Lint (Antwerp - Belgium), 9 September 2007 • Total revenues for the first half of 2007 reach EUR 10.6 million. The EBITDA amounts to EUR 3.2 million and the operating profit EUR 0.2 million. In spite of the fact that uneven years are traditionally weaker years, revenues for the full-year 2007 will be at least at the level of 2006. On an annual basis both EBITDA and EBIT for 2007 will reach the level of 2006. Today, Alfacam Group (Euronext Brussels: ALFA) announced its results for the first half year that ended 30 June 2007. The financial information is reported in Euro and has been prepared in accordance with the IFRS recognition and measurement criteria.
There are no comparable half-year figures available over 2005 and 2006, because Alfacam Group NV was only set up at the IPO in May 2007. Hence, the pro forma comparison basis is the first 6 months of 2007, the full-year period ending 31 December 2006 and the full-year period ending 31 December 2005. Special attention must be paid to the cyclic differences Alfacam Group has been confronted with in the past in even and uneven years.
The even years are traditionally characterised by strong revenue growth and a high ratio EBITDA versus total revenue. In the past (without taking special events into account) the first half of the year usually accounted for 40 to 45% of the full-year revenue, because January and February are in particular in the TV facilities sector the weakest months. Hence, the second semester represents 55 to 60% of the annual revenue.
In 2007, which is an uneven year, the management aims to reach the revenue and the margin levels of 2006, thus eliminating to a large extent the cyclic characteristic of the business. This year’s most important project, the Pan American Games 2007, accounts for 75% in the second half of 2007 and has therefore a limited impact on H1 2007. With those parameters in mind, the board of directors and the management of Alfacam Group have analysed the H1 2007 figures and full-year 2007 outlook.
1 PROFIT & LOSS ACCOUNT
In the first semester of 2007 the company’s revenues reached EUR 10.4 million. No material fixed assets were sold, resulting in the decrease of the company’s other revenues compared to 2006.
In first half year of 2007 EBITDA amounts to EUR 3.2 million EUR and the operating profit is EUR 0.2 million. The EBITDA margin on the total revenue climbs to 30.6%, which is an improvement of 6% compared to the more comparable year 2005.
Due to the hiring of additional staff, mainly in the TV facilities segment, the personnel costs are percentage-wise relatively higher than the revenues compared to 2005 and 2006.
The financial costs in the first half 2007 have decreased slightly thanks to the reduction of the debt after the IPO. It is expected that the financial costs will continue to decrease in the second half of 2007.
After settling mainly the deferred taxes, the loss before taxes of EUR 0.8 million is reduced to a net loss of EUR 0.4 million.
Because, at the beginning of September 2007, approximately 85% of guided second semester revenues are known, the total revenue for the full-year 2007 will be at least at the level of 2006. In the TV facilities segment, the second half of 2007 will be characterised by important events such as the Pan American Games, the World Championship Rugby and other assignments such as the World Championship Judo and the Brazilian football contract. In addition, Alfacam plans to sell one OB (outdoor broadcast) vehicle in the second half of 2007, just as the company did in 2006. As a result, both EBITDA and EBIT for the full-year 2007 will reach the level of 2006.
1.1 Results and outlook per segment
Hereafter, three segments (multi-camera TV facilities, content and Eurocam Media Center) are briefly commented on EBITDA level as well as regarding the expectations for each segment. The wireless segment is comprised in the multi-camera TV facilities segment.
1.1.1 Multi-camera TV facilities
In the first half of 2007, the revenues amount to EUR 8.1 million with and EBITDA margin of 31.7%, representing EUR 2.6 m. For the 12 months ending 31 December 2005 and 31 December 2006, the revenues were respectively EUR 17.7 million and EUR 18.9 million with a respective EBITDA margin of 27.9% and 53.3%.
Outlook
The Pan American Games are only being taken into account for a quarter in the first half of 2007; three quarters will be accounted in the second semester of 2007. This is revenue with a high EBITDA value.
In the aftermath of the Pan American Games two contracts were signed in Brazil. The World Championship Judo in particular has a relatively high EBITDA value.
The same applies to the long-term rental of five OB vehicles in the Middle East. A similar agreement was carried out successfully in 2006/2007. However, the value and all margins of the contract for 2007/2008 applying to the period from August 2007 to May 2008 are approximately 25% higher than last year’s contract. Both markets (South America and the Middle East) offer a lot of potential for the multi-camera segment, because in those regions there are few or no other HDTV facilities providers.
The demand for HDTV OB vehicles in Europe and Africa is growing and the expected shortage in 2008 is being confirmed. In particular, the demand for the recording in High Definition of the Champions League and weekly football competitions in France, Germany, Turkey and Italy is increasing.
Furthermore, the company foresees the sale of at least one OB vehicle, with guaranteed re-rental for mid-2008 at the occasion of the Beijing Olympics. The negotiations with regard to the sale of an OB vehicle are currently being held. In the course of the coming weeks, the management expects that a number of large, long-term contracts will be signed.
1.1.2 Content
In the first half of 2007, the revenue with regard to the content segment amounts to EUR 1.4 million and represents 37.7% of the annual revenue of 2006. The EBITDA amounts to EUR 37,000 for the first six months ending 30 June 2007.
For the periods ending 31 December 2005 and 31 December 2006 the revenues amounted respectively to EUR 3.5 million and EUR 3.7 million with an EBITDA margin of 19.0% and 20.2%
Outlook
Alfacam Group signed partnership agreements with Thomson, Canon, JVC, Carlsberg, Nuon, Sharp, Volvo Trucks, Tektronix , ING and KBC for a total value of more than EUR 5.5 million, which is spread over a 3-year period. In return, Alfacam Group offers these partners airtime on the Euro1080 HDTV channels and other marketing possibilities. The impact of these partnerships is substantially larger in the second half of 2007, because some partnership agreements only apply to one year.
With regard to the content distribution agreements, negotiations in Belgium and in other European countries are currently being held with cable and satellite platform operators. It is expected that in Autumn 2007 additional contracts will be signed. These contracts will however have a smaller impact on the revenue for 2007 in this segment.
The company did not realise any buy-outs in the first half of 2007.
Where the content segment is concerned, the total revenues and the margins of the full-year 2007 will equal those of 2006, resulting in creating a base for the coming years, as was announced during the IPO.
1.1.3 Eurocam Media Center
In the first half of 2007 revenues amount to EUR 0.8 million with an EBITDA of EUR 0.5 million, representing 57.6% of the revenues.
For the periods ending 31 December 2005 and 31 December 2006 the revenues amounted respectively to EUR 0.5 million and EUR 1.3 million with and EBITDA margin of minus 1.8% and 41,7%.
The Eurocam Media Center is performing better than expected. Although the second building phase was not fully completed in the first half of 2007, the revenue growth of the media center is obvious.
Outlook
The new studios 7-8-9 are fully booked until the Spring of 2008. All major Belgian broadcasters (VRT, VTM, VT4, MTV Networks Benelux, RTL-TVI) are frequently and often simultaneously utilising the studios.
2 BALANCE SHEET
On 30 June 2007, the equity amounted to EUR 27.1 million, representing 39.1% of the balance total compared to EUR 8.7 million representing 15.56% on 31 December 2006. The increase of EUR 18.4 million in the course of the first six months of 2007 can be explained as follows:
The net income from the issue of new shares after deduction of the IPO expenses amounted to EUR 18 million and were used for instance to pay back the existing debts to GIMV for an amount of EUR 4.6 million (including interest due). Overall, the financial liabilities, including the financial lease liabilities, decreased with EUR 5.5 million compared to 31 December 2006.
The investments in fixed assets amounted to EUR 10.3 million in the first half of 2007. The largest part went to the extension of technical recording material and the finishing of studios 6, 7, 8, and 9. In May 2007, a new OB vehicle (OB30) was put in service.
For the second half of 2007 Alfacam Group expects to maintain the same level of investments. In August 2007, two other new vehicles, OB31 and OB34, joined the OB fleet. The company is also preparing a number of OB structures in order to cover its own needs in the near future.
Forward Looking Statements
This press release contains forward-looking statements with respect to the business, financial condition and results of operations of Alfacam Group and its affiliates. These statements are based on the current expectations or beliefs of Alfacam Group’s management and are subject to a number of risks and uncertainties that could cause actual results or performance of the Company to differ materially from those contemplated in such forward-looking statements. These risks and uncertainties relate to changes in technology and market requirements, the company's concentration on one industry, decline in demand for the company's products and services and those of its affiliates, inability to timely develop and introduce new technologies, products and applications, and loss of market share and pressure on pricing resulting from competition which could cause the actual results or performance of the company to differ materially from those contemplated in such forward-looking statements. Alfacam Group undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
APPENDIX
3 Half Yearly Pro Forma Financial Information
3.1 Non-audited Pro Forma Consolidated Profit & Loss Account
EBITDA equals operating profit + depreciation and amortisation.% is a percentage on total revenue.
3.2 Non-Audited Pro Forma Consolidated Balance Sheet
