RNS Number:8631S
Advance Visual Communications PLC
13 March 2002
13 March 2002
Advance Visual Communications plc
('AVC' or 'the Company')
Interim results for the six months ended 31 December 2001
Highlights
• Restructuring focuses AVC on core marketplace in the UK
• Restructuring delivers annualised cost savings of over GBP 2 million
• Additional focus on evolving technologies such as wireless enterprise data
market
• Turnover in the period at GBP 778,000 (2000: GBP 1,069,807)
• Losses before amortisation and depreciation at GBP 1,233,000 (2000: GBP
1,174,198)
• Cash balance at end of period at GBP 1,067,000
• Following the completion of the restructuring Chief Executive Officer will
resign. Ali Amiri, Sales and Alliances Director to be appointed as Group
Managing Director
Chairman, Barclay Douglas said:
"The first half of our financial year to 31 December 2001 proved to be a very
difficult period for the Company. The marketplace and general economic
conditions continued to deteriorate and were compounded by the tragic events of
11 September.
"For the remainder of the current year ending 30 June 2002, contract wins are
essential to reach break even and reduce cash burn. Your Board and management
team are striving to safeguard the Company and to move it towards
profitability."
For further information:
Massoud Amiri, Chief Executive Officer
Advance Visual Communications plc 020 7554 8680
Alex Borrelli, Director - Head of Corporate Broking
Shore Capital & Corporate LTD 020 7408 4090
David Rydell / Billy Clegg
Bell Pottinger Financial 020 7861 3867
Advance Visual Communications plc
('AVC' or 'the Company')
Interim results for the six months ended 31 December 2001
Chairman's Statement
The first half of our financial year, being the six months to 31 December 2001
proved to be a very difficult period for the Company. The marketplace and
general economic conditions continued to deteriorate and were compounded by the
tragic events of 11 September.
As a result, during this period, AVC's web agencies in Paris and Berlin failed
to perform to our expectations while the existing businesses in Bradford and
Geneva suffered a distinct slow-down. Paris and Berlin were not contributing
towards covering central overheads while the internet production centre in
Sophia, Antipolis had become severely underutilised and therefore no longer
viable.
The strategic review which I referred to in my last report included an extensive
search for a merger partner or acquirer in conjunction with our professional
advisors at the time. This search, which had been initiated in May, was
ineffective as the level of corporate transactions in the market had come to a
virtual stand still. There was also very limited appetite to a potential
fund-raising from institutional shareholders. Your Board concluded that, in
order to preserve the Company and reduce radically cash outflows, we had to
focus on our core UK activities and abandon our pan-European business model.
Consequently, in November 2001 the directors of our European subsidiaries were
informed that the Company could no longer finance their operations and that they
needed to take appropriate measures. Subsequently, Advance eProductions SAS in
Sophia Antipolis, France, filed for liquidation. Advance Visual Communications
GmBH in Berlin filed for closure. Advance Visual Communications SARL in Paris
was sold back to its management for approximately GBP 9,000. Advance Visual
Communications SA in Geneva, whose clients and operations were wholly dependent
on the production centre in Sophia Antipolis, sold its non cash assets,
operations and clients to Label Communication SA, a Swiss web agency, for
approximately GBP 50,000.
The total shares issued for the acquisition of all of the above subsidiaries
amounted to 17.8 million shares, or 11% of AVC's outstanding shares. While the
dilution for those acquisitions was not substantial, the professional fees
related to the acquisitions and particularly the continued financing of the
loss-making operations had been exerting considerable strain on AVC's cash flow.
Overall, staff numbers were reduced from 70 to 25, including reductions in the
head office and the resignation of two AVC Directors. The resultant reduction in
operational cost is more than GBP 2 million per annum, which is in addition to
the August cost-cutting initiatives already announced of around GBP 800,000 per
annum.
Group revenues for the six months ended 31December 2001 were GBP 778,000 of
which Internet Professional Services revenues were GBP 667,000. This is a 27%
drop from the same period's revenue in 2000 of GBP 1,070,000. The drop in
revenues is principally due to a 73% drop in Video, Multimedia and Events sales.
In contrast, Internet Professional Services revenues in our UK operations grew
64% to GBP 270,000. Geneva's Internet revenues, however, dropped 20% to GBP
344,000.
Discontinued operations (Geneva, Paris, Sophia Antipolis and Berlin) accounted
for 51% of the Group's revenues but accounted for 62% of operating costs at the
EBITDA level when head office costs are excluded. The continuing UK operations
account for the remaining 49% of sales. 71% of the UK revenues were Internet
based.
Losses after taxation for the six-month period were GBP 3,074,000. A substantial
proportion of this figure relates to two non-cash charges comprising GBP
1,752,000 write-off of goodwill associated with the discontinued operations and
GBP 95,000 of depreciation. Losses before amortisation and depreciation for the
period were therefore GBP 1,233,000 of which GBP 498,000 is associated with
discontinued operations. GBP 152,000 related to non-recurring costs for legal
and professional services connected with the restructuring. Thus, losses before
amortisation and depreciation of GBP 584,000 are actually linked with our
current ongoing operations. Current annualised operational cost has been reduced
to GBP 1.5 million from GBP 4.25 million at the start of our fiscal year.
The cash balances at the end of the period were GBP 1,067,000. By the 28
February 2002, this had reduced to GBP 850,000, of which GBP 245,000 remains
within the Swiss subsidiary currently in the process of closure (most of the
cash is deemed recoverable).
After completing the remaining details of this complicated restructuring,
Massoud Amiri is resigning as Chief Executive Officer and Director of AVC at the
end of March. Ali Amiri will be appointed as Managing Director. The Board
believes that Ali Amiri and the existing executive team who have been managing
the sales and operations of the group while Massoud was focusing on a rapid
restructuring are well-placed to drive the Company forward in its new form.
On behalf of the Board of AVC, I would like to thank Massoud Amiri for leading
the Company during a very turbulent economic period. He engineered AVC's
turnaround while it was still on Ofex in 1999, managed its AIM flotation in 2000
and its European endeavours in 2001. Although our original business plan and
ambitions have not materialised, the survival of the Group is partly owed to the
decisive cost cutting and restructuring actions he and his team undertook on
several occasions. We wish him well in his future endeavours.
It is also important to note that Interactive Horizons Limited (IHL), Massoud
Amiri's original investment backers, who own 35% of AVC's shares and in which
both Massoud and Ali Amiri have beneficial interests, have indicated their
continuous support for the Company and have no present intention to dispose of
their shareholdings.
Moving forward, Advance Digital Productions Limited in Bradford and Advance
London Limited (previously xoo), continue providing Internet, Digital Video,
Multimedia and Events services to clients. We have also decided to focus on
evolving technologies and forge alliances and partnerships with leading
providers of these technologies.
The wireless enterprise data market is set to grow rapidly with the advent of
2.5G (GPRS) networks. AVC has entered into a reseller partnership with BT
Cellnet's BlackBerry wireless e-mail solution offering in the UK as a foray into
this growing market. We have started building a pipeline of opportunities since
January and expect a four to five month sales cycle for this product.
Additionally, we have entered into a reseller partnership with Onset Technology
to enhance our core BlackBerry offering by enabling the reading of e-mail
attachments. Management seeks further alliances which could enhance revenues
from the wireless client base we are targeting.
Due to the rapid prevalence of web sites in corporations and government
organisations, Content Management Solutions (CMS) has become a rapidly growing
market. These middleware solutions enable non-technical line managers to update
and manage web sites quickly and cost-effectively. AVC is in the process of
partnering with a major European mid-market CMS provider and we expect to make
an announcement shortly. Along with our own internally-produced 'Trinity'
solution covering low-end content management solutions, we are positioning
ourselves to exploit this growing segment of the market. In particular, we will
be focusing on the government sector where we believe demand is strong and AVC
has established trading experience.
For the remainder of the current year ending 30 June 2002, contract wins are
essential to reach break-even and reduce cash burn. Your Board and management
team are striving to safeguard the Company and to move it towards profitability.
Barclay Douglas
Chairman of the Board
Advance Visual Communications PLC
Consolidated Profit and Loss 6 months ended 6 months ended 12 months ended
Account
31 December 2001 31 December 2000 30 June 2001
(unaudited) (unaudited) (audited)
Turnover
GBP GBP GBP
Continuing operations 311,563 1,069,807 2,053,783
Acquisitions 67,678 - -
Discontinued operations 398,264 - -
----------- ----------- ------------
777,505 1,069,807 2,053,783
----------- ------------ ------------
Operating loss
Continuing operations (777,182) (1,132,105) (2,553,884)
Acquisitions (24,246) - -
Discontinued operations (527,276) - -
Goodwill written off (1,752,078) (48,048) (101,430)
-------------- -------------- --------------
(3,080,782) (1,180,153) (2,655,314)
Net interest receivable 18,685 5,955 77,302
--------------- --------------- ---------------
Loss on ordinary activities (3,062,097) (1,174,198) (2,578,012)
before taxation
Tax on loss on ordinary (11,807) (17,911) (38,182)
activities
---------------- ---------------- ----------------
Loss on ordinary activities after (3,073,904) (1,192,109) (2,616,194)
taxation
========= ========= =========
Basic loss per ordinary share (1.9)p (1.1)p (2.0)p
(note 3)
Diluted loss per ordinary share (1.9)p (1.1)p (2.2)p
(note 3)
Consolidated Balance Sheet As at As at As at
as at 31 December 2001 31 December 2001 31 December 2000 30 June 2001
Fixed assets (unaudited) (unaudited) (audited)
GBP GBP GBP
Intangible assets 570,223 1,793,148 2,102,457
Tangible assets 264,938 513,670 431,668
Investments - 25,000 -
------------- ------------- -------------
835,161 2,331,818 2,534,125
------------- ------------- -------------
Current assets
Stock and work in progress 11,906 57,586 176,452
Debtors 248,149 363,090 404,635
Cash at bank 1,066,796 3,917,690 2,287,166
------------- ------------- -------------
1,326,851 4,338,366 2,868,253
Creditors: amounts falling due (359,922) (690,850) (693,188)
within one year
------------- ------------- -------------
Net current assets 966,929 3,647,516 2,175,065
------------- ------------- -------------
Total assets less current 1,802,090 5,979,334 4,709,190
liabilities
Creditors: amounts falling due (64,578) (121,502) (39,408)
after more than one year
------------ ------------ ------------
1,737,512 5,857,832 4,669,782
======== ======== ========
Capital and reserves
Called up share capital 1,615,755 1,490,870 1,566,255
Share premium account 6,718,018 6,440,825 6,634,893
Merger reserve 1,562,799 1,562,799 1,562,799
Other reserves (21,025) 14,464 (25,721)
Profit and loss account (8,138,035) (3,651,126) (5,068,444)
-------------- -------------- --------------
Equity shareholders' funds 1,737,512 5,857,832 4,669,782
======== ======== ========
Consolidated Cash Flow Statement 6 months ended 6 months ended 12 months ended
31 December 2001 31 December 2000 30 June 2001
(unaudited) (unaudited) (audited)
GBP GBP GBP
Net cash outflow from operating (1,121,830) (960,603) (2,506,448)
activities (note 4)
Returns on investments and servicing of
finance
Interest received 24,878 14,480 94,520
Interest element of finance lease (6,193) (8,525) (17,218)
rentals
----------- ----------- -----------
Net cash inflow from returns on
investments and servicing of finance 18,685 5,955 77,302
Purchase of tangible fixed assets (41,234) (119,563) (186,442)
Disposal of tangible fixed assets 11,422 - 38,044
Investment - (25,000) -
----------- ----------- -----------
Net cash outflow from capital
expenditure and financial investment (29,812) (144,563) (148,398)
Acquisitions and disposals
Purchase of subsidiary undertaking (20,856) - (36,049)
Net cash acquired with subsidiary 2,448 - 16,455
------------ ------------ ------------
Net cash outflow from acquisitions and (18,408) - (19,594)
disposals
------------ ------------ ------------
Net cash outflow before financing (1,151,365) (1,099,211) (2,597,138)
--------------- --------------- ---------------
Financing
Capital element of finance lease (33,088) (46,650) (127,546)
rentals
Repayment of long term loans (37,917) (30,000) (69,000)
Issue of ordinary share capital 2,000 5,758,347 5,758,346
Expenses paid in connection with issue - (623,500) (664,048)
of shares
Warrant instrument - (27,848) -
------------- ------------- -------------
Net cash (outflow) / inflow from (69,005) 5,030,349 4,897,752
financing
--------------- --------------- ---------------
(Decrease) / increase in cash (1,220,370) 3,931,138 2,300,614
========= ========= =========
Statement of Total Recognised Gains and 6 months ended 6 months ended 12 months ended
Losses
31 December 2001 31 December 2000 30 June 2001
(unaudited) (unaudited) (audited)
GBP GBP GBP
Loss for the financial period (3,073,904) (1,192,109) (2,616,194)
Currency translation differences 9,009 11,415 (25,270)
--------------- --------------- ---------------
Total recognised gains and losses (3,064,895) (1,180,694) (2,641,464)
relating to the period
--------------- --------------- ---------------
Notes on the Interim Results
1. The results for the 6 months to 31 December, 2001, 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
2001 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 2001 are an abridged
version of the Group's full accounts for that period, which carry
unqualified auditors' 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 2001 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 159,792,153 (2000: 110,395,358). 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 159,792,153 (2000: 111,078,338)
4.
Net cash outflow from operating 6 months ended 6 months ended 12 months ended
Activities 31 December 2001 31 December 2000 30 June 2001
(unaudited) (unaudited) (audited)
GBP GBP GBP
Operating Loss (3,080,782) (1,180,153) (2,655,314)
Depreciation 95,192 136,158 185,051
Amortisation of intangible assets 1,752,078 - 101,430
Provision against investment - - 25,000
Loss on sale of fixed assets 121,280 - 25,556
Decrease/(increase) in stock 164,546 9,340 (109,526)
Decrease in debtors 173,410 163,285 125,531
Decrease in creditors (356,563) (93,880) (152,558)
Non cash movement 9,009 4,647 (51,618)
-------------- ------------- ------------
Net cash outflow from operating
activities (1,121,830) (960,603) (2,506,448)
--------------- ------------- ------------
5.
Reconciliation of movements in 6 months ended 6 months ended 12 months ended
Group shareholders funds 31 December 2001 31 December 2000 30 June 2001
(unaudited) (audited)
(unaudited)
GBP
GBP GBP
Loss for the financial period (3,073,904) (1,192,109) (2,616,194)
Issue of warrants - (27,848) -
Issue of shares 132,625 5,758,348 6,040,500
Expenses paid in connection with
issue of shares - (623,500) (664,048)
Exchange rate movement on other
reserves 9,009 4,647 (25,270)
Transfer to profit and loss of
lapsed warrant instrument - - (3,500)
-------------- -------------- ------------
Net (reduction in) /addition to
shareholders funds (2,932,270) 3,919,538 2,731,488
Opening shareholders funds 4,669,782 1,938,294 1,938,294
------------- ------------- ------------
Closing shareholders funds 1,737,512 5,857,832 4,669,782
------------- ------------- ------------
6. The Registered Office of the Company is The Dyehouse, Dyehouse
Drive, West 26, Bradford, BD19 4TY. Copies of the Annual Report,
Accounts and Six Months Interim Accounts may be obtained from the
Company Secretary at this address.
This information is provided by RNS
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