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Independent Media Distribution

  • BY: Andrew Hore |
  • POSTED: 03/03/2009 |

Independent Media Distribution increased its underlying 2008 profit but spent much of that profit on new businesses.

The online distributor of TV and radio commercials reported a fall in profits from £1.03m to £897,000 on revenues increased from £6.89m to £7.44m. Stripping out the costs of setting up operations in Germany, France and Spain plus new digital operations and amortisation, profits rose 45% to £1.9m.

Germany has moved into profit and the Spanish operations have been put on hold. France will continue to cost money in 2009 as the business builds up. There will also be more costs for additional digital media services.

Net debt was reduced from £619,000 to £117,00 although this year it could rise again.

Trading in the advertising sector is tough although IMD’s revenues are not directly related to ad spend. However, the loss of a reseller contributing 15% of revenues will have a significant negative effect in the short-term. IMD is confident that it can win back most of these customers and sell them additional services that it was not able to in the past.

These reseller revenues were around £1.1m in 2008 and IMD says that it has already won back the equivalent of 30% of those revenues from customers accounting for one-fifth of the volume lost. IMD is charging more but customers are paying less because there is no 50% mark-up from the reseller.

Shares in IMD rose 4p to 28p each, which values the company at £9.56m.

New house broker Charles Stanley forecasts a fall in profits to £500,000 on flat revenues in 2009. Excluding investment in new operations, the profit is expected to be £1m. The business is highly operationally geared so the loss of revenues has a sharp effect on profit. The 2009 dividend is forecast at 0.7p a share. The shares are trading on 24 times 2009 prospective earnings. That multiple is expected to fall to less than 10 in 2010. 

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