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, Hitachi, HTC, 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 Russia, Sweden, Denmark 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 agreement, 1,691,726 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 Street, London W1U 1HH and from its website, www.adventis.co.uk.

 

END

 

 

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