30th Jun 2008 10:06
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 2008.
Eclectic Bars
2008 has shown the business to be very resilient. Trading this year has continued well, with sales up 7% and EBITDA in excess of last year. Despite the current market conditions, the business has continued to improve sales and EBITDA whilst at the same time continuing to add value for the customer with high quality music, improved drinks brands and a consistent focus on providing the best customer service.
During the year, the business developed a new premium bar concept called Sakura with a subtle Far Eastern/ Japanese feel. It provides a lounge area for day time and early evening food, a high energy dance floor, a vibrant bar area where people can mingle and meet others and a roof top garden for smoking. The target audience is students during the weekdays and a weekend crowd that are looking for a quality London West End bar without the need to travel to the City to enjoy it.
The first Sakura was opened in Lincoln in October 2007. This has generated EBITDA some 60% in excess of forecast in its first nine months of trading. The second Sakura was opened in May 2008 under the fully developed Sakura brand utilising the ground floor space for earlier trading including food. Sales in the early weeks have been very strong, trading ahead of internal forecasts. Sites for additional Sakura bars and the company's Po Na Na brand are being actively sought.
Eclectic's management team has proven its ability to take over management of a portfolio of bars and successfully deliver an agreed strategy of restructuring to dispose of poorly performing sites, to improve revenues in underperforming sites, to drive down costs both at site and centrally and to open new sites.
Eclectic's strategy is to assemble a large portfolio of bars by consolidating a largely fragmented sector. The view is that there are too many sub-scale businesses overburdened by disproportionately large bank debt levels, central overheads and underperforming sites. Essentially Eclectic is a roll up play and through its extensive network of intermediaries, it is offered many opportunities in this sector. To this end, the team continues to look for opportunities which will enable Eclectic to expand the portfolio with the addition of quality units, with the aim of growing profits.
Espresso
Espresso is an extensive library of high quality, broadband teaching resources and student activities that motivates pupils and supports teachers.
Over recent years, Espresso has transformed itself from a UK focused single product entity into a multi-dimensional product set for domestic and international markets. The original product line "Espresso for Primary schools" is currently being used by over 10,000 schools and consistently enjoys a 95% retention rate for its subscription service.
Cash generated from this core business and the 2006 acquisition of Netmedia is being used to fund investment into additional growth areas that include Education Media Delivery (a new UK focused content distribution business), a new product line for secondary schools in the UK that includes the recently acquired Channel 4 Learning materials and the development of international revenue streams. All of these new investments are multi-year in nature and should begin making positive contributions to profitability of the overall company during the 2009 financial year. Early indications are that the appetite for these newly developed services is positive and should add value to the business as Espresso demonstrates the international scalability of its services.
During 2007, Espresso made an important acquisition. Channel 4 Learning (Channel 4's award-winning education rights exploitation business) joined Espresso Education, Netmedia Education and Education Media Delivery as part of Espresso. The acquired business was merged with Espresso Education to provide curriculum services to primary and secondary schools throughout the UK and abroad. Both businesses are award-winning market leaders in video-based, interactive teaching and learning resources. As part of the deal, Espresso acquired the assets of Channel 4 Learning, as well as a license agreement for the exclusive commercial exploitation of Channel 4's existing and future schools' television programs, where Channel 4 has the rights.
The business continues to perform well trading in line with expectations. Other investors include Proven VC, Media VC, Guinness VC, MeCom, ITN and Babcock & Brown.
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 2007 mBlox delivered over 2 billion application-to-person transactions. 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 predicts that within three years, mobile carriers will more than double their revenues from off-portal entertainment and that carrier revenues will grow to $8 billion by 2011 compared to $3 billion in 2007. This 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.
In February 2008, mBlox launched its global WAP Billing platform. Bringing together the next generation in mobile technology and mBlox's unrivalled strength in mobile billing and delivery, the platform provides a user-friendly payment experience which will fuel further growth for mobile content providers.
In late November 2007, mBlox raised $22.0 million in a Series E round. Other mBlox investors include Silicon Valley venture funds including Norwest, Scale, Novus, Duff Ackerman Goodrich, Trident and Galleon.
Medcenter
Medcenter is a multinational pharmaceutical marketing company, specialising in innovative solutions that increase drug sales and business effectiveness. Its largest market is Latin America.
Operating for over 10 years with offices in Europe and the Americas, Medcenter works with 50 of the most important international laboratories (with 80 of the most sold products in the global market) and Medcenter has a team of highly qualified pharmaceutical marketing professionals ready to respond with creativity to the needs of the pharmaceutical industry, with solutions in the areas of medical education, promotion, market research and marketing. These solutions are designed to strengthen the relationship between the pharmaceutical industry, physicians and patients in order to increase product prescription, market share and sales.
The company's strategy more recently has been to concentrate on its 15 largest customers. This had an adverse affect on revenues in 2007, however management reports that the results for Q4 07 and Q1 08 provide strong evidence that this strategy is the right one. In addition management reports that during Q1 08 the company has entered into committed contracts to be delivered in 2008 which, in terms of value, exceed the revenues for the whole of 2007.
A major development took place in December 2007 when the company entered into a joint venture with WebMD (Nasdaq:WBMD). WebMD only operates within the United States and enjoys a 90% market share of the online medical education market in US. The joint venture has created a new portal (www.medcenter.com/medscape) which combines WebMD's content and the company's relationships with physicians and medical societies, commencing with Latin America.
Legacy Portfolio
The Company reiterates its policy of disposing of its investment in the legacy portfolio at the earliest possible time.
Contact:
Avanti Capital plc 020 7299 1459
Julian Fellerman
Richard Kleiner
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