Vision Media Group International | Latest Results
30 September 2008 Interim Results
Vision Media Group (International) plc (AIM:VMG), the digital outdoor media contractor, today announces its Interim Results for the six months ended 30 June 2008.
Highlights
- Ten year partnership contract with Clear Channel Outdoor (UK) Limited signed to produce network advertising revenues in the second half of 2008
- Acquisition of Screen Media Networks Limited and appointment of new executive team
- Reduction of the Group’s commitments to annual minimum rental guarantees from £1.5 million to £0.2 million
- Digital network advertising revenue decreased by 13% to £656,000 (2007: £754,000)
- Total revenue from continuing activities decreased by 32% to £710,000 (2007: £1,038,000)
- Operating losses before reorganisation costs reduced 2% to £2,210,000 (2007: loss of £2,258,000)
- Net cash used in continuing operations of £1,504,000 (2007: £3,339,000)
- Basic and fully diluted loss per share improved to 5.76 pence (2007: loss of 12.66 pence)
Post Period Highlights
- Launch of proprietary double-sided touch-screen Iconic Pods
- Initial order placed for 100 Iconic Pods to be installed in autumn 2008
- Post installation VMG will have 200 new portrait panels and 350 existing screens across 35 shopping malls, a 59% increase in the Group’s mall portfolio since December 2007
- Heads of agreement or contracts signed with a further 22 malls to come on stream in 2009, making 57 shopping malls in total across the UK
- Signed agreement to outsource all local media sales to WRT Group plc, the UK’s leading local sales specialist
Mike Cottman, Executive Chairman of VMG commented: "This set of financial results does not reflect our underlying progress towards making the Group profitable by adopting a formal strategy of outsourcing where possible whilst simultaneously partnering with market sector leaders. Whilst advertising markets are generally difficult in the present economic uncertainty, the digital sector is bucking this trend and the relationships we have formed with leading players give me confidence that the second half results will see improving revenues”.
We are pleased to announce the results for the first half of this year. These results reflect the considerable reorganisation and investment costs which have been incurred by the Group in order to implement the streamlined strategy and outsourced sales model we began at the start of the year. We are now on the way to achieving our goal, the benefits of which we are starting to see in the second half of this year and which will grow into 2009 and beyond.
During the reported period the Company used £1,504,000 of net cash in continuing operations (2007: £3,339,000) as the Group restructured: downsizing personnel numbers, closing down non-core activities and outsourcing a number of functions. The increasingly leaner Group meant a decrease in revenue from continuing activities, by 32% to £710,000 (2007: £1,038,000), as the Group ceased chasing certain non-profitable income streams. Like-for-like advertising revenues across VMG’s digital panel network subsequently decreased 13% to £656,000 (2007: £754,000).
As the Group cut overheads in line with the revised strategy, the one off associated costs led to an increase in operating losses of £2,625,000 (2007: loss of £2,258,000). Operating losses before reorganisation costs, however, remained broadly the same at £2,210,000 (2007: loss of £2,258,000).
The basic and fully diluted loss per share improved to 5.76 pence (2007: loss of 12.66 pence).
Operational Developments
These financial results clearly do not reflect the restructuring and advances undertaken by the Group in the first half of the year, which have positioned us for considerable growth and profitability going forward.
Our first step along that journey was made in January 2008 with the successful completion of the acquisition of Screen Media Networks Limited which has now been fully integrated into our operations. With this acquisition the name of the Group was changed to Vision Media Group (International) plc and we strengthened our Board through the appointment of a new Chief Executive Officer, Dominic Brookman, and our senior management executive by the appointment of Tim Ritson as Sales and Marketing Director.
Together the new management team has continued to undertake the reorganisation of the Group and to review the business model to cope with the demands of a very competitive outdoor advertising market. This market is dominated by a few multinational media specialists and to compete as an independent has proven to be very restrictive to growth when client media budgets tend to be allocated as part of an entire media package to the big four outdoor media giants.
To address this, in March, we successfully completed the signing of a ten year contract with Clear Channel Outdoor UK Limited (“CCUK”), a part of one of the world’s leading outdoor advertising contractors, for the procurement of national advertising across VMG’s expanding country-wide mall network of digital panels. This contract is scheduled to commence in Q4 2008 upon the installation of our new in-house developed, portrait format Iconic Pods, which we launched in August 2008. 100 of these proprietary double-sided interactive panels, complete with touch-screen technology, have now been ordered and will be installed throughout autumn in time for the 2008 Christmas shopping period, the most important spending quarter of the advertising year.
Since the launch of the Iconic Pods, VMG has reached heads of agreement or contract with a further 33 shopping malls which will bring the total number of malls within the VMG estate to 57 with 527 operating panels. The average length of the new contracts will be 8 years with no minimal rental guarantees.
The manufacture of the Iconic Pods has been funded through draw downs on our existing facilities provided by Trafalgar Capital Specialised investment Fund. Further Iconic Pods, which are due to be rolled out early next year, will be funded from the increased revenues derived from the new operational and revenue structure. The Group has also managed to renegotiate the majority of its existing minimum rental guarantee agreements with the malls which will give greater flexibility going forward.
In addition, the Group has now concluded a deal to outsource all local media sales to the UK’s leading local sales specialist, WRT Group plc (“WRT”). This will permit us access to a national network of in excess of 160 local sales personnel, enabling us to reduce our headcount and general overheads even further, thereby further streamlining our operational efficiency.
Both the CCUK and WRT contracts will start to generate revenues in the later part of this year, although the real benefits will be seen in 2009.
As part of the contractual discussions with CCUK we also agreed a ten year contract with them for the Group’s convenience store road side advertising panel network which will generate revenues in the form of one-off up-front payments per site as the poster units are installed in late autumn 2008 through into early 2009.
In April 2008 VMG also announced a new five year deal to provide Merlin Entertainments Group with new digital screen and advertising facilities. Since then their entire theme park estate has been re-equipped with remote digital technology in time for the UK summer season. In addition, the Group successfully renegotiated and removed its minimum rental guarantee for its banner site in the centre of the City of Leeds.
Funding and Outlook
In the period we have funded the Group through the placing of £1,315,000 of new equity net of costs and raised a net £1,393,000 of new term debt. Further funds are in the process of being raised to ensure financial stability and assist further expansion. The Board maintains the view that the Group has and will have sufficient funds to meet our growth forecast.
The Group continues to experience financial restraints caused by historical losses and the need to reorganise the Group’s structure and outsource advertising selling functions. However this reorganisation is now essentially complete and the increased revenue streams from agreements signed over the course of 2008 will start to come through in the end of this year and onwards. We would like to thank all our staff and business partners in helping us through this transitional period and look forward to a far stronger performance going forward.
| Mike Cottman | Dominic Brookman |
| Executive Chairman | Chief Executive Officer |
| 29 September 2008 |
CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT
| 6 months to | 6 months to | Year to | ||
| 30 June 2008 |
30 June 2007 |
31 December 2007 |
||
| Notes | Unaudited | Unaudited | Audited | |
| £000's | £000's | £000's | ||
| Revenue from continuing operations | 2 | 710 | 1,038 | 1,563 |
| Cost of sales in respect of continuing operations |
(939) | (1,203) | (2,274) | |
| Gross loss from continuing operations | (229) | (165) | (711) | |
| Administrative expenses in respect of continuing operations |
(1,981) | (2,093) | (3,800) | |
| Operating loss before reorganisation costs from continuing operations |
(2,210) | (2,258) | (4,511) | |
| Reorganisation costs in respect of continuing operations |
4 | (415) | - | - |
| Operating loss from continuing operations | (2,625) | (2,258) | (4,511) | |
| Financial income in respect of continuing operations |
4 | 26 | 30 | |
| Financial expense in respect of continuing operations |
(311) | (192) | (401) | |
| Loss before tax from continuing operations on Ordinary Activities before Taxation |
(2,932) | (2,424) | (4,882) | |
| Taxation | - | - | - | |
| Loss after tax from continuing operations | (2,932) | (2,424) | (4,882) | |
| Loss from discontinuing operations (net of tax) |
2 | (249) | (295) | (662) |
| Loss for the period attributable to equity holders of the parent company |
(3,181) | (2,719) | (5,544) | |
| Loss per ordinary share | 5 | |||
| Basic and diluted | (5.76)p | (12.66)p | (24.52)p | |
| Continuing operations – basic and diluted | (5.31)p | (11.29)p | (22.04)p | |
| Discontinuing operations – basic and diluted | (0.45)p | (1.37)p | (2.48)p |
CONDENSED CONSOLIDATED INTERIM BALANCE SHEET
| 30 June 2008 |
30 June 2007 |
31 December 2007 |
|||||
| Notes | Unaudited | Unaudited | Audited | ||||
| £000's | £000's | £000's | |||||
| Non-current assets | |||||||
| Property, plant and equipment | 1,820 | 1,785 | 1,538 | ||||
| Intangible assets | 3 | 4,642 | 1,220 | 1,200 | |||
| Total non-current assets | 6,462 | 3,005 | 2,738 | ||||
| Current assets | |||||||
| Trade and other receivables | 1,116 | 1,962 | 1,911 | ||||
| Cash and cash equivalents | 64 | 375 | - | ||||
| 1,180 | 2,337 | 1,911 | |||||
| Assets held for resale | 5 | 576 | 547 | 574 | |||
| Total assets | 8,218 | 5,889 | 5,223 | ||||
| Equity and Liabilities | |||||||
| Equity attributable to equity shareholders of the company |
|||||||
| Share capital | 8 | 11,488 | 6,811 | 6,968 | |||
| Share premium | 11,972 | 10,920 | 11,372 | ||||
| Retained earnings | (21,738) | (15,732) | (18,557) | ||||
| Total equity | 1,722 | 1,999 | (217) | ||||
| Non-current liabilities | |||||||
| Interest-bearing loans and borrowings - continuing operations |
1,080 | 307 | 95 | ||||
| Total non-current liabilities | 1,080 | 307 | 95 | ||||
| Total current liabilities | |||||||
| Trade and other payables - continuing operations |
3,436 | 2,383 | 3,250 | ||||
| Provisions for reorganisation costs | 415 | - | - | ||||
| Interest-bearing loans and borrowings - continuing operations |
1,287 | 1,031 | 1,868 | ||||
| Total current liabilities | 5,138 | 3,414 | 5,118 | ||||
| Trade and other payables in respect of the disposal group |
219 | 165 | 162 | ||||
| Interest-bearing loans and borrowings in respect of the disposal group |
59 | 4 | 65 | ||||
| Total liabilities | 6,496 | 3,890 | 5,440 | ||||
| Total equity and liabilities | 8,218 | 5,889 | 5,223 | ||||
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
| 6 months to | 6 months to | Year to | ||
| 30 June 2008 | 30 June 2007 | 31 December 2007 | ||
| Unaudited | Unaudited | Audited | ||
| £000's | £000's | £000's | ||
| Cash flow from continuing operating activities |
||||
| Loss before tax | (3,181) | (2,424) | (4,882) | |
| Depreciation | 391 | 467 | 842 | |
| Amortisation of intangible assets | 25 | 20 | 40 | |
| Goodwill impairment | - | - | 74 | |
| Finance costs | 311 | 192 | 401 | |
| Finance income | (4) | (26) | (30) | |
| (Decrease)/Increase in trade and other receivables |
806 | (546) | (495) | |
| Increase/(Decrease) in trade and other payables |
347 | (856) | 11 | |
| Cash used in continuing operating activities |
(1,305) | (3,173) | (4,039) | |
| Finance costs | (203) | (192) | (401) | |
| Finance income | 4 | 26 | 30 | |
| Taxation | - | - | - | |
| Net cash used in continuing operating activities |
(1,504) | (3,339) | (4,410) | |
| Net cash used in discontinued operating activities |
(183) | (295) | (639) | |
| Total cash used in operating activities | (1,688) | (3,634) | (5,049) | |
| Cash flows from continuing investing activities |
||||
| Payments to acquire property, plant and equipment |
(337) | (28) | (156) | |
| Payments to acquire intangible assets | - | (23) | (23) | |
| Payment to acquire subsidiaries | (308) | - | (7) | |
| Net cash used in continuing investing activities |
(645) | (51) | (186) | |
| Net cash used in discontinued investing activities |
(11) | (26) | (80) | |
| Total cash used in investing activities | (656) | (77) | (266) | |
| Cash flows from continuing financing activities |
||||
| Proceeds on issue of ordinary shares | 1,403 | 1,000 | 1,609 | |
| Issue costs | (88) | 8 | 8 | |
| Proceeds of new borrowings | 1,431 | 400 | 1,125 | |
| Repayment of borrowings | - | (200) | (250) | |
| Repayment of bank borrowings | (7) | (8) | (15) | |
| Invoice discounting | - | (126) | (126) | |
| Capital element of finance leases repaid | (388) | (379) | (594) | |
| Movement in group borrowings | (200) | (622) | (955) | |
| Net cash inflow from continuing financing activities |
2,151 | 73 | 802 | |
| Net cash inflow from discontinued financing activities |
248 | 619 | 950 | |
| Total cash inflow from financing activities | 2,399 | 692 | 1,752 | |
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY
|
Share Capital |
Share Premium Account |
Retained Earnings |
Total | |
| £000’s | £000’s | £000’s | £000’s | |
| Group | ||||
| At 1 January 2007 | 6,611 | 10,112 | (13,013) | 3,710 |
| Proceeds of issue of shares (net of costs) | 200 | 808 | - | 1,008 |
| Retained loss for the year | - | - | (2,719) | (2,719) |
| At 30 June 2007 | 6,811 | 10,920 | (15,732) | 1,999 |
| Proceeds of issue of shares (net of costs) | 157 | 452 | - | 609 |
| Retained loss for the year | - | - | (2,825) | (2,825) |
| At 31 December 2007 | 6,968 | 11,372 | (18,557) | (217) |
| Proceeds of issue of shares (net of costs) | 998 | 317 | - | 1,315 |
| Shares issued for conversion of loan | 456 | 199 | - | 655 |
| Shares issued for fees | 168 | 84 | - | 252 |
| Shares issued for acquisition (note 3) | 2.898 | - | - | 2.898 |
| Retained loss for the period | - | - | (3,181) | (3,181) |
| At 30 June 2008 | 11,488 | 11,972 | (21,738) | 1,722 |
Notes
The notes to are available in the PDF download