Final Results

Mavinwood plc Preliminary Results for the year ended 31 December 2005 Highlights: 2005 2004 - Turnover £15,264,000 - - Profit/(loss) before tax £635,000 (81,000) - Profit/(loss) before goodwill amortisation of £860,000 and tax £1,495,000 (81,000) - Basic earnings per share 0.10p (1.07p) - Adjusted basic earnings per share 0.56p (1.07p) (before the amortisation of goodwill) - Two acquisitions completed during the year - Restore for initial consideration of £6.1m on 10 May - ANSA for £17.3m, plus debt settled of £7.6m on 30 June - Restore operating profit £614,000 on sales of £2,291,000 - ANSA operating profit £1,589,000 on sales of £12,973,000 - Both businesses have had a good start to 2006 - Wansdyke (another document storage business) acquired on 10 February 2006 for £11.2m Kevin Mahoney, Chief Executive, commented: "This is our first full year of operation and I am very pleased with these results. Both acquired businesses produced good results and have started 2006 well. Current trading is ahead of budget. The acquisition of Wansdyke has made us a significant player in the document storage market. There is very little customer crossover with Restore and both businesses will benefit. We have already started the process of integrating management and systems." "We have built a business from a cash shell in November 2004 with a market value of £2m to a profitable business with an annual turnover in excess of £35m, including Wansdyke, and a market value of around £46m. I am confident that we can continue to grow the business both organically and by acquisitions." Mavinwood plc Kevin Mahoney 020 7661 9650 Mike Vincent 020 7661 9651 Threadneedle Communications John Coles 020 7936 9604 Notes to editors: Mavinwood Plc was launched on AIM in November 2004 and is pursuing a Buy & Build strategy in Support Services. The strategy is to acquire and develop specialist support services businesses that have the potential for growth, either organically or in combination with other complementary businesses. The initial focus is in the document storage and emergency insurance services sectors. CHIEF EXECUTIVE'S REVIEW Review of operations 2005 was an important period in the development of the Mavinwood Group. On 1 January 2005, the Company was an AIM listed cash shell capitalised at £2 million with a strategy of building a support services group. During 2005 we completed two acquisitions which will provide the Group with a platform for growth. Since the end of the year we have acquired Wandsdyke Security Limited another document storage business, for £11.2 million in cash and have commenced the combination of the business with Restore. The Mavinwood Group results comprise four elements in 2005: * Operating profit of Restore for the 33 weeks from 10 May 2005. * Operating profit of ANSA for the six months from 30 June 2005. * Central costs for the whole of calendar year 2005. These are the Board costs and the costs of operating an AIM listed company. * Net interest payable. During the first four months of the year we operated with interest income from funds on deposit, moving to interest expense after the acquisition of Restore. Results Turnover in the year was £15,264,000 and the profit before tax and amortisation of goodwill, was £1,495,000. The profit before tax and after goodwill amortisation was £635,000. At 31 December 2005, net debt of the Group amounted to £4,335,000. After the acquisition of Wansdyke net debt is approximately £16 million. Earnings per share (EPS) Basic EPS at 0.10p compares with a loss per share in our first year of 1.07p. Adjusted basic EPS before goodwill amortisation was 0.56p. Assuming the exercise of all options and awards under our LTIP plus the conversion of the convertible A shares at an average price in 2005 of 10.05p, the fully diluted EPS before goodwill amortisation would become 0.53p. This represents dilution of approximately 5.7% compared to the basic adjusted EPS. Interest Net interest payable amounted to £213,000 as we borrowed to part fund the acquisitions of Restore and ANSA. Interest cover in 2005 was 8.0 times. Taxation The tax charge during 2005 was 30.2%, (as a percentage of profit before goodwill amortisation and taxation) slightly above the standard expected rate of 30%. This was due to central costs incurred in the earlier part of the year, prior to the first acquisition which did not qualify for group tax relief. Dividends The Board is not recommending the payment of a dividend in order to re-invest in our businesses. Document storage Restore On 10 May 2005, we completed the acquisition of the Restore business. Restore archives, stores and retrieves documents on behalf of its clients, with a particular focus on the legal profession. Mavinwood paid an initial consideration of £6.1 million for the business and depending upon the level of increased operating profit in the twelve months ending 31 March 2006, the Restore vendors could earn additional consideration. Current levels of trading indicate an additional sum of £2.6 million, half in cash and half in Mavinwood shares, will be made during April 2006. The cash element will be funded by a bank facility so no further equity placing will be required to fund the additional consideration. Restore has contributed revenue of £2,291,000 and operating profit of £614,000 in the thirty three weeks ended 31 December 2005. A number of new clients were won despite strong competition, principally due to our excellent service levels. Wansdyke We have acquired Wansdyke since the year end. Since 1954, Wansdyke has specialised in the secure off-site storage and management of clients' critical information, including individual live files, medical records and documents, archive document boxes, x-ray material, microfilm and microfiche. Providing highly secure underground private and shared vaults, Wansdyke offers a tailored solution to clients' specific requirements, all maintained in line with British Standards regulations governing temperature and humidity and with Government approved security clearance. Organisations are represented from wide ranging markets including the Financial, Government, Medical, Legal, Retail and Commercial Sectors. Wansdyke is an excellent fit with our existing document storage business, Restore. It doubles our turnover in document storage to approximately £8 million and makes us a significant player in this market. There is very little customer crossover between Wandsdyke and Restore. In addition, Wansdyke provides considerable additional storage capacity which can be utilised by both businesses. Emergency and insurance services ANSA On 30 June 2005, Mavinwood completed the acquisition of the ANSA business. ANSA is a specialist in insurance claims handling with particular expertise in drainage claims. ANSA was established in 1981 as a regional business offering drainage services. It became a specialist in insurance claims handling in 2000 and has subsequently developed IT systems and processes to service insurance related drainage claims. ANSA identifies valid insurance claims, arranges for a survey of a site and recommends necessary repairs, which may be undertaken either by ANSA's in-house contractors or by one of its UK network of accredited sub-contractors. ANSA also provides health and safety training for its staff and for external corporate clients at two sites in the North West of England. Mavinwood paid £17.3 million for the business in addition to the repayment of £7.6 million of indebtedness in ANSA. Of the total consideration, directors of ANSA took £1,851,000 in shares of Mavinwood. ANSA has contributed revenue of £12,973,000 and operating profit of £1,589,000 in the six months ended 31 December 2005. 2005 was the driest year in England since 1921 and accordingly, the level of drainage instructions from the insurance companies in the second half of 2005 was fairly flat. Nevertheless, cost savings initiated ensured an advance in profits to £1,589,000 for the half year with the prospect of a backlog of claims flowing through in 2006. ANSA also won 'service provider of the year' at the Insurance Times awards ceremony during December 2005 beating competitors from across the whole insurance industry. Outlook The Group ended the year with two established businesses and a market capitalisation of approximately £34 million. The document storage and insurance industries continue to grow strongly in 2006 and Restore and ANSA are trading in line with expectations. We have already added Wansdyke and we plan to add further complementary businesses to these operations. Kevin Mahoney Chief Executive Officer 14 March 2006 CONSOLIDATED PROFIT AND LOSS ACCOUNT For the year ended 31 December 2005 Notes Year For the ended period 31 Dec 2 July 2004 to 2005 31 Dec 2004 £'000 £'000 TURNOVER - Acquisitions 2 15,264 - Cost of sales - Acquisitions (10,640) - Gross profit - Acquisitions 4,624 - Administrative expenses: - Continuing (495) (94) - Acquisitions (3,281) - Total administrative expenses (3,776) (94) Operating profit/(loss) before depreciation and goodwill amortisation: 2,013 (94) Depreciation (305) - Goodwill amortisation (860) - OPERATING (LOSS) - Continuing (495) (94) OPERATING PROFIT - Acquisitions 1,343 - 848 (94) Interest receivable 55 13 Interest payable (268) - PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION 635 (81) Taxation (452) - PROFIT/(LOSS) ON ORDINARY ACTIVITIES AFTER TAXATION 183 (81) Dividends - - RETAINED PROFIT/(LOSS) FOR THE YEAR/PERIOD 6 183 (81) Basic earnings/(loss) per ordinary share 4 0.10p (1.07p) Fully diluted earnings/(loss) per ordinary share 4 0.09p (1.07)p There are no recognised gains or losses in the year other than those stated above and therefore no statement of total recognised gains and losses has been presented. CONSOLIDATED BALANCE SHEET As at 31 December 2005 Notes 2005 2004 £'000 £'000 FIXED ASSETS Intangible assets 5 31,224 - Tangible assets 1,996 - 33,220 - CURRENT ASSETS Stocks and work in progress 250 - Debtors 5,509 11 Cash at bank and in hand 837 1,969 6,596 1,980 CREDITORS: Amounts falling due within one year (9,166) (67) NET CURRENT (LIABILITIES)/ASSETS (2,570) 1,913 CREDITORS: Amounts falling due after more than one year (3,564) - Provision for liabilities and charges (142) - NET ASSETS 26,944 1,913 CAPITAL AND RESERVES Called up share capital 383 74 Share premium account 26,459 1,920 Profit and loss account 102 (81) EQUITY SHAREHOLDERS' FUNDS 6 26,944 1,913 CONSOLIDATED CASH FLOW STATEMENT For the year ended 31 December 2005 Notes Year For the ended period 31 Dec 2 July 2004 to 2005 31 Dec 2004 £'000 £'000 Net cash inflow/(outflow) from operating activities a 1,209 (38) Returns on investments and servicing of finance Net interest (paid)/received (133) 12 Interest element of financing lease payments (13) - (146) 12 Tax paid (213) - Capital expenditure and financial investment Purchase of tangible fixed assets (182) - Acquisitions Purchase of subsidiaries 5 (22,079) - Cash acquired with subsidiaries 1,150 - Net cash outflows before financing (20,261) (26) Financing Principal repayment due under finance leases (203) - Net proceeds from issue of shares 22,982 1,995 Bank loan advances 5,140 - Deferred financing costs (202) - Bank loan repayments (1,000) - Repayment of indebtedness acquired (7,588) - 19,129 1,995 (DECREASE)/INCREASE IN CASH (1,132) 1,969 Cash flows arise from the impact of acquisitions in the year. a CASH FLOWS Year to 2 July 2004 to 31 Dec 31 Dec 2005 2004 £'000 £'000 Reconciliation of operating profit/(loss) to net cash outflow from operating activities Operating profit/(loss) 848 (94) Depreciation 305 - Amortisation of goodwill 860 - 2,013 (94) Decrease in stock and work in progress 195 - (Increase) in debtors (64) (11) (Decrease)/increase in creditors (935) 67 Net cash inflow/(outflow) from operating activities 1,209 (38) NOTES TO THE PRELIMINARY ANNOUNCEMENT For the year ended 31 December 2005 1 Basis of accounting The consolidated financial information for the year ended 31 December 2005 has been prepared in accordance with applicable UK accounting standards. The financial information included in this announcement has been extracted from the un-audited financial statements for the year ended 31 December 2005 and the audited period 2 July 2004 to 31 December 2004. The contents of this announcement have been agreed with the Company's auditors. The preliminary announcement does not constitute the Group's financial statements. The Group's 2005 Annual Report and Financial Statements, are to be delivered to the Registrar of Companies following the Company's Annual General Meeting. The Group's 2004 accounts, which contain an unqualified audit report, have been filed with the Registrar of Companies. 2 SEGMENTAL ANALYSIS Year to 2 July 2004 31 Dec to 31 Dec 2005 2004 £'000 £'000 Turnover for the year was derived from the Group's principal activities as follows: Document storage and record management (33 weeks) 2,291 - Emergency and insurance services (six months) 12,973 - ______ ______ 15,264 - The Group's profit before tax was derived from it's principal activities as follows: Document storage and record management (33 weeks) 614 - Emergency and insurance services (six months) 1,589 - Central costs (495) (94) Goodwill amortisation (860) - Net interest payable (213) 13 ______ ______ 635 (81) 3 ANALYSIS OF CHANGES IN NET At 1 At 31 DEBT January Cash- Non-cash December 2005 flow Acquisitions Movement 2005 £'000 £'000 £'000 £'000 £'000 Cash at bank and in hand: Increase/(decrease) in cash during the year 1,969 (1,132) - - 837 Bank loans & notes due within one year - 6,088 (7,588) - (1,500) Bank loans & notes due after one year - (2,650) - (1,007) (3,657) Finance leases due within one year - 203 (378) - (175) 1,969 2,509 (7,966) (1,007) (4,495) Deferred financing costs - 202 - (42) 160 1,969 2,711 (7,966) (1,049) (4,335) The non-cash movement relates to the issue of loan notes on the acquisition of ANSA. 4 EARNINGS/ (LOSS) PER ORDINARY SHARE Basic earnings per share have been calculated on the profit after taxation for the year/period and the weighted average number of ordinary shares in issue during the year/period. Adjusted earnings per share which is before goodwill amortisation has been presented in addition to the basic earnings per share since, in the opinion of the directors, this provides shareholders with a more appropriate representation of the earnings derived from the Group's present businesses. Year to July 2004 31 Dec to 31 Dec 2005 2004 £'000 £'000 Profit /(loss) after taxation on ordinary activities 183 (81) 2005 2004 No. of No. of shares shares Weighted average equity in issue 184,579,044 7,601,099 2005 2004 Basic earnings/(loss) per ordinary share 0.10p (1.07)p Amortisation of goodwill 0.46p - _________ _________ Adjusted earnings/(loss) per ordinary share 0.56p (1.07)p (before the amortisation of goodwill) The diluted earnings per share is the basic earnings per share adjusted for the dilutive effect of the conversion into fully paid shares of the outstanding share options and awards under the LTIP. It is also adjusted for the conversion of the A shares into ordinary shares at a price of 10.05p, being the average price per ordinary share in the year ended 31 December 2005. 2005 2004 No. of shares No. of shares Weighted average equity in issue 195,666,915 7,601,099 2005 2004 Fully diluted earnings/(loss) per ordinary share 0.09p (1.07)p Amortisation of goodwill 0.44p - _________ _________ Adjusted fully diluted earnings/(loss) per ordinary 0.53p (1.07)p share (before the amortisation of goodwill) 5 INTANGIBLE FIXED ASSETS Goodwill £'000 1 January 2005 - Additions - Restore 8,268 Additions - ANSA 23,816 _________ 32,084 Less amortisation (860) 31 December 2005 31,224 On 10 May the Company acquired 100% of the issued share capital of Restore Group Holdings Limited for an initial consideration of £6,140,000. Deferred consideration estimated at £2,600,000 is to be paid later in 2006. The deferred consideration is linked to the performance of Restore for the year ending 31 March 2006. The maximum deferred consideration under the purchase agreement was £5 million. The deferred consideration is payable half in cash and half in Mavinwood shares. On 30 June the Company acquired 100% of the issued share capital of ANSA Holdings Limited for a total consideration of £17,264,000. In addition, third party indebtedness of £7,588,000 was repaid. The directors consider each acquisition separately for the purpose of determining the amortisation period of any goodwill that arises. The goodwill arising from both acquisitions in 2005 is being amortised over 20 years. Book value at Fair value Fair value at Restore acquisition adjustment acquisition £'000 £'000 £'000 Fixed assets 596 - 596 Working capital 477 44 521 Taxation (366) (17) (383) Cash 362 - 362 Loans - - - Finance leases (113) - (113) _______ _______ _______ 956 27 983 Goodwill 8,268 _______ Consideration 9,251 Satisfied by: Initial consideration 6,140 Related costs of acquisition 511 Deferred consideration 2,600 _______ 9,251 ANSA Book value at Fair value Fair value at acquisition adjustment acquisition £'000 £'000 £'000 Goodwill 5,081 (5,081) - Fixed assets 1,523 - 1,523 Working capital 145 (139) 6 Taxation 69 (63) 6 Cash 788 - 788 Loans (7,588) - (7,588) Finance leases (237) (28) (265) ________ _______ ________ (219) (5,311) (5,530) Goodwill 23,816 _______ Consideration 18,286 Satisfied by: Cash to vendors 14,406 Related costs of acquisition 1,022 Loan notes issued to vendors 1,007 Issue of shares to vendors 1,851 _______ 18,286 The adjustments between book and fair values were accounting policy alignments at Restore and ANSA, together with the related taxation impact. 6 RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS Group Group 2005 2004 £'000 £'000 Profit/(loss) for the financial year/period 183 (81) Issue of shares during the year/period 25,795 2,239 Issue costs (962) (245) Recovery of prior year flotation costs 15 - Net addition to shareholders' funds 25,031 1,913 Opening shareholders' funds 1,913 - Closing shareholders' funds 26,944 1,913 END Mavinwood plc

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