Final Results

Adventis Group PLC 10 April 2008 10 April 2008 Adventis Group Plc ('Adventis' or the 'Company') Preliminary results, for the year ended 31 December 2007 Adventis Group Plc ('ATG'), the AIM quoted multimedia marketing services and advertising agency, is pleased to announce record results for the year ended 31 December 2007. The results represent the Company's third full trading year since the admission of the Company's shares to AIM. Financial Highlights • Group billings (Turnover): £47.1m, up 33% (2006: £35.5m) • Pre-tax profit: £2.64m, up 47% (2006: £1.80m) • Pre-tax profit margin remains in excess of 20% • Earnings per share: 4.33p, up 15.2% (2006: 3.76p) • Recommended final dividend up 5% to 0.48p (2006: 0.46p); total up 5% to 0.71p (2006: 0.68p) • Net cash of £3.74m at year end (2006: £2.46m) Operational Highlights • The sole newly acquired business, Leapfrog Medical Communications Limited contributed 5% to Group billings and made a first time profit contribution • Billings relating to existing businesses grew by 26% • Client wins across all our sectors Prospects Said Charles Phillpot, Chief Executive of Adventis: '2007 saw significant consolidation of Group assets and their reorganisation into structures that more fully exploit their synergies. Leapfrog Medical Communications Limited made an immediate contribution in its first year of trading as part of the Group and we continue to consolidate our position in our market sectors. The first quarter results indicate that the Group as a whole is ahead of target and ahead of last year. Visibility for the year ahead is generally good and overall we anticipate our clients' marketing expenditure continuing at a similar or greater level to the prior year. Cost controls remain paramount and we will continue to be vigilant especially as economic conditions tighten. We remain open to, but very selective about, acquisition opportunities in each market sector.' Enquiries: Adventis Group Plc Charles Phillpot, CEO Tel: 020 7034 4750 Peter Linnell, Finance Director Tel: 020 7034 4795 Adventis Financial PR Chris Steele Tel: 020 7034 4759 Tarquin Edwards Tel: 020 7034 4758 Arbuthnot Securities Tom Griffiths Tel: 020 7012 2000 Notes to Editors Adventis's strategy is to focus its marketing and media buying services on the healthcare, financial services and property sectors, in which it has the opportunity to build significant market positions. There are three main strands to Adventis' strategy to develop the business: • Consolidation of its position in the healthcare, financial services, residential and commercial property markets, which are predominantly serviced by a large number of small operators; • Diversification into other specific sectors which have a requirement for a higher level of expertise; • Maintain / increase profit margins which are amongst the strongest in the industry. Management intends to achieve these objectives through a mix of organic development, acquisitions and by creating structures to attract new senior people with proven revenue earning ability and appropriate sector expertise. Chairman's statement for the year ended 31 December 2007 2007 proved to be another excellent year for Adventis with significant advances across key financial metrics - Turnover + 33%, profit before tax ('PBT') + 47% and earnings per share ('EPS') +15%. This strong growth continues the Company's record of improved financial performance since its listing almost four years ago. Particularly encouraging has been the profitable expansion of our established businesses, built through acquisition and organic growth between 2004 and 2006. This was added to, very positively in 2007, by the acquisition of Leapfrog Medical Communications Limited which has greatly enhanced our total healthcare offering. 2007 saw increasing benefits across the Group with the consolidation of leading parts of our business in healthcare marketing, media planning and buying and property marketing. This greater integration in our main business sectors is delivering an improved service to our clients and increasing financial benefits to the Company. In 2007, this was supplemented by growth in our financial services sector and our fast developing digital marketing business, both of which promise well for the future. Our financial PR business has also continued to consolidate its position in the market. A further very important development in this consolidation process was the opening, in mid-2007, of our new office in Beaconsfield, bringing together our various healthcare businesses and re-branded as Adventis Health. The continuing strong progress made in 2007 affirms our ongoing focus on growth in specific sectors of marketing services where our expertise lies, while seeking to reinforce our established business with selective acquisitions. This will continue and our strong balance sheet means Adventis is well placed to pursue such acquisition opportunities as they present themselves. In line with our progressive dividend policy, the Board is recommending a 5% increase in the final dividend to 0.484p per share which will be put to the Annual General Meeting for approval. To have achieved the excellent results of 2007 would not have been possible without the talented efforts and commitment of almost 150 staff across the various Adventis companies. The Board offers its thanks and appreciation to all of them. 2008 has started well, but the Board recognises the more volatile and uncertain economic climate in which all businesses are operating. Nonetheless, we believe Adventis's operational strengths, financial soundness and high quality client service will enable it to continue to progress strongly through this year and beyond. On a personal note, I have been Chairman of Adventis for approximately four years. I informed my Board colleagues some time ago that I would be seeking to retire as a director during the next year, to enable me to pursue new interests. A process to appoint a new Chairman is under way. A further announcement will be made in due course. Peter Mitchell Chairman Chief Executive Officer's review I am pleased to report a strong set of results for the year ended 31 December 2007, with record levels of billings and profits, both organically across all of our businesses and through acquisitions. Group turnover of £47.1m was up 33% (2006: £35.5m); gross profit of £11.7m was up 38% (2006: £8.5m), and pre-tax profit of £2.64m was up 47% (2006: £1.80m). This represents the fourth successive year of significantly increased billings and profits and the Company continues to benefit from healthy margins and strong cash flow. The earnings per share for 2007, including acquisitions were 4.33p, which compares with 3.76p for the previous year, an increase of 15%. Dividend The Board is recommending an increased final dividend of 0.48p per share, making a total for the year of 0.71p. This is in line with our progressive dividend policy and reflects our confidence in the business going forward, especially our continued ability to translate revenue growth into cash. Net cash as at 31 December 2007 was £3.74m, and the Company continues to be cash generative and has a strong balance sheet. Market Overview The Company was regrouped into five business divisions in 2007 covering Health, Property, Financial, Media and PR. With the addition of Adventis Digital, offering a full range of digital service to all group clients, and Adventis Integrated, offering direct marketing services, the Company now has seven divisions. This re-organisation has enabled us to exploit further synergies and economies leading to business growth and improved cost control. Each of our business units enjoyed continued profitability in 2007 and their management was structured to exploit the considerable depth of skills to the full. Retaining the services of key directors and staff continues to be an issue in the marketing services industry due to its highly labour intensive nature. Our policy of offering competitive packages with an element of profit share has delivered a high quality and stable senior team. It is in this environment of consolidation that I am pleased to report results that reflect the hard work of all the team at Adventis. Business Strategy Our rapid growth has not been at the expense of either our cash position or operating margins. The Board intends to continue to pursue growth on a similar scale, but retain the same level of checks and balances. We continue to assess other market sectors with a view to acquiring operations that both match our current performance and complement our existing business offering. The drive for an increase in scale will be matched only by the focus on overall business performance. Acquisition In February 2007, the Group announced the acquisition of Leapfrog Medical Communications Limited. This strategic purchase of one of the best medical education service providers was seen as a vital asset to our healthcare operation, as pharmaceutical companies demand a fully integrated marketing offering. It remains our intention to be extremely selective in our M&A activity and the Board will only sanction purchases that meet our strict internal criteria. Operational Review The following is a summary of activity by business sector for the year ended 31 December 2007. Healthcare Sector The Group now has a substantial presence in the Healthcare sector through its two creative agencies, Affiniti and Roundhouse. Together with Leapfrog Communications, a medical education specialist, the three business units have been combined to create Adventis Health, a specialist MedComms agency, offering innovative and dynamic business solutions to the pharmaceutical industry. With an impressive list of blue chip clients, Adventis Health is in a leading position to explore new generation concepts, such as digital media and interactive customer generated programmes. Adventis Health now occupies new premises at Adventis House in Beaconsfield, with a satellite office in Hertfordshire. Financial Services Sector Adventis NMG grew significantly in 2007. A series of large scale projects were concluded for clients, such as Foresters Friendly Society, Just Retirement, Cardiff Pinnacle, Equity Insurance Group and Reita. The outlook for further such projects from similar clients is positive. The integration of digital projects increased and the range of services was enhanced following key senior appointments in digital and creative roles. Property Marketing Sector We continued to serve a number of clients during the year across the residential property spectrum, such as Savills, Galliard Homes, Devington Homes and Grove Manor Homes. We were also instructed by leading registered social landlords, including Places for People, Home Group, Genesis Housing Group and London & Quadrant. The year also presented several opportunities in the commercial property market. New business wins included The Winston Group, Oakhurst Properties, Ahli United Bank, Sunlight Property Finance, Greenhills, Mckay Securities, Scottish Widows Investment, Target Follow, The Blackstone Group, Protego Real Estate Investments, Davis Coffer Lyons, EPF Group and Sackville Properties. Media Planning and Buying Sector Our three media planning and buying companies, Premium Media, Adgenda Media and Adventis Coltman, represent a significant force in the property and financial sector. Their combined billings account for around the UK's 30th largest buying point. They have full NPA (Newspapers Publishing Association) and TV recognitions, enjoying favourable commercial terms with media owners. The specialist media services that we offer work very much in tandem with our creative businesses. Business volumes continue to grow at good margins for this industry. Account wins during 2007 included Brit Insurance, Partnership Assurance, SPA ETF's, China Travel Service, St James Homes, Weston Homes, Shepherds Bush Housing Group and St Modwen Plc. Outlook The turbulence of the global financial markets has permeated the economy overall, but the first quarter results indicate that the Group as a whole is ahead of target and ahead of last year. Visibility for the year ahead is generally good and overall we anticipate our clients marketing expenditure continuing at a similar or greater level to the prior year. Cost controls remain paramount and we will continue to be vigilant especially as economic conditions tighten. We continue to raise our profile in our chosen market sectors and consider suitable acquisition opportunities. I am confident that our growth and operating efficiency will continue in 2008. Charles Phillpot Chief Executive Officer Consolidated income statement for the year ended 31 December 2007 2007 2006 Notes £'000 £'000 Turnover Continuing operations 44,788 27,973 Acquisitions 2,288 7,556 47,076 35,529 Operating profit Continuing operations 2,116 1,221 Acquisitions 310 451 Profit on ordinary activities before 2,426 1,672 interest Investment revenue 226 130 Finance costs (15) (2) Profit on ordinary activities before 2,637 1,800 taxation Taxation on profit on ordinary activities 3 (832) (467) Profit for the financial 1,805 1,333 year Attributable to: Equity holders of the parent 1,756 1,316 Minority interest 49 17 Profit for the financial 1,805 1,333 year Earnings per share ('EPS') 5 Basic earnings per share Average number of shares in issue 40,580,636 35,007,794 EPS (pence) 4.33 3.76 Fully diluted earnings per share Fully diluted average number of shares in issue 42,654,944 36,066,998 EPS (pence) 4.12 3.65 The Group's results derive entirely from continuing operations Consolidated balance sheet as at 31 December 2007 2007 2006 Notes £'000 £'000 ASSETS Non-current assets Property, plant and equipment 531 259 Goodwill and other intangible assets 6 11,126 8,273 Deferred tax asset 143 164 11,800 8,696 Current assets Work in progress 104 293 Trade and other receivables 7,840 6,590 Cash and cash equivalents 3,740 2,464 11,684 9,347 Total assets 23,484 18,043 EQUITY Capital and reserves Share capital 104 96 Share premium account 6,168 4,789 Treasury stock (10) 0 Capital redemption reserve 200 200 Other reserves 20 20 Share based payments reserve 96 43 Retained earnings 4,506 3,036 11,084 8,184 Minority interest 67 18 Total equity 11,151 8,202 LIABILITIES Non-current liabilities Obligations under finance leases - due in more than one year 10 7 Provisions for other liabilities and charges 10 4 Deferred consideration 2,922 3,400 2,942 3,411 Current liabilities Trade and other payables 6,423 4,371 Current income tax liabilities 945 572 Obligations under finance leases - due in less than one year 4 5 Deferred consideration 2,019 1,482 9,391 6,430 Total liabilities 12,333 9,841 Total equity and liabilities 23,484 18,043 Consolidated statement of changes in equity for the year ended 31 December 2007 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 2005 81 2,862 220 47 - 23 1,892 5,125 Changes in equity for 2006 Profit for the year - - - - - - 1,333 1,333 Dividends paid - - - - - - (218) (218) Minority interests - - - 17 - - (17) 0 Adjustment - - - (46) - - 46 0 Recognised earnings - - - (29) - - 1,144 1,115 for the year Issue of share capital 15 2,015 - - - - - 2,030 Cost of share issue - (88) - - - - - (88) Share based transactions - - - - - 20 - 20 Balance 31 December 2006 96 4,789 220 18 - 43 3,036 8,202 Changes in equity for 2007 Profit for the year - - - - - - 1,805 1,805 Dividends paid - - - - - - (285) (285) Minority interests - - - 49 - - (49) 0 Recognised earnings - - - 49 - - 1,471 1,520 for the year Issue of share capital 8 1,499 - - - - - 1,507 Cost of share issue (120) - - - - - (120) Share based transactions - - - - - 53 - 53 EBT holding - - - - (10) - - (10) Balance 31 December 2007 104 6,168 220 67 (10) 96 4,506 11,151 Consolidated cash flow statement for the year ended 31 December 2007 2007 2006 £'000 £'000 Cash flows from operating activities Profit from operations 2,426 1,672 Adjustments for: Amortisation of 50 25 investments Share based transactions 53 20 Depreciation on fixtures and equipment 136 80 Operating cash flows before movement in working capital 2,665 1,797 Increase /(decrease) in work in progress 189 (65) Increase in receivables (262) (993) Increase in payables 1,183 133 Cash generated by operations 3,775 872 Corporation tax paid (701) (436) Interest (19) (2) paid Net cash from operating activities 3,055 434 Cash flows from investing activities Interest received 226 130 Purchase of property, plant & equipment (475) (128) Purchase of other investments 0 (125) Acquisition of (1,561) (1,230) subsidiaries Net cash used in investment activities (1,810) (1,353) Cash flows from financing activities Dividends paid (285) (218) Repayments of obligations under finance leases 0 (3) Proceeds of issuing share capital 316 1,019 Net cash from financing activities 31 798 1,276 (121) Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period 2,464 2,585 Cash and cash equivalents at the end of the period 3,740 2,464 Notes to the financial statements For the year ended 31 December 2007 1. Basis of preparation The financial information set out in this announcement does not constitute the Company's statutory accounts for the years ended 31 December 2007 and 2006. Except as shown below, the financial information for the year ended 31 December 2007 has been prepared using the accounting policies which are consistent with those adopted in the audited accounts for the year ended 31 December 2006. The financial information for the year ended 31 December 2006 is derived from the statutory accounts for that year, which have been delivered to the Registrar of Companies. The auditors have reported on the 2006 accounts; their report was unqualified and did not contain a statement under section 237 (2) or (3) of the Companies Act 1985. The auditors have yet to sign their report on the 2007 accounts. The statutory accounts for the year ended 31 December 2007 will be finalised on the basis of the financial information presented by the Directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The financial information set out in this announcement was approved by the Board of Directors on 9 April 2008. 2. Summary of significant accounting policies Basis of accounting The 2007 financial statements are the group's third consolidated financial statements prepared under International Financial Reporting and Accounting Standards, with a transition date of 1 January 2004. The financial statements have also been prepared in accordance with International Financial Reporting and Accounting Standards ('IFRSs') adopted for use by the European Union. The financial statements have been prepared on the going concern basis. Basis of consolidation The consolidated financial statements incorporate the financial statements of the company and enterprises controlled by the company (its subsidiaries) made up to 31 December each year. Control is achieved where the company has the power to govern the financial and operating policies of a subsidiary. Minority interests in the net assets of consolidated subsidiaries are identified separately from the group's equity therein. Minority interests consist of the amount of those interests at the date of the original business combination and the minority's share of changes in equity since the date of the combination. Losses applicable to the minority in excess of the minority's interest in the subsidiary's equity are allocated against the interests of the group except to the extent that the minority has a binding obligation and is able to make additional investment to cover the losses. The results of subsidiaries acquired or disposed of during the period are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. All intra-group transactions and balances are eliminated on consolidation. Taxation The tax charge represents the sum of current and deferred tax. Current tax payable is based on taxable profits for the year. Taxable profits differ from net profits as reported in the income statement because it excludes items that are taxable or deductible in other years and items that are not taxable or deductible. The group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the liability method. Deferred tax liabilities are recognised for all temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which temporary differences can be utilised. Notes to the financial statements For the year ended 31 December 2007 2. Summary of significant accounting policies Taxation - continued The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability or the asset is realised. Employee Benefit Trust In accordance with SIC 12 'Consolidation - special purpose entities', the Company includes the assets and liabilities of that trust within its consolidated 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. Investment in own shares held in connection with the Group's employee share schemes are deducted from the shareholders' funds in accordance with IAS 32 ' Financial instruments: disclosure and presentation' until such time as they vest unconditionally to participating employees. The fair value of employee services received in exchange for the grant of shares is recognised as an expense. The total amount to be expensed rateably over the performance period is determined by reference to the fair value of the shares determined at the grant date. 3. Tax on profit on ordinary activities Analysis of charge in period 2007 2006 £'000 £'000 Current tax UK corporation tax on profits of the year 819 544 Adjustments in respect of previous periods (8) (104) Total current tax 811 440 Deferred tax: Origination and reversal of timing differences 21 27 Total deferred tax 21 27 Tax on profits on ordinary activities 832 467 4. Dividends 2007 2006 £'000 £'000 Amounts recognised as distributions to equity holders in the year: Final dividend of 0.461p (2006: 0.436) per share 183 142 Interim dividend of 0.23p (2006: 0.22p) per share 95 76 First dividend to minority shareholders of Adventis NMG Ltd 7 - 285 218 Recommended final dividend of 0.484p (2006: 0.461p) per share 202 182 The recommended final dividend is subject to approval by shareholders at the annual general meeting and has not been included as a liability in these financial statements. The estimate of the recommended dividend is based on the number of shares in issue as at 9 April 2008. Notes to the financial statements For the year ended 31 December 2007 5. Earnings per share The calculations of the basic and diluted earnings per share are based on the following data: 2007 2006 £'000 £'000 Profit for the purpose of basic earnings per share 1,756 1,316 Number of shares Weighted average number of ordinary shares in issue during the year 40,580,636 35,007,794 Effect of dilutive options 783,115 538,966 Effect of dilutive warrants - 171,179 Effect of dilutive long-term incentive plan 482,631 - Effect of dilutive deferred consideration 808,562 349,059 Diluted weighted average number of ordinary shares in issue during the year 42,654,944 36,066,998 The weighted average number of ordinary shares in issue during the year includes 349,445 Ordinary shares, which represent the deferred consideration due on the acquisition of Coltman Media Company Limited at the average Adventis share price for 2007. The diluted weighted average number of ordinary shares in issue during the year includes 327,025 Ordinary shares, which represent the contingent deferred consideration due on the acquisition of Roundhouse Advertising Limited, and 539,144 Ordinary shares, which represent the contingent deferred consideration due on the acquisition of Leapfrog Medical Communications Limited, both at the average Adventis share price for 2007. 6. Goodwill 2007 2006 £'000 £'000 Carrying amount At 1 January 8,273 1,827 Additions 2,853 6,030 Reclassification of intangible assets - 416 At 31 December 11,126 8,273 The additions relate to the acquisition of Leapfrog Medical Communications Limited (£2,248,000) and adjustments to goodwill arising from the re-valuation of the contingent consideration relating to other acquisitions (£605,000). This information is provided by RNS The company news service from the London Stock Exchange

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