RNS Number:0377B
Screen FX PLC
05 April 2006
Press Release 5 April 2006
ScreenFX plc
("ScreenFX" or "the Group")
Unaudited Preliminary Results
ScreenFX plc (AIM:SFX), the digital advertising and communications specialists,
announces its Unaudited Preliminary Results for the year ended 31 December 2005.
Highlights
* turnover of #543,109 (2004: #342,524)
* operating losses of #3.5 million (2004: #2.0 million)
* portfolio of the UK's premier shopping malls doubled to 16, now reaching an annualised
audience of circa 300 million shoppers.
* added to the existing super mall portfolio including the prestigious Trafford Centre,
Manchester, and leading Westfield centres, such as Merry Hill, Birmingham.
* premium national presence that includes 8 of the top 20 UK shopping centres
* strong pipeline for continued roll out in the second half of 2006
* successful launch of the TrainFX on-board TV service on commuter services operated by
Central Trains
* positive response to initial HealthFX installations in both public and private hospitals
Commenting on the results, Dave Clark, Chief Executive, said: "2005 was an
important year for ScreenFX as we continued to secure contracts and invested in
building up our premium mall portfolio as well as introducing two new vertical
markets, namely transport and health. On the back of this investment programme
we are already beginning to see the benefits in 2006 with an order book well in
excess of last year's turnover. We view the future with considerable optimism."
- Ends -
For further information:
ScreenFX plc
David Clark, Chief Executive Tel: +44 (0) 161 428 5544
info@screenfx.com www.screenfx.com
Media enquiries:
Abchurch
Henry Harrison-Topham / Katherine Murphy Tel: +44 (0) 20 7398 7700
henry.ht@abchurch-group.com www.abchurch-group.com
Chairman's Statement
ScreenFX continues to successfully develop a strategy of building market share
in the fast-growing "out-of-home" digital advertising market. We are well
progressed towards our objective of becoming the dominant screen media player in
major UK malls, and our focus remains the premium top fifty. Prospects for
further long term contracts remain strong.
We believe our recent announcements relating to development activities in the
transport and health sectors will further enhance the Group's long-term growth
potential.
The second half of the year saw the continued roll-out of our network in the
UK's leading shopping malls, and we can now offer big screen advertising to over
300 million customers. Achieving this level of critical mass was an important
milestone for the Company and we now expect significantly greater revenues in
2006. This continued expansion into the retail market has been important to
establish our lead position as well as long term barriers-to-entry against
competitive businesses.
We are also extremely pleased to have secured low cost entry points to both the
transport and health sectors. The launch of the TrainFX service in Birmingham
has been a great success and is an investment towards gaining other valuable
contracts on commuter train networks. In HealthFX, we have also identified a
valuable opportunity to take a lead in digital communication to patients in both
the public and private sectors.
We believe that the investments we are making in the short term will create
significant long term value for shareholders and, supported by the proposed
funding we expect to conclude following these results, our focus remains on
developing sustained revenue growth.
Sir Geoffrey Pattie
Chairman
4 April 2006
Chief Executive's Review
Operating Review
The key drivers to our long term success remain the rollout of our network into
more premium locations to achieve critical mass, while achieving revenue
adoption amongst our target customers, the major consumer brands and their media
agencies. Therefore, our primary focus throughout 2005 remained the building of
the leading screen advertising network in major UK shopping malls.
Having successfully installed our first eight centres in 2004, we doubled the
number of centres on the network to sixteen by December 2005, taking the
annualised ScreenFX audience to circa 300 million shoppers:
Shopping Centre Annual footfall (millions)
The Trafford Centre, Manchester 31.2
Lakeside, Thurrock 26.0
Eldon Square Shopping Centre, Newcastle 24.9
Victoria Centre, Nottingham 23.5
Metrocentre, Gateshead 22.9
Merry Hill, Birmingham 20.8
The Glades Shopping Centre, Bromley 19.0
Broadmarsh, Nottingham 18.4
CastleCourt, Belfast 18.2
The Harlequin Shopping Centre, Watford 17.0
Braehead, Glasgow 16.9
St James Shopping Centre, Edinburgh 16.1
The Potteries Shopping Centre, Stoke 13.0
The Chimes Shopping Centre, Uxbridge 10.4
Royal Victoria Place, Tunbridge Wells 9.8
The Friary Shopping Centre, Guildford 9.6
The Group has continued to focus on the leading, premium malls and has been
delighted to add centres such as the prestigious Trafford Centre, Manchester to
the network.
Westfield Shoppingtowns Limited, the world's largest mall operator, has added
their UK centre portfolio, which consists of six malls including Merry Hill
Birmingham, to the ScreenFX network. This is a positive endorsement of our
leading position in the sector. Overall the centres added in 2005 have enhanced
the ScreenFX network in terms of national spread. Advanced negotiations are
well progressed with other leading centres and further announcements are
anticipated in the near future.
The move from traditional media formats to dynamic digital screens continues to
grow. Reflecting this migration, Warner Bros advertised a number of major film
releases in the second half of 2005. In total, around fifty internationally
recognised brands have now been trialled across the ScreenFX network, including
companies such as BT, Vodafone, Samsung and Fox Films.
Advertisers and their clients have been excited by the interactive capability
offered by our "info pods". Initial tests of advertising campaigns delivering
additional content via touch screens produced exciting results and they also
provide added functionality in terms of campaign reporting and measurement. The
touch screens have also been used to develop additional services such as
customer loyalty schemes and more of these will be introduced during 2006.
As announced on 28 July 2005, the Group signed a concession agreement with
Central Trains Limited, part of the National Express network of commuter trains.
We retained the services of a small and highly experienced team to work
towards the introduction of a live audio visual service on Central Trains as
part of an evaluation process into the long term potential in this sector. The
TrainFX service was launched in December 2005, supported by high quality content
from BSkyB and the BBC, and this has been extremely well received both by the
management of National Express and, importantly, the travelling public. The
Group is now reviewing options for the roll out and development of this service
and expects to make further announcements in the future.
In December 2005, we also secured a low cost entry point to the Health sector.
As announced on 14 February 2006, HealthFX will provide digital communication
and advertising solutions to the public and private healthcare sectors. The
initial digital screen installations in eight locations around the country have
received a positive response. Real time messaging, patient information, and
healthy lifestyle information are packaged together to enhance patient
communication, and this newly formed division is testing a number of revenue
models to support future growth.
HealthFX systems have already been installed and are fully operational in six
NHS locations throughout the UK, and the Group is in final negotiations to
provide similar services for three other NHS hospital trusts as well as a
leading private hospital group
Financial Results
Turnover for the year improved significantly to #543,109 (2004: #342,524).
Operating loss for the period was #3.5 million (2004: #2.0 million). The Group
has invested in additional overhead to support our new channel activities in
both transport and health. We have also added to our investment in our estate
to the extent of #1.5m of new screens and pods during the year. Whilst having a
negative impact on short-term profitability, we are confident that these
activities will enhance longer term financial results for the Group.
Outlook
The Group has continued to make strong progress towards its objective of
becoming the leading digital screen network in major UK shopping malls. For
2006, the focus will be to consolidate further this position by securing
additional long term contracts with selected leading centres that enhance our
national status and critical mass. We also anticipate stronger adoption of the
new medium as we move through the year, and we are supporting this drive by
adding further enhancements to the product and service offering to advertisers.
We also believe that we have identified new opportunities to add incremental
revenue streams to the Group via our low cost entry points to the commuter
transport and health sectors. Having developed the business models for these
sectors, we have maintained an appropriate level of management focus and
resource on the delivery of our core mall business.
We remain optimistic about the long term growth prospects for the Group and,
with the proposed funding we expect to conclude following these results, we
believe that we can deliver sustained long-term revenue growth.
Dave Clark
Chief Executive
4 April 2006
ScreenFX plc
Unaudited Consolidated Profit and Loss Account
for the period ended 31 December 2005
Notes
2005 2004
# #
TURNOVER 3 543,109 342,524
Cost of sales (949,505) (313,395)
Gross (loss)/profit (406,396) 29,129
Other operating expenses (net) (3,074,593) (2,090,694)
OPERATING LOSS (3,480,989) (2,061,565)
Investment income 42,166 47,421
(3,438,823) (2,014,144)
Interest payable (151,802) (25,638)
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION
(3,590,625) (2,039,782)
Taxation 5 - 19,867
RETAINED LOSS FOR THE PERIOD
(3,590,625) (2,019,915)
Earnings per ordinary share - basic 12 (2.39)p (2.10)p
Earnings per ordinary share - diluted 12 (2.39)p (2.10)p
The operating loss for the period arises from the Group's continuing operations.
No separate Statement of Total Recognised Gains and Losses has been presented as
all such gains and losses have been dealt with in the Profit and Loss Account.
ScreenFX plc
Unaudited Consolidated Balance Sheet
31 December 2005
Notes 2005 2004
# #
FIXED ASSETS
Intangible assets 1,049,042 1,178,820
Tangible assets 6 2,810,759 1,895,234
3,859,801 3,074,054
CURRENT ASSETS
Debtors 656,272 418,859
Cash at bank and in hand 136,479 666,175
792,751 1,085,034
CREDITORS: Amounts falling due within one
year
7 (1,528,704) (639,562)
NET CURRENT (LIABILITIES)/ASSETS (735,953) 445,472
TOTAL ASSETS LESS CURRENT LIABILITIES
3,123,848 3,519,526
CREDITORS: Amounts falling due after more
than one year
8 (776,203) (433,988)
2,347,645 3,085,538
CAPITAL AND RESERVES
Called up share capital 9 1,693,333 1,200,000
Share premium account 6,264,852 3,905,453
Profit and loss account (5,610,540) (2,019,915)
SHAREHOLDERS' FUNDS 2,347,645 3,085,538
ScreenFX plc
Unaudited Consolidated Cash Flow Statement
for the period ended 31 December 2005
Notes 2005 2004
# #
Cash flow from operating activities 11a (2,444,756) (2,222,653)
Returns on investments and servicing of finance
11b (109,636) 21,783
Taxation - (32,463)
Capital expenditure and servicing of finance 11b (699,937) (1,281,346)
CASH OUTFLOW BEFORE FINANCING
(3,254,329) (3,514,679)
Financing 11b 2,724,633 4,163,160
INCREASE/ (DECREASE) IN CASH IN THE PERIOD
(529,696) 648,481
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN DEBT
2005 2004
# #
Decrease)/increase in cash in the period (529,696) 648,481
Funds from invoice discounting (119,824) -
Capital element of finance lease and hire
purchase payments
232,923 229,793
Bank loan repaid 15,000 12,500
Change in net debt resulting from cash flows (401,597) 890,774
New finance leases and hire purchase contracts
(795,802) (631,621)
MOVEMENT IN NET DEBT IN PERIOD (1,197,399) 259,153
NET DEBT BROUGHT FORWARD (16,758) -
NET DEBT ACQUIRED - (275,911)
NET DEBT CARRIED FORWARD 11 (1,214,157) (16,758)
NOTES TO THE PRELIMINARY ANNOUNCEMENT
for the period ended 31 December 2005
1. Presentation of financial information
Information in this preliminary announcement does not constitute statutory
accounts of the Group within the meaning of Section 240 of the Companies Act
1985. The figures for the year ended 31 December 2005 are unaudited. The
preliminary announcement is prepared on the same basis as set out in the
previous year's statutory accounts except for the changes in accounting
standards as detailed below.
FRS 21 "Events after the Balance Sheet Date", FRS 22 "Earnings per Share" and
the disclosure requirements of FRS 25 "Financial Instruments: Disclosure and
Presentation" are effective for accounting periods beginning on or after 1
January 2005 but have had no impact on the financial statements.
Statutory accounts for the year ended 31 December 2004, which were prepared
under accounting practices generally accepted in the UK, have been filed with
the Registrar of Companies. The auditor's report on those accounts was
unqualified and did not contain any statement under Section 237 (2) or (3) of
the Companies Act 1985. It did contain however an explanatory paragraph dealing
with a fundamental uncertainty relating to going concern.
The auditors are yet to sign their report on the statutory accounts for the year
ended 31 December 2005 but have indicated that their auditor's report will be
modified by the inclusion of an emphasis of matter paragraph which highlights
the existence of a material uncertainty that casts doubt on the company's and
group's ability to continue as a going concern. Their opinion is not qualified
in this respect. Further information is disclosed below.
2. Going concern
The preliminary announcement is prepared on a going concern basis, which assumes
the Group will continue in operational existence for the foreseeable future.
The Group's ability to meet its future working capital requirements and
therefore continue as a going concern is dependent upon being able to generate
significant revenues and free cash flow. In common with many early stage
businesses and given the current economic climate, it is very difficult to
predict the timing and extent of future revenues. However, the directors have
prepared projections which they consider to be prudent and demonstrate that the
business can operate within its existing cash resources and the funds raised
from the expected placing, and have identified a series of realistically
achievable actions that they are committed to taking to mitigate the rate of
cash outflow should revenues not be secured as predicted.
Whilst there is fundamental uncertainty in relation to the above matters, the
directors are in negotiations with potential financiers and based on indications
received so far anticipate a positive outcome and consider that it is
appropriate that the preliminary announcement to be prepared on a going concern
basis. The accounts therefore do not include any adjustments that would result
from the Group being unable to continue as a going concern.
3. TURNOVER AND PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
The Group's turnover and profit before taxation were all derived from its
principal activity, in the United Kingdom.
Sales originated from the following networks:
2005 2004
# #
Banners 81,104 222,637
Digital network 305,501 118,899
Other 156,504 988
543,109 342,524
Loss before tax originated from the following business units:
2005 2004
# #
Banners (111,588) 25,130
Digital network (2,868,056) (1,766,528)
Transport network (305,088) -
Central costs and amortisation (305,893) (298,384)
(3,590,625) (2,039,782)
4. LOSS ON ORDINARY ACTIVITIES 2005 2004
# #
Loss on ordinary activities before taxation is stated after charging:
Amortisation of intangible fixed assets 129,778 118,963
Depreciation and amounts written off tangible fixed assets:
Charge for the period
- owned assets 419,757 197,750
hire purchase and leased assets 164,196 52,907
5. TAXATION
2005 2004
# #
Current Tax:
UK corporation tax at 30% on loss of the year - -
Adjustments in respect of previous periods - (19,867)
Total current tax - (19,867)
Deferred tax - -
Tax on loss on ordinary activities - (19,867)
The Group has tax losses of #6.3m available to carry forward and offset against
future profits.
6. TANGIBLE FIXED ASSETS
Ipods and Fixtures,
plasma Computer fittings & Motor
screens equipment equipment vehicles Total
GROUP # # # # #
Cost or valuation:
As at 1 January 2005 1,288,552 795,842 105,429 13,076 2,202,899
Additions 1,261,343 221,489 33,261 3,800 1,519,893
Disposals (18,720) - (4,793) - (23,513)
31 December 2005 2,531,175 1,017,331 133,897 16,876 3,699,279
Depreciation:
As at 1 January 2005 112,865 147,440 45,998 1,362 307,665
Charged in the period 289,698 270,500 19,536 4,219 583,953
Disposals (3,038) - (60) - (3,098)
31 December 2005 399,525 417,940 65,474 5,581 888,520
Net book value
31 December 2005 2,131,650 599,391 68,423 11,295 2,810,759
31 December 2004 1,175,687 648,402 59,431 11,714 1,895,234
7. CREDITORS: Amounts falling due within one year
2005 2004
# #
Hire purchase and leasing 439,609 233,945
Trade creditors 561,257 192,139
Other taxation and social security 78,599 63,001
Other creditors 7,463 5,441
Accruals and deferred income 306,952 130,036
Bank loan 15,000 15,000
Invoice discounting 119,824 -
1,528,704 639,562
8. CREDITORS: Amounts falling due in more than one year
2005 2004
# #
Bank loan 93,750 108,750
Hire purchase and finance loans 682,453 325,238
776,203 433,988
Repayable by instalments:
In more than one year but not more than two years 455,698 248,945
In more than two years but not more than five years 286,755 136,293
In five years or more 33,750 48,750
776,203 433,988
9. SHARE CAPITAL
2005 2004
# #
Authorised:
240,000,000 ordinary shares of 1p each 2,400,000 2,400,000
Allotted, issued and fully paid:
169,333,340 (2004: 120,000,000) ordinary shares of 1p each 1,693,333 1,200,000
10. RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
#
Loss for the financial period (3,590,625)
Proceeds from issue of shares 2,852,732
Net addition to shareholders' funds (737,893)
Opening shareholders' funds 3,085,538
2,347,645
11. CASH FLOWS 2005 2004
# #
a Reconciliation of operating loss to net cash outflow from operating
activities
Operating (loss) on ordinary activities (3,480,989) (2,061,565)
Depreciation and amortisation 713,731 369,620
(Profit) on disposal of fixed assets (3,739) -
(Increase) in debtors (237,413) (227,424)
Increase/(decrease) in creditors 563,654 (303,284)
Net cash outflow from operating activities (2,444,756) (2,222,653)
2005 2004
# #
b Analysis of cash flows for headings netted in the cash flow
Returns on investments and servicing of finance
Interest received 42,166 47,421
Interest paid (151,802) (25,638)
Net cash (outflow)/inflow from returns on investments and servicing of
finance
(109,636) 21,783
Capital expenditure and financial investment
Purchase of tangible fixed assets (724,091) (1,414,891)
Sales of tangible fixed asset 24,154 133,185
Net cash outflow from capital expenditure and financial investment
(699,937) (1,281,706)
Financing
Issue of ordinary share capital 3,020,000 5,000,000
Issue costs (167,268) (594,547)
Invoice discounting 119,824 -
Repayment of bank loans (15,000) (12,500)
Capital element of HP and finance lease rental payments (232,923) (229,793)
Net cash inflow from financing 2,724,633 4,163,160
c Analysis of net debt At At 31
1 January Non cash December
2005 Cash flow movements 2005
# # # #
Cash in hand and at bank 666,175 (529,696) - 136,479
Debt due within 1 year (15,000) (104,824) (15,000) (134,824)
Debt due after 1 year (108,750) - 15,000 (93,750)
Finance leases and hire purchase
contracts
(559,183) 232,923 (795,802) (1,122,062)
(682,933) 128,099 (795,802) (1,350,636)
Total (16,758) (401,597) (795,802) (1,214,157)
12. EARNINGS PER SHARE
The calculation of basic loss per ordinary share is based on losses of
#3,590,625 (2004 #2,019,915) and on 150,151,600 ordinary shares (2004
97,314,944) being the weighted average number of shares in issue during the
year.
The loss for the period and the weighted average number of ordinary shares for
calculating the diluted loss per share for the year ended 31 December 2005 are
identical to those used for the basic loss per share. This is because the
outstanding share options and warrants would have the effect of reducing the
loss per ordinary share and would therefore not be dilutive under the terms of
Financial Reporting Standard ("FRS") No 22.
13. OTHER INFORMATION
The board of directors of ScreenFX plc approved the preliminary results on 4
April 2006.
The statutory accounts for the year ended 31 December 2005 will be delivered to
the Registrar of Companies following the Annual General Meeting. The statutory
accounts will be posted to shareholders on Tuesday 2 May 2006. Other copies
will be available to the public, free of charge, at the Company's registered
office at Halliwells LLP, St. James Court, Brown Street, Manchester M2 2JF.
The Annual General Meeting will be on Thursday 1 June 2006 at 12.30 p.m. at the
offices of Halliwells LLP, St. James Court, Brown Street, Manchester M2 2JF.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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