Shares digital

Digital advertising and communications specialist ScreenFX (SFX:AIM) has signed a non-binding indication of interest with a major, albeit it unnamed advertising player granting the advertising group exclusive rights for a limited time to finalise a purchase agreement for the acquisition of ScreenFX’s retail business unit. The decision came after the group was hit by financial challenges last year, with pre-tax losses for the year almost doubling from the year before to £6.6 million.

Turnover increased to £1.8 million, compared to £0.5 million the year before. Chairman Mike Cottman has acknowledged that growth was not satisfactory and has therefore chosen to partner the retail advertising estate with a major industry player in a bid to provide the company with the necessary expertise to maximise advertising revenues.

‘The signing of this indication of interest with a major advertising company is a significant milestone for the group,’ says Cottman. He adds that if the agreement is successfully completed, it will provide the group with the proceeds to develop other digital screen-based advertising sectors, such as its TrainFX franchise. He is confident there will be a ‘different shape to the revenue curve’ in the future and that the group will deliver shareholder return. Shares jumped almost 12% on the recent news to 0.38p.

Shares says: Pipeline remains promising and revenues should pick up this year. Buy