30th Jun 2009 07:00
Avanti Capital plc
Full Year Pre-Close Update
Avanti Capital plc ("the Company") the private equity company is updating the market today prior to its year end on 30 June 2009.
Eclectic Bars
Despite unprecedented trading conditions brought about by the global banking crisis during this financial year, Eclectic continues to trade well ahead of the sector and last year.
Total sales for the 11 months to the end of May 2009 were up 20% on last year and up 12% on a like for like basis. This has resulted in significant improvement in EBITDA over the same period.
In addition, Eclectic opened a Sakura in Lincoln in October 2007 which is now well into its second year of trading; it is expected to deliver EBITDA some 64% ahead of management expectation. The latest Sakura, which opened in Reading in May 2008, has now passed the one year mark and is expected to deliver EBITDA some 68% ahead of management expectation.
The business continues to focus on delivering added value for our customers. Improved product ranges, excellent DJ's and live entertainment, together with quality service and standards which are the bedrock to this success.
In the final weeks of this financial year, Eclectic has refurbished its Chelsea club, Embargo and it has re-emerged as Embargo 59. Even though this club has always been popular with locals and celebrities, the aim is to take this very successful venue and give it more style, better facilities, and add some class and sophistication to keep pace with the expectations of a demanding market place. Amongst some of the more interesting elements to this design is the walk-in cigar humidor adjacent to the 60-seat VIP area, where customers can buy from a hand-picked selection of fine Havana cigars then enjoy them on the significantly expanded open air terrace. Eclectic's management expertise continues to be their ability to take businesses and radically improve their profitability and customer appeal. It is testament to the confidence placed is the team that Eclectic's bankers provided a senior debt facility to fund the refurbishment works.
Eclectic's strategy continues to be to assemble, grow and improve a large portfolio of bars. The current brands within the Eclectic estate have over the years proven themselves to be strong and resilient cash contributors and so provide an excellent template to develop many of the venues and businesses coming on the market today from failed operators. Depressed market conditions continue to present opportunities for acquiring venues and businesses at sensible prices and enable Eclectic to continue its roll up play in this sector.
Espresso
At the beginning of 2009 Espresso carried out a strategic review that included investigating the possibility of selling the business in its entirety. The business is at a crossroads where there are long-term opportunities to exploit Espresso's services outside the UK that require investment and time to enhance the profits and value of the business. The board of Espresso considered whether it was an appropriate time to sell the business to an investor with the resources to meet these opportunities. Espresso received numerous expressions of interest, however, not surprisingly given the depressed state of the merger and acquisition market conditions, the level of interest did not meet the Espresso board's price expectations. The average level expressed exceeded the carrying value of Avanti's investment in Espresso as at 31 December 2008.
The conclusion of the review was that it was not the correct time to sell the business in its entirety. Instead in April 2009, Espresso sold its subsidiary Netmedia to a Norwegian company It's Learning which produces products similar to the Netmedia business.
With the proceeds from the transaction, Espresso has significant cash resources that will be used to address some of the international opportunities, invest into systems that will enhance its UK and international opportunities, restructure some of its businesses and provide incentives and rewards for the management team who have committed to taking the business through its next stage of development.
Meanwhile, the UK customer base for Espresso remains stable despite increasing cost pressures within the UK education market. The opportunity to acquire additional customers in the UK is becoming more challenging, but despite this challenge Espresso continues to trade in line with the expectations of its board.
mBlox
mBlox is the world's largest mobile transaction network. It enables businesses to deliver and bill for mobile services and content around the world. It specialises in global operator connectivity and mobile billing, maintaining connections to more then 500 mobile operators in 180+ countries through its carrier-grade network.
In the year to December 2008, mBlox delivered over 2.5 billion application-to-person transactions, a volume up over 30% versus the prior year. These transactions covered a wide range of applications including, mobile originated and terminated messages and Premium SMS, powered mobile business, mobile marketing and mobile entertainment worldwide. mBlox continues its path of high growth.
mBlox is prepared for its next phase of global growth recently appointing Andrew Dark as its Chief Executive Officer. Andrew held a number of senior positions, most recently as Chief Executive for DataCash Group plc where he successfully grew the company organically and through acquisitions.
mBlox is confident that, as an extension of its existing business, mobile users are increasingly open to broader types of payment options that can be used to purchase higher value goods and services. The company is well positioned to capture a substantial share of this emerging market having established, global carrier connections as well as proven customer relationships and contracts.
Organic market growth will be derived from providing value added and enabling services to off-portal publishers. The research, conducted in conjunction with Cambridge University's Judge Business School, found that this additional revenue will principally come from three newly emerging areas: WAP billing, sender pays data and handset/subscriber data. These services will help off-portal content and service providers to meet growing consumer demand for rich mobile entertainment on the mobile internet.
mBlox will focus on developing these new and emerging markets over the coming 12 months as well as building further scale into its existing operations and technology platform ensuring that it is ready to grow its revenue and profits.
Medcenter
Medcenter continues to make sound progress in its core business of providing medical, education and marketing services to the pharmaceutical industry in Latin America and Iberia. Following a comprehensive refocusing effort, it has secured larger and more profitable contracts and strong gross margin improvement. During a period of positive sales growth, the refocusing towards tier one clients and larger more profitable contracts enabled the company to substantially reduce its headcount. Sales growth is expected to continue in 2009.
Following the announcement of the deal with WebMD in December 2007, the company designed, developed and launched the WebMD/Medcenter physician portals for Latin America, Spain and Portugal ahead of schedule. The first year's physician and revenue results for the Portal exceeded budget targets set by WebMD and it is pleasing to note that year to date results place the company ahead of expectations for the second year.
Medcenter is actively expanding into Europe beyond the Iberian Peninsula and has made significant progress in developing commercial and strategic relationships with select parties across Europe.
Legacy Portfolio
The Company reiterates its policy of disposing of its investment in the legacy portfolio at the earliest possible time.
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Contact:
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Avanti Capital plc
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020 7299 1459
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Julian Fellerman
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Richard Kleiner
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Collins Stewart Europe Limited
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Adrian Hadden
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020 7523 8353
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