RNS Number:3410A
Advance Visual Communications PLC
13 March 2001
Advance Visual Communications plc
Interim Results for the Six Months ended 31 December 2000
Highlights
* Year on year turnover up 234% to #1,069,807 (1999:
#320,341)
* Pre-tax losses #1,174,198, reflecting increased
investment (1999: loss of #539,184)
* Successful move in November 2000 from Ofex to
Alternative Investment Market
* Company raised #5 million by way of institutional
placing
* Appointment of Barclay Douglas, former Director of
Mercury Asset Management, as Chairman strengthening
management team
* Strategic review of cost structure achieves savings of
#500,000 per annum
* 40% of revenues generated outside of UK, less than 5%
ofrevenues from dot coms
* Post interim period, successful acquisition of Paris
based Webmania
Barclay Douglas, Chairman of Advance Visual Communications said:
"In the second half of this financial year we look forward to
making further acquisitions, developing our sales and marketing
capabilities and achieving improved operational efficiencies as
the capacity utilisation of our centralised production facility
increases. Advance's 78 strong multinational team is on track in
building the Company into a significant European IPS player."
For further information:
Advance Visual Communications
0207 830 9740
Massoud Amiri - Chief Executive
07899 756 060
Bell Pottinger Financial
0207 353 9203
David Rydell
07498 646 021
Billy Clegg
07977 578 153
Chairman's Statement
Six Month Period ending 31 December 2000
The first half of this financial year has been a decisive period
for your Company. In November, despite a dramatic drop in the
market valuation of Internet Professional Service (IPS)
companies, Advance moved from Ofex onto the AIM market raising
#5 million at 10p per share as part of the flotation process.
Shareholders now include several well-known investing
institutions. We welcome this broadening of the shareholder
base. The flotation proceeds secures the Company's financial
position and will allow management to focus upon the
implementation of its strategy to buy and build a pan-European
business.
During the flotation process, the board recognised the changing
environment for technology companies and that investor's
requirements were shifting more acutely to focus on a company's
prospects of reaching break-even, rather than rapid expansion.
Consequently, in December, your management cut 11 jobs across
all departments and closed down Advance Presentation Products
which was the under-performing Equipment Hire and Sales
subsidiary. The cost of the redundancies was #32,000 and the
savings achieved were #210,000 per annum. In January 2001, post
balance sheet, Advance Software Development was shut down. The
cost of redundancies was #53,000 and the additional savings were
#228,000 per year. In total the staff headcount has been
reduced by 19, which was at the time 21% of our work force.
Considering additional cuts in other non-core expenses, such as
company cars etc., management has achieved more than #500,000 of
annualised cost savings, which will improve the Company's
prospects for reaching profitability sooner than would otherwise
have been possible.
Despite the requirement for increased management time during the
flotation process, the company's sales growth was not seriously
affected. Sales for the six months ending December were
#1,069,807, up from #320,341 in the same period last year. The
growth is derived both from organic growth in the Bradford
operations and as a result of the acquisition of Voxel in
Switzerland and France. The Company has changed its year-end to
June and this first half performance can perhaps be compared
more meaningfully to sales for the preceding nine months to 30th
June 2000 of #1,227,003. In terms of a run rate, this equates to
a 30% increase. Of particular interest is the split in revenues.
Some 51% was derived from Internet projects, 25% from Video and
Events, 18% from Multi Media and the remaining 6% from Equipment
Hire and Sales, which has been since discontinued. After-tax
losses for the period were #1,192,109. This is partially
associated with the non-core overheads prior to the cost cutting
exercise and also reflects the basic cost structure necessary to
facilitate a pan European acquisition strategy.
With the European IPS market growth estimated to remain strong
over the next three years, the shift in the sales mix is
encouraging, considering that Advance had practically no
Internet sales during this period last year. In addition, 40% of
revenues were derived from Switzerland, significantly reducing
Advance's dependency on any single country or client. We
believe that both of these positive trends - the shift in
revenue mix towards the internet and the territorial spread of
revenues - will continue to improve throughout this financial
year. Advance continues to focus on blue chip and mid size
clients, assisting them to harness the Internet in order to
increase margins and improve their operational efficiencies. Dot
com clients constitute less than 5% of revenues.
Our Central Production Facility in Sophia Antipolis in the South
of France employs 29 software engineers, designers and
consultants, covering the full range of necessary skills for
delivering the sophisticated internet products, which our
clients such as the Private Swiss Banks require. Because of this
facility, we can offer a much broader product range to the
clients of the Internet Agencies that we acquire. All the
operational and low cost benefits associated with a Central
Production Facility will become more apparent as the acquisition
programme progresses and the Company achieves critical mass.
In January, we announced the acquisition of WebMania in Paris in
an all paper deal for #100,000 with an additional #35,000
consideration payable in shares if the company achieve sales of
#600,000 during the following nine months. This acquisition
provides Advance with a knowledgeable team of consultants and
account managers as a foundation for growing our sales
activities in France. It also brings with it a group of
attractive clients. Your management is pursuing talks with a
number of companies in Berlin and London as part of its ambition
to grow the business through acquisition.
In the areas of sales and marketing we are actively pursuing
clients which we perceive to have requirements for our
expertise. The new business development is supported by a full
marketing effort consisting of an upgraded web site, brochures,
case studies and support material. I recommend that you visit
our web site (www.advancevisual.com) to see for yourself what
has been achieved. The outcome of these new initiatives will
begin to become apparent in the second half of this financial
year. The objective is to generate a healthy flow of new
clients to compliment our high level of repeat business.
In the second half of this financial year we look forward to
making further acquisitions, developing our sales and marketing
capabilities and achieving improved operational efficiencies as
the capacity utilisation of our centralised production facility
increases. Advance's 78 strong multinational team is on track
in building the Company into a significant European IPS player.
Barclay Douglas
Chairman of the Board
March 2001
Advance Visual Communications PLC
Consolidated Profit and Loss Account
Proforma
6 months 6 months
ended ended 9 months
31 December 31 December ended
2000 1999 30 June 2000
(unaudited) (unaudited) (audited)
# # #
Turnover
Continuing operations 1,003,916 290,619 1,105,498
Discontinued operations 65,891 29,722 121,505
------------- ------------- -------------
1,069,807 320,341 1,227,003
------------- ------------- -------------
Operating loss
Continuing operations (1,149,303) (529,395) (871,053)
Discontinued operations (30,850) 4,767 (93,453)
------------- ------------- -------------
(1,180,153) (524,628) (964,506)
Net interest
receivable/(payable) 5,955 (14,556) (26,221)
------------- ------------- -------------
Loss on ordinary
activities before
taxation (1,174,198) (539,184) (990,727)
Tax on loss on ordinary
activities (17,911) - (8,397)
------------- ------------- -------------
Loss on ordinary
activities after
taxation (1,192,109) (539,184) (999,124)
============= ============= =============
Basic loss per ordinary
share (note 3) (1.1)p (1.3)p (1.6)p
Diluted loss per ordinary
share (note 3) (1.1)p (1.2)p (1.6)p
Consolidated Balance Sheet as at 31 December 2000
Proforma
As at As at
31 December 31 December As at
2000 1999 30 June 2000
(unaudited) (unaudited) (audited)
# # #
Fixed Assets
Intangible assets 1,793,148 404,826 1,841,196
Tangible assets 513,670 442,449 482,216
Investments 25,000 - -
------------- ------------- -------------
2,331,818 847,275 2,323,412
------------- ------------- -------------
Current assets
Stock 57,586 733 66,926
Debtors 363,090 223,677 526,375
Cash at bank 3,917,690 - -
------------- ------------- -------------
4,338,366 224,410 593,301
Creditors: amounts
falling due within one
year (690,850) (602,758) (783,384)
------------- ------------- -------------
Net current assets 3,647,516 (378,348) (190,083)
------------- ------------- -------------
Total assets less current
liabilities 5,979,334 468,927 2,133,329
Creditors: amounts
falling due after more
than one year (121,502) (244,816) (195,035)
------------- ------------- -------------
5,857,832 224,111 1,938,294
============= ============= =============
Capital and reserves
Called up share capital 1,490,870 497,780 832,870
Share premium account 8,003,624 1,377,389 3,526,777
Other reserves 14,464 100,000 30,897
Profit and loss account (3,651,126) (1,751,058) (2,452,250)
------------- ------------- -------------
Equity shareholders funds 5,857,832 224,111 1,938,294
============= ============= =============
Consolidated Cash Flow Statement
Proforma
6 months 6 months
ended ended 9 months
31 December 31 December ended
2000 1999 30 June 2000
(unaudited) (unaudited) (audited)
# # #
Net cash outflow from
operating activities
(note 4) (960,603) (525,989) (901,009)
Returns on investments
and servicing of
finance
Interest received /
(paid) 14,480 (10,064) (13,615)
Interest element of
finance lease rentals (8,525) (4,492) (12,606)
------------ ------------ ------------
Net cash inflow/(outflow)
from returns on
investments and
servicing of finance 5,955 (14,556) (26,221)
Purchase of tangible
fixed assets (119,563) (72,359) (130,181)
Disposal of tangible
fixed assets - - 27,066
Investment (25,000) - -
------------ ------------ ------------
Net cash outflow from
capital expenditure
and financial
investment (144,563) (72,359) (103,115)
Acquisitions and
disposals
Purchase of subsidiary
undertaking - - (35,450)
Purchase of business - - (70,000)
Net cash acquired with
subsidiary - - 17,485
------------ ------------ ------------
Net cash outflow from
acquisitions and
disposals - - (87,965)
------------ ------------ ------------
Net cash outflow before
financing (1,099,211) (612,904) (1,118,310)
------------ ------------ ------------
Financing
Capital element of
finance lease rentals (46,650) (21,410) (78,246)
Repayment of long term
loans (30,000) - (92,550)
Issue of ordinary share
capital 5,758,347 666,425 1,455,667
Expenses paid in
connection with issue
of shares (623,500) (61,908) -
Warrant instrument (27,848) 100,000 31,348
------------ ------------ ------------
Net cash inflow from
financing 5,030,349 683,107 1,316,219
------------ ------------ ------------
Increase in cash 3,931,138 70,203 197,909
============ ============ ============
Statement of Total Recognised Gains and Losses
Proforma
6 months 6 months
ended ended 9 months
31 December 31 December ended
2000 1999 30 June 2000
(unaudited) (unaudited) (audited)
# # #
Loss for the financial
period (1,192,109) (539,184) (999,124)
Currency translation
differences 11,415 - (451)
------------ ------------ -----------
Total recognised gains
and losses relating to
the period (1,180,694) (539,184) (999,575)
------------ ------------ -----------
Notes on the Interim Results
1. The results for the 6 months to 31 December, 2000, which
are neither audited nor reviewed by the auditors have been
prepared on the basis of the accounting policies adopted
for the period ended 30 June 2000 as set out in the
Company's annual report and accounts after taking into
account any accounting standards issued since that date,
none of which have resulted in any changes to the
accounting policies of the company.
2. The results for the period ended 30 June 2000 are an
abridged version of the Group's full accounts for that
period, which carry unqualified auditor's reports and do
not contain any statements under S237 (2) or (3) of the
Companies Act 1985. The full accounts for the period ended
30 June 2000 have been filed with the Registrar of
Companies.
3. The calculation of earnings per share is based on the loss
attributable to shareholders and the weighted average
number of ordinary shares in issue of 110,395,358 (1999:
41,942,958). The calculation of earnings per share on a
diluted basis takes account of the dilutive effect of
outstanding share options giving a weighted average number
of ordinary shares of 111,078,338 (1999: 46,841,953)
4. Net cash outflow Proforma
from operating 6 months 6 months
activities ended ended 9 months
31 December 31 December ended
2000 1999 30 June 2000
(unaudited) (unaudited) (audited)
# # #
Operating Loss (1,180,153) (524,628) (964,506)
Depreciation and
amortisation 136,158 44,294 125,704
Loss/(Profit) on
sale of fixed
assets - (471) 16,834
Decrease/(increase)
in debtors 163,285 23,341 (202,260)
Decrease/(increase)
in stock 9,340 10,231 (21,926)
(Decrease)/increase
in creditors (93,880) (78,756) 145,145
Other non cash
Movements 4,647 - -
------------ ------------ -----------
Net cash outflow
from operating
activities (960,603) (525,989) (901,009)
------------ ------------ -----------
5. Reconciliation of
movements in Proforma
Group shareholders 6 months
funds ended 6 months
31 December ended 9 months
2000 31 December ended
(unaudit 1999 30 June 2000
ed) (unaudited) (audited)
# # #
Loss for the
financial period (1,192,109) (539,184) (999,124)
Issue of warrants (27,848) 100,000 103,500
Issue of shares 5,758,348 754,552 2,917,491
Expenses paid in
connection with
issue of shares (623,500) - -
Shares to be issued - (150,000) (150,000)
Movement on
translation
reserve 4,647 - (451)
------------ ------------ -----------
Net addition
to/(reduction in)
shareholders funds 3,919,538 165,368 1,871,416
Opening shareholders
funds 1,938,294 58,743 66,878
------------ ------------ -----------
Closing shareholders
funds 5,857,832 224,111 1,938,294
------------ ------------ -----------
6. As of 13th March 2001, shareholders interested in 3% or
more of the issued share capital of the company are
Interactive Horizons Ltd, AIM Trust, Singer and
Friedlander and Michael Smith Esq.
7. The Registered Office of the Company is The Dyehouse,
Dyehouse Drive, West 26, Bradford, BD19 4TY. Copies of
the Annual Report and Accounts may be obtained from the
Company Secretary at this address.
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