10th Apr 2008 07:01
Adventis Group PLC10 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 andadvertising agency, is pleased to announce record results for the year ended 31December 2007. The results represent the Company's third full trading year sincethe 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 reorganisationinto structures that more fully exploit their synergies. Leapfrog MedicalCommunications Limited made an immediate contribution in its first year oftrading as part of the Group and we continue to consolidate our position in ourmarket sectors. The first quarter results indicate that the Group as a whole is ahead of targetand ahead of last year. Visibility for the year ahead is generally good andoverall we anticipate our clients' marketing expenditure continuing at a similaror greater level to the prior year. Cost controls remain paramount and we willcontinue to be vigilant especially as economic conditions tighten. We remainopen to, but very selective about, acquisition opportunities in each marketsector." Enquiries: Adventis Group PlcCharles Phillpot, CEO Tel: 020 7034 4750Peter Linnell, Finance Director Tel: 020 7034 4795 Adventis Financial PRChris Steele Tel: 020 7034 4759Tarquin Edwards Tel: 020 7034 4758 Arbuthnot SecuritiesTom Griffiths Tel: 020 7012 2000 Notes to Editors Adventis's strategy is to focus its marketing and media buying services on thehealthcare, financial services and property sectors, in which it has theopportunity 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 organicdevelopment, acquisitions and by creating structures to attract new seniorpeople 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 advancesacross key financial metrics - Turnover + 33%, profit before tax ("PBT") + 47%and earnings per share ("EPS") +15%. This strong growth continues the Company'srecord of improved financial performance since its listing almost four yearsago. Particularly encouraging has been the profitable expansion of our establishedbusinesses, built through acquisition and organic growth between 2004 and 2006.This was added to, very positively in 2007, by the acquisition of LeapfrogMedical Communications Limited which has greatly enhanced our total healthcareoffering. 2007 saw increasing benefits across the Group with the consolidation of leadingparts of our business in healthcare marketing, media planning and buying andproperty marketing. This greater integration in our main business sectors isdelivering an improved service to our clients and increasing financial benefitsto the Company. In 2007, this was supplemented by growth in our financialservices sector and our fast developing digital marketing business, both ofwhich promise well for the future. Our financial PR business has also continuedto consolidate its position in the market. A further very important development in this consolidation process was theopening, in mid-2007, of our new office in Beaconsfield, bringing together ourvarious healthcare businesses and re-branded as Adventis Health. The continuing strong progress made in 2007 affirms our ongoing focus on growthin specific sectors of marketing services where our expertise lies, whileseeking to reinforce our established business with selective acquisitions. Thiswill continue and our strong balance sheet means Adventis is well placed topursue 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 theAnnual General Meeting for approval. To have achieved the excellent results of 2007 would not have been possiblewithout the talented efforts and commitment of almost 150 staff across thevarious Adventis companies. The Board offers its thanks and appreciation to allof them. 2008 has started well, but the Board recognises the more volatile and uncertaineconomic climate in which all businesses are operating. Nonetheless, we believeAdventis's operational strengths, financial soundness and high quality clientservice will enable it to continue to progress strongly through this year andbeyond. On a personal note, I have been Chairman of Adventis for approximately fouryears. I informed my Board colleagues some time ago that I would be seeking toretire 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 willbe made in due course. Peter MitchellChairman Chief Executive Officer's review I am pleased to report a strong set of results for the year ended 31 December2007, with record levels of billings and profits, both organically across all ofour 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-taxprofit of £2.64m was up 47% (2006: £1.80m). This represents the fourthsuccessive year of significantly increased billings and profits and the Companycontinues to benefit from healthy margins and strong cash flow. The earnings per share for 2007, including acquisitions were 4.33p, whichcompares 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, makinga total for the year of 0.71p. This is in line with our progressive dividendpolicy and reflects our confidence in the business going forward, especially ourcontinued ability to translate revenue growth into cash. Net cash as at 31December 2007 was £3.74m, and the Company continues to be cash generative andhas 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 AdventisIntegrated, offering direct marketing services, the Company now has sevendivisions. This re-organisation has enabled us to exploit further synergies andeconomies leading to business growth and improved cost control. Each of our business units enjoyed continued profitability in 2007 and theirmanagement was structured to exploit the considerable depth of skills to thefull. Retaining the services of key directors and staff continues to be anissue in the marketing services industry due to its highly labour intensivenature. Our policy of offering competitive packages with an element of profitshare has delivered a high quality and stable senior team. It is in thisenvironment of consolidation that I am pleased to report results that reflectthe hard work of all the team at Adventis. Business Strategy Our rapid growth has not been at the expense of either our cash position oroperating margins. The Board intends to continue to pursue growth on a similarscale, but retain the same level of checks and balances. We continue to assessother market sectors with a view to acquiring operations that both match ourcurrent performance and complement our existing business offering. The drivefor an increase in scale will be matched only by the focus on overall businessperformance. Acquisition In February 2007, the Group announced the acquisition of Leapfrog MedicalCommunications Limited. This strategic purchase of one of the best medicaleducation service providers was seen as a vital asset to our healthcareoperation, as pharmaceutical companies demand a fully integrated marketingoffering. It remains our intention to be extremely selective in our M&A activity and theBoard 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 31December 2007. Healthcare Sector The Group now has a substantial presence in the Healthcare sector through itstwo creative agencies, Affiniti and Roundhouse. Together with LeapfrogCommunications, a medical education specialist, the three business units havebeen combined to create Adventis Health, a specialist MedComms agency, offeringinnovative and dynamic business solutions to the pharmaceutical industry. Withan impressive list of blue chip clients, Adventis Health is in a leadingposition to explore new generation concepts, such as digital media andinteractive 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 wereconcluded 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 projectsincreased and the range of services was enhanced following key seniorappointments in digital and creative roles. Property Marketing Sector We continued to serve a number of clients during the year across the residentialproperty spectrum, such as Savills, Galliard Homes, Devington Homes and GroveManor 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 UnitedBank, Sunlight Property Finance, Greenhills, Mckay Securities, Scottish WidowsInvestment, Target Follow, The Blackstone Group, Protego Real EstateInvestments, Davis Coffer Lyons, EPF Group and Sackville Properties. Media Planning and Buying Sector Our three media planning and buying companies, Premium Media, Adgenda Media andAdventis Coltman, represent a significant force in the property and financialsector. Their combined billings account for around the UK's 30th largest buyingpoint. They have full NPA (Newspapers Publishing Association) and TVrecognitions, enjoying favourable commercial terms with media owners. Thespecialist media services that we offer work very much in tandem with ourcreative businesses. Business volumes continue to grow at good margins for thisindustry. Account wins during 2007 included Brit Insurance, PartnershipAssurance, 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 economyoverall, but the first quarter results indicate that the Group as a whole is ahead of targetand ahead of last year. Visibility for the year ahead is generally good and overall we anticipate ourclients marketing expenditure continuing at a similar or greater level to theprior year. Cost controls remain paramount and we will continue to be vigilantespecially as economic conditions tighten. We continue to raise our profile in our chosen market sectors and considersuitable acquisition opportunities. I am confident that our growth and operatingefficiency will continue in 2008. Charles PhillpotChief Executive Officer Consolidated income statement for the year ended 31 December 2007 2007 2006 Notes £'000 £'000TurnoverContinuing operations 44,788 27,973Acquisitions 2,288 7,556 47,076 35,529Operating profitContinuing operations 2,116 1,221Acquisitions 310 451Profit on ordinary activities before 2,426 1,672interest Investment revenue 226 130Finance costs (15) (2) Profit on ordinary activities before 2,637 1,800taxation Taxation on profit on ordinary activities 3 (832) (467) Profit for the financial 1,805 1,333year Attributable to:Equity holders of the parent 1,756 1,316Minority interest 49 17 Profit for the financial 1,805 1,333year Earnings per share ("EPS") 5 Basic earnings per shareAverage number of shares in issue 40,580,636 35,007,794EPS (pence) 4.33 3.76Fully diluted earnings per shareFully diluted average number of shares in issue 42,654,944 36,066,998EPS (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 for2006Profit for the year - - - - - - 1,333 1,333Dividends paid - - - - - - (218) (218)Minority interests - - - 17 - - (17) 0Adjustment - - - (46) - - 46 0Recognised earnings - - - (29) - - 1,144 1,115for the year Issue of share capital 15 2,015 - - - - - 2,030Cost 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 for2007Profit for the year - - - - - - 1,805 1,805Dividends paid - - - - - - (285) (285)Minority interests - - - 49 - - (49) 0Recognised earnings - - - 49 - - 1,471 1,520for the year Issue of share capital 8 1,499 - - - - - 1,507Cost of share issue (120) - - - - - (120)Share based transactions - - - - - 53 - 53EBT 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 £'000Cash flows from operating activitiesProfit from operations 2,426 1,672 Adjustments for:Amortisation of 50 25investmentsShare based transactions 53 20Depreciation 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 activitiesInterest received 226 130Purchase 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 activitiesDividends 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 theperiod 2,464 2,585 Cash and cash equivalents at the end of the period 3,740 2,464 Notes to the financial statementsFor the year ended 31 December 2007 1. Basis of preparation The financial information set out in this announcement does not constitute theCompany's statutory accounts for the years ended 31 December 2007 and 2006.Except as shown below, the financial information for the year ended 31 December2007 has been prepared using the accounting policies which are consistent withthose adopted in the audited accounts for the year ended 31 December 2006. Thefinancial information for the year ended 31 December 2006 is derived from thestatutory accounts for that year, which have been delivered to the Registrar ofCompanies. The auditors have reported on the 2006 accounts; their report wasunqualified and did not contain a statement under section 237 (2) or (3) of theCompanies Act 1985. The auditors have yet to sign their report on the 2007accounts. The statutory accounts for the year ended 31 December 2007 will befinalised on the basis of the financial information presented by the Directorsin this preliminary announcement and will be delivered to the Registrar ofCompanies following the Company's Annual General Meeting. The financialinformation set out in this announcement was approved by the Board of Directorson 9 April 2008. 2. Summary of significant accounting policies Basis of accounting The 2007 financial statements are the group's third consolidated financialstatements prepared under International Financial Reporting and AccountingStandards, with a transition date of 1 January 2004. The financial statementshave also been prepared in accordance with International Financial Reporting andAccounting 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 ofthe company and enterprises controlled by the company (its subsidiaries) made upto 31 December each year. Control is achieved where the company has the power togovern the financial and operating policies of a subsidiary. Minority interests in the net assets of consolidated subsidiaries are identifiedseparately from the group's equity therein. Minority interests consist of theamount of those interests at the date of the original business combination andthe 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 thesubsidiary's equity are allocated against the interests of the group except tothe extent that the minority has a binding obligation and is able to makeadditional investment to cover the losses. The results of subsidiaries acquired or disposed of during the period areincluded in the consolidated income statement from the effective date ofacquisition 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 profitsdiffer from net profits as reported in the income statement because it excludesitems that are taxable or deductible in other years and items that are nottaxable or deductible. The group's liability for current tax is calculated usingtax rates that have been enacted or substantively enacted at the balance sheetdate. Deferred tax is the tax expected to be payable or recoverable on differencesbetween the carrying amounts of assets and liabilities in the financialstatements and the corresponding tax bases used in the computation of taxableprofit, and is accounted for using the liability method. Deferred taxliabilities are recognised for all temporary differences and deferred tax assetsare recognised to the extent that it is probable that taxable profits will beavailable 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 sheetdate and reduced to the extent that it is no longer probable that sufficienttaxable profits will be available to allow all or part of the asset to berecovered. Deferred tax is calculated at the tax rates that are expected to apply in theperiod when the liability or the asset is realised. Employee Benefit Trust In accordance with SIC 12 "Consolidation - special purpose entities", theCompany includes the assets and liabilities of that trust within itsconsolidated balance sheet. In the event of the winding up of the Company,neither the shareholders nor the creditors would be entitled to the assets ofthe employee benefit trust. Investment in own shares held in connection with the Group's employee shareschemes are deducted from the shareholders' funds in accordance with IAS 32 "Financial instruments: disclosure and presentation" until such time as they vestunconditionally to participating employees. The fair value of employee services received in exchange for the grant of sharesis recognised as an expense. The total amount to be expensed rateably over theperformance period is determined by reference to the fair value of the sharesdetermined at the grant date. 3. Tax on profit on ordinary activities Analysis of charge in period 2007 2006 £'000 £'000 Current taxUK corporation tax on profits of the year 819 544Adjustments 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 142Interim dividend of 0.23p (2006: 0.22p) per share 95 76First dividend to minority shareholders of Adventis NMG Ltd 7 - 285 218Recommended final dividend of 0.484p (2006: 0.461p) per share 202 182 The recommended final dividend is subject to approval by shareholders at theannual general meeting and has not been included as a liability in thesefinancial statements. The estimate of the recommended dividend is based on thenumber 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 inissue 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 includes349,445 Ordinary shares, which represent the deferred consideration due on theacquisition of Coltman Media Company Limited at the average Adventis share pricefor 2007. The diluted weighted average number of ordinary shares in issue duringthe year includes 327,025 Ordinary shares, which represent the contingentdeferred consideration due on the acquisition of Roundhouse Advertising Limited,and 539,144 Ordinary shares, which represent the contingent deferredconsideration due on the acquisition of Leapfrog Medical Communications Limited,both at the average Adventis share price for 2007. 6. Goodwill 2007 2006 £'000 £'000Carrying amountAt 1 January 8,273 1,827Additions 2,853 6,030Reclassification of intangible assets - 416 At 31 December 11,126 8,273 The additions relate to the acquisition of Leapfrog Medical CommunicationsLimited (£2,248,000) and adjustments to goodwill arising from the re-valuationof the contingent consideration relating to other acquisitions (£605,000). This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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