ScreenFX back on AIM and says it selling TrainFX

Adrian J Cotterill, Editor-in-Chief

ScreenFX shares were suspended on the UK’s Alternative Investment Market (AIM) on September 4th 2007 as the company was strapped for cash.

It was announced yesterday that “Digital advertising specialist ScreenFX restored its listing after it secured £600,000 of further funding with an additional £330,000 by way of a convertible loan”

The group also announced interim results with total revenue flat at £1m and pre-tax losses increasing slightly to £2.7m from £2.5m before.

It also announced that it was going to sell is TrainFX business. This, I guess is part of a plan to focus the business on running its Shopping Mall networks – it had previously announced that it was no longer doing media sales for other screen networks and indeed was looking for someone to do media sales for MallFX!

The announcement of the sale has a lot of provisos – it’ subject to the acquiring group raising £2 Million for example, I quote…

“Furthermore, the Group has also reached an agreement, in principle, to sell its TrainFX franchise for the sum of £2 million to in cash. This transaction is subject to due diligence, the necessary approvals, fundraising by the acquiring group, and the signing of the finalised contract. In the event that the disposal of TrainFX does not proceed within three months, the Company will need to raise £2 million in order to continue trading”

That last line of the statement should worry potential investors – the need to do the deal for the pre-agreed total sum within 3 months or ScreenFX will need to raise more funds to continue trading.

TrainFX is basically 468 screens on 34 Centro Trains, all the equipment involved and of course the all important media rights. You do the sums – that’s over £4,200 per screen or £58,000 per train!

Anyway £2 million seems a wild valuation to me. I assume the ‘acquiring group’ won’t be asking me to do the due diligence on the deal.

They also announced that their ‘Digital network advertising revenue’ for the last 6 months was £754,000 but unfortunately did not break this down across networks. When you think that they have 468 screens on trains, the rights to advertise on 230 screens in World News venues and 335 screens in 22 malls you are talking about just over £750 per screen per year!!!

And that’s taking out of the calculation all the screens in The Life Channel and The Community Channel (1,000’s of screens and well thought of networks) that they previously had the rights to sell advertising on in this 6 month period.

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