24th Feb 2005 07:00
Avanti Capital PLC24 February 2005 Avanti Capital Plc, the AIM quoted private equity company,announces interim resultsfor the six months ended 31st December 2004. Highlights During the period under review, Avanti Capital plc(excluding the consolidated results of Barvest) made a profitof £475,000 before exceptional items and warrant cancellationpayment. Consolidated net assets (excluding negative goodwill) of£19.5 million or 188p per ordinary share. Barvest achieved £598,000 EBITDA for 26 weeks to 26thDecember 2004. 24 February 2005 Enquiries Avanti Capital Plc Tel: 020 7070 7070Julian Fellerman, Joint CEORichard Kleiner, Joint CEO Ballard and Associates Tel: 020 7727 1333Louise Ballard Group Review Results of the Group As at 31 December 2004, the group had net assets of £19.1million (2003: £19.7 million) or 185 pence per share (2003:189 pence per share). Excluding negative goodwill, the grouphad net assets of £19.5 million (2003: £20.5 million) or 188pence per share (2003: 198 pence per share). These amounts exclude any potential uplift in the value ofBarvest Limited or mBlox Inc or the potential value of thesignificant tax losses available to be used by the group inthe future. As previously reported, these tax losses totalapproximately £19.7 million. The difference in the comparative net assets is mostlyaccounted for by the amount paid of £1.2m by the group for thewarrant cancellation full details of which were provided inthe results for the group for the year ended 30 June 2004. Ofthe £1.2m, £87,000 is reflected in these results. In the period to 31 December 2004, the profit beforeexceptional items, was £475,000 (2003: profit of £215,000),excluding the consolidation of Barvest and the warrantcancellation. Portfolio Investments Barvest Limited Barvest owns and operates the estate of bars and nightclubs,which trade predominantly under the Po Na Na and Fez Clubbrands. For the 26 weeks ended 26 December 2004, Barvest made £598,000EBITDA (before exceptional items). Whilst in turnover andgross profit terms the business exceeded its internal forecastfor the period, there were certain controllable costs of thebusiness amounting to £340,000, which were greater thanbudgeted. These costs, however, have now been brought backinto line with internal forecasts. The business continues to trade well in a competitiveenvironment. The company's investment in Barvest Limited as at 31 December2004, at book value, totalled £2.3m comprising a 60% equityinterest at a cost of £600,000 and a secured preferred loannote of £1.7m which carries a coupon of 37.5% per annum. By way of additional information to our shareholders, note 5contains pro-forma accounts which reflect the group's coreinvestment activity and separately the bar and nightclubbusiness operated by Barvest Limited. mBlox Inc mBlox Inc is a leading European and US provider of SMSservices. Its customers use standard and premium rate outboundand inbound SMS to provide information, entertainment andcommunication services. The group owns 7.7% of the equity ofmBlox. Total revenues for the year to 31 December 2004 more thandoubled when compared with the previous year and the businesscontinues to trade strongly. Jeff Clark was appointed as CEO of mBlox in November 2004. Jeff has a long and distinguished career in thetelecommunications industry, most recently serving as theSenior Vice President of Vodafone Global Platform and InternetServices at Vodafone Americas. He is responsible for thedevelopment and execution of mBlox's operational plan forinternational growth. mBlox has continued to grow strongly in Europe consolidatingits leadership position in the UK market and furtherdeveloping its presence in other markets side-by-side with itsinternational customers. It has recently announcedenhancements to its offering in France and the establishmentof operations in Germany. In the United States mBlox has seen a concerted increase inthe uptake and acceptance of its premium SMS services and isaggressively growing its business. As leader in this market,mBlox is well placed to benefit from the strong forecastgrowth of premium SMS in the US. Others In relation to the other investments in the group's portfolio,as previously indicated we continuing to seek ways ofmaximising the value to the group. In December 2004 the group disposed of its holding in UswitchLimited, realising a profit of £124,000. As at 31st December 2004, the carrying value of the group'sportfolio (excluding its interest in Barvest Limited) was £2.2million (2003: £2 million) of which the group's interest in mBlox Inc represented more than 80%. Cancellation of share premium On 11 November 2004, the Company passed a resolution to reducethe share premium account of the Company by £33.9m(representing the entire share premium account of the Company)and to authorise the directors to credit such amount to thedistributable reserves of the Company. On 8 December 2004 theCompany obtained an order of the High Court confirming suchreduction in accordance with the provisions of the CompaniesAct 1985. Purchase of own shares On 11 November 2004 the Company passed a resolutionauthorising it to make market purchases of ordinary shares ofthe Company. The maximum number of ordinary shares that theCompany may purchase is 1,037,359, the minimum price that maybe paid is 60p per share and the maximum price is 105% of theaverage of the middle market price for ordinary shares for the5 business days immediately preceding the date of purchase. J M FellermanR H Kleiner Joint Chief Executives Group Profit and Loss Accountfor the six months ended 31 December 2004 6 6 12 months months months ended ended ended 31 Dec 31 Dec 30 June 2004 2003 2004 £000 £000 £000 Turnover 10,360 8,200 19,003Cost of sales (1,897) (1,664) (3,697)Gross profit 8,463 6,536 15,306 Operating expenses:Administrative expenses- exceptional - warrant cancellation (87) - (1,106)Administrative expenses- other exceptional (96) (705) (791)Administrative expenses- others (8,578) (6,234)(14,894) (8,761) (6,939)(16,791) Operating loss (298) (403) (1,485) Profit on disposal of investments 124 - 432Interest receivable 314 213 468Interest payable (215) - (86) Loss on ordinary activities beforetaxation (75) (190) (671)Taxation 84 (20) (134)Minority interest 113 (86) (107) Retained profit/(loss) for the period 122 (296) 912 Earnings/(loss) per share- basic 1.18p (2.86)p (8.79)p- fully diluted 0.95p (2.86)p (8.79)p Statement of total recognised gains and losses 6 6 12 months months months ended ended ended 31 Dec 31 Dec 30 June 2004 2003 2004 £000 £000 £000 Profit/(loss) for the period 122 (296) (912)Surplus on share re-organisation - 11 12Total recognised gains and losses forperiod 122 (285) (900) Group Balance Sheetat 31 December 2004 6 6 12 months months months ended ended ended 31 Dec 31 Dec 30 June 2004 2003 2004 £000 £000 £000 Fixed AssetsGoodwill - positive goodwill 4,926 5,261 5,167Goodwill - negative goodwill (437) (849) (656)Tangible assets 1,928 1,205 1,807Fixed asset investments 2,243 2,046 2,468 8,660 7,663 8,786 Current AssetsStock 403 414 343Debtors 2,303 1,139 1,739Cash at bank and in hand 13,400 12,613 15,606 16,106 14,166 17,688 Creditors: amounts falling due withinone year (2,938) (1,770) (4,343) Net current assets 13,168 12,396 13,345Total assets less current liabilities 21,828 20,059 22,131Creditors: amounts falling due aftermore than one year (2,467) - (2,869)Minority interest loan account (205) (404) (115)Provisions for liabilities and charges (50) - (50) Net Assets 19,106 19,655 19,097 Capital and ReservesCalled up share capital 6,224 6,203 6,224Share premium account - 33,836 33,851Other reserves 2,045 2,045 2,045Profit and loss account 10,443 (22,915)(23,530)Shareholders funds 18,712 19,169 18,590Minority interests 394 486 507 Total Equity 19,106 19,655 19,097 Approved by the board on 24 February 2005 J M FellermanR H Kleiner Group Statement of Cash flowsfor the six months ended 31 December 2004 6 6 12 months months months ended ended ended 31 Dec 31 Dec 30 June 2004 2003 2004 £000 £000 £000 Net Cash (outflow)/inflow from operatingactivities (1,800) 1,003 754 Returns on investments and servicing of financeInterest received 314 213 468Interest paid (215) - (11)Bank loan issue cost - - (264) Capital expenditure and financial investmentsPurchase of tangible fixed assets (342) (307) (1,033)Purchase of investments - (25) (608)Proceeds from sale of tangible assets - - 30Receipts from sales of fixed assetinvestments 249 - 644Net cash outflow from capital expenditureand financial investment (93) (332) (967) Acquisitions and disposalsPurchase of subsidiary undertaking - (6,453) (6,647)Net cash acquired with subsidiaryundertakings - 74 74 Proceeds of share issue in Barvest receivedfrom minority interest - 400 400 - (5,979) (6,173) Net cash (outflow) before management ofliquid resources and financing (1,794) (5,095) (6,193) Management of liquid resourcesMovement of liquid resources 785 - 3,112 FinancingIssue of ordinary share capital - - 36New short term borrowings - - 817New long term borrowings (412) - 3,142Other new loans - - 357Repayment of other loans - - (251)(Decrease)/Increase in cash in the year(1,421) (5,095) 1,020 Note to the Group Statement of Cashflows Reconciliation of operating loss to net cash outflow fromoperating activities Operating loss (298) (403) (1,485)Depreciation 187 101 228Goodwill amortisation 64 (22) 43Provision against diminution in investments96 456 434(Increase) in stock (60) - (43)(Increase) in debtors (564) (1,082) (1,602)(Decrease)/increase in creditors (1,225) 1,953 3,179 (1,800) 1,003 754 Notes to the accounts 1. Basic of preparation of interim financial Information Accounting convention The interim accounts are prepared under the historical costconvention and in accordance with applicable accountingstandards. Basis of consolidation The group accounts consolidate the financial statements of thecompany and its subsidiary undertakings, including BarvestLimited, drawn up to 31 December. No profit and loss accountis presented for the company as permitted by section 230 ofthe Companies Act 1985. Barvest Limited prepares its financial statements to theSunday prior to the period end and therefore its resultsincluded within the consolidated group accounts are in respectof the 26-week period to 26 December 2004 Fixed asset investments Fixed asset investments, comprising equity shares and shareoptions, are stated at the lower of cost and valuation and inaccordance with the "Guidelines for the valuation anddisclosure of venture capital portfolios" published by theBritish Venture Capital Association on the following basis: (a) Early stage investments: these are investments in immature companies, including seed, start-up and early stage investments. Such investments are valued at cost less any provision considered necessary, until no longer viewed as early stage or unless a significant transaction involving an independent third party at arm's length, values the investment at a materially different value; (b) Development stage investments: such investments are in mature companies having a maintainable trend of sustainable profits and from which an exit, by way of flotation or trade sale, can be reasonably foreseen. An investment of this stage is periodically revalued by reference to open market value. Valuation will usually be by one of four methods as indicated below: i) At cost for at least one period unless such a basis is unsustainable; ii) On a third party basis based on the price at which a subsequent issue of capital is made involving a significant investment by a new investor; iii) On an earnings basis, but not until at least a period since the investment was made, by applying a discounted price/earnings ratio to profit after taxation, either before or after interest; or iv) On a net asset basis, again applying a discount to reflect the illiquidity of the investment. (c) Quoted investments: such investments are valued using the quoted market price, discounted if the shares are subject to any particular restrictions or are significant in relation to the issued share capital of a small quoted company; (d) Share options are subject to vesting and other conditions set out in the various option agreements. The valuation is based on the intrinsic value of all share options that have vested. This is the difference between the market value of shares at the balance sheet date and the exercise price. A review of permanent diminution in value is undertaken by reference to funding, investment or offers in progress after the balance sheet date. No adjustment is made for any uplift in value after the balance sheet date. 2. Exceptional items 6 6 12 months months months ended ended ended 31 Dec 31 Dec 30 June 2004 2003 2004 £000 £000 £000 Provision for impairment offixed asset investments 96 456 434Redundancy costs - 65 230Restructuring charges - 237 127Abortive deal costs - (53) - 96 705 791 3. Contingent liability In January 2005 the company (jointly and severally with Jeremy Sturgess and Twigmarket Limited) entered into a guarantee of the obligations of Barvest Limited in respect of the lease at its Edinburgh site. At the same time, Barvest Limited entered into an indemnity and guarantee fee agreement with the guarantors. The annual rent of Barvest's Edinburgh site is £57,000. 4. Year ended 30 June 2004 The figures for the full financial year ended 30 June 2004 are not the Group's statutory accounts for that financial year within the meaning of section 240 of the Companies Act 1985. Those accounts have been reported on by the Group's auditors and delivered to the registrar of companies. The report of the auditors was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985. 5. Pro-forma information The pro-forma information has been prepared to illustrate the effect of not consolidating the results and net assets of Barvest Limited and therefore sets out the investment activity of Avanti Capital plc as distinct from the bars and clubs activity operated by Barvest Limited. The adjustments shown within the pro-forma financial information enables a reconciliation to be made to the consolidated figures included within this report and which comprise the usual consolidation items including fees and interest charged by the group to Barvest Limited. Profit & Loss Avanti Barvest Adjustments Group Total £000 £000 £000 £000 TURNOVER 83 10,327 (50) 10,360 Less: Cost of sales 0 (1,897) (1,897)Gross profit 83 8,430 8,463Operating expenses Administration expenses (424) (7,832) 50 (8,206)EBITDA before exceptional items (341) 598 257 Depreciation & goodwill amortisation 205 (453) (248)Interest payable 0 (513) 298 (215)Interest receivable 611 1 (298) 314Profit on ordinary activities before exceptional items 475 (367) 108Exceptional items- warrants cancellation (87) 0 (87)Exceptional items- other (96) 0 (96) Profit/(loss) on ordinaryactivities before taxation and afterexceptional items 292 (367) (75)Taxation 0 84 84Profit/(loss) on ordinaryactivities after taxation 292 (283) 9 Minority interest 0 0 113 113Profit/(loss) for the period afterminority interest 292 (283) 122 Net assets Avanti Barvest Adjustments Group Total £000 £000 £000 £000 Fixed assets Goodwill (437) 4,926 4,489 Tangible assets 357 1,571 1,928 Investments 4,569 0 (2,326) 2,243 4,489 6,497 8,660 Current assets Stock 0 403 403 Debtors 1,051 1,988 (736) 2,303 Cash at bank and in-hand 13,261 139 13,400 14,312 2,530 16,106 Creditors: amounts falling due within one year 78 3,647 736 2,989Net current assets 14,234 (1,117) 13,117Total assets less current liabilities 18,723 5,380 21,777 Creditors: amounts falling due after one year Bank loans 0 (2,466) 0 (2,466) Shareholders' loans 0 (1,931) 1,726 (205) 0 (4,397) (2,671) Net Assets 18,723 983 (600) 19,106 Represented by: Share capital 6,224 1,000 (1,000) 6,224 Share premium account 0 0 0 Other reserves 2,045 0 2,045 Profit & loss account 10,454 (17) 6 10,443 Shareholders' funds 18,723 983 18,712 Minority interest 0 0 394 394 Total equity 18,723 983 (600) 19,106 Copies of this Announcement will be available, free of charge,from the company's office at 2 Motcomb Street, London, SW1X8JU for a period of 1 month from the date of this Announcement.A copy of this Announcement will also be available on thecompany's website. Independent review report to Avanti Capital plc Introduction We have been instructed by the company to review the financialinformation for the six months ended 31 December 2004 whichcomprises the Group Profit and Loss Account, Group Statementof Total Recognised Gains and Losses, Group Balance Sheet,Group Cash Flow Statement and the related notes 1 to 4. Wehave read the other information contained in the interimreport and considered whether it contains any apparentmisstatements or material inconsistencies with the financialinformation. This report is made solely to the company in accordance withguidance contained in Bulletin 1999/4 'Review of interimfinancial information issued by the Auditing Practices Board.To the fullest extent required by the law, we do not accept orassume responsibility to anyone other than the company, forour work, for this report, or for the conclusions we haveformed. Directors' responsibilities The interim report, including the financial informationcontained therein, is the responsibility of, and has beenapproved by, the directors. The directors are responsible forpreparing the interim report as required by the AIM Rulesissued by the London Stock Exchange. Review work performed We conducted our review having regard to the guidancecontained in Bulletin 1999/4 'Review of interim financialinformation' issued by the Auditing Practices Board for use inthe United Kingdom. A review consists principally of makingenquiries of management and applying analytical procedures tothe financial information and underlying financial data, andbased thereon, assessing whether the accounting policies andpresentation have been consistently applied, unless otherwisedisclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities andtransactions. It is substantially less in scope than an auditperformed in accordance with United Kingdom Auditing Standardsand therefore provides a lower level of assurance than anaudit. Accordingly we do not express an audit opinion on thefinancial information. Review conclusion On the basis of our review we are not aware of any materialmodifications that should be made to the financial informationas presented for the six months ended 31 December 2004. Ernst & Young LLPLondon 24 February 2005 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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