RNS Number:9567R
Screen FX PLC
29 September 2005
29 September 2005
SCREENFX PLC
Interim Results
Network roll-out continues
ScreenFX plc, which offers digital screen advertising in shopping centres across
the UK, today announces its interim results for the six months to 30 June 2005:
Operational highlights
* Established leading network of large plasma screens in 10 of UK's premier
shopping malls, including MetroCentre, Lakeside and centres in Glasgow and
Edinburgh.
* Network to be extended by a further 8 malls in Q4 2005 following long term
contract wins with Westfield Shoppingtowns and Trafford Centre, Manchester.
* Letter of intent signed for a further five malls across the UK.
* Market research continues to support high impact of digital screen
advertising.
* Advertising agreement with Warner Bros will benefit second half revenues.
Results summary
* Turnover for the half year improved to #118,000 (2004: #47,000).
* Operating losses increase to #1.6 million (2004: loss #0.7 million).
* Cash in hand of #1.3 million at 30 June 2005.
Richard Nichols, Chairman of Screen FX said:
"The first half has seen the continued development of the group as we now have a
fully operational network offering big screen advertising to almost 200 million
customers in some of the UK's leading shopping malls. We also have the ability
to extend this to over 330 million customers with the contracts recently signed
with Westfield and the Trafford Centre. The company is entering a key stage of
its development as we seek to convert the positive endorsement of the network by
major national advertisers into revenue. The lack of revenue generation in the
first half was disappointing although there have been some more encouraging
signs for second half revenues, particularly the contract signed with Warner
Brothers in June.
We continue to believe that the market has the potential to grow strongly and
with the increased critical mass which can be achieved with the proposed funding
we expect to conclude following these results, our focus remains on developing
sustained revenue growth across our network."
For further information please contact:
ScreenFX plc Tel: 0161 428 5544
David Clark
Citigate Dewe Rogerson Tel: 020 7638 9571
Patrick Toyne Sewell/Fiona Bradshaw
Financial Summary
#000's Six months to Period to Period to
30 June 2005 30 June 2004 31 December 2004
Turnover 118 47 343
Operating loss (1,599) (736) (2,062)
Retained loss for the period (1,635) (718) (2,020)
Loss per share - pence (1.12) (1.08) (2.10)
Cash at hand 1,280 1,834 666
Overview
We continue to develop our strategy of maintaining and building our share of the
fast-growing "out of home" digital advertising market in order to become the
dominant screen media player in major UK malls. Our targets remain the premium
Top 50 retail malls and our screen network will reach over 30% of footfall
market share in these prime locations by Q4 2005 and the prospects for further
growth remain good.
Financial Results
Turnover for the half year improved to #118,000 (2004: #47,000) but was
disappointing. However, as previously stated, the Group expected the rate of
media adoption to build slowly throughout 2005 with greater momentum coming in
2006-2007 as the network establishes critical scale and digital channels become
more established amongst its key media targets.
The Group continues to place a strong focus on controlling costs and minimising
working capital levels.
The total Group operating loss for the period was #1.6 million (2004: loss #0.7
million). Cash in hand stood at approximately #1.3 million at 30 June 2005.
As mentioned in the Prospectus, the strategy of the Directors is to generate
capital growth for shareholders. The Directors will recommend the payment of
dividends when it becomes commercially prudent to do so and then subject to the
availability of distributable reserves and the retention of funds required to
finance future growth. For these reasons the Group will not be paying a interim
dividend at this stage of the company's development.
On 6 January the Group placed 26,666,668 million ordinary shares at 7.5p each,
raising #1,920,000 (after costs) in order to fund the continued development of
sites for the digital screen network and cover ongoing working capital
requirements.
Operating Review
The key drivers to our development are the rollout of our network into more
locations, thereby establishing critical scale, and achieving revenue adoption
amongst our target customers, the major consumer brands, their advertising
agencies and their media buyers. Therefore our primary focus has remained the
building of the leading screen advertising network in major UK shopping malls.
Following the successful installation of our first eight centres in 2004,
ScreenFX increased its network further by going live in two of Scotland's
premier shopping centres, Braehead, Glasgow and St. James, Edinburgh, during the
summer. This has built the ScreenFX audience to around 200 million shoppers
annually:
Shopping Centre Location Annual footfall (millions)
Lakeside Thurrock 25.6
The Glades Bromley 19.0
The Harlequin Watford 17.0
The Chimes Uxbridge 10.3
Victoria Centre Nottingham 22.9
The Potteries Stoke-on-Trent 13.0
Metrocentre Gateshead 28.0
Eldon Square Newcastle 24.9
St James Edinburgh 13.0
Braehead Glasgow 20.0
The Group has also made further strong progress in securing long term contracts
with additional major centres over the first half. The agreement with Westfield,
the world's largest retail mall operator, will add a further seven centres,
including the extensive Merry Hill centre in Birmingham. ScreenFX also secured
an agreement with the prestigious Trafford Centre Manchester which, together
with the Westfield centres, will increase its audience to circa 300 million
shoppers per annum during Q4 2005.
As well as building audience numbers, these developments also strengthen
ScreenFX's national coverage of major UK cities, and thus provide a more
compelling critical mass to advertisers. ScreenFX remains convinced that the
mall environment presents one of the best opportunities to develop a premium
media product and it continues to advance other negotiations which will enable
ScreenFX's network to reach an audience of 400-500 million shoppers by the end
of 2006.
The rollout of the network is underpinned by the Group's agreement with BT Media
and Broadcast which as well as providing a very secure operational platform also
offers access to evolving technologies in the rapidly changing environment in
which it operates.
The Group is now starting to see the early signs of adoption by major
advertisers. The advertising agreement with Warner Bros to advertise a number of
the major film releases in the second half of this year was an important
milestone. As part of the Warner Brothers agreement ScreenFX has tested one of
the unique parts of its product proposition via the touchscreens incorporated in
the Group's Infopods. This has demonstrated the power of interactive content in
the malls and has generated significant interest from other potential
advertisers.
The final quarter of 2005 should see further revenue build as advertisers
appreciate the access ScreenFX's increased audience gives them in the critical
pre-Christmas trading period.
The benefits of ScreenFX's network to advertisers were highlighted by research
undertaken by IPSOS-RSL limited, a specialist media research organisation. The
research results were highly encouraging for the Group, demonstrating that
ScreenFX delivers a very valuable audience to advertisers with high levels of
awareness of the screens and their content. The Group is also working with
early adopters of the network to further develop and enhance the offering in
order to support future campaign development.
As announced on 28 July the Group signed a concession agreement with Central
Trains Ltd, part of the National Express network of commuter trains, to exploit
the audio visual advertising on their fleet of commuter trains. ScreenFX
continues to explore the opportunity to develop a business in the valuable
transport sector via this agreement and is reviewing the best route to
developing long term value from this new sector whilst maintaining its primary
focus on the mall business.
Board changes
As announced on 28 September, David Neale, who has served as the Group Marketing
Director since joining ScreenFX in June 2004, will become the Group's Managing
Director and will join the Board with immediate affect.
Funding
As set out in Note 1 to the Interim Statement the Group's interim results have
been prepared on a going concern basis. The Group is pursuing all funding
options, including strategic partnerships with major sales channels, and is in
the advanced stages of a placing which is expected to conclude in the near
future.
Outlook
The Group has made strong progress towards its objective of developing the
leading screen network in major UK shopping malls. The focus is now on
consolidating this position by selectively adding further top 50 centres, whilst
continuing the drive towards adoption of this new medium by national
advertisers. ScreenFX has also made good progress in developing value-added
propositions which will enhance the consumer experience on the threshold of the
UK's leading retail stores.
We continue to believe that the market has the potential to grow strongly and
with the increased critical mass which can be achieved with the proposed funding
we expect to conclude following these results, our focus remains on developing
sustained revenue growth across our network.
Dave Clark
Chief Executive
29 September 2005
ScreenFX plc
Consolidated Profit and Loss Account
For the six months to 30 June 2005
Unaudited Unaudited Audited
Six months to Period to Period to
30 June 2005 30 June 2004 31 December 2004
#000's #000's #000's
Group turnover 118 47 343
Cost of sales (313) (71) (314)
_____ _____ _____
Gross (loss)/profit (195) (24) 29
Administrative expenses (1,339) (658) (1,972)
(pre amortisation of goodwill)
Amortisation of goodwill (65) (54) (119)
_____ _____ _____
Total administrative expenses (1,404) (712) (2,091)
_____ _____ _____
Total group operating loss (1,599) (736) (2,062)
Net interest (payable)/receivable (36) 18 22
_____ _____ _____
Loss on ordinary activities before taxation (1,635) (718) (2,040)
Tax on loss on ordinary activities - - 20
_____ _____ _____
Loss on ordinary activities after taxation (1,635) (718) (2,020)
_____ _____ _____
Retained loss for the period (1,635) (718) (2,020)
_____ _____ _____
Basic loss per share (pence)
(note 3) (1.12) (1.08) (2.10)
Diluted loss per share (pence)
(note 3) (1.12) (1.08) (2.10)
Consolidated Statement of Total Recognised Gains and Losses
There were no recognised gains or losses other than the loss in the period, or
in the prior periods, other than those passing through the profit and loss
account above and therefore no separate statement of total recognised gains and
losses has been prepared.
ScreenFX plc
Consolidated Balance Sheet
As at 30 June 2005
Unaudited Unaudited Audited
30 June 2005 30 June 2004 31 December 2004
#000's #000's #000's
Fixed Assets
Tangible assets (note 7) 1,700 1,944 1,895
Intangible assets - goodwill 1,114 1,244 1,179
_____ _____ _____
2,814 3,188 3,074
Current Assets
Debtors 380 390 419
Cash at bank and in hand 1,280 1,834 666
_____ _____ _____
1,660 2,224 1,085
Creditors - amounts falling due within one year
(676) (956) (640)
_____ _____ _____
Net current assets 984 1,268 445
_____ _____ _____
Total assets less current liabilities 3,798 4,456 3,519
Creditors - amounts falling due after more than
one year
(428) (116) (434)
_____ _____ _____
Net Assets 3,370 4,340 3,085
_____ _____ _____
Capital and reserves
Called up share capital 1,467 1,200 1,200
Share premium account 5,558 3,858 3,905
Profit and loss account (3,655) (718) (2,020)
_____ _____ _____
Total shareholders' funds 3,370 4,340 3,085
_____ _____ _____
ScreenFX plc
Consolidated Cash Flow Statement
For the six months to 30 June 2005
Unaudited Unaudited Audited
Six months to Period to Period to
30 June 2005 30 June 2004 31 December 2004
#000's #000's #000's
Net cash outflow from operating activities (1,145) (620) (2,223)
Returns on investments and servicing of finance
Interest received 35 25 47
Interest paid (71) (7) (25)
_____ _____ _____
Net cash (outflow)/inflow from returns on
investments and servicing of finance
(36) 18 22
Taxation - (20) (32)
Capital expenditure
Purchase of tangible fixed assets (99) (1,867) (2,046)
Sale of tangible fixed assets 21 133 133
_____ _____ _____
Net cash outflow for capital expenditure (78) (1,734) (1,913)
_____ _____ _____
Net cash outflow before use of liquid resources
and financing
(1,259) (2,356) (4,146)
_____ _____ _____
Financing
Issue of ordinary share capital 2,000 5,000 5,000
Expenses on share issue (80) (642) (595)
Hire purchase and leasing loans received 59 - 632
Loans and hire purchase repaid (106) (185) (242)
_____ _____ _____
Net cash inflow from financing 1,873 4,173 4,795
_____ _____ _____
Increase in cash 614 1,817 649
_____ _____ _____
Reconciliation of net cash
Net cash at beginning of period 666 - -
Net cash acquired with subsidiaries - 17 17
Increase in net funds from cash flows 614 1,817 649
_____ _____ _____
Net cash at end of period 1,280 1,834 666
_____ _____ _____
SCREENFX PLC
NOTES TO THE INTERIM STATEMENT
For the six months ended 30 June 2005
1. Basis of Preparation of Interim Financial Information
The unaudited Interim Report was approved by the Board of Directors on 29
September 2005.
The financial information contained in this statement does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985. The
accounts have been prepared in accordance with applicable accounting standards
and under the historical cost accounting rules.
The comparative figures for the period ended 30 June 2004 and the period ended
31 December 2004 have been extracted from the unaudited interim results and the
audited Group Accounts for the respective periods. The audited Group accounts
have been reported on by the Company's auditors and delivered to the Registrar
of Companies.
The interim financial statement has been prepared in accordance with the
accounting policies in effect at 31 December 2004.
The accounts are prepared on a going concern basis, which assumes that 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 dependant on it 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 which 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 negotiation with potential financiers and based on indications
received so far anticipate a positive outcome and consider that it is
appropriate for the accounts 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.
Turnover and the loss before taxation were all derived from the Group's
principal activities.
2. Dividends
No dividends have been paid and none are proposed.
3. Loss Per Ordinary Share
The loss attributable to ordinary shareholders and weighted average number of
ordinary shares for the purpose of calculating the diluted earnings per ordinary
share are identical to those used for basic earnings per share. This is because
the exercise of share options would have the effect of reducing the loss per
ordinary share and is therefore not dilutive under the terms of Financial
Reporting Standard 22.
The calculation of the loss per ordinary share is based on a loss of #1,635,000
(period to 30 June 2004: loss of #718,000; period to 31 December 2004: loss of
#2,020,000) and on a weighted average of 145,925,927 shares in issue (period to
30 June 2004: 66,470,698 shares; period to 31 December 2004: 97,314,944 shares).
4. Reconciliation of Movement in Group Shareholder's Funds
Unaudited Unaudited Audited
Six months to Period to Period to
30 June 2005 30 June 2004 31 December 2004
#000's #000's #000's
Loss for the period (1,635) (718) (2,020)
Net proceeds of ordinary shares issued
- Net cash on placing 1,920 4,358 4,405
- Consideration for the acquisition
of subsidiaries - 700 700
1,920 5,058 5,105
_____ _____ _____
Net change in shareholders' funds 285 4,340 3,085
Shareholders' funds at the beginning of the
period 3,085 - -
_____ _____ _____
Shareholders' funds at the end of the period 3,370 4,340 3,085
_____ _____ _____
5. Reconciliation of operating loss to net cash outflow from operating activities
Unaudited Unaudited Audited
Six months to Period to Period to
30 June 2005 30 June 2004 31 December 2004
#000's #000's #000's
Operating loss (1,599) (736) (2,062)
Depreciation and amortisation charges 341 76 370
Profit on disposal of fixed assets (3) - -
Decrease/(increase) in debtors and prepayments 39 (333) (227)
Increase/(decrease) in creditors and accruals 77 373 (304)
_____ _____ ____
Net cash outflow from operating activities (1,145) (620) (2,223)
_____ _____ ____
6. Reconciliation of net cash flow to movement in net debt
Unaudited Unaudited Audited
Six months to Period to Period to
30 June 2005 30 June 2004 31 December 2004
#000's #000's #000's
Increase in cash 614 1,817 649
Cash outflow from finance leases 55 157 (377)
Bank loan repaid (8) 5 (13)
_____ _____ _____
Movement in net debt in the period 661 1,979 259
Net debt at the beginning of the period (17) - -
Net debt acquired - (276) (276)
_____ _____ _____
Net funds/(debt) at end of period 644 1,703 (17)
_____ _____ _____
7. Fixed Assets
#000's Motor Office Equipment & Screen Network Total
Vehicles Fixtures &
Fittings
Cost
- B/fwd at 1 January 2005 13 105 2,084 2,202
- Additions during the period 3 13 83 99
- Disposals during the period - (5) (16) (21)
__ _____ _____ _____
As at 30 June 2005 16 113 2,151 2,280
__ _____ _____ _____
Depreciation
- B/fwd at 1 January 2005 1 46 260 307
- Charge for the period 2 11 263 276
- Disposals during the period - - (3) (3)
__ _____ _____ _____
As at 30 June 2005 3 57 520 580
__ _____ _____ _____
Net book value
As at 30 June 2005 13 56 1,631 1,700
__ _____ _____ _____
As at 31 December 2004 12 59 1,824 1,895
__ _____ _____ _____
INDEPENDENT REVIEW REPORT BY BAKER TILLY TO SCREENFX PLC
Introduction
We have been instructed by the company to review the financial information set
out in the consolidated profit and loss account, the consolidated balance sheet,
the consolidated cash flow statement and the accompanying notes number 1 to 7
and we have read the other information in the interim statement and considered
whether it contains any apparent misstatements or material inconsistencies with
the financial information.
This report, including the conclusion, has been prepared for and only for the
company for the purpose of their interim statement and for no other purpose. We
do not, therefore in producing this report, accept or assume responsibility for
any other purpose or to any other person to whom this report is shown or into
whose hands it may come save where expressly agreed by our prior consent in
writing.
Directors' responsibilities
The interim statement, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors are
responsible for preparing the Interim Statement in accordance with the
Alternative Investment Market Rules which require that the accounting policies
and presentation applied to the interim figures must be consistent with those
that will be adopted in the company's annual accounts.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board as if that Bulletin applied. A review
consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and based thereon assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with Auditing Standards and therefore provides a lower
level of assurance than an audit. Accordingly we do not express an audit opinion
on the financial information.
Fundamental uncertainty
In reaching our conclusion we have considered the adequacy of the disclosures
made in the interim report and accounts concerning the basis of their
preparation. The interim report and accounts have been prepared on the going
concern basis, the validity of which depends on the group generating projected
revenue and operating within its existing cash resources and the funds raised
from the expected placing. The accounts do not include any adjustment that
would result from its failure to achieve this. Details relating to the
fundamental uncertainty are described in note 1.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2005.
Baker Tilly
Chartered Accountants
Brazennose House
Lincoln Square
Manchester
M2 5BL
29 September 2005
This information is provided by RNS
The company news service from the London Stock Exchange
END
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