Interim results

RNS Number : 9021Z

Adventis Group PLC

30 September 2009

 



FOR RELEASE

7.00AM

September 30, 2009

ADVENTIS GROUP PLC 

Interim Results for the half-year ended 30th June 2009

Adventis Group plc ('the Company' or 'the Group'), the AIM listed marketing services group, today announces its unaudited interim results for the six months ended 30th June 2009.

Highlights

• Operating income (revenue) £5.6m (2008: £6.0m) 

• Operating profit £0.73m (2008:£0.94m) 

• Pre-tax profit of £0.71m (2008:£1.0m)  

• Annualised cost savings of £1.3m in 2009, total annualised cost savings of £2.0m since 2008

• Basic EPS 1.12p (2008: 1.66p) 

• Interim dividend per share 0.23p (2008: - 0.23p)

• New client wins in the Technology sector include Cisco, Clearswift and Intrinsic Technology, and in Healthcare major activity for clients such as Allergan, Lundbeck, Leo International, GE Health and Merial.  

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

'Our Pharmaceutical and Technology & Telecoms divisions continue to generate good profits, as do our three Media companies. Financial Services activity has recovered somewhat from 2008 levels. Our Property activity has been cut back to match the continued low level of transactions.

During 2009 the Group has reduced its annualised underlying cost base by an additional £1.3m. The additional annualised cost savings, when added to those already made in the period to 31 December 2008, take the total underlying annualised cost base savings to £2m. The full benefit of these cost reductions will only be felt in 2010.

The Group remains profitable and is making use of this market downturn to evaluate various strategic and well priced acquisition opportunities. The Board is confident of raising funding for these opportunities on appropriate terms should the need and opportunity arise.

2009 is considered by many to be the low point of this cycle and considerable focus is now being put on 2010 when organic growth is anticipated to return. When such growth is enjoyed the real benefit of the cost savings described will be apparent.'

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
Peckwater PR ·          Tarquin Edwards/Chris Steele	07879 458 364/ 07979 604 687

 Chief Executive Officer's Statement and Review

Trading Update

The first half of 2009 was spent ensuring that each division within the Group was correctly positioned for current business levels. Strategic cuts in staff and premises have resulted in the annual overhead being reduced by a further £1.3m in 2009, making an annualised total of £2m cuts since January 2008. The Board believes that the Group will now be able to benefit from any recovery with a significantly reduced cost base.

Revenue was very close to target at £5.6m and visibility on sales is good for all the divisions for the rest of 2009.  

The last two years have been a long haul for every operator in the marketing communications sector, but the Board can now see signs of a recovery and believes that this, combined with the very significant reduction in its cost base, plus any M&A activity should enable the growth of earnings to resume in 2010.

Dividend

The Board is declaring a maintained interim dividend of 0.23p (2008 0.23p) per share, payable to those shareholders on the register on 9th October 2009 for payment on 23rd October 2009.

Financial Position

During this six-month period a total of £2.3m was utilised settling deferred consideration relating to acquisitions made prior to this period. As in 2008 due to poor share price performance the Company chose to settle these obligations wholly in cash rather than issue new shares and cause disproportionate dilution. Basic earnings per share fell from 1.66p to 1.12p largely due to the profit reduction but this would have been considerably worse had the cash-shares swap not been effected. For the first time the Company had net debt at the period end with a balance of £1.78m but we continue to be cash generative at an operational level and have considerable unused bank facilities. As a result we have a very strong balance sheet which will help us to fund future acquisitions. 

Business Strategy

The Group has been able to exploit its market presence in the first half of 2009 and I am very grateful to all the teams who were able to continue to generate good revenues in harder times. Understandably clients have been cautious about expenditure plans so all proposals have been the subject of a great deal of intellectual and financial interrogation. The ability to match activity with a client's expectations in such a difficult market has been a great strength.

Increasingly digital solutions attract our clients so a 'platform neutral' base has been key where new, on-line solutions can in some cases give clients a more immediate and measurable response. Focus on any cost remained rigorous and any saving has been exploited wherever it could be found. 'Recovery packages' have been developed by the teams to offer clients a strategy for recovery.

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. They have settled well into our Beaconsfield offices and good progress is being made integrating them into the Group.

Operational Review

The following is a summary of activity by business sector for the six months ended 30 June 2009:

  Healthcare sector

Spend in the healthcare market has remained robust and Adventis Health, the fully merged entity created from the three acquired companies, has found evidence of clients changing the way they allocate marketing budgets with a shift from advertising to relationship building. This has played well to Adventis Health's strengths and has seen Medical Education benefit from the market conditions. 

The division has had a successful half year in terms of new business with wins such as Leo International, GE Health and Merial. Organic growth through companies such as Allergan, Leo and Lundbeck combined with strong control of expenditure, has also contributed to results to date.

Technology and Telecoms sector

Second2 has continued to profitably deliver effective marketing campaigns for some of the leading technology and telecoms brands, including EMC, Emulex, Hitachi, Microsoft, Toshiba and Trend Micro. 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, including video, e-learning and website and application development. Significant new business wins include Cisco, Clearswift, and Intrinsic Technology. 

Second2 has also taken responsibility for coordinating digital service across the Group.

Financial Services sector

AdventisNMG continued to trade successfully and has delivered the first phase of a high profile project for the IFA trade body AIFA, to support major industry change following the FSA's Retail Distribution Review. A branding and company launch project is underway for a major insurer, a new website and brand strategy has been delivered for new client, Home & Capital and a steady flow of digital projects has been won from HSBC. The business has expanded its new business acquisition resources despite the downturn and is well positioned to emerge from the current economic climate in a strong and competitive position.

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.  

2009 media spends have, as expected, been suppressed but there is a level of confidence returning to both the financial and property sectors which we hope to see reflected in 2010 activity. Within the property sector activity across Registered Social Landlords (RSL) is still increasing, and we are seeing glimpses of activity in the private residential sector. There is demand for digital solutions and as a result this part of the business has grown by approximately 60% year on year. New business initiatives continue with account wins including Vanguard, Gilliat Financial Solutions, Catalyst Investment, Swan Housing, the Grainger Trust, Mount Anvil, Family Mosaic and Targetfollow

Residential Property Marketing Sector 

The residential property sector has been particularly affected by the credit crunch. However the RSL sector continues to thrive and new business gains include several high profile projects from Family Mosaic and A2Dominion 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 has been successful in maintaining profile and generating new business in what is undoubtedly a difficult year. We were appointed as one of three roster agencies for Segro, working on projects in the South and Midlands, most notably, their flagship development Winnersh Triangle. Two other notable wins were Ealing Cross for Standard Life and The Green, Solihull for Prupim. 

Established clients have continued to support us well and in May, Targetfollow appointed Adventis on their flagship development, Centre Point. Greenhills continue in the marketing of Croxley Green Business Park for which we won the prestigious Property Marketing Awards in April. Other notable clients are Schroders, ING, McKay Securities, Muse, Arora Hotels, Scottish Widows Investments and Jones Lang LaSalle.

Outlook

We believe that the combination of benefits arising from the action taken in the first half of the year in relation to cost control together with the recovery packages developed for each sector will give continued profitable trading in the second half of the year. 

The general market sentiment seems to indicate a slight improvement in trading outlook and all the teams are focused on exploiting this to the full. 

The potential for acquisition deals should add a boost to our growth plans and this, plus the market improvement should enable the Group to rebuild its growth momentum.

Charles Phillpot

Chief Executive

30 September 2009

Adventis Group plc
Group income statement				Unaudited	Unaudited	Audited
				6 months to	6 months to	12 months to
				30 June 2009	30 June 2008	31 December
						2008
			Notes	£'000	£'000	£'000
Turnover				15,099	20,849	38,112
Cost of sales				9,516	14,807	25,852
Operating income				5,583	6,042	12,260
Operating expenses				4,852	5,107	10,554
Operating profit				731	935	1,706
Net interest receivable				1	95	96
Finance costs				-19	-10	-6
Profit on ordinary activities before taxation				713	1,020	1,796
Taxation on profit on ordinary activities				-213	-306	-579
Profit for the period				500	714	1,217
Attributable to:
Equity holders of the parent				477	700	1,197
Minority interest				23	14	20
Profit for the period				500	714	1,217
Earnings per share ('EPS')			4
Basic earnings per share
Average number of shares in issue				42,721,738	42,043,956	43,077,514
EPS (pence)				1.12	1.66	2.78
Fully diluted earnings per share
Fully diluted average number of shares in issue				44,410,662	43,497,344	45,139,170
EPS (pence)				1.07	1.61	2.65
Statement of comprehensive income
All items of comprehensive income are shown in the income statement. There were no items of other
comprehensive income in any of the reporting periods presented.

Adventis Group Plc			Unaudited	Unaudited	Audited
Group Balance Sheet			30 June 2009	30 June 2008	31 December 2008
		Notes	£'000	£'000	£'000
ASSETS
Non-current assets
Property, plant and equipment			578	834	569
Goodwill and other intangible assets		7	15,988	17,936	16,067
Deferred tax asset			97	143	97
			16,663	18,913	16,733
Current assets
Work in progress			806	260	256
Trade and other receivables			4,843	11,352	9,990
Cash and cash equivalents			0	915	287
			5,649	12,527	10,533
Total assets			22,312	31,440	27,266
EQUITY
Capital and reserves
Share capital		3	109	108	109
Share premium account			6,655	6,616	6,655
Treasury stock			-157	-23	-157
Capital redemption reserve			200	200	200
Other reserves			20	20	20
Share based payments reserve			126	122	126
Retained earnings			5,885	5,004	5,408
			12,838	12,047	12,361
Minority interest			79	82	56
Total equity			12,917	12,129	12,417
LIABILITIES
Non-current liabilities
Obligations under finance leases - due in more than			0	10	0
one year
Provisions for other liabilities and charges			0	10	4
Deferred consideration		5	2,363	5,459	2,605
			2,363	5,479	2,609
Current liabilities
Trade and other payables			3,896	10,850	8,528
Current income tax liabilities			730	1,210	999
Bank borrowings			1,783	0	0
Deferred consideration		5	623	1,772	2,713
			7,032	13,832	12,240
Total liabilities			9,395	19,310	14,849
Total equity and liabilities			22,312	31,440	27,266

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 2007		104	6,168	220	67	-10	96	4,507	11,152
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	81	-23	123	5,005	12,130
Period to 31 December 2008
Profit for the period		-	-	-	-	-	-	503	503
Dividends paid		-	-	-	-25	-	-	-100	-125
Minority interests		-	-	-	-	-	-	-	0
Recognised earnings		-	-	-	-25	-	-	403	378
Issue of share capital		1	39	-	-	-	-	-	40
Share based transactions		-	-	-	-	-	3	-	3
Company share purchases		-	-	-	-	-134	-	-	-134
EBT holding		-	-	-	-	-	-	-	0
Balance 31 December 2008		109	6,655	220	56	-157	126	5,408	12,417
Period to 30 June 2009
Profit for the period		-	-	-	-	-	-	500	500
Dividends paid		-	-	-	-	-	-	-	0
Minority interests		-	-	-	23	-	-	-23	0
Recognised earnings		-	-	-	23	-	-	477	500
Issue of share capital		-	-	-	-	-	-	-	0
Cost of share issue		-	-	-	-	-	-	-	0
Share based transactions		-	-	-	-	-	-	-	0
EBT holding		-	-	-	-	-	-	-	0
Balance 30 June 2009		109	6,655	220	79	-157	126	5,885	12,917

Adventis Group plc
Group cash flow statement
				Unaudited		Unaudited		Audited
				6 months to		6 months to		12 months to
				30 June 2009		30 June 2008		31 December
								2008
			Notes	£'000		£'000		£'000
Cash generated from operating activities				831		1,608		1,863
Corporation tax paid				-486		-470		-957
Interest paid				-19		-12		-6
Net cash from operating activities				326		1,126		900
Cash flows from investing activities
Interest received				1		95		95
EBT share purchases				0		-3		-3
Purchase of own shares				0		0		-131
Purchase of property, plant & equipment				-73		-252		-235
Acquisition of subsidiaries			5	-2,320		-3,591		-3,741
Net cash used in investment activities				-2,392		-3,751		-4,015
Cash flows from financing activities
Dividends paid				0		-202		-327
Repayments of obligations under finance leases				-4		0		-14
Proceeds of issuing share capital				0		2		3
Net cash used in financing activities				-4		-200		-338
Net decrease in cash and cash equivalents				-2,070		-2,825		-3,453
Cash and cash equivalents at the beginning of the
period				287		3,740		3,740
(Borrowings)/cash and cash equivalents at the end of the period				-1,783		915		287

  Adventis Group Plc

Notes to the accounts

Note 1    Principal activity

Adventis Group plc is a company incorporated and domiciled in England & Wales with its registered office at 95 Wigmore Street, London W1U 1HH. The principal activity of the Group is in the provision of marketing communications services.

Note 2    Basis of preparation

The accounting policies applied in the interim consolidated financial information are consistent with those of the annual financial statements for the year ended 31 December 2008 as described in those financial statement except for the impact of the Standard applicable for the current financial period described below:

IAS 1 (revised 2007) Presentation of Financial Statements - effective for annual periods beginning on or after 1 January 2009. IAS 1 (revised 2007) presents transactions with owners in detail and non-owner changes in equity as a single line in the statement of changes in equity. The standard introduces a Consolidated Statement of Comprehensive Income which presents all items of unrecognised income and expense and is inked to the Consolidated Income Statement. In addition, the Consolidated Balance sheet may be renamed as the Consolidated Statement of Financial Position and the Consolidated Cash Flow Statement can be renamed Consolidated Statement of Cash Flows. The Company may continue to use existing terminology. 

IAS 1 (revised 2007) is a disclosure standard and has no impact on the financial position and results of the Group.

Note 3    Share capital

	30 June 2009 No. shares	30 June 2008 No. shares	31 December 2008 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	43,515,871	43,335,842	43,515,871

The employee benefit trust is the beneficial owner of 65,180 fully paid ordinary shares. The Company holds 728,953 fully paid ordinary shares acquired during 2008 in treasury.

  Note 4      Earnings per share

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

The EPS has moved from 1.66p in the six months ended 30 June 2008 to 1.12p in the six months ended 30 June 2009 whilst the fully diluted EPS has moved from 1.61p to 1.07p between the same periods.

Note 5     Settlements relating to acquisitions 

A number of payments were made for the next instalments of deferred consideration due on acquisitions completed prior to 2009 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 £145,207 which is the final instalment payable under this agreement.

• In respect of the acquisition of Roundhouse Advertising Limited, originally announced on 23 May 2006, a cash settlement of £249,146.

• In respect of the acquisition of Leapfrog Medical Communications Limited, originally announced on 6 February 2007, a cash settlement of £132,000.

• In respect of the acquisition of Second2 Limited, originally announced on 10 June 2008, a cash settlement of £526,133 and the issue of loan notes totalling £100,000. In addition loan notes liabilities amounting to £180,563 were settled during this period.

Payments of £320,365 was also made following the exercise of put options relating to Adgenda Media Limited, originally announced on 30 March 2005, relating to the fourth year of this deal.

Note 6    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 7    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 2009	16,067
Reductions	79
As at 30 June 2009	15,988

Note 8    Nature of financial information

The interim information set out above is neither audited nor reviewed and does not represent the statutory financial statements within the meaning of s240 of the Companies Act 1985 for Adventis Group plc or for any of the entities comprising the Adventis Group for the period ended 30 June 2009. The figures for the year ended 31 December 2008 were extracted from the consolidated financial statements which have been presented to shareholders. The auditors' report on those financial statements was unqualified.

The Board approved the interim financial information for the period ended 30 June 2009 on 29 September 2009.

These interim results are available on the Company's website at www.adventis.co.uk.

 

END

 

 

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