RNS Number:6986T
Real Affinity PLC
29 December 2003
REAL AFFINITY PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2003
Overview:
+ *Gross profit up to #1.24m (2002: #1.22m), on turnover of #2.46m
(2002: #2.64m).
+ *26% reduction in operating expenses to #0.94m (2002: #1.27m)
+ *18% reduction of our central overheads to #0.19m (2002: #0.23m)
+ *Performance across all divisions has been extremely encouraging
+ *New contracts won include significant deal with DaimlerChrysler
Services
+ *Organic growth plays a key role in the development of the Company
+ *Committed to identifying synergistic acquisition opportunities as
market conditions improve
Real Affinity Chief Executive Mark Richardson said: "The Company is now emerging
from a period of difficulty that affected the entire marketing sector as budgets
were slashed and projects scrapped. With a more positive sentiment prevailing,
we are now seeing increased signs of recovery as companies begin to invest more
in accountable marketing, which remains a key tool in promotional activity. Your
Company is well placed to benefit from this improvement in confidence, which
should enable us to grow organically and take advantage of acquisition
opportunities. We remain committed to establishing a leading independent group
of autonomous branded companies offering dedicated and cost effective marketing
services."
Chairman's Statement
The last six months has seen a marked improvement both in general confidence
within the marketing sector and the performance of Real Affinity. We have
focused on our strengths, improved our business proposition and significantly
reduced our cost structure, all of which have contributed to an increase in
gross margin and a return to profitability.
The unaudited interim results for the six-month period ending 30 September 2003,
show a gross profit of #1.24m (2002: #1.22m), on turnover of #2.46m (2002:
#2.64m). These figures reflect the 26% reduction in operating expenses to #0.94m
(2002: #1.27m), and an 18% reduction of our central overheads to #0.19m (2002:
#0.23m). Pre-tax profit was #0.22m (2002: loss of #0.49m) while EBITDA improved
162% to #0.14m.
Our performance across all divisions has been extremely encouraging mainly
because we have stuck to our principles and successfully focused on our core
offerings.
Ladders, our full service direct marketing division and main subsidiary, has
been performing well with client activity running to expectation. Importantly
and after a competitive tender, we won a contract with DaimlerChrysler Services,
to handle both its direct marketing and customer relationship management (CRM)
initiatives. This deal will contribute to our future financial performance and
underpins our increased confidence going forward. With strong client retention
we have consolidated our business and reported an operating profit of #202,801
against a loss of #248,922 last time.
Ecomextra, our new media division, has won a number of contracts in the
education and local government sectors. In the six-months to 30 September 2003,
it made operating profits of #17,849 (2002: loss of #8,439).
As well as expanding our client base we are also increasing the levels of
activity with existing clients. Our extensive blue chip list now includes
amongst others, Parcelforce Worldwide, Green Flag Motoring Assistance,
InterContinental Hotel Group, Rizla and Procter & Gamble Professional. I am also
pleased to report that we have had no major client loss since the beginning of
the financial year.
Real Affinity is positioned to make a significant contribution to improving the
profile and effectiveness of its clients. Despite intense competition, we are
capitalising on our skills and track record to ensure that we are a preferred
provider of marketing services to existing and future clients. Although organic
growth plays a key role in the development of the Company, we remain committed
to identifying synergistic acquisition opportunities as market conditions
improve. We are currently in a number of discussions, which we hope we will be
able to report on shortly.
We have been through some very lean times in the last two years, but are now
optimistic for the future. We remain committed to building a group of
entrepreneurial companies who can advise clients on how best to build successful
customer relationships and to add value to their brand. I should like to thank
all our clients for their continuing support and our employees for their loyalty
and hard work, without whom the very real progress which has been made in the
past six months, would not have been possible.
Tony Douglas
Chairman
PROFIT AND LOSS ACCOUNT
6 months ended 30 6 months ended 30
September 2003 September 2002
# #
Turnover 2,465,206 2,645,086
Costs of sales (1,223,572) (1,417,350)
------------------ ----------------
Gross profit 1,241,634 1,227,736
Other operating expenses (1,210,912) (1,588,213)
------------------ ----------------
Operating profit /(loss) 30,722 (360,477)
Cost of reorganisation 0 (120,347)
Interest receivable/(payable) (8,261) (13,310)
and similar income
------------------ ----------------
Profit on ordinary activities 22,461 (494,134)
before taxation
Taxation 6,738 0
----------------- ----------------
Retained profit 15,723 (494,134)
------------------ ----------------
The operating profit for the period arises from the Company's continuing
operations.
No separate Statement of Total Recognised Gains and Losses has been presented as
all such gains and losses have been dealt with in the Profit and Loss Account.
BALANCE SHEET
As at 30 As at 30
September 2003 September 2002
# #
Fixed assets
Intangible assets 746,466 847,433
Tangible assets 118,920 277,999
----------------- ----------------
865,386 1,125,432
----------------- ----------------
Current assets
Stock 100,283 38,020
Debtors due within one year 683,134 1,089,895
Debtors due after more than one 598,632 0
year
Cash at bank and in hand 76,124 1,786
----------------- ----------------
1,458,173 1,129,701
Creditors: amounts falling due (1,901,583) (1,510,210)
within one year
----------------- ----------------
Net current liabilities (443,410) (380,509)
----------------- ----------------
Total assets less current 421,976 744,923
liabilities
Creditors: amounts falling due (126,011) (58,223)
after more than one year
----------------- ----------------
Net assets 295,965 686,700
================= ================
Capital and reserves
Called up share capital 54,946 52,946
Share premium 1,418,690 1,370,690
Profit and loss account (1,177,671) (736,936)
----------------- ----------------
Equity shareholders' funds 295,965 686,700
================= ================
CASH FLOW STATEMENT
6 months ended 6 months ended
30 September 30 September
2003 2002
# #
Cash flow from operating (37,498) (123,572)
activities
Returns on investments and (8,261) (13,310)
servicing of finance ---------------- ----------
Capital expenditure and financial (1,701) 23,814
investment
----------------- ----------
Cash inflow before use of liquid (47,460) (113,068)
resources and financing
Net cash inflow from financing 22,964 (214,885)
------------------ ----------------
Decrease in cash in period (24,496) (327,953)
------------------ ----------------
Reconciliation of net cash flow to 6 months ended 6 months ended
movement in net debt 30 September 30 September
2003 2002
# #
Decrease in cash in period (24,496) 327,953
Cash outflow from decrease in debt 27,036 0
and lease financing
------------------ ----------------
Change in net debt resulting from 2,540 (214,885)
cash flows
------------------ ----------------
Movement in net debt for period (2,540) 113,068
Opening net debt (580,857) (306,852)
------------------ ----------------
Closing net debt (578,317) (419,920)
------------------ ----------------
Note to the Consolidated 6 months ended 6 months ended
cashflow statement 30 September 30 September
2003 2002
# #
Operating profit/(loss) 30,722 (360,477)
Cost of fundamental 0 (120,347)
reorganisation
Depreciation and 109,560 137,599
amortisation --------------------- ---------
Loss/(profit) on sale of 0 0
fixed assets
Decrease/(increase) in 7,072 80,838
stocks
Decrease/(increase) in 280,282 292,189
debtors ---------------------- ---------
Increase/(decrease) in (465,134) (153,374
creditors
----------------- -----------------
(37,498) (123,572)
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The company news service from the London Stock Exchange
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