11 April 2017 

 

IMMEDIA GROUP PLC

 

("Immedia" or "the Group" or "the Company")

 

Final Results for the year ended 31 December 2016

 

 

Immedia Group Plc (AIM: IME) a multi-media content and digital solutions provider to global businesses and organisations , today announces its final results for the year ended 31 December 2016.

 

Highlights

 

2016 was an important year in the development of the Company:

 

•  Substantial acquisition of AVC Media Enterprises Ltd ("AVC") in September 2016; funded solely from the Group's own cash resources

 

•  Three significant new clients were acquired, the full year financial impact of which will only be seen in 2017

 

•  The Group is free of non-leasing debt and is cash generative.

 

•  Reduction in EBITDA for the year due to the addition of overhead costs from AVC, prior to merger related synergies being achieved and the lag in realisation of contribution from our new client wins after the expiry of some other contracts

 

Current Trading

 

Since the year end we have already seen the anticipated benefits of the AVC acquisition coming through, both in terms of revenue from its own clients and additional services that can be integrated into the Company's product and service offering to Immedia's existing clients, and we expect that to continue and develop over the course of the year.

 

 

Financial Summary

	12 months to 31 December 2016	12 months to 31 December 2015
Revenue	£2,610,121	£2,366,293
(Loss)/earnings before interest, taxation, depreciation, amortisation, impairment charges and other exceptional income (EBITDA)	£(83,025)	£54,767
(Loss)/profit before tax	£(184,372)	£5,379
Net fair value (loss) on available for sale assets	£(90,000)	£(352,200)
Total comprehensive (loss) for the year	£(279,065)	£(446,881)
Basic (loss) per share	(1.38)p	(0.69)p
Diluted (loss) per share	(1.38)p	(0.69)p
Basic pre-tax (loss)/earnings per share	(1.34)p	0.04p
Year-end balance of cash and cash equivalents	£125,886	£353,435
Net funds	£115,103	£344,664

 

 

 

Bruno Brookes, Chief Executive of Immedia, said:  

"In 2016 Immedia enhanced its strategic positioning and scale of operations by acquiring the business and certain assets of AVC Media Enterprises Ltd in Aberdeen.  With a reputation built over 30 years, we are delighted to add AVC's multimedia offering to the Group's capability.  AVC specialises in 3D / 4D video production, Virtual Reality and all areas of creative digital design. The business also delivers high end AV design, supply and installation. Amongst a growing list, clients include FIFA, BP, Transocean and Aberdeen University.

The year has also brought some frustrations as contracts have expired in the normal course of events; substantial new contracts have been won, but with some delays to planning and expected delivery of revenues. However, these new business wins now demonstrate that our revenue and profit growth difficulties are behind us. 

Our strong focus on cash management in 2016 has been rewarding and was evidenced by the acquisition and assimilation of the AVC business on an entirely self-financed basis. Revenue generation from our acquisition is growing as expected and the integration is providing healthier margins, specifically in our AV installation work. We are pleased with AVC's customer wins, which includes work to complete 41 videos for Robert Gordon University, a six figure total amount.

Immedia's investment in multifunctional app technology has continued and will be maintained in 2017 as we continue to develop new opportunities in sport and education.   

The year has begun very positively across all sectors and we look forward to the year ahead with confidence."

 

This announcement contains information which, prior to its disclosure, was inside information for the purposes of the Market Abuse Regulation.

 

 

 

Enquiries:

 

Immedia Group Plc
Bruno Brookes - Chief Executive	Tel: +44 (0) 1635 556200
www.immediaplc.com
SPARK Advisory Partners Limited (NOMAD) Mark Brady/Neil Baldwin	Tel:  +44 (0) 203 368 3550

 

       SI Capital Ltd (Broker)                                                                            Tel: +44 (0) 1483 413500                                            

        Nick Emerson

 

 

 

 

 

Chairman's Statement

 

2016 was an important year in the development of your company with, what we believe will be the transformative acquisition of the AVC Media Enterprises business in September and three significant client wins for Immedia Broadcast.

 

AVC brings new skills and capabilities as well as some significant new clients and we welcome Spencer Buchan and his team in Aberdeen to the Group.

 

 

Results

 

On revenue of £2,610,121 (2015: £2,366,293), growing 10% on the previous year, the Group delivered EBITDA loss of £83,025 (2015: profit £54,767) and loss before tax of £184,372 (2015: profit £5,379) which translates to pre-tax loss per share of 1.34p, compared to pre-tax earnings per share of 0.04p in 2015.

 

The reduction in EBITDA came about partly due to timing differences between the gaining of new client contracts and the expiry of others. In addition, there were one-off costs and short term working capital requirements relating to the acquisition and support of our new trading division, AVC Immedia.

 

Cash balances at the year end were lower than the prior year as a consequence of the acquisition of AVC for which we paid in cash.  However, the Company continues to be cash generative and we remain debt free, save for a very small amount of lease liabilities.

 

 

Current trading and future prospects

 

The new year has started well for the Group as we get to grips with the new clients and work on an integrated basis with AVC.  Whilst we continue to attract new clients, contracts with some clients expire in the normal course of events and this has been the case in 2017 with BT Openreach.  However, we expect revenue to grow in 2017 as we will have a full year of contribution from both AVC and the three significant new contract wins from 2016.

 

We are therefore looking forward to 2017 with growing confidence and I would like to thank all the team for their continued efforts as we drive the business forward.

 

 

Board changes

 

In July, Charles Barker-Benfield informed us that he was going to retire from Immedia after many years.  I would like to thank Charles for his excellent contribution to the business over the years and we all wish him the very best for the future.

 

We have also taken the opportunity to look at the composition of the Board and look to strengthen it.  We are delighted to say that we have appointed a new independent director to join us and we have announced his appointment today.  We continue to review our options and will consider further appointments if we believe it will strengthen the Board and help the business.  

 

 

Geoff Howard-Spink

Chairman

 

 

 

Chief Executive's Review

 

Results

The Group produced a loss before tax of £184,372 on revenues of £2,610,121.  The Group made a total comprehensive loss of £279,065, after making the fair value adjustment to our strategic investment in the AIM-quoted spoken-word audio platform for hosting distributing and monetising content company, Audioboom Group plc (AIM: BOOM).  This reduced the carrying value of our investment in Audioboom by £90,000, which was recognised in other comprehensive income.

The loss before tax is predominantly attributable to timing delays between the natural termination of service contracts and the introduction of new business to Immedia.  In addition there have been one-off costs relating to the acquisition and integration of AVC Media Enterprises Ltd ("AVC").  The outlook for 2017 is very different with a full year of contributions to be received from SUBWAY®, JD Sports Fashion plc and a major UK high street financial services institution - all significant new client wins in 2016.

The Group made good progress in its new business development to offset the expired contracts with Spar (UK) Ltd, Arcadia Group Ltd and the expiry in 2017 of the contract with BT Openreach.  Whilst frustrating, the expiry of contracts can be an inevitable part of the business cycle but the Group's continued focus on client account management helps maintain our upward momentum.

The acquisition of AVC was entirely self-financed with no ongoing debt to service.  Management of cash has always been a priority and we have successfully incorporated AVC into the Group and supported a much larger number of employees, albeit with a reduction in the end of year cash balances.  We expect this reduction to be turned around in 2017 as new revenues come through and the integration of AVC beds down.

 

The business

Our core strengths are using audio production and technology to deliver content to hard to reach audiences.  Our innovative apps enable customers to take brands out of the store or retail environment and to engage with their customers in new ways. 

We have greatly expanded our ability to innovate through the acquisition of AVC and its renowned creative team.  The enhanced skillset of the Group includes 3D/ 4D Video production, Virtual Reality modelling (often for highly technical energy sector applications), app development and web design, as well as AV equipment hire, sale and installation. 

AVC has already been able to assist in the delivery of solutions to existing Immedia clients.

The acquisition of AVC was a value accretive strategic decision to enhance Immedia's position in light of 'media convergence'. This is the interconnection of information and communications technologies, networks and the digitisation of media content. Media convergence is eroding long-established media and content silos. I believe the acquisition of AVC was perfectly timed in order to strengthen our branded content channels to all digital delivery platforms and to all pillars of our strategy.

We believe, more than ever, that the Group is a content delivery powerhouse with no competitor in our sector that can readily compete across all areas of our expertise. 

We continue to expand our channel development to audiences beyond retail and remain committed to our strategic pillars of growth, creating channels for retail, workforce, fans, and education.  We are also working on new opportunities in the sports and energy sectors.

 

Current trading and future prospects

Over the last year, we have had a busy time on all fronts. With the acquisition and integration of AVC and a healthy landscape for new opportunities for the Group, we have been considerably engaged with new business negotiations both here in the UK and in other new territories. Those negotiations continue whilst ongoing trials for live radio stations and the preparation of other services with new clients have been and are being launched. We expect to be able to bring you news of these developments during this financial period.

At AVC, the first quarter of 2017 has seen the business secure long term project work across a number of their service lines and in a range of sectors including Energy, Sport, Education and Tourism with global blue chip companies including Total, Subsea 7, FIFA, Weir Group, Opito, Robert Gordon University, Aberdeen University and D.C Thomson & Co Newspaper Group. The services provided range from video, animation, augmented reality, virtual reality, digital design and Audio Visual solutions.  This is a truly blue chip list of clients and one upon which we intend to build.

As part of this growth we are strengthening our Group finance team in order to maximise profitability across the business from our many new opportunities and enhance our management reporting post the acquisition of AVC.  In addition, we are also looking to strengthen the Board. 

I remain confident and look forward to updating you with more news in the not too distant future.

 

 

 

Bruno Brookes

Chief Executive

 

 

 

Financial review  

 

 

Group trading results

2016 was a transformational year during which the directors completed the acquisition of the business of AVC whose services complement those offered by Immedia and whose customer base further diversifies the economic sectors in which Immedia operates. These changes reduce the risk associated with Immedia ' s historic dependency on a small number of key customers in consumer-oriented economic sectors, provide opportunities for growth and synergies and expand the base from which the expanded group ' s future activity derives. 

Additionally, underlying revenues (excluding AVC) improved during the second half of 2016 when compared to the second half of 2015, confirming the progress made in replacing business from Lloyds Banking Group plc, a significant customer whose contract expired in 2015.

Continued competition on pricing has contributed to reduced gross profit percentages in 2016, but growth in our new and proprietary services, including the services offered by AVC, is expected to help counter the effects of margin erosion.

 

Consolidated balance sheet and cash flows

Cash collections from customers improved in 2016 and we continue to improve cash and working capital management. In 2016 we utilised cash resources totalling £ 281,522 in the acquisition of AVC, invested £ 44,363 in tangible fixed assets and repaid leases totalling £ 9,485. The net cash outflow from these activities, after using internally generated funds of £107,821 , was £ 227,549 and we ended the year with cash balances of £125,886.

 

 

 

Ross Penney

Business Affairs Director

 

 

 

 

 

 

 

 

Consolidated statement of profit or loss

 

for the year ended 31 December 2016

		2016	2015
	Note	£	£
Revenue		2,610,121	2,366,293
Cost of sales		(1,285,369)	(1,119,619)
Gross profit		1,324,752	1,246,674
Administrative expenses		(1,525,719)	(1,240,400)
Other exceptional income	6	17,125	-
(Loss)/profit from operations		(183,842)	6,274
Finance income		2,540	11,481
Finance cost		(3,070)	(12,376)
(Loss)/profit before tax		(184,372)	5,379
Tax expense		(4,693)	(100,060)
Loss for the year		(189,065)	(94,681)
Loss per share
Basic (pence)	4	(1.38)	(0.69)
Diluted (pence)	4	(1.38)	(0.69)

 

 

 

 

Consolidated statement of profit or loss and other comprehensive income

 

for the year ended 31 December 2016

		2016	2015
	Note	£	£
Loss for the year		(189,065)	(94,681)
Items that may be reclassified subsequently to profit or loss
Net fair value loss on available for sale assets during the year	3	(90,000)	(352,200)
Total comprehensive loss for the year		(279,065)	(446,881)

 

 

 

Consolidated balance sheet

 

At 31 December 2016

	Note		2016 £		2015 £
Assets
Non-current assets
Property, plant and equipment			303,929		211,481
Intangible assets			425,044		201,694
Deferred tax assets			13,150		60,700
Available for sale assets			165,000		255,000
Total non-current assets			907,123		728,875
Current assets
Inventories			98,353		89,621
Trade and other receivables			807,506		859,610
Prepayments			87,014		85,360
Cash and cash equivalents			125,886		353,435
Total current assets			1,118,759		1,388,026
Total assets			2,025,882		2,116,901
Equity
Share capital			1,455,684		1,455,684
Share premium			3,586,541		3,586,541
Merger reserve			2,245,333		2,245,333
Share based payment reserve			4,578		4,578
Investment valuation reserve			75,000		165,000
Retained losses			(6,527,926)		(6,335,948)
Total equity			839,210		1,121,188
Liabilities
Non-current liabilities
Finance leases			5,796		-
Trade and other payables			-		103,347
Provisions			42,500		14,063
Total non-current liabilities			48,296		117,410
Current Liabilities
Finance leases			4,987		8,771
Trade and other payables			944,841		732,891
Deferred income			188,548		136,641
Total current liabilities			1,138,376		878,303
Total liabilities			1,186,672		995,713
Total equity and liabilities			2,025,882		2,116,901