Independent Media Support Group PLC
28 June 2007
Immediate release 28 June 2007
Independent Media Support Group Plc
('IMS' or the 'Company' or the 'Group')
Preliminary Audited Results
for the Year ended 31 December 2006
IMS, the UK based independent supplier of media access services today announces
its preliminary audited results for the year ended 31 December 2006. The Report
and Accounts for 2006 is being posted to shareholders today.
Financial Summary
£'000s Year ended Year ended
31 December 31 December
2006 2005
as restated
Turnover £5,403 £6,425
Operating profit* £6 £175
Pre tax loss (£1,267) (£94)
Loss per share (4.82)p (0.67)p
Diluted earnings per share* 0.00p 0.22p
Net cash £25 £220
* Before amortisation and impairment of goodwill
Operational Summary
• New contract signed with existing major customer leading to a reduction
in turnover
• Turnover up by 11% in other business areas
• Overheads and unit production costs reduced
• Encouraging start to 2007
Sylvia Sheridan, OBE, Executive Chairman of IMS commented:
'I would like to thank my colleagues and all our employees for their energy,
enthusiasm and commitment over what has been a difficult year and look forward
to their continuing support and enthusiasm.'
'The first few months of 2007 have been encouraging and have provided stability
to the Group, enabling us to look to the future with increased focus'
For further details
IMS Tel: 020 7440 5400
Sylvia Sheridan, Executive Chairman
Mark Robinson, Managing Director
Beaumont Cornish Tel: 020 7628 3396
Roland Cornish
Independent Media Support Group Plc
Preliminary Results for the year ended 31 December 2006
Executive Chairman's Statement
Introduction
Independent Media Support Group ('IMS') is the only quoted business in the UK
offering media access services to broadcasters, film and DVD distributors,
advertisers and their agencies. The Group offers a wide range of services
incorporating pre-recorded and real-time subtitling, translation, audio
description, signing and voice-overs.
Financial results
Group turnover for the period was £5,403,000 (2005: £6,425,000), with gross
profit of £2,067,000 (2005: £2,882,000). Operating profit before amortisation of
goodwill was £6,000 (2005: £175,000 profit as restated). This is stated after a
net gain of £43,000 following the adoption of Financial Reporting Standard 20 -
Share-based payments ('FRS 20') in 2006 (2005: charge of £109,000 as restated).
This operating profit is after costs of £53,000 incurred by the Group as a
result of dealing with the possible offer from me to acquire the Group.
Additionally, residual costs have continued in relation to IMS's complaint to
Ofcom against Red Bee Media (formerly BBC Broadcast) over a competitive tender
to provide media access services to Channel 4, as well as Ofcom's investigation
into the contract between the BBC and Red Bee Media following its disposal by
the BBC.
The Board has reviewed the carrying value of the goodwill in the Group's balance
sheet at the year end and has concluded that, in addition to the Group's normal
annual amortisation charge of £237,000, an impairment provision of £1,021,000
should be made.
Business Overview
The Group's principal activities consist of the following:
Deaf and Hearing Impaired Subtitling
IMS has contracts to deliver live, and pre-recorded subtitling for programming
including news and sport. The provision of subtitles is skilled and requires
significant training. IMS has sought to reduce the cost of providing its
subtitling, primarily through the use of new technology, such as speech
recognition.
The Group produces over 400 hours of live subtitling and some 90 hours of
pre-recorded television subtitling for its customers every week. The Group also
subtitles for cinema releases and has subtitled films together with their audio
description. The Group supplies subtitled television commercials to major
national advertisers as well as to the major advertising agencies.
Translation Subtitling
The rapid proliferation of satellite and cable broadcasting that transcends
national and regional borders, together with the growth of DVDs has expanded the
need for translation subtitling. The Group has provided translation subtitling
services for broadcasters, theatrical and home entertainment film release as
well as corporate producers.
Signing
Signing is the use of hands and facial expressions to convey meaning and is best
understood as a language in itself. The Broadcasting Act 1996 introduced a
statutory obligation upon certain UK broadcasters to provide signing services,
an obligation which has been extended by the Communications Act 2003. IMS has
supplied signing services to both broadcasters and major disability charities.
Audio Description
Audio description is a recorded or 'live' verbal information service for the
blind or sight impaired, which describes, in between the dialogue, the action
and events taking place in a film, television program, video or theatre
performance. Again, the Communications Act 2003 has increased the number of
broadcasters upon which the obligation to provide audio description services is
imposed. IMS's audio description unit has worked on many major Hollywood
productions.
Document Translation
This is mainly translation of public policy and administrative documents from
English to Welsh carried out by our subsidiary Trosol based in Cardiff.
Market and Business Development
During 2006, the Group announced that it had signed a new contract, at reduced
prices, with a major customer. The Group's reduction in income from the previous
year, and its losses in the second half of 2006 were due entirely to the terms
of this new contract. Nevertheless, we are delighted that IMS has secured this
major contract which, as one of the largest available in the UK market, further
secures IMS's position in the top tier of subtitling providers.
Overall, in the rest of its business areas, IMS grew its turnover by over 11%
compared to 2005. Areas that fared particularly well included the subtitling of
television commercials and Audio Description, the latter as a result of the
Ofcom Code for broadcast work, and in the area of theatrical Audio Description
as distributors continue to recognise the importance of making their products
accessible.
As we announced last year, the Group undertook a major cost review to compensate
for the anticipated effect of reduced income. Overall, the Group's underlying
overheads were reduced by over 16% against 2005 through cost-saving measures.
Additionally unit production costs in IMS's key business areas have also been
reduced as a result of this cost review and additionally as a result of the
introduction of speech recognition technology for live subtitling. IMS is proud
to note that it is the first major subtitling company in the world to produce
its entire live subtitling output using this technology and the Board envisages
that its application in international markets could bear fruit in the future.
The Future
The first months of 2007 have been encouraging. Whilst the Group's profitability
to date is below that of the same period last year, this was to be expected
given the new contract terms with the major customer as outlined above, and
current performance is greatly improved over that of the second half of 2006.
With this increased stability, the Group is now in a better position to focus on
the future and is looking to capitalise on previous development work in overseas
markets. Already this year, IMS has handled localisation aspects of channel
launches for a major international broadcaster in two European territories and
we are looking to expand this service offering further.
IMS also notes the development of the IPTV market and the potential for
localisation services. While this market, and its business model, is seemingly
not yet proven, the Group believes it is well placed to benefit from any future
growth in this area.
I would like to thank my colleagues and all our employees for their energy,
enthusiasm and commitment in what has been a difficult year and look forward to
the future with confidence.
Sylvia Sheridan OBE
Executive Chairman
27 June 2007
Consolidated Profit And Loss
Account For The Year Ended 31
December 2006
Profit before Goodwill
goodwill amortisation
amortisation and impairment Total
2006 2006 2006 2005
----------------------- --------- --------- ------- --------
£000s £000s £000s £000s
as restated
----------------------- --------- --------- ------- --------
Turnover 5,403 - 5,403 6,425
Cost of sales (3,336) - (3,336) (3,543)
----------------------- --------- --------- ------- --------
Gross profit 2,067 - 2,067 2,882
Administrative
expenses
before
goodwill
amortisation
and impairment (2,061) - (2,061) (2,707)
Goodwill
amortisation
and impairment - (1,258) (1,258) (237)
----------------------- --------- --------- ------- --------
Operating loss 6 (1,258) (1,252) (62)
Interest
receivable and
similar income 24 - 24 39
Interest
payable and
similar
charges (39) - (39) (69)
Disposal of
associate
investment - - - (2)
----------------------- --------- --------- ------- --------
Loss on
ordinary
activities
before
taxation (9) (1,258) (1,267) (94)
Taxation on
ordinary
activities 9 - 9 (82)
----------------------- --------- --------- ------- --------
Loss retained
for the year - (1,258) (1,258) (176)
----------------------- --------- --------- ------- --------
Earnings (loss) per 2.5p ordinary
share (pence per share)
Basic - - (4.82)p (0.67)p
Diluted - - (4.72)p (0.63)p
Adjusted profit before goodwill
amortisation and impairment
Basic 0.00p - - 0.24p
Diluted 0.00p - - 0.22p
----------------------- --------- --------- ------- --------
Consolidated Statement of Total Recognised Gains
and Losses For The Year Ended 31 December 2006
2006 2005
£000s £000s
as restated
---------------------------- --------- ------- --------
Total recognised losses for the year (1,258) (176)
Prior year adjustment (109)
---------
Total recognised losses since
last annual report (1,367)
---------
Group Balance Sheet
As At 31 December 2006
2006 2005
£000s £000s
as
restated
---------------------------- -------------- --------- ------- --------
Fixed assets
Intangible assets 3,000 4,258
Tangible assets 449 575
Investments - -
---------------------------- -------------- --------- ------- --------
3,449 4,833
---------------------------- -------------- --------- ------- --------
Current assets
Debtors 1,525 1,480
Cash at bank and in hand 275 732
---------------------------- -------------- --------- ------- --------
1,800 2,212
Creditors: amounts falling due
within one year (1,125) (1,191)
---------------------------- -------------- --------- ------- --------
Net current assets 675 1,021
---------------------------- -------------- --------- ------- --------
Total assets less current
liabilities 4,124 5,854
Creditors: amounts falling due
after more than one year - (250)
Provisions for liabilities and
charges (4) (183)
---------------------------- -------------- --------- ------- --------
Net assets 4,120 5,421
---------------------------- -------------- --------- ------- --------
Share capital and reserves
Share capital 652 652
Share premium account 4,741 4,741
Share-based payment reserve 66 109
Profit and loss account (1,339) (81)
---------------------------- -------------- --------- ------- --------
Equity shareholders' funds 4,120 5,421
---------------------------- -------------- --------- ------- --------
Consolidated Cash Flow Statement
For The Year Ended 31 December 2006
2006 2005
£000s £000s
-------------------------- ------ --------- --- ---------
Net cash
(outflow)/inflow
from operating
activities (76) 689
-------------------------- ------ --------- --- ---------
Return on investments and servicing of
finance
Interest received 24 39
Interest paid (39) (69)
Net cash outflow
from returns on
investment and
servicing of
finance (15) (30)
-------------------------- ------ --------- --- ---------
Taxation (53) (167)
-------------------------- ------ --------- --- ---------
Capital expenditure and financial investment
Purchase of tangible fixed assets (51) (414)
-------------------------- ------ --------- --- ---------
Net cash outflow
for capital
expenditure and
financial
investment (51) (414)
-------------------------- ------ --------- --- ---------
Net cash
(outflow)/inflow
before management
of liquid
resources and
financing (195) 78
-------------------------- ------ --------- --- ---------
Financing
Repayment of bank loan (250) (250)
Capital element of finance lease - (9)
payments
-------------------------- ------ --------- --- ---------
Net cash outflow
from financing (250) (259)
-------------------------- ------ --------- --- ---------
Decrease in cash
in the year (445) (181)
-------------------------- ------ --------- --- ---------
1. Annual Report
The financial information in this announcement has been derived from the
Company's statutory accounts for the year ended 31 December 2006, which
were approved by the Directors on 27 June 2007 and on which the auditors
have given an unqualified opinion. The financial information set out in
this announcement does not constitute statutory accounts within the meaning
of section 240 of the Companies Act 1985. Statutory accounts for the year
ended 31 December 2006 will be delivered to the Registrar of Companies in
accordance with section 242 of the Companies Act 1985.
The financial information for the year ended 31 December 2005 is derived
from the Company's statutory accounts, which have been delivered to the
Registrar of Companies and on which the auditors gave an unqualified
opinion.
2. Accounting Policies
This preliminary announcement is prepared on the basis of the accounting
policies stated in the annual financial statements.
3. Earnings Per Share
The calculation of basic earnings per share is based on a loss after tax of
£1,258,000 (2005 - loss of £176,000 as restated) and 26,087,000 (2005 -
26,087,000) ordinary shares, being the weighted average number of shares in
issue during the year. To calculate the diluted earnings per share the
weighted average number of shares in issue is adjusted to include dilutive
potential ordinary shares, which may be issued in the future arising from
share options.
2006 2006 2006 2005 2005 2005
Earnings Weighted Earnings Earnings Weighted Earnings
average per average per
number of share number of
shares shares share
£000s No.'000s Pence £000s No.'000s Pence
as as
restated restated
Basic (loss) (1,258) 26,087 (4.82) (176) 26,087 (0.67)
earnings per share
Goodwill (1,258) 26,087 4.82 237 26,087 0.91
Adjusted basic 0 26,087 0.00 61 26,087 0.24
(loss) earnings
per share
Dilutive (loss) (1,258) 26,631 (4.72) (176) 27,891 (0.63)
earnings per share
Goodwill (1,258) 26,631 (4.72) 237 27,891 0.85
Adjusted diluted 0 26,631 0.00 61 27,891 0.22
(loss) earnings
per share
Adjusted earnings per share have been shown in order to demonstrate the
performance of the Group before goodwill amortisation and impairment.
4. Operating Loss
2006 2005
Operating loss is stated after charging: £000s £000s
as restated
Amortisation and impairment of goodwill 1,258 237
Depreciation of tangible assets - owned by the Group 177 153
- held under finance lease - 5
Auditors' remuneration - audit fee 23 23
- non-audit 71 11
Operating lease rentals - plant and machinery 2 4
- land and buildings 178 273
Exceptional items - provision for change management costs (note
18) - 165
- advisory costs: BBC complaint 27 106
- costs incurred relating to possible
acquisition of the Group 27 -
Share-based payment - charge 33 109
Share-based payment - write back of charge (76) -
The advisory costs were incurred in pursuing a complaint against BBC Broadcast (now Red Bee Media) over a
competitive tender to provide media access services to Channel 4.
The costs relating to the possible acquisition of the Group relate to the cost of professional advice to the
Independent Director directly in connection with this matter. Additionally, costs of £26,000 are included within
fees paid to auditors for non-audit work which would not otherwise have been incurred if the Group had not been
the subject of a possible offer. Together, the costs incurred by the Group on this matter totalled £53,000.
Additionally, fees of £23,000 were paid to the auditors in respect of financial advice relating to a potential
acquisition by the Group. It is regarded as unlikely that this acquisition will be made.
5. Share Capital
2006 2005
£000s £000s
Authorised
40,000,000 Ordinary shares of 2.5p each 1,000 1,000
________ ________
Allotted called up and fully paid
26,087,000 Ordinary shares of 2.5p each 652 652
________ ________
6. Reconciliation Of Group Company Group Company
Movements In 2006 2006 2005 2005
Shareholders' Funds £000s £000s £000s £000s
as restated as restated
At 1 January 2006 5,421 5,539 5,488 5,450
Loss for the year (1,258) (1,376) (176) (20)
Share-based payments (43) (43) 109 109
_____________ ____________ _____________ ____________
At 31 December 2006 4,120 4,120 5,421 5,539
_____________ ____________ _____________ ____________
7. Analysis Of Net Funds At Cash flow At 31 December 2006
1 January
2006
£000s £000s £000s
Net cash:
Cash at bank and in hand 732 (457) 275
Bank overdraft (12) 12 -
_____________ ____________ ______________
720 (445) 275
_____________ ____________ ______________
Debt:
Bank loan due within one (250) - (250)
year
_____________ ____________ ______________
(250) - (250)
_____________ ____________ ______________
Debt:
Bank loan due after one year (250) 250 -
_____________ ____________ ______________
(500) 250 (250)
_____________ ____________ ______________
Net Funds 220 (195) 25
_____________ ____________ ______________
8. The Company's Annual Report is available free of charge for one
month from the Company at 10 Carlisle Street, London,W1D 3BR.
ENDS
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