Vision Media Group International | News
28 May 2008 Operational and trading update
Vision Media Group (International) plc (AIM:VMG), the outdoor media contractor, is pleased to provide the following operational and trading update.
Mike Cottman, Executive Chairman of VMG, said: "2007 was the year in which we started the process of implementing a new strategy and rebuilding our business model. As with any turnaround the positive impact of the restructuring takes time to become apparent, as such, 2007 continued to be the expected financial challenge for the Group. However, I am pleased to report that we are already seeing the initial benefits of the 2007 and early 2008 re-structuring coming through."
Operational Update Q1 2008
On 23 January 2008, ScreenFX plc completed the transformational acquisition of Screen Media Networks Limited and renamed the Group as Vision Media Group (International) plc. This brought in a new leadership team, led by our Chief Executive Officer Dominic Brookman, to help complete the restructuring of the business.
During this period VMG signed Heads of Agreement for new contracts with our two largest shopping mall operators. In addition, across our portfolio, the Group renegotiated and removed the vast majority of our minimum rental guarantees which in 2007 stood at total liabilities of £1.5 million and which has now been reduced to £0.2 million and thereafter is expected to be minimal. An additional two new malls were also contracted in the first quarter of 2008.
Also in this first quarter, VMG was able to complete the signing of a ten year contract with Clear Channel Outdoor UK ("CCUK") for national sales advertising across this mall network. This contract, as announced on 11 March 2008, commences in Q4 2008 once certain remedial work to the network is completed. VMG's existing landscape orientated TVs are being reconfigured and re-launched in a portrait style digital panel product offering in conjunction with CCUK and both CCUK and the Group are extremely confident that this partnership will produce revenues which are significant to the Group in the months and years ahead.
VMG and CCUK are also jointly working on the Group's new iconic Pod, a combined digital advertising panel and computerised screen information service system that CCUK plan to use at other appropriate indoor locations.
The Group has continued to successfully develop its local sales initiative within its malls business and are now consistently taking new orders at a rate of approximately £200,000 per month with new contracts of a 12 or 24 month duration.
Alongside the mall contract, VMG signed a ten year deal with CCUK for the Group's convenience store roadside advertising panel network, with a plan to deliver at least 600 roadside six-sheet panel installations by the end of this year.
Heads of Agreement were also signed, as announced on 17 March 2008, with New Planet Investments Limited for the disposal of the Group's TrainFX assets totalling £574,000 for a combination of primarily loan notes and preference shares in the acquiring company at a combined valuation of £2 million. Discussions are underway to convert this disposal to cash.
Operational Update Q2 2008
Already in this quarter of 2008 VMG has signed Heads of Agreement with a further four shopping malls and has completed the installation of digital screens in one further centre.
VMG successfully signed a new five year theme park contract with Merlin Entertainments Group, as announced on 1 April 2008. The entire theme park estate has now been re-equipped with remote digital technology and the first orders for national advertising, totalling £150,000, have been received for the summer season with a strong pipeline to follow. The Group has also contracted Match Day Media Limited to provide local sales resource where sales have just started this week and orders are already being taken.
VMG's convenience store roadside six-sheet programme, in partnership with Clear Channel Outdoor UK, is now underway and in excess of 450 retailer commitments have been received requesting the installation of six-sheet panels. Once installed this contract should produce gross earnings of at least £1 million in the second half of 2008.
In addition in this quarter, the Group has removed the minimum rental guarantees from its banner site in Leeds city centre, the largest illuminated advertising medium in the North of England, which has delivered £60,000 of orders to date.
Financial Update
As stated on 6 December 2007 it was, and remains, the Group's intention to complete a series of fund-raisings totalling approximately £3 million. The initial stage of this activity has been completed, as announced on 14 March 2008, with an injection of £940,000 of new equity from existing institutional and other shareholders. It is the Board's view that a share capital reorganisation will assist the Group in the process of raising the remainder of this capital and therefore VMG has, as announced on 16 May 2008, requested shareholder approval for a series of proposals at a General Meeting to be convened for 9:00 a.m. on Monday 2 June 2008 at the offices of Halliwells LLP, 1 Threadneedle Street, London EC2R 8AY.
The Group has today confirmed the second stage of the fund raising activity with the announcement of the new Trafalgar Capital investment. This new debt facility, totalling £2.75 million, replaces the existing Trafalgar facility of £1.25 million. An amount of £1 million within the new facility is predicated upon VMG raising £500,000 of new equity in the future. This will be made possible by the recent proposal to reorganise our capital structure and is planned to be implemented after the General Meeting on 2 June 2008.
Outlook
Revenue:
- The Group's debtor book is currently standing at approximately £2 million.
- Total booked new sales revenue for shopping malls this year to date is approximately £1.1 million, a significant increase year on year.
- These sales are prior to the receipt of any CCUK sales national mall advertising revenue which is scheduled to commence in quarter 4 this year.
- The Group's Clear Channel convenience store six sheet income will commence towards the end of the third quarter this year, making a major contribution to the Group's cash flows and profitability.
- Additional advertising on VMG's theme park network alone is anticipated to generate approximately £600,000 of revenue in 2008.
- To compliment these developments the Group envisages enlarging its mall estate and is scheduling a further five new malls to be installed by the end of 2008 which in turn enhances the revenue opportunity from our Clear Channel national advertising partnership.
- The Group anticipates that additional cash will also be received from the expected completion of the TrainFX disposal.
Costs:
- Over the past 16 months the Group has reduced its monthly operating costs from in excess of £500,000 per month to approximately £200,000 per month.
- Commensurate with this, the Groups headcount has been reduced from over 80 personnel to approximately 30.
Mike Cottman, Executive Chairman of VMG, said: "We believe that the combination of all of what we have achieved to date and what we expect to achieve over the next few months will complete our turnaround story and will ensure that investors should be looking forward to the future with renewed confidence."
For further information:
| Vision Media Group (International) plc | |
| Mike Cottman, Executive Chairman | Tel: +44 (0) 203 206 0001 |
| mikec@visionmediagroupplc.com | www.visionmediagroupplc.com |
| Seymour Pierce Limited | |
| Stuart Lane / John Depasquale, Corporate Finance | Tel: +44 (0) 20 7107 8000 |
| stuartlane@seymourpierce.com | www.seymourpierce.com |
| Media enquiries: | |
| Abchurch | |
| Henry Harrison-Topham / Gareth Mead | Tel: +44 (0) 20 7398 7710 |
| gareth.mead@abchurch-group.com | www.abchurch-group.com |