30th Mar 2007 07:01
Avanti Capital PLC30 March 2007 Avanti Capital plc Avanti Capital plc, the private equity company, announces its interim results for the six months ended 31 December 2006. HIGHLIGHTS • As at 31 December 2006, the group had net assets (excluding the accounting effects of the consolidation of Barclub Limited) of 181 pence per ordinary share. • Espresso acquires Channel 4 Learning in move into secondary school market. • 2006 was the fifth consecutive year of high growth for mBlox. • Po Na Na delivers sales 7% ahead on a like for like basis. • London property sold at £0.4m surplus to book value. • Share buy back policy to continue. 30 March 2007 ENQUIRIES:Avanti Capital Plc Tel: 020 7070 7070 Julian FellermanRichard Kleiner Collins Stewart Europe Limited Tel: 020 7523 8350Adrian Hadden Company statement Results of the Group As at 31 December 2006, the group had net assets (excluding the accountingeffects of the consolidation of Barclub Limited) of £15.2 million (2005: £20.1million) or 181 pence per ordinary share (2005: 216 pence per share). It is theview of the board that this basis gives shareholders the most relevant measureof the underlying value of the net assets within the guidelines for thevaluation and disclosure of venture capital portfolios. As at 31 December 2006, the group had net assets on a consolidated basis of£13.4 million (2005: 18.2 million) or 159 pence per share (2005: 195 pence pershare). In the period to 31 December 2006, the loss before exceptional items, excludingthe consolidation of Barclub Limited, was £218,000 (2005: profit of £645,000).The loss on a consolidated basis was £305,000 (2005: loss of £518,000). Net asset values (excluding the accounting effects of the consolidation ofBarclub Limited), per Avanti share by category were: Investment Carrying value (pence per share) Espresso 4 mBlox 66 Medcenter 4 PoNaNa (Barclub) 82 Others 2 Cash 18 Property (and other net assets) 5 Total 181 In line with the announcement made by the company in October 2006, the board isnow concentrating all efforts on maximising the realisation value of thisrelatively mature portfolio of investments. Portfolio Investments Espresso On 21 March 2007 Espresso announced that it had reached an agreement to mergeChannel 4 Learning, Channel 4's award winning education rights exploitationbusiness, into its portfolio of businesses. The transaction is subject toEspresso shareholder approval and is expected to complete during April 2007.Channel 4 will retain a minority stake in the combined business. The deal will further enhance Espresso's position in the UK education sectorwhere it already has nearly 50% market penetration in English primary schools.The deal will enable Espresso to build on the success that it has enjoyed in theprimary school sector, in the secondary school sector. As at 31 December 2006 the carrying value of the company's investment inEspresso was 4 pence per ordinary share. mBlox During the period to 31 December 2006 mBlox continued to grow successfully. Atthe beginning of February 2007 mBlox announced a record number of off-portaltransactions for 2006, with over 1.4 billion application-to-person transactionsprocessed worldwide. 2006 was the fifth consecutive year of high growth for mBlox with business up40% over 2005. In the US, the number of premium SMS transactions mBlox processedincreased 100% over 2005 and globally mBlox cleared and settled payments formobile content transactions worth more than $500 million in street revenue. In February 2007 mBlox also announced that Simon Duffy joined the company'sboard of directors as chair of the audit committee. Previously chief executiveofficer and executive vice-chairman of NTL, the UK fixed network operator, SimonDuffy held senior roles at Orange, EMI and Tiscali and has served on the boardsof several major public companies listed in London and New York. Thisappointment followed the appointment in October 2006 of Susan Swenson to itsboard of directors. Susan Swenson is currently a non-executive director of WellsFargo & Company, the US financial services group. mBlox continues to prosper in this dynamic business sector. By way of an exampleof the type of business transacted by mBlox, it announced on 19 March 2007 thatit is working with travel and transport information company OAG to deliver aglobal SMS flight status alert service to the Star Alliance network. Madepossible through mBlox's mobile terminated solution, the SMS update serviceenables Star Alliance customers to track flights irrespective of locationvirtually anywhere on the planet as well as track details of internal connectingflights. As at 31 December 2006, the carrying value of the company's investment in mBloxwas £5.6 million or 66 pence per ordinary share. Medcenter During the period, Medcenter began to see the benefits following the recruitmentof Paul Kelly as Chief Executive Officer and Ray Land as Chief FinancialOfficer, with gross margins having been increased substantially and greateroperational efficiency. The business traded broadly in line with its internalforecasts. As at 31 December 2006, the carrying value of the company's investment inMedcenter was 4 pence per ordinary share. Po Na Na Since the restructuring of the business in June 2006 sound progress has beenmade. The site EBITDA for the bars and clubs acquired for the first six monthssince the restructuring was £0.52 million. This was 14% ahead of the internalforecast set at the time of the restructuring, with sales for that period being7% ahead on a like for like basis. In the second half, the business continues totrade ahead of the internal forecast and ahead of sales on a like for likebasis. Barclub has a very experienced and sound management team and is now consideringa number of expansion opportunities both organically and by merger andacquisition. As at 31 December 2006, the carrying value of the company's investment inBarclub was £6.9 million or 82 pence per ordinary share. As at 30 June 2006 thecarrying value of the company's investment in Barclub was £7.5 million. Thereduction of £0.6 million is represented by repayments made by Barclub to thecompany under the loan arrangements in place. Others In relation to the remainder of the legacy investments in the group's portfolio,as previously indicated, the board continues to seek ways of maximising thevalue to the group. As at 31 December 2006 the aggregate carrying value of theinvestment in these companies was £131,000. Property On 26 March 2007 the company agreed to sell its leasehold office in London for£700,000 which showed an excess of £376,000 over the book value to the property.This excess has not been reflected in the Interim Accounts. Purchase of own shares During the period, the company made purchases of 118,160 of its own shares at anaverage price per share of 123 pence. Since 31 December 2006, the company made purchases of a further 50,000 of itsown shares with an average price per share of 122 pence. The board reaffirms its policy of the company making purchases of its own sharesin circumstances where it believes the net asset value per share is likely to beincreased. J M Fellerman R H Kleiner 27 March 2007 Group Profit and Loss Account for the six months ended 31 December 2006 6 months 6 months 12 months ended ended ended 31 Dec 31 Dec 30 June 2006 2005 2006 £000 £000 £000Turnover - continuing operations 6,973 9,552 17,107Cost of sales (1,158) (1,758) (3,153) Gross profit 5,815 7,794 13,954 Operating expenses:Administrative expenses - exceptional (698) (119) (687)Administrative expenses - others (6,160) (8,347) (16,062) (6,858) (8,466) (16,749)Operating loss (1,043) (672) (2,795)Operating loss - continuing operations (1,043) (672) (2,795)Profit on disposal of investments - - 96Loss on disposal of tangible assets - - (273) Interest receivable 41 234 352Interest payable - (199) (185)Loss on ordinary activities before taxation (1,002) (637) (2,805) Taxation - - -Minority interest 182 222 113Retained (loss)/profit for the period (820) (415) (2,692) Loss per share - basic and diluted (9.13)p (4.40)p (29.01)p Statement of total recognised gains and losses 6 months 6 months 12 months ended ended ended 31 Dec 31 Dec 30 June 2006 2005 2006 £000 £000 £000(Loss)/profit for the period (820) (415) (2,692)Revaluation of fixed asset investments - - 1,984(Loss)/profit for the period attributable to members of (820) (415) (708)the parent company Group Balance sheetAt 31 December 2005 6 months 6 months 12 months ended ended ended 31 Dec 31 Dec 30 June 2006 2005 2006 £000 £000 £000Fixed AssetsGoodwill - positive goodwill 4,076 4,566 4,214Tangible assets 1,406 1,927 1,513Fixed asset investments 6,411 6,407 6,362 11,893 12,900 12,089Current AssetsStock 163 345 201Debtors 1,233 1,807 846Cash at bank and in hand 1,690 8,884 1,083 3,086 11,036 2,850Creditors: amounts falling due within one year (1,309) (3,931) (129)Net current assets 1,777 7,105 2,721Total assets less current liabilities 13,670 20,005 14,810Creditors: amounts falling due after more than one year (10) (1,677) -Minority interest loan account - (107) -Net Assets 13,660 18,221 14,810 Capital and ReservesCalled up share capital 5,060 5,602 5,131Revaluation reserves 1,984 2,125 1,984Capital redemption reserves 1,164 622 1,093Other reserves 2,045 2,045 2,045Minority interests (182) (189) 1Profit and loss account 3,589 8,016 4,556Shareholders' funds 13,660 18,221 14,810 Approved by the board on 27 March 2007 Richard Kleiner Julian Fellerman Group Statement of Cash flows For the period ended 31 December 2005 6 months 6 months 12 months ended ended ended 31 Dec 31 Dec 30 June 2006 2005 2006 £000 £000 £000Net Cash inflow/(outflow) from operating activities 299 1,509 (2,416)Returns on investments and servicing of financeInterest received 41 234 352Interest paid - (199) (185)TaxationCorporation tax paid - - - Capital expenditure and financial investmentsPurchase of tangible fixed assets (74) (302) (459)Purchase of intangible assets (183) - -Purchase of investments (52) (1,760) (2,081)Proceeds from sale of tangible assets 3 16 4Receipts from sales of fixed asset investments - - 27Net cash outflow from capital expenditure and financial (306) (2,046) (2,509)investment Acquisitions and disposalsPurchase of minority interest in subsidiary undertaking - - -Net cash outflow from acquisition and disposal - - - Net cash inflow/(outflow) before management of liquid 34 (502) (4,922)resources and financing Management of liquid resourcesMovement of liquid resources (20) 2,056 9,314 FinancingPayments for share buy back (147) (874) (2,050)New long term borrowings - (1,187) -Repayment of other loans - - (2,752)Issue of shares by group companies to minority - - 80shareholders(Decrease)/Increase in cash in the year (133) (507) (330) Note to the Group Statement of CashflowsReconciliation of operating loss to net cash outflow fromoperating activitiesOperating loss (1,043) (672) (2,795)Depreciation 181 203 434Goodwill amortisation 321 86 396Provision against diminution in investments - 25 223Loss on sale of tangible assets - 136 -Decrease/(Increase) in stock 38 22 84(Increase)/Decrease in debtors (387) (235) 2Increase/(Decrease) in creditors 1,189 1,944 (541) 299 1,509 (2,416) Notes to the Accounts 1. Basis of preparation of interim financial information Accounting conventionThe interim accounts are prepared under the historical cost convention and inaccordance with applicable accounting standards. Basis of consolidationThe group accounts consolidate the financial statements of the company and itssubsidiary undertakings, including Barclub Limited, drawn up to 31 December. Noprofit and loss account is presented for the company as permitted by section 230of the Companies Act 1985. Fixed asset investmentsFixed asset investments, comprising equity shares and share options, are statedat the lower of cost and valuation and in accordance with the "Guidelines forthe valuation and disclosure 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 established companies 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 ismade for any uplift in value after the balance sheet date. 2. Exceptional items 6 months 6 months 12 months ended ended ended 31 Dec 31 Dec 30 June 2006 2005 2006 £000 £000 £000Provision for impairment of fixed asset investments - 25 223Deal and merger costs: - Redundancy costs 340 - 354 - Cost on share buy back 1 7 -Restructuring charges 334 46 56Abortive deal costs 23 41 54 119 119 687 3. Year ended 30 June 2006 The figures for the full financial year ended 30 June 2006 are not the Group'sstatutory accounts for that financial year within the meaning of section 240 ofthe Companies Act 1985. Those accounts have been reported on by the Group'sauditors and delivered to the registrar of companies. The report of the auditorswas unqualified and did not contain a statement under section 237(2) or (3) ofthe Companies Act 1985. 4. Commitments The company has a cash commitment in respect of one of its investments, namelyXDL Intervest (USA) Limited Partnership. The company was originally committed topay a total of CAN$1m to XDL Intervest (USA) Limited Partnership but thecommitment has now been capped at CAN$800,000. As at 31 December 2006,CAN$668,000 had been paid leaving an outstanding commitment of CAN$132,000. 5. Contingent liabilities The company has entered into a guarantee of the obligations of Barclub Limitedin respect of its lease at its Edinburgh site. The annual rent of Barclub'sEdinburgh site is £57,000. 6. Pro-Forma information The Accounting Standards require the Group to consolidate Barclub Limited.Shareholder may find it useful to see the separate trading results and netassets of Avanti and Barvest as shown in this Pro-Forma. Avanti Barclub Adjustments Group TotalProfit & Loss £000 £000 £000 £000 £000 £000 £000TURNOVER - continuing operations 92 6,934 (53) 6,973Less : Cost of sales 0 (1,158) (1,158) Gross profit 92 5,776 5,815 Operating expenses Administrative expenses (446) (5,256) 53 (5,649)EBITDA (354) 520 166 Depreciation & goodwill (8) (503) (511)amortisationInterest payable 0 (114) 114 0Interest receivable 155 0 (114) 41 155 (114) 41(Loss)/profit on ordinaryactivities before taxationand exceptional items (207) (97) (304)Exceptional items (339) (359) (698)(Loss)/profit on ordinary (546) (456) (1,002)activities before taxationTaxation 0 0 0(Loss)/profit on ordinary (546) (456) (1,002)activities after taxationMinority interest 0 0 182 182 (Loss)/profit for the period (546) (456) £(820)after minority interest Avanti Barclub Adjustments Group TotalNet assets £000 £000 £000 £000Fixed assets Goodwill 0 6,098 (2,022) 4,076 Tangible assets 328 1,078 1,406 Investments 13,487 0 (7,076) 6,411 13,815 7,176 11,893Current assets Stock 0 163 163 Debtors 155 1,099 (21) 1,233 Cash at bank and in-hand 1,539 151 1,690 1,694 1,413 3,086Creditors: amounts falling due within one year 71 1,259 21 1,309Net current assets 1,623 154 1,777 15,438 7,330 13,670Creditors: amounts falling due after one year Shareholders' loans 0 (7,776) 7,776 0 Other creditors 0 (10) (10) 0 (7,787) (10)Net Assets 15,438 (456) (1,322) 13,660 Represented by: Share capital 5,060 0 (0) 5,060 Revaluation reserves 1,984 0 1,984 Capital redemption reserves 1,164 0 1,164 Other reserves 2,045 0 2,045 Minority interest 0 0 (182) (182) Profit & loss account 5,185 (456) (1,140) 3,589Shareholders' funds 15,438 (456) (1,322) 13,660 Copies of this Announcement will be available, free of charge, from thecompany's office at 2 Motcomb Street, London, SW1X 8JU for a period of 1 monthfrom the date of this Announcement. A copy of this Announcement will also beavailable on the company's website. Independent review report to Avanti Capital plc Introduction We have been instructed by the company to review the financial information forthe six months ended 31 December 2006, which comprises the Group Profit and LossAccount, Group Statement of Total Recognised Gains and Losses, Group BalanceSheet, Group Cash Flow Statement and the related notes 1 to 4. We have read theother information contained in the interim report and considered whether itcontains any apparent misstatements or material inconsistencies with thefinancial information. This report is made solely to the company in accordance with guidance containedin Bulletin 1999/4 'Review of interim financial information issued by theAuditing Practices Board. To the fullest extent required by the law, we do notaccept or assume responsibility to anyone other than the company, for our work,for this report, or for the conclusions we have formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing 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 guidance contained in Bulletin 1999/4 'Review of interim financial information' issued by the Auditing PracticesBoard for use in the United Kingdom. A review consists principally of makingenquiries of management and applying analytical procedures to the financialinformation and underlying financial data, and based thereon, assessing whetherthe accounting policies and presentation have been consistently applied, unlessotherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance with UnitedKingdom Auditing Standards and therefore provides a lower level of assurancethan an audit. Accordingly we do not express an audit opinion on the financialinformation. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 31 December 2006. Ernst & Young LLP London 27 March 2007 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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