RAM – A Focused And Fast-Growing Force In Digital Outdoor Media

21st Oct '10 by steddieddie

10 comments 6508 reads

Introduction

Now with a pure focus, RAM Investment Group is something of a misnomer for this fast-growing Digital Out Of Home (DOOH) media and broadcasting company.

Almost two years ago, Tim Baldwin became the Chairman of this former shell with a vision of building a substantial company. The period since has seen RAM first acquire 49.9% of TrainFX (with options to acquire 100%) and then, in Nov 2009, seize the opportunity to acquire certain assets of ASG Media on its move into administration. Within weeks, Estates Media Partners had also been acquired from Frogmore Property Co Ltd (in exchange for RAM shares @ 9.75p) and the ASG and EMP businesses were then combined into a brand new RAM subsidiary, RAMVision.

RAM placed one of the final pieces of the jigsaw in Sep 2010 when, via a Reverse Takeover under AIM Rules, it completed the full acquisition of TrainFX. On the same day, RAM finalised a £1.5m Convertible Loan Note which, together with an earlier £1m placing, was said in the 2010 Interim Results to provide sufficient working capital and capital expenditure for the Group going forward.

I think the significance of this event both in respect of the financing and forward earnings potential of the newly focused RAM Investment Group has been generally overlooked, the exception being analysis by GE&CR of the t1ps.com stable. From a related direction, the SF T1ps Smaller Companies Growth Fund participated in the Placing and has added aggressively since the RTO, claiming an additional 1% of the enlarged share capital in the process. In this video, Tom Winnifrith talks of his Fund's recent RAM purchases and offers his view on RAM's outlook.

Clearly, this is a turnaround situation for the Group as a whole but, importantly, one where the component parts and their DOOH media focus are entirely new. Therefore, with little or no reliable pedigree, I would argue that history is of less use than current research and a good nose! The 18 months of available financial data from shell to the present reflects the price paid to build the businesses but what of the sense that a positive tipping point has been reached and of a growing dynamic?

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steddieddie

18th Oct '10

I mentioned the t1ps Fund adding aggressively (TW's words, not mine). It might therefore also be of interest that the Directors added a combined 3.75m in the Jul placing and Tim Baldwin, the Executive Chairman, added a further 600k very recently @ 5p. Here's the breakdown:

04-10-2010 T.E. Baldwin BUY 600,000 ORD 5.00 30,000 8,629,438 7.11
19-07-2010 B.E. Adams TAKE 250,000 ORD 4.00 10,000 1,387,967 1.27
19-07-2010 T.E. Baldwin TAKE 2,500,000 ORD 4.00 100,000 8,029,438 7.32
19-07-2010 M.R. Edmonds TAKE 1,000,000 ORD 4.00 40,000 1,063,363 0.97

Eddie

20th Oct '10

I see RAMVision is tweeting that they'll be showcasing themselves at an exciting event in December and to watch this space. There's a RAMVision Twitter link embedded in the above article.

I also saw this regarding DOOH spend forecasts - right place, right time?

http://en.ooh-tv.com/2010/07/09/uk-screen-digest-predicts-20-increase-in-dooh-advertising-in-2010/

http://en.ooh-tv.com/2010/10/20/europe-dooh-spend-to-reach-500-million-by-2014-according-to-screendigest-doohbizkonf/?utm_source=twitterfeed&utm_medium=twitter

21st Oct '10

I have amended the above article to now include the Director Dealings and also to amend the seller of Estates Media Partners to read Frogmore Property Co Ltd and not Frogmore Estates as original stated.

23rd Oct '10

RAMVision already getting going on the new and significant Capital Shopping Centres contract win:

http://www.metrocentre.uk.com/advertising_contacts(RAM_VISION)-2255.htm

corkboy

4th Nov '10

Hi,

Thanks for starting such a great thread steddieeddie.

The basic idea of selling advertising to both shoppers and commuters does sound like a good one, with the more traditional forms of advertising (i.e. papers and telly) in fairly bad shape. I can certainly see the attraction for companies looking getting their message across to consumers. Can you help answer a few questions?

Regarding the PICS contracts, I assume that RAM don't receive an ongoing revenue stream for this. Once the system is installed and they get paid then that is the end of that contract? i.e. they dont operate the system and receive payments year after year?
The margins of 35% do sound great; with £2.5 million in contracts already signed up and bids in for another £5m then if we assume that they win even 20% of those then that would give £3.5m revenue leading to about 1.2m profit. Not bad for a company with a market cap of under £6m! Also good to hear that the EU are insisting that train companies provide this type of passenger information service.

For the "DOOH" part of TrainFX, any idea what actual content will be shown? I can see that they plan on making their money from advertising but they refer to " news and passenger information channel to its self-funded equipment installations in rail carriages on commuter trains into London." Who actually provides the news content? A very good point in your post about passengers being a captive audience; no fear of them channel-hopping or Sky+ fast forwarding or anything like that. I'd assume that would really appeal to companies looking to advertise too.

For the comment:

"DOOH on Trains" (see TrainFX below for definition) that TrainFX is now ready to start installing on predominantly South-East commuter trains where it has won exclusive contracts. It is currently negotiating on external Group funding arrangements to facilitate this."

Any idea how much these contracts are worth?

Encouraging that the CEO has being investing heavily too and now owns over 7% of the company.

For comment:

"[the placing and convertible loan note] will provide sufficient working capital and capital expenditure for the Group going forward."

Any idea how long they mean by "going forward"? It sounds like they expect to be profitable in the 2nd half of this year but it will not be enough to recoup the losses from the 1st half of the year (mainly due to the cost of being admitted to the AIM? Which is obviously a one-off). They imply that they expect to be fully profitable in 2011 but just wondering how long they have sufficient working capital for without including anything from 2011?

Very much appreciated if you could help answer/comment on the above. I'll try and get my overloaded head around RamVision next.......

Thanks
Corkboy

5th Nov '10

Hi Corkboy,

Welcome and I must say what a great contribution to debate. I'll do my best to answer your questions insofar as I see things myself.

I believe your take on the PICS contracts is correct i.e. one off contracts designed and tailored to the customers' requirements but with no RAM content-broadcasting involvement thereafter, nor would this aspect be generally financially viable for RAM on regional services. There may, of course, be future maintenance work and/or future upgrades to include more of the various aspects of the PICS package beyond a basic passenger information system e.g. CCTV; passenger count (via infra-red sensors), train communication. Click here for greater detail.

So these contracts may be one-offs but the evidence points to the EU Regulation being a significant driver and therefore no shortage of the requirement, probably ongoing at a pace until 2020. As you suggest, current tenders pipeline refers, very good margins. And as you rightly observe, assuming that only a fraction of the available work is actually won, substantial bread and butter income for the foreseeable future. I believe your 20% estimate may actually prove to be very conservative but at this stage it is indeed right to be cautious.

Re your DOOH on Trains content question, the TFX Video (link in the article) probably covers it for now. There is further information on the TFX website. In general, I guess it's still fairly flexible and to some extent will be a "suck it and see" situation, no doubt being adjusted according to passenger tastes and feedback. After all, if it doesn't suit, then it doesn't work!

The basic idea here is to target the mass commuter markets such as in and around London where they already have contracts giving them the right to install the screens. I would not be surprised if the broadcasting element was then outsourced. I understand the basic model is that revenues would be split 85%/15% RAM/TOCs which gives RAM clear scope to partner with broadcasting providers while also making revenues from in-house sales of advertising creation and content delivery. During the Olympics in particular, I can also see significant potential in the Public Services being able to broadcast real-time information to those in transit.

What are these contracts worth? How long is a piece of string? Clearly, the recovery of installation costs would be a main factor but then they would appear to be worth as much as the advertising revenue that can be generated minus TOC-share; possible JV broadcasting partner share; and running costs. In a nutshell, not unlike a typical commercial TV revenue model but, as you observe, with many attributes that are becoming increasingly attractive to advertisers.

No idea of how long "going forward" actually means but they only said it in September and 2011 is almost upon us. On the other hand, we're in a growth situation and I guess opportunities could arise at any time, as indeed was the case with the sudden opportunity to acquire both the ASG and EMP assets last Nov/Dec. I imagine that event caused all erstwhile funding projections to be torn up but was it the right thing to do? There can surely be only one answer.

All things being equal though, the indication is that DOOH on Trains will be "externally financed", presumably via a JV or similar and, in any case, plays no part in anyone's earnings projections i.e. if this external arrangement is secured, then we're off to the races with icing on the cake but, if not, we are as we are and that promises to be no bad place!

Generally, I believe both businesses are probably seeing good cashflow and tipping into profitability in this last quarter - it's a big seasonal quarter for RV and the latest TFX press release suggests chunky take there too before the year end. I therefore expect the second half to show the first signs of the corner having been turned and that the GE&CR 2011 profitability forecasts have good substance but we must remember that it was already September before the RTO process and the second phase of the financial footing was concluded so some of those one-off costs you mention might reasonably be seen in the second half too.

Just at the start here but I believe there's plenty scope for positive newsflow to keep us up to speed with progress, which I expect to offer firmer indication as we move forward that 2011 numbers are increasingly achievable.

Hope this helps. Just my take for what it's worth. As ever, DYOR. Keep watching this site though, you may shortly be offered another take from a very useful direction!

Best,

Eddie

Right place, right time?

http://www.mediaweek.co.uk/news/rss/1039413/Outdoor-revenues-grow-124-third-quarter/

7th Nov '10

Seems the t1ps Smaller Companies EIS Fund performance is launching an EIS Fund 2. As part of the marketing literature they show a Fund 1 holding of 2.5m shares in RAM. Interestingly, they say of Fund 1's seven holdings "the belief is that within that [3-5 year] period, three investments will have been bought in a trade sale while the other four will have rolled out a buy and build and achieved a size where they are no longer microcaps"

Whichever of those categories they see RAM fitting would do very nicely!

23rd Nov '10

Away from whatever the market is currently playing at, the business is undoubtedly moving on towards a very big year, as per the recent Stockopedia interview with Tim Baldwin and Mark Edmonds

Ram Vision is holding a event on 9 Dec at the Courthouse Doubletree Hotel on Great Marlborough Street in their state of the art auditorium facilities showcasing RV's exciting new digital programme. The title:

2011 – The Year of Digital Advertising!

The session will involve key presentations from members of the Ram Vision team and exclusive guest speakers. Topics to be covered will include:

· An overview of RV's rapidly growing digital screen portfolio within the Mall and Leisure sector

· A case study from a major Brand sharing their experience with Ram Vision and their future advertising expectations for digital media.

· A presentation of the New iconic screens in association with MMD Phillips

· An insight in how the correct software enhance the digital media proposition association with Broadsign.

· A launch and exclusive demonstration of innovative 3D technology in large screen format.

· Digital creative content and how RV tailors their current and brand new technological services, to suit the clients' needs.

The event is by invitation only and attendees will consist of senior commercialisation Managers and Directors from Mall Owners, Brand Owners, Creative Agencies, Media planners from a cross section of agencies and the National Media.

24th Nov '10

Right place, right time shining through again I see:

http://www.bloomberg.com/news/2010-11-24/capital-shopping-centres-in-talks-to-buy-manchester-mall-for-1-2-billion.html

Capital Shopping Centres in Talks to Buy Manchester Mall for $1.2 Billion

"...Investors in Europe are focusing more on malls and stores than at any time in the last decade, according to a report this month from Cushman & Wakefield Inc...

...Capital Shopping already owns four of the U.K.’s 10 biggest malls, including the Manchester Arndale shopping center, the ninth-biggest. Trafford, which has 118,776 square meters (1.3 million square feet) of retail space, ranks seventh..."

A couple of reminders:

http://www.dailydooh.com/archives/31535
http://www.stockopedia.com/shares/ram-investment-group-LON:RAM/news/rns/100913ram000890n.htm/

This looks extremely positive for RV idc given the absence of Peel from the list of major mall owners RV lists as clients in that 13 Sep RNS.

RAM – A Focused and Fast-Growing Force In Digital Outdoor Media

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Steddieddie

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