugal, where we now have approximately 100 sites. Towards the middle of
the year we established a distributor in Dubai, which serves the Middle East and
Asia market and already we have secured 70 sites. The rapid development of the
economies of these markets present exciting opportunities for the Group. Towards
the end of the year we signed heads of terms on a further distribution agreement
in Budapest, to cover Eastern Europe, which is a very undeveloped market and
offers significant opportunities. We plan to commence an aggressive marketing
campaign to add critical mass to this business throughout the coming year.
By establishing these hubs in core markets across the globe, we are able to
source further client wins, whilst also offering a fully integrated service and
support network for our existing international clients. For example, we have
recently continued the roll-out to Mont Blanc's international store network,
based on our success within the UK and our ability to service a truly global
customer base International revenues, including those from MusicStyling,
represent approximately 21% of full year revenues (2006: 9% of revenues).
Management and Board Changes
With the continued evolution of the Imagesound business, the Board took the
decision to re-define and re-focus the scope of the executive management team's
roles, in order to fully capitalise upon the numerous opportunities that
continue to present themselves. Derek Mapp, Executive Chairman, is responsible
for the strategic direction of the Company and its acquisition strategy. For
clearer reporting structures and greater focus the Managing Director role has
been divided so that Michael Clark is Managing Director of UK & Worldwide Sales
while Ken Pratt is Managing Director of Operations and Finance. These changes
have had a positive impact within the business.
Outlook
We have been encouraged by the performance of the Group throughout 2007, which
demonstrates that in spite of signs of toughening retail and leisure market
conditions, the Imagesound offering is considered to play an integral role for
our customers in controlling their selling environment, differentiating their
brand and providing the appropriate ambience for their retail and leisure
venues.
The background music market remains ripe for consolidation, both in the UK and
internationally, and we believe we have both the management skills and financial
leverage to be able to continue to execute our strategy. We have worked hard to
improve our financial position during the year and have a stronger balance sheet
as we enter 2008.
I am pleased to report that trading in the first nine weeks of 2008 has been in
line with management expectations and this, coupled with our increasing base of
recurring UK and international revenues, provides us with confidence for the
coming year.
Derek Mapp
Chairman
3 March 2008
Financial Review
For the year ending 31 December 2007, the group's financial statements are
prepared in accordance with International Financial Reporting Standards adopted
for use in the EU ('Adopted IFRS').
In preparing these financial statements the directors became aware of an error
in the transition to International Financial Reporting Standards in the 2006
accounts. On restatement of the fair values of previous acquisitions no deferred
tax liability was recorded on the difference between the book value and the tax
value of certain intangible assets under IFRS 3. These financial statements
include a prior period adjustment for this error, as set out within note 2.
Turnover
Turnover for the year increased by 8% to £8.8m (2006: £8.2m). More
significantly, recurring revenue increased 10% to £5.6m (2006: £5.1m), and
represents some 64% of total turnover, in line with our strategy to increase
recurring revenue streams to provide greater predictability for the business.
Operating result
The group returned a reduced operating loss of £0.7m (2006: £1.1m)
The operating loss is inclusive of amortisation of intangible assets, a charge
for share based payment expense required under IFRS2, non-recurring integration
and restructuring costs.
To demonstrate the underlying profitability of the group a proforma income
statement is presented below which shows adjusted EBITDA whereby earnings before
interest, taxation, depreciation and amortisation has been adjusted for
non-recurring expenditure and the share based payment charge..
The higher quality recurring revenues coupled with our continued focus on cost
control has led to a 38% increase in adjusted EBITDA at £2.3m (2006: £1.6m).
Adjusted EBITDA margin has also increased year on year by six percentage points
to 26%.
Adjusted earnings per share was 1.81p (2006: 1.25p) where adjusted earnings
excludes amortisation of intangible assets, non-recurring expenditure, share
based payments and tax.
Proforma Income Statement
---------------------------
Year ended Year ended
------------ ------------
31-Dec-07 31-Dec-06
----------- -----------
(Unaudited) As restated
Revenue 8,841 8,184
---------- ----------
Adjusted EBITDA 2,257 1,630
Depreciation (744) (561)
---------- ----------
Adjusted operating profit 1,513 1,069
Net financing costs (362) (293)
---------- ----------
Adjusted earnings 1,151 776
Share based payment expense (133) (145)
Non- recurring expenditure (587) (109)
Profit on sale of head office - 609
Amortisation of intangible assets (1,494) (1,903)
Taxation 272 932
---------- ----------
(Loss))/profit after tax (791) 160
---------- ----------
Adjusted Earnings per share (p) 1.81 1.25
Weighed average number of shares 63,312,500 61,945,000
Non-recurring expenditure
Non-recurring expenditure of £587,000 (2006: £109,000) was incurred in
integrating TSC Music Systems Limited into the Imagesound plc business, the
closure of the Waterfront Studio and redundancy costs arising from the
restructure of the head office team.
Interest and taxation
Net finance costs amounted to £362,000 (2006: £293,000). This increase was
primarily due to the increase in debt outstanding following the TSC Music
Systems acquisition for £4.75m (plus associated costs).
The taxation credit in the accounts of £272,000 (2006: £932,000 as restated)
includes deferred tax impact on the amortisation of intangible assets identified
on acquisitions.
Dividends and loss per share
No dividend will be declared in respect of the year. Basic and diluted loss per
share amounted to 1.25p (2006: earnings per share of 0.26p and diluted earnings
per share of 0.25p after the restatement above).
Capital expenditure
Fixed asset additions were £1.4m of which £1.2m were additions to the rental
estate. The remainder invested was in enhanced systems and replacement of IT
equipment. The rental estate additions were part funded through the drawdown of
£0.9m of bank financing from Royal Bank of Scotland.
Cash flow and financing
Cash generated from operations amounted to £1,488,000 (2006: £63,000) before
interest and tax. This improvement reflects the cash generation of the business
and tight control of working capital in the year. The group paid the final
consideration of £575,000 of the 2006 Musicstyling.com Limited acquisition in
the year.
During the year the group acquired TSC Music Systems Limited with cash payments
totalling £4.75m. This acquisition was funded through a loan of £5.1m from Royal
Bank of Scotland.
The net bank debt position at 31 December 2007 was £6.7m (2006: £1.3m). The
existing bank facilities were extended with the Royal Bank of Scotland in
December 2007, which allow the company to operate a current account overdraft up
to £1.0m and a further £2.0m for acquisition purposes subject to agreed lending
criteria.
The cash position of the group improved by £0.5m in the year (2006: £0.5m
reduction).
Financial instruments
The group's principal financial instruments comprise cash, bank loans,
convertible debt and finance leases. The purpose of these financial instruments
is to finance the group's operations. The main risks arising from the group's
financial instruments are liquidity, foreign currency and interest rate risk on
floating rate financial liabilities. The policies for managing these risks are
as follows.
Liquidity risk
The group's policy is to ensure that cash balances are available for operating
activities and that appropriate funding is in place should the group have a
short term borrowing requirement. The group has a facility of £1.0m with Royal
Bank of Scotland plc. Interest is charged at 1.45% above the Bank's base rate.
Foreign currency hedging
The group has not made use of forward currency contracts, other financial
derivatives or hedging during the year and expects not to in the forthcoming
year. The group does receive and makes substantial payments denominated in
Euros. However these cash flows are relatively predictable, cash neutral and
occur evenly throughout the year. Accordingly the utilisation of a distinct bank
account denominated in Euros provides hedging suitable for the group's current
requirements.
Interest rate risk
The convertible debt and finance leases are fixed rate instruments. Due to the
floating nature of the interest charged on the group's bank overdraft and loans,
there is a risk arising from potential interest rate movements. Given the
current level of debt within the business, the group feels that hedging is not
required at present but continues to review the situation.
Ken Pratt
Managing Director - Operations and Finance
3 March 2008
Income statement
For the year ended 31 December 2007
Before Before
amortisation Amortisation amortisation Amortisation
and non- and non- and non- and non-
recurring recurring recurring recurring
costs costs Total costs costs Total
2007 2007 2007 2006 2006 2006
As restated As restated As restated
£000 £000 £000 £000 £000 £000
----------------- -------- -------- -------- -------- -------- --------
Revenue 8,841 - 8,841 8,184 - 8,184
Cost of sales (5,029) - (5,029) (4,769) - (4,769)
----------------- -------- -------- -------- -------- -------- --------
Gross profit 3,812 - 3,812 3,415 - 3,415
Administrative
expenses (2,432) (2,081) (4,513) (2,491) (2,012) (4,503)
----------------- -------- -------- -------- -------- -------- --------
Operating
profit/(loss) 1,380 (2,081) (701) 924 (2,012) (1,088)
Gain on sale of
property, plant
And equipment - - - - 609 609
Financial
income 3 - 3 - - -
Financial
expenses (365) - (365) (293) - (293)
----------------- -------- -------- -------- -------- -------- --------
Profit/(loss)
before tax 1,018 (2,081) (1,063) 631 (1,403) (772)
Taxation (352) 624 272 404 528 932
----------------- -------- -------- -------- -------- -------- --------
Profit/(loss)
for the year 666 (1,457) (791) 1,035 (875) 160
----------------- -------- -------- -------- -------- -------- --------
Attributable to:
Equity holders
of the parent
company (791) 160
----------------- -------- -------- -------- -------- -------- --------
Loss/(profit) per
share - pence
Basic
(loss)/profit
per share (1.25)p 0.26p
Diluted
(loss)/profit
per share (1.25)p 0.25p
----------------- -------- -------- -------- -------- -------- --------
Consolidated statement of recognised income and expense
for the year ended 31 December 2007
As restated
2007 2006
£000 £000
---------------------------------- ---------- ----------
(Loss)/profit for the year being the total recognised
income and expense for the year (791) 160
Impact of prior period adjustment on retained earnings 1,365
------------------------------------- ------- ----------
Balance sheet
for the year ended 31 December 2007
As restated
2007 2006
£000 £000
---------------------------------- ---------- ----------
Assets
Non-current assets
Property, plant and equipment 1,787 891
Intangible assets 15,010 11,262
Deferred tax assets 19 -
---------------------------------- ---------- ----------
16,816 12,153
---------------------------------- ---------- ----------
Current assets
Inventories 551 440
Trade and other receivables 3,386 2,510
Cash and cash equivalents 19 23
---------------------------------- ---------- ----------
3,956 2,973
---------------------------------- ---------- ----------
Total assets 20,772 15,126
---------------------------------- ---------- ----------
Liabilities
Current liabilities
Bank overdraft (643) (1,108)
Income tax payable (19) -
Loans and borrowings (918) (112)
Trade and other payables (4,625) (3,709)
---------------------------------- ---------- ----------
(6,205) (4,929)
---------------------------------- ---------- ----------
Non-current liabilities
Deferred tax liability - (98)
Loans and borrowings (6,563) (1,437)
---------------------------------- ---------- ----------
(6,563) (1,535)
---------------------------------- ---------- ----------
---------------------------------- ---------- ----------
Total liabilities (12,768) (6,464)
---------------------------------- ---------- ----------
---------------------------------- ---------- ----------
Net assets 8,004 8,662
---------------------------------- ---------- ----------
Equity attributable to equity holders of the parent
Share capital 6,331 6,331
Share premium 5,467 5,467
Other reserve 86 86
Retained earnings (3,880) (3,222)
---------------------------------- ---------- ----------
Total equity 8,004 8,662
---------------------------------- ---------- ----------
Cash flow statement
For the year ended 31 December 2007
2007 2006
£000 £000
---------------------------------- ------ -------------
Cash flows from operating activities
(Loss)/profit for the year (791) 160
Depreciation 744 560
Amortisation 1,494 1,903
Financial income (3) -
Financial expense 365 293
Gain on sale of property, plant and equipment (2) (609)
Share based payment expense 133 145
Taxation (272) (932)
---------------------------------- ------ -------------
Operating profit before changes in working capital 1,668 1,520
(Increase)/decrease in inventories (49) 42
Decrease in trade and other receivables (534) (316)
Increase/(decrease) in trade and other payables 403 (1,183)
---------------------------------- ------ -------------
Cash generated from the operations 1,488 63
Interest paid (339) (239)
Tax repayment 28 -
---------------------------------- ------ -------------
Net cash from operating activities 1,177 (176)
---------------------------------- ------ -------------
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 2 1,658
Interest received 3 -
Acquisition of subsidiary, net of cash acquired (5,220) (384)
Acquisition of property, plant and equipment (1,405) (468)
---------------------------------- ------ -------------
Net cash from investing activities (6,620) 806
---------------------------------- ------ -------------
Cash flows from financing activities
Proceeds from new bank borrowings 6,035 -
Proceeds from the issue of share capital - 50
Proceeds from convertible loan notes - 1,450
Repayment of bank borrowings (92) (2,565)
Repayment of finance lease liabilities (15) (27)
Payment of debt arrangement fees (24) (65)
---------------------------------- ------ -------------
Net cash from financing activities 5,904 (1,157)
---------------------------------- ------ -------------
---------------------------------- ------ -------------
Net increase/(decrease) in cash and cash equivalents 461 (527)
Cash and cash equivalents at 1 January (1,085) (558)
---------------------------------- ------ -------------
Cash and cash equivalents at 31 December (624) (1,085)
---------------------------------- ------ -------------
Notes
1. Basis of preparation
The financial information set out above does not constitute the company's
statutory accounts for the years ended 31 December 2007 and 31 December 2006.
The financial information for 2006 is derived from the statutory accounts for
the year ended 31 December 2006 that have been delivered to the Registrar of
Companies. The auditors have reported on the 2006 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 statutory accounts for 2007 will be finalised on the basis of the
financial information presented by the directors in this preliminary
announcement and will be delivered to the Registrar of Companies in due course.
2. Prior period adjustment
In preparing these financial statements the directors became aware of an error
in the transition to International Financial Reporting Standards in the 2006
accounts. On restatement of the fair values of previous acquisitions no deferred
tax liability was recorded on the difference between the book value and the tax
value of certain intangible assets under IFRS 3. These financial statements
include a prior period adjustment for this error. The effect at 1 January 2006
was to increase goodwill by £1,772,000, create a deferred tax liability of
£978,000 and increase retained earnings by £794,000. Additionally in the year
ended 31 December 2006, the financial statements have been restated to include a
deferred tax credit of £571,000 in relation to the amortisation of intangibles
in the period and include additional £52,000 of goodwill on the acquisitions in
the year through the recognition of a £52,000 deferred tax liability on the
intangibles acquired. At 31 December 2006, goodwill was increased by £1,824,000,
the deferred tax asset was reduced by £459,000 and retained earnings was
increased by £1,365,000.
The effect on earnings per share in the year ended 31 December 2006 was to
increase the basic earnings per share by 0.92p to 0.26p and increase diluted
earnings per share by 0.93p to 0.25p.
3. Acquisitions of subsidiaries
On 31 July 2007, the group and company acquired all the shares in TSC Music
Systems Limited, which provides in-store music services. The acquisition has
been accounted for using the purchase method of accounting.
From the date of acquisition to 31 December 2007, the subsidiary contributed
profit after tax of £163,000 to the consolidated net loss after tax for the
year.
If the acquisitions had occurred on 1 January 2007, group revenue would have
increased by £1,437,000 and loss after tax would have increased by £229,000.
These amounts have been calculated using the group's accounting policies and by
adjusting the results of the acquisitions to reflect the additional amortisation
that would have been charged assuming the fair value adjustments to intangible
assets had applied from 1 January 2007.
Effect of the acquisition
The acquisition had the following effect on the group's assets and liabilities.
Acquiree's Fair value Acquisition
book value adjustments amounts
£000 £000 £000
---------------------------------- -------- -------- --------
Acquiree's net assets at the acquisition
date:
Property, plant and equipment 236 - 236
Intangible assets - 874 874
Deferred tax liability (11) (187) (198)
Inventories 62 - 62
Trade and other receivables 344 - 344
Cash and cash equivalents 308 - 308
Trade and other payables (1,067) (8) (1,075)
---------------------------------- -------- -------- --------
Net identifiable assets and
liabilities (128) 679 551
---------------------------------- -------- --------
Goodwill on acquisition 4,420
---------------------------------- -------- -------- --------
4,971
---------------------------------- -------- -------- --------
Cash consideration paid (including
legal fees of £244,000) 4,953
Contingent consideration 18
---------------------------------- -------- -------- --------
Net cash outflow 4,971
---------------------------------- -------- -------- --------
The fair value adjustments above have arisen as follows:
* recognition of intangible assets for customer related and non-compete
arrangements;
* provision of deferred tax; and
* provision for excess holiday taken at the time of the acquisition in
accordance with IFRS 3; and
The contingent consideration was based on net asset levels at completion and a
further final payment of £18,000 was made in January 2008.
Notes (continued)
4. Amortisation and non-recurring costs
2007 2006
£000 £000
------------------------------ ------------- -------------
Amortisation of intangibles (1,494) (1,903)
Integration of TSC Music Systems Limited (419) -
Closure of Waterfront Studio (45) -
Restructuring of Imagesound plc (123) (109)
------------------------------ ------------- -------------
(2,081) (2,012)
------------------------------ ------------- -------------
Non-recurring costs were incurred in integrating TSC Music Systems Limited
(acquired in the year) into the Imagesound plc business. There were also further
non-recurring costs incurred in the year closing the Waterfront Studio acquired
with the Impact Audio Media Limited acquisition made in 2006 and redundancy
costs arising from the restructure of the head office team at Imagesound Plc.
The restructuring costs in 2006 relate to the termination of senior managers and
costs associated with the closure of the London premises.
5. (Loss)/profit per share
(Loss)/profit per share is calculated by dividing the earnings attributable to
equity holders of the parent company by the weighted average number of ordinary
shares in issue.
No diluted loss per share has been presented for 2007 as the effect of both
share options and convertible debt is anti-dilutive.
Weighted average (Loss)/profit
(Loss)/profit number of shares per share
------- ------- ------- ------- ------- -------
As As
restated restated
2007 2006 2007 2006 2007 2006
£000 £000 000 000 pence pence
---------------------- ------- ------- ------- ------- ------- -------
(Loss)/profit (791) 160 63,312 61,945 (1.25) 0.26
attributable to
equity shareholders
Effect of diluted items
- - - 2,625 1,864 - (0.01)
share options
---------------------- ------- ------- ------- ------- ------- -------
(Loss)/profit (791) 160 65,937 63,809 (1.25) 0.25
attributable to
equity shareholders
---------------------- ------- ------- ------- ------- ------- -------
6. Board approval
This Preliminary statement was approved for release by a committee of the board
of Imagesound plc on 28 February 2008. The Company Annual Report will be made
available to shareholders in April 2008.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR GGGGFMZNGRZZ
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