2005 Results Presentation

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2005 Results Presentation
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Todays Agenda

• 2005 Results review
• Business Review
• Future Prospects

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2005 Overview

• Challenging year internally and externally
• Core subscriber business held up well to pressure
  on High Street spending
• Overall subscriber numbers increased 12 to
  12,932
• Acquisition of Ideal Music Media
• System sales below expectations
• Consumer spending impact on client spending
• Legacy warranty issues
• Strengthened Management team
• Business restructuring in Q4 to focus on core
  growth opportunities

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2005 Final Results
Year ended 31st December
2005 000s Sales 7,922 Recurring
revenues 4,818 Service
sales 597 System sales 2,507 Adjusted
EBITDA 1,326 Depreciation
(672) Adjusted operating profit
654 One-off warranty obligations
(278) One-off overhead expenditure
(216) Operating profit
160 Amortisation of goodwill
(645) Interest
(250) Profit/(Loss) before Tax
(744) Earnings/(Loss) per share
(1.24)p
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Consolidated Balance Sheet
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Business Review
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Trading Highlights

• Subscriber sites increased from 11,560 to 12,937
• New client wins include
• Progress on existing roll-outs
• Linux based AV roll-outs
• Acquisition of Ideal Music completed at end of H1

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Sales Mix
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Other operational actions

• Operating efficiency measures
• Adoption of Linux based software for all Audio
  and AV players
• Migration of all clients on common operating
  system
• Addressed warranty issue
• Thorough review of installed base
• Upfront investment of 278k to bring inherited
  systems up to standard
• Tightened sales/contract process to avoid
  repetition
• Investment in non-licensed music channels
• Mitigates impact of proposed PPL licence fee
  increases
• 1,000 subscriber sites from January 2006

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Strategic Actions

• Restructured business to focus on growth
  opportunities
• Exited pro-audio sector, reducing stock levels,
  service costs and warranty exposure
• Closure and relocation of London manufacturing
  operations
• Headcount reduction from 60 to 51 during the year
• Exceptional reorganisation costs of 0.2m
  incurred in 2005
• Strengthened executive management team
• Derek Mapp appointed Executive Chairman in Sept
  05
• Ken Pratt appointed Finance Director in March 06

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Future Prospects
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Near term outlook

• Strong order book and sales pipeline
• Improved operational efficiency service
• Competitive market and challenging retail
  environment
• Reduced exposure to volatile systems sales
• Strengthened management team and financial
  systems

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Longer term outlook

• Market opportunity remains very attractive
• Operational gearing from adding new subscribers
  to existing system and operational structure
• Large number of outlets still not using a third
  party provider
• Fragmented sector offers opportunities for
  further consolidation

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Competitor Analysis Major UK suppliers
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Board of Directors

• Derek Mapp Chairman
• Founder of Tom Cobleigh plc Leapfrog
• formerly Chairman EMDA
• Chairman of Staffline plc and senior NED at
  Informa plc
• Michael Clark Managing Director
• Imagesound CEO
• Ken Pratt Finance Director
• formerly Finance Director of Eton Group plc
• Prior to that, Finance Director Tom Cobleigh
  plc
• Richard Gregory Non-exec Senior Independent
  Director
• Former Managing Director Yorkshire Television
• Non-exec Director of Yorkshire Clydesdale
  Banks and National Australia Group Europe
  Limited
• Charles Fairbairn Non-exec Director
• Non-exec Director of Research Now plc,
  Statpro and Bright Things plc

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