Interim Results

RNS Number : 6291E
Adventis Group PLC
29 September 2008
 







FOR RELEASE

7.00AM

September 30 2008




ADVENTIS GROUP PLC (the 'Group' or 'Company')


Interim Results 


Unaudited results for the half-year ended 30 June 2008


Highlights


  • Operating income (revenue) £6.0m up 5% (2007: £5.7m) and 2% on a like for like basis

  • Pre-tax profit £1.020m down 19% (2007: £1.255m) due mainly to one off restructuring costs 

  • Group's largest acquisition to date of Second2 Limited in June 2008 and further deferred consideration settlements on other deals utilised cash of £3.7m

  • No borrowings and cash of £0.9m (2007: £3.7m)

  • Basic EPS 1.66p (2007: 2.20p)

  • Interim dividend per share held at 0.23p (2007 - 0.23p)

  • Major client wins include: Trend Micro, Kcom, Genesis Housing Group, Newlon Housing Trust, GAM, ODL Securities, BestInvest and Milestones Tours. 


Charles Phillpot, Chief Executive of Adventis Group plc, commented:

'We believe that the combination of benefits arising from the action taken in the first half of the year together with full six months of earnings from our acquisition of Second2 Limited should restore our margins and yield a stronger result in the second half of the year. 


We continue to consolidate those companies which we have either acquired or started in the last four years and will endeavour to drive out value from every aspect of their operation. The benefits of the addition of the technology and telecoms sector are already being felt and will become more marked in 2009 when we enjoy a full year of their results and exploit further areas of synergy. 


I am confident that our business performance, improved cash generation and strong balance sheet will enable the Group to maintain its growth momentum and build its market share.'


For further information, contact:


Adventis Group plc


  • Charles Phillpot, Chief Executive Officer

020 7034 4750

  • Peter Linnell, Finance Director

020 7034 4795



Arbuthnot Securities Limited


  • Tom Griffiths

 020 7012 2000



Adventis PR


  • Chris Steele / Tarquin Edwards

020 7034 4759 / 58

  


Chief Executive Officer's Statement and Review


Trading Update


The first half of 2008 was spent continuing to consolidate our healthcare businesses in their new Beaconsfield base. However, the property division had to be restructured as client spending dropped, in particular from residential property clients. With this background, I am therefore pleased to report a positive set of results for the six months ended 30 June 2008 in a year that will be remembered for the credit crunch and the associated downturn in levels of activity. Revenue at £6.0m (£5.7m) increased 5% on the same period in 2007, and on a like for like basis excluding our acquisition of Second2 Limited was up 2%. Turnover of £20.8m (£24.9m) was down 16% and pre-tax profit at £1.020m (£1.255m) was down 19% having suffered from one off restructuring costs and surplus office space that has now been largely occupied


Basic earnings per share fell from 2.20p to 1.66p largely due to the profit reduction but this would have been worse if shares had been issued in settlement of acquisition related deferred consideration rather than utilising cash reserves. 


Dividend


The Board is declaring a maintained interim dividend of 0.23p (2007 0.23p) per share, payable to those shareholders on the register on 10th October 2008 for payment on 24nd October 2008.


Financial Position


The net cash balance at 30 June 2008 was £0.9m and we continue to be highly cash generative. The Company currently has no borrowings having financed its acquisition strategy from its own resources. As a result we have a very strong balance sheet which will help us to fund any future acquisitions. 


Business Strategy


The Group was able to exploit its market presence in the first half of 2008 and increased its market share within the healthcare and financial services sectors whilst adding the technology sector. The consolidation of all three of our healthcare operations into one building was further enhanced by Second2 moving into the same premises thereby enabling a platform for cross selling. We further consolidated our creative resources to be more cost effective and have fully integrated digital marketing.  


Acquisitions and Joint Ventures


In June 2008 the Group announced the acquisition of Second2 Limited, a technology, telecoms and digital marketing specialist, with unrivalled blue chip clients including the likes of Toshiba, Hitachi and Norton. We anticipate strong growth in this sector.


Operational Review


The following is a summary of activity by business sector for the six months ended 30 June 2008:


  Healthcare sector


Adventis Health has integrated its three individual entities and now offers a comprehensive and fully differentiated proposition.  MDC (Medical Device Communications) ends its maiden 3 month period with several active clients and a good outlook for the rest of 2008 and into 2009. The outlook for the full year results looks healthy with new business wins in oncology, dermatology and animal health with significant opportunities to pitch for new business. Consequently we are particularly optimistic for the prospects for 2009.


Digital and Integrated services


Adventis Digital has been very successful in cross selling its service to the healthcare, technology and property sectors and has a strong order book for the balance of 2008 and forward into 2009. Adventis Integrated has also had a successful first half of 2008 with clients such as ATP, Cirencester Friendly Society and Lloyds Pharmacy. Both services are now a key aspect of the total service offering to all sectors.


Technology and Telecoms sector


Second2 has continued to achieve significant year on year revenue and profitability growth, and develop relationships with many long-term clients including EMC, Emulex, HitachiHTC, Kensington, Nortel and Toshiba. This includes significant growth in the delivery of pan-European and global campaigns for several clients. New business opportunities have been identified through offering additional digital marketing services to Second2 clients, delivered by Adventis Digital. Significant new business wins in 2008 include Trend Micro, Kcom and BakBone Software. 


Financial Services sector


AdventisNMG continued to trade successfully and has delivered a branding project for a new SIPP company called Gaudi and a rebranding for annuity specialists Just Retirement. Additionally the team has designed new websites for Newcastle Building Society and HSBC. Visibility is good for the rest of 2008 with numerous projects in the pipeline.


Media Planning and Buying services


Our three media planning and buying companies, Premium Media, Adgenda Media and Adventis Coltman, are a significant force in the media sector with a combined annual billing that puts us firmly inside the UK's top 50 buying points.  They have full NPA (Newspapers Publishing Association) and TV recognition and enjoy very favourable commercial terms with media owners.  


Media spend has largely held up for the first six months of 2008 despite the gloom in the residential property market. As the year progresses we are looking at other markets to try to reach UK purchasers including outdoor and direct mail campaigns. At the top end of the market we are targeting our advertising globally to include RussiaSwedenDenmark and Switzerland. New business wins in 2008 so far have included St James Homes, Genesis Housing Group, Newlon Housing Trust, GAM, ODL Securities, BestInvest and Milestones Tours. 


Residential Property Marketing Sector 

 

The residential property sector has been particularly affected by the credit crunch. However the RSL sector (Registered Social Landlords) continues to thrive and new business gains include Family Mosaic, Hyde Vale and In Place with further new projects for Genesis Homes and London & Quadrant. We are also working with Savills International on both design and media planning/buying for several luxury high end projects.


  Commercial Property 


The commercial property team enjoyed a strong first 6 months with a major win of an emerging market fund for Ahli United Bank and Morley Investment Managers. This was followed by major new projects for established developers such as Greenhills, Segro, Prupim, Development Securities, Skelton Group Investments and Seaspace, the Government regeneration body, plus specialist planning and bid projects for Menta, DP9, and Muse Regeneration.


Outlook


We believe that the combination of benefits arising from the action taken in the first half of the year together with full six months of earnings from our acquisition of Second2 Limited should restore our margins and yield a stronger result in the second half of the year. 


We continue to consolidate those companies which we have either acquired or started in the last four years and will endeavour to drive out value from every aspect of their operation. The benefits of the addition of the technology and telecoms sector are already being felt and will become more marked in 2009 when we enjoy a full year of their results and exploit further areas of synergy. 


I am confident that our business performance, improved cash generation and strong balance sheet will enable the Group to maintain its growth momentum and build its market share.


Charles Phillpot

Chief Executive

30 September 2008



  

Adventis Group plc

 

 

 

 

 

Group income statement

 

 

 

Unaudited

Unaudited

Audited


 

6 months to

6 months to

12 months to

 

 

 

 

30 June 2008

30 June 2007

31 December 2007

 

 

 

 




 

 

 

 

 

 

 

 

 

 

Notes

£'000

£'000

£'000

 

 

 

 

 

 

Turnover

 

 

20,849

24,915

47,076

Cost of sales

 

 

 

14,807

19,247

35,338

Operating income

 

 

 

6,042

5,668

11,738


 

 

 

 

 

Operating expenses

 

 

5,107

4,521

9,312

Operating profit

 

935

1,147

2,426

 

 

 

 

 

 

 

Net interest receivable

 

 

95

115

226

Finance costs


 

-10

-7

-15

 

 

 

 

 

 

 

Profit on ordinary activities before taxation

 

1,020

1,255

2,637

 

 

 

 

 

 

 

Taxation on profit on ordinary activities

 

-306

-376

-832

 

 

 

 

 

 

 

Profit for the period

 

 

714

878

1,805

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

Equity holders of the parent

 

700

869

1,756

Minority interest

 

 

14

9

49

 

 

 

 

 

 

 

Profit for the period

 

 

714

878

1,805

 

 

 

 

 

 

 

Earnings per share ('EPS')

3

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

 

 

 

Average number of shares in issue

 

42,043,956

39,576,955

40,580,636

EPS (pence)

 

 

 

1.66

2.20

4.33

Fully diluted earnings per share

 

 

 

 

Fully diluted average number of shares in issue

43,497,344

42,317,537

42,654,944

EPS (pence)

 

 

 

1.61

2.05

4.12


  

Adventis Group Plc

 

 

Unaudited

Unaudited

Audited

Group Balance Sheet

 

 

30 June

30 June

31 December


 

 

2008

2007

2007


 

 






Notes

£'000

£'000

£'000

ASSETS






Non-current assets






Property, plant and equipment



834

575

531

Goodwill and other intangible assets


6

17,936

10,809

11,126

Deferred tax asset



143

164

143




18,912

11,548

11,800

Current assets






Work in progress



260

335

104

Trade and other receivables



11,352

8,337

7,840

Cash and cash equivalents



915

2,689

3,740




12,527

11,362

11,684

Total assets



31,439

22,910

23,484







EQUITY






Capital and reserves






Share capital


2

108

100

104

Share premium account



6,616

5,508

6,168

Treasury stock



-23

10

-10

Capital redemption reserve



200

200

200

Other reserves



20

20

20

Share based payments reserve



122

53

95

Retained earnings



5,004

3,722

4,506




12,047

9,613

11,083

Minority interest



82

27

68

Total equity



12,129

9,640

11,151







LIABILITIES






Non-current liabilities






Obligations under finance leases - due in more than




one year



10

0

10

Provisions for other liabilities and charges


10

6

10

Deferred consideration


4

5,459

3,615

2,922




5,479

3,619

2,942

Current liabilities






Trade and other payables



10,848

5,988

6,423

Current income tax liabilities



1,210

1,462

945

Obligations under finance leases - due in less than





one year



2

4

4

Deferred consideration



1,772

2,196

2,019




13,832

9,650

9,391

Total liabilities



19,310

13,270

12,333

Total equity and liabilities



31,439

22,910

23,484





  

Adventis Group plc

 

 

 

 

 

 

 

 

Group statement of changes in equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share

Share

Capital

Minority

Treasury

Share based

Retained

Total

 

 

capital

premium

reserves

Interests

stock

transactions

earnings

 

 

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

 

 

Balance 31 December 2006

96

4,789

220

18

-

43

3,036

8,202

 

 

 

 

 

 

 

 

 

 

Period to 30 June 2007

 

 

 

 

 

 

 

 

Profit for the period

-

-

-

-

-

-

878

878

Dividends paid

-

-

-

-

-

-

-183

-183

Minority interests

-

-

-

9

-

-

-9

0

 

 

 

 

 

 

 

 

 

 

Recognised earnings

-

-

-

9

-

-

686

695

Issue of share capital

4

719

-

-

-

-

-

723

Share based transactions

-

-

-

-

-

10

-

10

EBT holding

 

-

-

-

-

-10

-

-

-10

 

 

 

 

 

 

 

 

 

 

Balance 30 June 2007

100

5,508

220

27

-10

53

3,722

9,620

 

 

 

 

 

 

 

 

 

 

Period to 31 December 2007

 

 

 

 

 

 

 

Profit for the period

-

-

-

-

-

-

927

927

Dividends paid

-

-

-

-

-

-

-102

-102

Minority interests

-

-

-

41

-

-

-41

0

Recognised earnings

 

 

 

41

 

 

784

825

Issue of share capital

4

660

-

-

-

-

-

664

Share based transactions

-

-

-

-

-

42

-

42

EBT holding

 

-

-

-

-

-

-

-

0

 

 

 

 

 

 

 

 

 

 

Balance 31 December 2007

104

6,168

220

68

-10

95

4,506

11,151

 

 

 

 

 

 

 

 

 

 

Period to 30 June 2008

 

 

 

 

 

 

 

 

Profit for the period

-

-

-

-

-

-

714

714

Dividends paid

-

-

-

-

-

-

-202

-202

Minority interests

-

-

-

14

-

-

-14

0

 

 

 

 

 

 

 

 

 

 

Recognised earnings

-

-

-

14

-

-

498

512

Issue of share capital

4

448

-

-

-

-

-

452

Share based transactions

-

-

-

-

-

27

-

27

EBT holding

 

-

-

-

-

-13

-

-

-13

 

 

 

 

 

 

 

 

 

 

Balance 30 June 2008

108

6,616

220

82

-23

122

5,004

12,129


  

Adventis Group plc

 

 

 

 

 

Group cash flow statement

 

 

 

 

 

 


 

Unaudited

Unaudited

Audited

 

 

 

 

6 months to

6 months to

12 months to

 

 

 

 

30 June 2008

30 June 2007

31 December

 

 

 

 

 

 

2007

 

 

 

 




 

 

 

Notes

£'000

£'000

£'000

 

 

 

 

 

 

 

Cash generated from operating activities

 

1,608

1,617

3,775

Income tax paid

 

 

-470

-129

-701

Interest paid

 

 


-12

-6

-19

 

 

 

 

 

 

 

Net cash from operating activities

 

1,126

1,482

3,055

 

 

 





Cash flows from investing activities

 




Interest received

EBT share purchase

 

 

95

-3

115

0

226

0

Purchase of property, plant & equipment

 

-252

-220

-475

Acquisition of subsidiaries


4

-3,591

-1,005

-1,561

 

 

 

 

 

 

 

Net cash used in investment activities

 

-3,751

-1,110

-1,810

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

Dividends paid

 

 

-202

-183

-285

Repayments of obligations under finance leases

 

0

-9

0

Proceeds of issuing share capital

 

2

45

316

 

 

 

 

 

 

 

Net cash (used in)/from financing activities

 

-200

-147

31

Net (decrease)/increase in cash and cash equivalents

-2,825

225

1,276

 

 

 

 

 

 

 

Cash and cash equivalents at the beginning of the

 

 

 

period

 

 


3,740

2,464

2,464

 

 

 

 

 

 

 

Cash and cash equivalents at the end of the period

915

2,689

3,740


  Adventis Group Plc

Notes to the accounts

Note 1    Principal accounting policies


These unaudited interim consolidated financial statements do not constitute statutory accounts within the meaning of s240 of the Companies Act 1985. The statutory accounts for the year ended 31 December 2007 (from which comparative figures have been extracted) on which the auditors gave an unqualified audit report, have been filed with the Registrar of Companies. 


The Company has applied IFRS for the reporting period and all prior periods where figures have been included for comparison purposes. The financial statements are prepared under the historical cost convention and, in conformity with generally accepted accounting principles require the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from those of estimates.


Full details of the Company's accounting policies can be found in the 2007 Annual Report and Accounts published in April 2008 and available on the Company's website at www.adventis.co.uk .


Note 2    Share capital




30 June

2008

No. shares

30 June

2007

No. shares

31 December

2007

No. shares

Authorised




Ordinary Shares of 0.25pence each

60,000,000

60,000,000

60,000,000





Allotted, called up and fully paid




Ordinary Shares of 0.25pence each

43,335,842

39,869,260

41,635,344


In accordance with the terms of the Second2 Limited share sales and purchase agreement1,691,726 fully paid ordinary shares were issued on 9 June 2008


In addition 8,772 fully paid shares were issued as an employee exercised her share options. 

As a result the nominal value of issued share capital increased £4,251 while £448,249 was added to the share premium account. 

The employee benefit trust is the beneficial owner of 65,180 fully paid ordinary shares.




  Note 3      Earnings per share


The number of shares used in the calculation of the earnings per share is shown at the foot of the income statement.


The EPS has moved from 2.20p to 1.66p whilst the fully diluted EPS has moved from 2.05p to 1.61p.



Note 4     Acquisition of Second2 Limited 

On 9th June 2008 the Company acquired 100% of the issued share capital of Second2 Limited for cash and shares totalling:








£'000





Property plant and equipment



51

Stocks



51

Trade debtors



942

Bank and cash balances



1,187

Tax liabilities



(430)

Trade and other payables



(919)




882

Goodwill



6,698





Total Consideration



7,580





Satisfied by 




Cash



2,993

Issue of loan notes



337

Issue of Adventis Group ordinary share capital


450

Deferred consideration


2,850

Contingent consideration



950





7,580





Net cash (outflow) arising on acquisition



(1,806)

Cash consideration



2,993

Bank balances and cash acquired



1,187





In addition, a number of payments were made for the next instalments of deferred consideration due on acquisitions completed prior to 2008 as follows: 

  • In respect of the acquisition of Coltman Media Company Limited, originally announced on 23 May 2006, a cash settlement of £765,000.

  • In respect of the acquisition of Affiniti (UK) Limited, originally announced on 16 December 2004, cash settlements totalling £125,402.

  • In respect of the acquisition of Roundhouse Advertising Limited, originally announced on 23 May 2006, a cash settlement of £341,515.

  • In respect of the acquisition of Leapfrog Medical Communications Limited, originally announced on 6 February 2007, a cash settlement of £192,200.



Note 4 - continued


A payment of £349,430 was also made following the exercise of put options relating to Adgenda Media Limited, originally announced on 30 March 2005, relating to the third year of this deal.


Note 5    Employee Benefit Trust

In accordance with the Urgent Issues Task Force (UITF) Abstract 32 'Employee Benefit Trusts and other intermediate payment arrangement', the Company includes the assets and liabilities of that trust within its balance sheet. In the event of the winding up of the Company, neither the shareholders nor the creditors would be entitled to the assets of the employee benefit trust.


Note 6    Goodwill and business combinations


Goodwill arising on consolidation represents the excess of the cost of acquisition over the fair value of the identifiable assets, liabilities and contingent liabilities of a subsidiary, associate or jointly controlled entity at the date of acquisition. Goodwill is recognised as an asset and is tested for impairment annually, or on such occasions that events or changes in circumstances indicate that its value might be impaired. 


The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the acquisition date, of assets given, liabilities incurred or assumed, and equity instruments issued by the group, plus any costs directly attributable to the acquisition. The acquiree's identifiable assets, liabilities and contingent liabilities are recognised at their fair value at the acquisition date, except for non-current assets that are held for resale, which are recognised and measured at fair value less costs to sell. The following is a summary of the Goodwill account:

                                                         £000's

            As at 1 January 2008             11,126

            Additions                                6,810                

            As at 30 June 2008                17,936


Note 7    Share buy-back


The Company's AGM was held on 29 May 2008 and was immediately followed by an EGM at which shareholder authority permitting the Company to buy its own shares was granted. During July 2008 the Company purchased 590,570 ordinary shares of 0.25p each on the open market and now holds these in Treasury. The Company announced details of each transaction as they were executed and these can been seen within the Rule 26 section of the company website www.adventis.co.uk 


  Note 8    Availability


Copies of this announcement are available from the Company's registered office, 93-95 Wigmore StreetLondon W1U 1HH and from its website, www.adventis.co.uk.





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