Last checked at 30 Sep 2009 07:00
| 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 |
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|
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|
| |
| Group statement of changes in equity |
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| |||
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|
| Share | Share | Capital | Minority | Treasury | Share based | Retained | Total |
|
|
| capital | premium | reserves | Interests | stock | transactions | earnings |
|
|
|
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
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| Balance 31 December 2007 | 104 | 6,168 | 220 | 67 | -10 | 96 | 4,507 | 11,152 | |
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| Period to 30 June 2008 |
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| |
| Profit for the period | - | - | - | - | - | - | 714 | 714 | |
| Dividends paid | - | - | - | - | - | - | -202 | -202 | |
| Minority interests | - | - | - | 14 | - | - | -14 | 0 | |
| Recognised earnings | - | - | - | 14 | - | - | 498 | 512 | |
|
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| Issue of share capital | 4 | 448 | - | - | - | - | - | 452 | |
| Share based transactions | - | - | - | - | - | 27 | - | 27 | |
| EBT holding |
| - | - | - | - | -13 | - | - | -13 |
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| Balance 30 June 2008 | 108 | 6,616 | 220 | 81 | -23 | 123 | 5,005 | 12,130 | |
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| Period to 31 December 2008 |
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| ||
| Profit for the period | - | - | - | - | - | - | 503 | 503 | |
| Dividends paid | - | - | - | -25 | - | - | -100 | -125 | |
| Minority interests | - | - | - | - | - | - | - | 0 | |
| Recognised earnings | - | - | - | -25 | - | - | 403 | 378 | |
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| Issue of share capital | 1 | 39 | - | - | - | - | - | 40 | |
| Share based transactions | - | - | - | - | - | 3 | - | 3 | |
| Company share purchases | - | - | - | - | -134 | - | - | -134 | |
| EBT holding |
| - | - | - | - | - | - | - | 0 |
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| Balance 31 December 2008 | 109 | 6,655 | 220 | 56 | -157 | 126 | 5,408 | 12,417 | |
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| Period to 30 June 2009 |
|
|
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|
|
|
|
| |
| 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 |
|
|
|
|
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|
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|
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| Balance 30 June 2009 | 109 | 6,655 | 220 | 79 | -157 | 126 | 5,885 | 12,917 | |
| Adventis Group plc |
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| Group cash flow statement |
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| Unaudited |
| Unaudited |
| Audited |
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| 6 months to |
| 6 months to |
| 12 months to |
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| 30 June 2009 |
| 30 June 2008 |
| 31 December |
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| 2008 |
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| Notes | £'000 |
| £'000 |
| £'000 |
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|
|
|
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| |
| 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 | ||
|
|
|
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| Cash flows from investing activities |
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|
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| ||
| 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 | |
|
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| Net cash used in investment activities |
| -2,392 |
| -3,751 |
| -4,015 | ||
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| Cash flows from financing activities |
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| ||
| 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 | ||
|
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|
|
|
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| Cash and cash equivalents at the beginning of the |
|
|
|
|
|
| ||
| period |
|
|
| 287 |
| 3,740 |
| 3,740 |
|
|
|
|
|
|
|
|
|
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| (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.