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Preliminary Results Presentation March 2008

Preliminary Results Presentation March 2008. Agenda. Overview Market Background Preliminary Results Outlook Appendix. Investment Overview. Leading provider of in-store music, messaging and AV Good earnings visibility: 64% recurring revenues typical contracts of 3+ years

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Preliminary Results Presentation March 2008

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  1. Preliminary Results Presentation March 2008

  2. Agenda • Overview • Market Background • Preliminary Results • Outlook • Appendix

  3. Investment Overview • Leading provider of in-store music, messaging and AV • Good earnings visibility: • 64% recurring revenues • typical contracts of 3+ years • High quality blue chip client base • Proven consolidator in highly fragmented sector • International growth opportunities - under-developed markets in contrast to UK • Experienced, ambitious and proven management team

  4. Market Background • The Background Music (BGM) sector emerged on the back of the‘branded’ retail and leisure boom of the 80’s and 90’s • Background music and messaging are now very established in retail and leisure as brand reinforcement tools • Control the audio environment • Creating a point of differentiation • Increasingly being used to make a ‘Foreground’ contribution… • Tactically communicating key offers and promotions • Increasing dwell times and driving customer spend • Fragmented market, with 10 identified direct competitors (including two quoted companies – Immedia and Avanti Screenmedia)

  5. Imagesound History • Established in 1998 to exploit emerging MPEG and low cost satellite airtime opportunities • Investment capital secured in 2000 from Quester to develop robust software and operating systems and platform for sector consolidation • Six acquisitions completed to date (aggregate value of £22m): • July 04 - Reverse takeover of ACI plc (AIM listed cash shell) - Acquisition of TTL Music and Rolec • June 05 - Acquisition of Ideal Music • May 06 - Acquisition of Music Styling.com • Sept 06 - Acquisition of Impact Automedia • July 07 - Acquisition of TSC Music Systems Ltd

  6. Imagesound Today • UK’s leading listed supplier of in-store music, radio and AV services • Two market leading trading brands: • Imagesound (retail & leisure chains) • MusicStyling (luxury hotels) • Offices in Chesterfield and Vancouver • 76 staff • Growing international presence: • Distributor agreements signed in 2007 covering Portugal/Spain, Middle East and Eastern Europe • 21% revenues currently from international business • Refocused management roles

  7. Music Styling • Acquired May 2006 • Consultancy approach • 1700 music ‘zones’ • 447 hotels • 75 countries worldwide • Office in Vancouver to serve N. American market • 24/7 multi-lingual hotline for worldwide support established

  8. Imagesound Offer “Since introducing FootlockerTV, our customer awareness surveys revealed a 26% increase in Footlocker brand awareness.” High Profile Chains “Sales uplifts on advertised lines have been as high as 24.5% and are currently averaging an impressive 16%.” Offer Driven Chains “Imagesound help us get the music right for everyone, hour after hour, day after day.” Mainstream Chains

  9. Blue chip client base • Imagesound provides music and messaging services to 50+ leading branded retail and leisure chains reaching 17,800 subscriber outlets

  10. 2007 Operational Highlights • Subscriber outlet growth - 17,800 sites/zones (06: 13,383) • Major renewals and additional sites secured with Wickes, Superdrug, Bon Marche, HBOS, Foot Locker, Phase8 and Poundland • New contracts signed with Au Naturelle (180 stores), Swarovski (45 stores), Richleys (28 stores), Slug & Lettuce (92 bars), Ha Ha bars (27 bars) • MusicStyling 175 site roll-out to Marriott and Rezidor chains completed with continued work with Hyatt, Starwood & Marriott • Distributor agreements signed covering Portugal/Spain, Middle East and Eastern Europe • Transitioning from satellite to web-based delivery solution offering efficiencies and cost savings

  11. 2007 Financial Highlights • Revenue up 8% to £8.8m (2006: £8.2m) • Recurring revenues up 10% to £5.6m (£5.1m) • International revenues now 21% of total recurring revenue (2006: 9%) • Adjusted* EBITDA up 38% to £2.3m (2006: £1.6m) • Adjusted* EBITDA margin increased 6 percentage points to 26% • Operating loss reduced by 36% to £0.7m (2006: £1.1m) • Reported loss before tax £1.1m (2006: £0.8m) • Adjusted* earnings per share up 45% to 1.81p (2006: 1.25p) • Cash from operations of £1.5m (2006: £0.1m) * Adjusted to exclude amortisation of intangible assets, non-recurring expenditure, share based payments and tax

  12. 2007 FY Results

  13. Consolidated Balance Sheet

  14. Consolidated Cash Flow Statement

  15. Good earnings visibility 2007 Total Revenues £8.8m 64% Recurring 36% Non-Recurring • Recurring Revenue = the hire of music services and equipment • Non Recurring Revenues = the installation of equipment & servicing costs

  16. Geographic Split 2007 Total Recurring Revenues £5.6m 21% International 79% UK • International Revenue = Music Styling + partnership deals in Spain/Portugal, Dubai and Budapest

  17. Acquisition of TSC Music Systems Ltd • Major supplier of music services to branded fashion retail, coffee chain, fast food and retail financial services sectors • Acquired July 2007 and fully integrated within 6 months • £4.75m in cash • 3,500 outlets across the UK • Significant synergies and cost savings realised • Organic growth within client base with continued roll-outs across Starbucks, Orange, Caffé Nero, Alliance & Leicester and Gala Bingo

  18. Outlook • Retail and leisure markets remain challenging • Increasing the importance of brand differentiation • Continue to improve operational gearing & profitability • New client wins • Advancements in technology improve margins • Large number of outlets still not using a third party provider (c.75%) • Opportunities for further international expansion • Roll-out UK customers internationally • Win new clients within underdeveloped markets for BGM • Fragmented sector offers opportunities for further consolidation • Re-shaped balance sheet & banking facilities in place

  19. Appendix

  20. Competitor analysis – UK suppliers * Source: Management estimates

  21. Directors Derek Mapp Executive Chairman Founder of Tom Cobleigh plc & Leapfrog Day Nurseries Chairman of Staffline plc and senior NED of Informa plc Michael Clark Managing Director - Sales & Marketing Imagesound founder Ken Pratt Managing Director - Finance & Operations Former FD and co-Director of Tom Cobleigh plc and Eton Group Limited Richard Gregory Non-exec Director Former Managing Director Yorkshire Television Non-exec Director of Yorkshire & Clydesdale Banks and National Australia Group Europe Limited Stephen Yapp Non-exec Director (Chairs Audit Committee) Chairman of Watermark Plc Previously CEO of DCS Group David Clayton-Smith Non-exec Director Management Consultant 12 yrs retail experience with Halfords, Boots, Do It All Previously Group Marketing Director of Courage

  22. Imagesound plc. Venture WayDunston Technology ParkChesterfieldS41 8NE T: 01246 572 990www.imagesound.co.uk

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