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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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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 | |
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0.00 | 0.00% | 5.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
RNS Number:5350D Imagesound PLC 10 September 2007 10 September 2007 Imagesound plc Interim Results for the six months ended 30 June 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 six months ended 30 June 2007. Financial Highlights * Revenue reduced in line with expectations to #3.5m (H1 2006: #3.9m) * Adjusted* operating profit up 7% to #629k (H1 2006: #590k) * Adjusted* operating profit margin increased 3 percentage points to 18% * Adjusted* earnings per share up 10% to 0.74p (H1 2006: 0.67p) * Cash from operations up 69% to #505k (H1 2006: #299k) * Adjusted to exclude amortisation of intangible assets, non recurring expenditure and share based payments Operational Highlights * Subscriber outlets increased to 17,000 sites/zones as at 1 August 2007; * Major renewals and additional sites secured in H1 with Wickes, Superdrug, Bon Marche, HBOS, Foot Locker, Richleys, Slug & Lettuce and Ha Ha bars; * New contract signed today with Au Naturelle for 180 stores across the UK; * MusicStyling have agreed a contract with Rezidor Group to supply 150 hotels over the next 12 months, in addition to the continuing rollout to the Marriott chain; * Acquisition of TSC Music Systems Ltd on 31 July for #4.75m adds new clients including Starbucks, Caffe Nero, Montblanc and Alliance & Leicester. Derek Mapp, Chairman of Imagesound said: "I am very pleased with the progress we have made in the first half, which is building value for H2 and beyond. Whilst some of our clients are experiencing tough trading conditions, this is not impacting their recognition of the need for managing and developing their retail and leisure offer through music, messaging and AV. Imagesound is in a strong position to capitalise on this continuing trend and well placed to take advantage of opportunities for further growth through acquisition - both in the UK and overseas. Our recent acquisition of TSC is an example of such opportunity and we remain confident that we are on track to meet our expectations for the year as a whole." 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, Halifax, Next, Focus, Holiday Inn, River Island, O'Neill's, Pizza Express, Hyatt, Starwood, Marriott and JJB. Imagesound is listed on the AIM market of the London Stock Exchange (AIM: ISD.L). Imagesound plc (the "Company" or "Group") Interim Results for the six months ended 30 June 2007 Chairman's Statement I am pleased to report that we have made further good progress in the first half of 2007 as we continue to build on the benefits of our operational and financial restructuring in 2006 and by securing the opportunities that have arisen from our recent acquisitions. New clients added in the first half together with the completion of a number of major equipment roll-out programmes are helping to build a strong pipeline of recurring revenue opportunities, which are expected to positively impact trading in the second half. Accordingly, we are confident that we are on track to meet our expectations for the full year. Financial Review Our focus on improving the quality of the business and more predictable recurring revenues saw turnover drop slightly, as expected, to #3.5m (H1 2006: #3.9m). Within this, however, recurring revenues increased to #2.5m, and now represent 68% of total turnover (H1 2006: 62%). The higher quality revenues, combined with our continued focus on costs and leveraging our existing operating infrastructure, has led to an increase in adjusted operating profit of #629,000, a 7% increase on the same period last year. Adjusted operating margins improved three percentage points to 18%. Adjusted earnings per share were up 10% to 0.74p (H1 2006: 0.67p). Interest costs were lower following the refinancing of the business in the second half of 2006, leading to a 21% reduction in net finance costs to #95,000 (H1 2006: #120,000). After the #963,000 amortisation of intangible assets relating to prior year acquisitions, #62,000 of non-recurring restructuring charges and #65,000 of share based payments, Imagesound reported a loss before tax of #556,000 (H1 2006 loss: #621,000) and a loss per share of 0.88p (H1 2006 loss: 1.04p). The improving quality of the business was further evidenced by an 69% increase in cash generated from operating activities to #505,000 (H1 2006: #299,000). Proforma Income Statement Restated --------------------------- ---------- Half Year Half Year Year --- ----------- ----------- ------ Ended Ended Ended --- ------- ------- ------- 30-Jun-07 30-Jun-06 31-Dec-06 --- ----------- ----------- ----------- (Unaudited) (Unaudited) (Audited) --- --- Revenue 3,513 3,909 8,184 Adjusted EBITDA 882 868 1,630 Depreciation (253) (278) (561) ---------- ---------- ---------- Adjusted Operating Profit 629 590 1,069 Non recurring expenditure (62) (89) (109) Amortisation of intangible assets (963) (936) (1,903) Share based payment charge (65) (66) (145) ---------- ---------- ---------- Operating loss (461) (501) (1,088) Profit on sale of head office - - 609 Net financing costs (95) (120) (293) ---------- ---------- ---------- Loss before tax (556) (621) (772) Taxation (131) - 361 ---------- ---------- ---------- Loss after Tax (687) (621) (411) Adjusted Earnings per share (p) 0.74 0.67 1.02 Weighed average number of shares 63,312,500 60,716,667 61,945,000 Operating Review Competition in the international luxury hotel sector remains under-developed and our activities in this market continue to move from strength to strength. In the UK retail and leisure markets competition remains strong and market conditions, for retailers in particular, have remained challenging throughout the first half of 2007. Despite this, branded retail and leisure operators increasingly recognise the importance of maintaining brand differentiation for their businesses and this has strengthened Imagesound's pitch to both existing clients and prospects. We continue to see a strong pipeline of opportunities for new business. We have increased subscriber numbers to 17,000 outlets/music zones as at 1 August 2007 (December 2006: 13,383). During the first half we secured new contracts and service and equipment upgrades with Wickes, Superdrug, Bon Marche, HBOS, Foot Locker, Richleys, Slug & Lettuce and Ha Ha. The majority of these contract renewals are for three year terms, which increases our recurring income levels and improves future visibility. We are delighted to announce today that we have won a new contract with Au Naturelle, providing music services to 180 stores across the UK. A major initiative for the Group during 2007 is the transition of our technology offer away from expensive satellite transmission to a network-based system, delivered via the internet. Building on the experience from MusicStyling, which delivers the majority of music content via the web, the reduced cost for our customers and improved efficiency of delivery is expected to have a positive impact on our competitiveness and on gross margins going forward. To date we have transitioned Superdrug, Peacocks, Poundland and Bon Marche in retail and Slug & Lettuce and Ha-Ha in the leisure arena to web-based delivery. Discussions are ongoing with a number of other clients and we expect further moves in the second half. MusicStyling.com, which is the clear world leading provider of bespoke music content to the international luxury hotel, spa and resort industry, has continued to perform extremely well in the first half. Recurring annualised revenues increased to #700,000 in the period, and we anticipate a further uplift in the second half as the new wins and rollouts completed in the first half come on stream. New wins in H1 include the Four Seasons and Radisson chains and a major roll out across the Marriott estate. The acquisition of MusicStyling in May 2006 represented a significant step in Imagesound's international growth strategy, and the business is now operating in around 1,200 music 'zones' in 292 hotels in 70 countries around the world. Supporting this business, we will be opening an office in Vancouver later this month, which will allow us to build on our position in the key American hotel market. The convergence of music licensing policies, procedures and prices, particularly in Europe, is opening up other opportunities overseas. We have taken steps to progress the international expansion of our in-store music business in the first half. During the period we entered distribution partnership deals in Spain/ Portugal, where we already have penetration of 90 sites, and in Dubai, to service the Middle East and Asia. We are also in discussions with other potential distributors in Italy, Germany and South Africa, all of which offer exciting opportunities. International revenues, including those from MusicStyling, represent approximately 12% of total first half revenues. We anticipate that this proportion could increase substantially over the coming years During the period we introduced a best in class Audio-Visual player, in partnership with a leading international manufacturer and we are currently developing a sales team to promote this further within the leisure market. Acquisition of TSC Since the half year end we have announced the acquisition of TSC Music Systems ("TSC") for a total consideration of #4.75m. This was a major step in our strategy to consolidate our market leading position for the provision of in-store music, adding some 3,500 outlets across the UK. TSC is a major supplier of music services to the branded fashion retail, coffee chain, fast food and retail financial services sectors, with a blue chip customer base which includes leading brands such as Billabong, Orange Retail, Montblanc, Starbucks, Caffe Nero, Alliance & Leicester, Welcome Break, and Gala. 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. The acquisition of TSC also adds further technology to Imagesound in the form of a music player that is comparable in quality to the one used by Imagesound, but is less costly to manufacture. Imagesound plans to adopt the TSC music player for its existing clients further improving Imagesound's competitiveness as we drive for renewals and new business. James Abdool, former Managing Director of TSC has been appointed Retail Sales Director of Imagesound. 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 Consolidated Income Statement for Six Months Ended 30 June 2007 Restated ---------- Half Year Half Year Year ----------- ----------- ------ Ended Ended Ended ------- ------- ------- 30-Jun-07 30-Jun-06 31-Dec-06 ----------- ----------- ----------- (Unaudited) (Unaudited) (Audited) Revenue 3,513 3,909 8,184 Cost of sales (1,975) (2,268) (4,769) ----------- ----------- ----------- Gross Profit 1,538 1,641 3,415 Administrative Expenses (1,999) (2,142) (4,503) ----------- ----------- ----------- Operating loss (461) (501) (1,088) Gain on disposal of profit - - 609 Financial Income - - - Financial Expenses (95) (120) (293) ----------- ----------- ----------- Net Financing Costs (95) (120) (293) ----------- ----------- ----------- Loss before taxation (556) (621) (772) Taxation (131) - 361 ----------- ----------- ----------- Loss after taxation (687) (621) (411) ----------- ----------- ----------- Basic Loss per Share (0.88) (1.04) (0.66) Diluted Loss per Share (0.88) (1.04) (0.66) Consolidated Balance Sheet for Six Months Ended 30 June 2007 Restated --- ---------- --- Half Year Half Year Year ----------- ----------- ------ Ended Ended Ended ------- ------- ------- 30-Jun 30-Jun 31-Dec -------- -------- -------- 2007 2006 2006 ------ ------ ------ (Unaudited) (Unaudited) (Audited) Net current assets Intangibles 8,477 10,238 9,438 Property Plant & Equipment 1,256 1,826 891 Deferred Tax Assets 296 - 361 --------- --------- --------- 10,029 12,064 10,690 --------- --------- --------- Current Assets Inventories 649 621 440 Trade and Other Receivables 2,211 2,277 2,510 Cash and Cash Equivalents 32 - 23 --------- --------- --------- 2,892 2,898 2,973 --------- --------- --------- --------- --------- --------- Total Assets 12,921 14,962 13,663 --------- --------- --------- Current Liabilities Bank Overdraft (726) (768) (1,108) Interest Bearing Loans and Borrowings (87) - (112) Trade and Other Payables (3,289) (4,807) (3,709) --------- --------- --------- (4,102) (5,575) (4,929) --------- --------- --------- Non-Current Liabilities Interest Bearing Loans and Borrowings (2,144) (2,499) (1,437) --------- --------- --------- (2,144) (2,499) (1,437) --------- --------- --------- Total Liabilities (6,246) (8,074) (6,366) --------- --------- --------- Net Assets 6,675 6,888 7,297 --------- --------- --------- Equity Attributable to Equity Holders of the Parent Called Up Share Capital 6,331 6,300 6,331 Share Premium 5,467 5,464 5,467 Other Reserve 86 - 86 Retained Earnings (5,209) (4,876) (4,587) --------- --------- --------- Total Equity 6,675 6,888 7,297 --------- --------- --------- Cash Flow Statements for Six Months Ended 30 June 2007 Restated --- ---------- Half Year Half Year Year ----------- ----------- ------ Ended Ended Ended ------- ------- ------- 30-Jun-07 30-Jun-06 31-Dec-06 ----------- ----------- ----------- (Unaudited) (Unaudited) (Audited) Cash flows from operating activities Loss for the period (687) (621) (411) Adjustments for: Depreciation & Amortisation 1,216 1,214 2,463 Financial Income - - - Financial expense 95 120 293 Gain on sale of property, plant & equipment - - (609) Equity-settled share based payment expenses 65 66 145 Taxation 66 - (361) --------- --------- ---------- Operating profit before changes in working capital & provisions 755 779 1,520 (Increase)/decrease in trade & other receivables 234 (85) (316) (Increase)/decrease in stock inventories (209) (139) 42 (Decrease)/increase in trade & other payables (275) (256) (1,183) --------- --------- ---------- Cash generated from the operations 505 299 63 Interest Paid (87) (109) (239) Tax Paid - 24 - --------- --------- ---------- Net cash from operating activities 418 214 (176) --------- --------- ---------- Cash flows from investing activities Proceeds from sale of property , plant & equipment - 41 1,658 Interest received - - - Acquisition of subsidiary , net of cash acquired - (152) (384) Acquisition of plant & equipment (617) (119) (468) --------- --------- ---------- Net cash from investing activities (617) (230) 806 --------- --------- ---------- Cash flows from financing activities Proceeds from the issue of share capital - - 50 Proceeds from convertible loan notes - - 1,450 Proceeds from capital expenditure loans 635 - - Repayment of borrowings (38) (159) (2,565) Payment of finance lease liabilities (8) (19) (27) Payment of arrangement fees - (16) (65) --------- --------- ---------- Net cash from financing activities 589 (194) (1,157) --------- --------- ---------- Net decrease/(increase) in cash & equivalents 391 (210) (527) Cash & cash equivalents at beginning of period (1,085) (558) (558) --------- --------- ---------- Cash & cash equivalents at end of period (694) (768) (1,085) --------- --------- ---------- Notes to the interim report 1. Preparation of the interim report The interim report has been prepared using accounting policies consistent with those adopted in the statutory accounts of the group for the year ended 31 December 2006. 2. Interim financial information The interim financial information for the period ended 30 June 2007 is unaudited and does not constitute statutory accounts within the meaning of section 240 of the companies Act 1985. The results for the year ended 31 December 2006 have been extracted from the financial statements of the group on which an unqualified auditors' report has been received and which has been delivered to the Registrar of Companies. 3. Tax The tax charge for the period is based upon the anticipated effective rate of tax for the year to 31 December 2007. 4. Loss per share The calculation of loss per share is based on a loss of #687,000 (H1 2006: loss of #621,000) and on a weighted average of 63,312,500 (H1 2006: 60,716,667) ordinary shares in issue during the period. In both the half year ended 30 June 2007 and 2006 and the year ended 31 December 2006 the impact of share options is anti-dilutive and these have been excluded from the calculation of the diluted weighted average share capital. 5. Reconciliation of movements in total equity 30 Jun 2007 30 Jun 2006 31 Dec 2006 (unaudited) (unaudited) (Audited) #000 #000 #000 ----------------------------- ---------- ---------- ---------- Opening total equity shareholders' funds 7,297 7,143 7,143 Share issue - 300 334 Accumulated loss for the period (687) (621) (411) Share based payment charge 65 66 145 Equity portion of convertible loan note - - 86 ----------------------------- ---------- ---------- ---------- Closing total equity shareholders' funds 6,675 6,888 7,297 ----------------------------- ---------- ---------- ---------- 6. Post balance sheet event Since the period end, Imagesound has acquired TSC Music Systems Limited. This information is provided by RNS The company news service from the London Stock Exchange END IR EAXNXEFFXEFE
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