AVID HOLDINGS PLC
("Avid" or the "Company")
INTERIM STATEMENT FOR THE PERIOD ENDED 30 JUNE 2007
Business Highlights in the Period
* Acquisition of Electro-Mec completed
* Turnover increased from �68,404 (previous six months) to �679,356 in this
period
* Gross profit increased from �39,048 (previous six months) to �228,951 in
this period
* The loss before taxation amounted to �370,937 in line with predictions.
* UK Patent granted for heat sealed products
* Trials of Pill protect successfully completed for a major client
* Electro-Mec's NG feeder launched 4 months early, with first unit sold to
GSK
* Research and development well advanced for a new product in the elderly
healthcare market
Chairman's Statement
During the period under review, Avid has achieved some major milestones with
the acquisition of Electro-Mec and the ongoing commercialisation of its range
of child resistant packaging solutions for blister packed drugs. Encouraging
trials of the new heat sealed products launched back in February have been
taking placeand the company is confident that one of the trials may lead to a
significant contract. More importantly, the UK Patent for this new range has
now been granted. This bodes well for our other Patent applications.
Current trading
Pill protect
The Company continues to make progress in a market sector where protracted lead
times from presentation to contract are the industry norm. The new Pill protect
heat sealed product has been well received and successfully tested by 3 market
leaders with contractual negotiations already in progress with one of the
three. The launch of the heat sealed product under a major brand will enhance
the credibility of the product and could be the catalyst for broader market
penetration. A bespoke product is also being developed with Reckitt Benckiser,
an existing client, for use in Germany. The UK Patent has just been granted for
this product, which allows the company to pursue international opportunities
with confidence both directly and through product licensing arrangements. The
company has already received a number of enquiries to license the range from
suitably qualified companies in Europe, North America and Asia. Discussions are
at an early stage.
Electro-Mec
The acquisition was completed on the 15th March this year and is already
contributing well to the Group's turnover. The launch of the new NGfeeder, a
new generation of its market leading EMF tablet and capsule blister pack
feeder, was accelerated to ensure it was available for the Packaging Exhibition
where it was well received by an international audience. The first feeder was
sold 2 weeks later to GSK, whilst a further unit is being tested by Brecon
Pharmaceuticals, an established client.
A new corporate identity has been created, which presents a modern and
technically innovative image for the company and its products. This has been
extended consistently to marketing collateral materials and will be introduced
to the Trade to launch the European sales campaign in September 2007.
A new and significant project was started in April in the elderly healthcare
market. Early trials have been very successful and have sparked interest from 2
major potential customers for whom we are aiming to have a fully functional
unit available for assessment as early as October 2007. This product will also
incorporate the Pill protect packaging system. Patents are currently being
applied for. To ensure the timely and successful delivery of our business
plans, David Whitaker was appointed as Interim Managing Director in July. David
was previously operations director of AIM listed Business Direct Group plc.
Results for the period ended 30 June 2007
The loss before taxation for the period and loss per share amounted to �370,937
and 0.12 pence per share respectively, in line with management's predictions.
As at 30th June 2007, net assets were �3,259,066 and cash balances amounted to
�226,676 at the same date. The Directors do not propose a dividend at this
time.
Michael Walter
Chairman
CONSOLIDATED INCOME STATEMENT
For the period to 30 June 2007
Six months Year ended Six months
ended 31 December ended
2006
30 June 30 June
2007 2006
(Unaudited) (Audited as (Unaudited
restated) as
restated)
� � �
Revenue 679,356 71,467 3,063
Cost of sales (450,405) (31,301) (1,945)
_______ _______ _______
Gross profit 228,951 40,166 1,118
Administrative expenses (593,174) (489,495) (136,867)
_______ _______ _______
Operating loss (364,223) (449,329) (135,749)
Finance income 18,866 19,649 16,738
Finance expenses (25,580) (76,200) (43,656)
_______ _______ _______
Loss before tax (370,937) (505,880) (162,667)
Income taxes (note 6) - - -
_______ _______ _______
Loss for the period (370,937) (505,880) (162,667)
_______ _______ _______
Basic and diluted loss per share from (0.12)p (0.39)p (0.33)p
continuing and total operations (note 2)
______ ______ ______
STATEMENT OF CHANGES IN EQUITY
For the period to 30 June 2007
Six months Year ended Six months
ended 31 December ended
2006
30 June 30 June
2007 2006
(Unaudited) (Audited as (Unaudited
restated) as
restated)
� � �
Loss for the financial period (370,937) (505,880) (162,667)
Issue of share capital 1,395,470 2,529,306 2,453,050
Increase in reserve for potential share 11,244
issues
_______ _______ _______
Net increase in shareholders equity 1,035,777 2,023,426 2,290,383
Equity at the start of the period 2,223,289 199,863 199,863
_______ _______ _______
Equity at the end of the period 3,259,066 2,223,289 2,490,246
_______ _______ _______
CONSOLIDATED BALANCE SHEET
As at 30 June 2007
As at As at As at
30 June 31 December 30 June
2007 2006 2006
(Unaudited) (Audited as (Unaudited
restated) as
restated)
� � �
ASSETS
Non-current assets
Property, plant and equipment 505,333 52,241 61,806
Goodwill 2,268,745 1,678,668 1,691,523
Other intangible assets 508,579 513,734 510,470
_______ _______ _______
3,282,657 2,244,643 2,263,799
_______ _______ _______
Current assets
Inventories 352,127 6,996 6,996
Trade receivables 331,161 33,377 16,060
Other current assets 129,210 69,686 145,673
Cash and cash equivalents 226,676 235,617 500,938
_______ _______ _______
1,039,174 345,676 669,667
_______ _______ _______
Total assets 4,321,831 2,590,319 2,933,466
_______ _______ _______
EQUITY AND LIABILITIES
Equity attributable to equity holders of
the parent
Share capital 1,903,334 1,070,000 1,045,000
Share premium 2,408,736 1,846,600 1,795,343
Share to be issued reserve 11,244 - -
Retained earnings (1,064,248) (693,311) (350,097)
_______ _______ _______
Total equity 3,259,066 2,223,289 2,490,246
_______ _______ _______
Non-current liabilities
Long-term borrowings 311,570 175,726 207,536
_______ _______ _______
Current liabilities
Trade and other payables 628,318 159,824 162,216
Current portion of long-term borrowings 122,877 31,480 73,468
_______ _______ _______
Total current liabilities 751,195 191,304 235,684
_______ _______ _______
Total liabilities 1,062,765 367,030 443,220
_______ _______ _______
Total equity and liabilities 4,321,831 2,590,319 2,933,466
_______ _______ _______
CONSOLIDATED CASH FLOW STATEMENT
For the period to 30 June 2007
Six months Year ended Six months
ended 31 December ended
2006
30 June 30 June
2007 2006
(Unaudited) (Audited as (Unaudited
restated) as
restated)
� � �
Cash flows from operating activities
Loss before taxation (370,937) (505,880) (162,667)
Adjustments for:
Depreciation 39,002 18,650 973
Investment income (18,866) (19,649) (16,738)
Interest expense 25,580 76,200 43,655
Equity-settled share-based payment 11,244 - -
expense
Increase in trade and other 14,961 329,417 219,214
receivables
Increase in inventories (118,205) - (6,996)
Increase in trade payables (212,187) (271,119) 147,286
_______ _______ _______
Cash generated from operations (629,408) (372,381) 224,727
Interest paid (25,580) (76,200) (43,655)
_______ _______ _______
Net cash from operating activities (654,988) (448,581) 181,072
_______ _______ _______
Cash flows from investing activities
Acquisition of subsidiary net of cash (554,557) (495,726) (1,213,581)
acquired
Purchase of property, plant and equipment (254,421) - (62,219)
Purchase of intangible assets - (13,765) (511,030)
Proceeds from sale of equipment 224,880 1,715 -
Interest received 18,866 19,649 16,738
_______ ______ ______
Net cash used in investing activities (565,232) (488,127) (1,770,092)
_______ ______ ______
Cash flows from financing activities
Proceeds from issue of share capital 995,470 963,491 2,453,050
Proceeds from long-term borrowings 215,809 202,930 -
Payment of debt - - (368,996)
_______ _______ _______
Net cash used in financing activities 1,211,279 1,166,421 2,084,054
_______ ______ ______
Net increase in cash and cash equivalents (8,941) 229,713 495,034
Cash and cash equivalents at beginning of 235,617 5,904 5,904
period
_______ _______ _______
Cash and cash equivalents at end of period 226,676 235,617 500,938
_______ _______ _______
Note A. Acquisition of subsidiary
During the period the Group acquired Electro-Mec (Reading) Limited. The fair
value of assets acquired and liabilities assumed were as follows:
Property, plant and equipment 457,398
Inventories 226,926
Accounts receivable 372,269
Cash 19,613
Trade payables (635,763)
Long-term debt (56,350)
_______
384,093
Goodwill 590,077
_______
Total acquisition cost 974,170
Less:
Cash and cash equivalents acquired (19,613)
Non-cash consideration (400,000)
_______
Cash outflow on acquisition 554,557
_______
Notes to the unaudited interim report
1. Adoption of International Financial Reporting Standards (IFRS)
For all periods up to 31 December 2006 Avid Holdings plc has prepared its
financial statements in accordance with UK Generally Accepted Accounting
Principles (UK GAAP). AIM Rules require that the annual consolidated financial
statements of Avid Holdings plc for the year ended 31 December 2007 be prepared
in accordance with International Financial Reporting Standards (IFRS).
Accordingly, these interim financial statements which are for the six months
ending 30 June 2007 have been prepared for the first time in accordance with
International Financial Reporting Standards and are covered by IFRS1,
First-time Adoption of IFRS.
The information presented within these interim financial statements is in
compliance with IAS 34 `Interim Financial Reporting'.
In preparing these interim financial statements the comparative figures
previously reported under UK GAAP have been restated for the transition to
IFRS. The disclosures required by IFRS 1 regarding the transition for the
relevant periods are given in note 3 below. Other than changes to accounting
policies as a result of the adoption of IFRS, the same accounting policies have
been followed in the interim financial statements as compared to the most
recent annual financial statements.
2. Earnings per ordinary share
The calculation of basic earnings per ordinary share is based on the result for
the period, for continuing operations as well as total acquisitions, and the
weighted average number of shares in issue during the period.
6 months to 6 months to Year ended 31
30 June 2007 30 June 2006 December 2006
Weighted average number of ordinary 309,203,702 48,814,814 129,952,511
shares in issue
Dilutive potential ordinary shares: 10,104,545 2,737,557 -
Employee share options
Loss after tax (�) (370,937) (162,667) (505,880)
Basic earnings per share - pence per (0.12p) (0.33p) (0.39p)
share (p)
There are potentially dilutive employee share options of 10,104,545 in
existence at 30 June 2007 (30 June 2006: 2,737,557) which relate to share
options granted to employees where the exercise price is less than the average
market price of the Company's ordinary shares during the period. These are not
dilutive at present.
3. Transition from UK GAAP to IFRS
As required under IFRS 1, the equity reconciliations at 1 January 2006 (the
transition date for IFRS) and at 31 December 2006 (date of last UK GAAP
financial statements) are set out below. For comparative purposes, the equity
reconciliation at 30 June 2006 is also included to enable a comparison of the
2007 published interim figures
The net effect of adopting IFRS rather than UK GAAP for the year ending 31
December 2006 is to increase total assets from �2,507,355 to �2,590,319,
primarily due to the removal of the amortisation charge on purchased goodwill.
This change also has the effect of reducing the loss on ordinary activities for
the year from �588,844 to �505,880.
Reconciliation of UK GAAP equity to IFRS equity
31 December 30 June 2006 1 January 2006
2006
Capital and reserves according to 2,140,325 2,486,095 199,863
UK GAAP
Effect of adopting IFRS 3 - 89,222 4,634 -
Business Combinations
Effect of adopting IAS 38 - (6,258) (483) -
Intangible Assets
------------- ------------- -------------
Equity according to IFRS 2,223,289 2,490,246 199,863
------------- ------------- -------------
Reconciliation of UK GAAP balance sheets to IFRS balance sheets
As at 31 December 2006 As at 30 June 2006 As at 1 January 2006
As Effect of As As Effect of As As Effect of As
previously transition restated previously transition restated previously transition restated
reported under reported under reported under
under UK IFRS under UK IFRS under UK IFRS
GAAP GAAP GAAP
� � � � � � � � �
ASSETS
Non-current
assets
Investments - - - - - - 477,942 - 477,942
Property, 52,241 - 52,241 61,806 - 61,806 - - -
plant and
equipment
Goodwill 1,589,446 89,222 1,678,668 1,686,889 4,634 1,691,523 - - -
Other 519,992 (6,258) 513,734 510,953 (483) 510,470 - - -
intangible
assets
_______ _______ _______ _______ _______ _______ _______ _______ _______
2,161,679 82,964 2,244,643 2,259,648 4,151 2,263,799 477,942 - 477,942
_______ _______ _______ _______ _______ _______ _______ _______ _______
Current assets
Inventories 6,996 - 6,996 6,996 - 6,996 - - -
Trade 33,377 - 33,377 16,060 - 16,060 - - -
receivables
Other current 69,686 - 69,686 145,673 - 145,673 380,947 - 380,947
assets
Cash and cash 235,617 - 235,617 500,938 - 500,938 5,904 - 5,904
equivalents
_______ _______ _______ _______ _______ _______ _______ _______ _______
345,676 - 345,676 669,667 - 669,667 386,851 - 386,851
_______ _______ _______ _______ _______ _______ _______ _______ _______
Total assets 2,507,355 82,964 2,590,319 2,929,315 4,151 2,933,466 864,793 - 864,793
_______ _______ _______ _______ _______ _______ _______ _______ _______
EQUITY AND
LIABILITIES
Equity
attributable
to equity
holders of the
parent
Share capital 1,070,000 - 1,070,000 1,045,000 - 1,045,000 191,667 - 191,667
Share premium 1,846,600 - 1,846,600 1,795,343 - 1,795,343 195,637 - 195,637
Other reserves - - - - - - -
Retained (776,275) 82,964 (693,311) (354,248) 4,151 (350,097) (187,431) - (187,431)
earnings
_______ _______ _______ _______ _______ _______ _______ _______ _______
Total equity 2,140,325 82,964 2,223,289 2,486,095 4,151 2,490,246 199,863 - 199,863
_______ _______ _______ _______ _______ _______ _______ _______ _______
Non-current
liabilities
Long-term 175,726 - 175,726 207,536 - 207,536 650,000 - 650,000
borrowings
_______ _______ _______ _______ _______ _______ _______ _______ _______
Current
liabilities
Trade and 159,824 - 159,824 162,216 - 162,216 14,930 - 14,930
other
payables
Current 31,480 - 31,480 73,468 - 73,468 - - -
portion of
long-term
borrowings
_______ _______ _______ _______ _______ _______ _______ _______ _______
Total 191,304 - 191,304 235,684 - 235,684 14,930 - 14,930
current
liabilities
_______ _______ _______ _______ _______ _______ _______ _______ _______
Total 367,030 - 367,030 443,220 - 443,220 664,930 - 664,930
liabilities
_______ _______ _______ _______ _______ _______ _______ _______ _______
Total equity 2,507,355 82,964 2,590,319 2,929,315 4,151 2,933,466 864,793 - 864,793
and
liabilities
_______ _______ _______ _______ _______ _______ _______ _______ _______
Reconciliation of UK GAAP income statements to IFRS income statements
Year ended 31 December 2006 Six months ended 30 June 2006
As Effect of As As Effect of As
previously transition restated previously transition restated
reported under reported under
under UK IFRS under UK IFRS
GAAP GAAP
� � � � � �
Revenue 71,467 - 71,467 3,063 - 3,063
Cost of sales (31,301) - (31,301) (1,945) - (1,945)
_______ _______ _______ _______ _______ _______
Gross profit 40,166 - 40,166 1,118 - 1,118
Administrative (572,459) 82,964 (489,495) (141,018) 4,151 (136,867)
expenses
_______ _______ _______ _______ _______ _______
Operating loss (532,293) 82,964 (449,329) (139,900) 4,151 (135,749)
Finance income 19,649 - 19,649 16,738 - 16,738
Finance expenses (76,200) - (76,200) (43,656) - (43,656)
_______ _______ _______ _______ _______ _______
Loss before tax (588,844) 82,964 (505,880) (166,818) 4,151 (162,667)
Income taxes - - - - - -
_______ _______ _______ _______ _______ _______
Loss for the 588,884 82,964 (505,880) (166,818) 4,151 (162,667)
period
_______ _______ _______ _______ _______ _______
Loss per share (0.45)p 0.06p (0.39)p (0.34)p 0.01p (0.33)p
______ ______ ______ ______ ______ ______
4. Business Combination
On 15th March 2007 Avid Holdings plc completed the purchase of the entire share
capital of Electro-Mec (Reading) Limited for initial consideration of �800,000.
This consisted of a cash payment of �400,000 and the issue of 28,333,333 new
Ordinary Shares in Avid Holdings plc at an average price of 1.41 pence.
Deferred consideration of up to �750,000, to be satisfied by the issue of
further new Ordinary Shares, will be due dependent on future profits of
Electro-Mec for the years ending 31 December 2007 and 31 December 2008. The
Board of Directors believe that the future profits of Electro-Mec will reach
the necessary levels for the deferred consideration to become payable. No
provision for this has been made.
In addition, directly attributable costs of �174,170 were incurred in relation
to integrating the business into the Group.
5. Segmental Reporting
In the opinion of the Directors, the Group's core activities are the supply of
specialist packaging solutions and the production of precision tooling both for
the pharmaceutical industry as carried out by the subsidiary companies.
Six months Year ended 31 Six months
ended December 2006 ended
30 June 2007 30 June 2006
� � �
Revenue
Packaging solutions 18,945 68,317 3,063
Precision tooling 656,861 - -
Group activities 3,550 3,150 -
_______ _______ _______
679,356 71,467 3,063
_______ _______ _______
Profit
Packaging solutions (183,723) (187,737) (12,601)
Precision tooling (1,312) - -
Group activities (179,188) (261,592) (123,148)
_______ _______ _______
Underlying operating loss (364,223) (449,329) (135,749)
Finance income 18,866 19,649 16,738
Finance expenses (25,580) (76,200) (43,656)
_______ _______ _______
Loss for the period (370,937) (505,880) (162,667)
_______ _______ _______
6. Due to the Company's losses, no taxation charge has arisen for the period.
7. The Directors have not declared an interim dividend.
8. The financial statements for the six months ended 30 June 2007 were approved
by the Board of Directors on 29th August 2007.
These financial statements do not constitute statutory accounts within the
meaning of the Companies Act 1985 and are neither reviewed nor audited.
9. In accordance with AIM Rule 31, the Company is required to have in place
sufficient procedures, resources and controls to enable its compliance with the
AIM Rules for Companies; seek advice from its nominated adviser ("NOMAD")
regarding its compliance with the AIM Rules for Companies whenever appropriate
and take that advice into account, provide the Company's NOMAD with any
information it requests in order for the NOMAD to carry out its
responsibilities under the AIM Rules for Companies and the AIM Rules for
Nominated Advisers, ensuring that each of the Company's directors accepts full
responsibility, collectively and individually, for compliance with the AIM
Rules for Companies, and ensure that each director disclosures without delay
all information which the Company needs in order to comply with AIM Rule 17
(Disclosure of Miscellaneous Information) in so far as that information is
known to the director or could with reasonable diligence be ascertained by the
director.
In order to ensure these obligations are being discharged, the Board has formed
a committee of the Board (the "AIM Committee"), chaired by Michael Walter, a
non-executive director of the Company.
Having reviewed the relevant Board papers the AIM Compliance Committee is
satisfied that the Company's obligations under Rule 31 have been satisfied
during the period under review.
10. Copies of this statement are available to shareholders and members of the
public, free of charge, from the Company's registered office at 10 Woodfalls
Business Park, Gravelly Ways, Laddingford, Kent, ME18 6DA.
Contact details:
Jonathan Bobbett, Avid Holdings plc 01622 872 022
Ross Andrews, City Financial Associates Limited 0207 492 4777
END
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