AVID HOLDINGS PLC
FINAL RESULTS
Audited Results for the year ended 31 December 2007
Avid Holdings plc, the acquisitive precision engineering group, today announces
preliminary results for the year ended 31 December 2007.
Operational highlights
* Acquisition of Electro-mec completed in March 2007
* Electro-mec win �480,000 contract for a defence project
* Pill protect successfully developed a bespoke product for a key European
player
* Patent granted in the UK for heat sealed products
Financial highlights
* Turnover up from �71,467 (Y/E 2006) to �1,746,105
* Increase in turnover from continued operations of 75%
Jonathan Bobbett, CEO of Avid, commented:
"Despite difficult market conditions, Avid has achieved a year of significant
development and growth. I am pleased to announce that we have delivered
financial results in line with expectations. Newly acquired subsidiaries have
become fully integrated into the Group and consolidation initiatives have been
implemented. The foundations that have been established over the past year will
enable Avid to offer good shareholder value in the future."
For further information, please contact:
Jonathan Bobbett, Chief Executive
Avid Holdings plc
+44 (0)1622 872 022
Ross Andrews, Nominated Adviser
Ben Thompson
Zeus Capital Ltd
+44 (0)161 831 1512
CHAIRMAN'S STATEMENT
Introduction
I am pleased to report, as Chairman of Avid Holdings plc, that the company has
continued to make progress in its second year of operation following its
admission to AIM in June 2006.
At the end of last year, I reported that terms had been agreed for the
acquisition of Electro-mec (Reading) Ltd. I am pleased to confirm that the
company has now been successfully restructured and integrated into the group.
David Whitaker was appointed in June 2007 in an interim management assignment
and joined the Board of Electro-mec in February 2008 as Managing Director of
Electro-mec. The Group has invested in process and new management systems,
which have resulted in significantly improved efficiency and a reduction in
overheads for Electro-mec. A new sales team has been built from scratch and has
achieved a number of early successes, subsequently winning significant new
contracts worth over �650,000.
Pill protect has continued to make slow progress and in the latter part of the
year started to make small profits for the first time since its launch. Some
success has come from a new bespoke project for a leading manufacturer, which
will be launched into Europe at the end of 2008.
During the year negotiations for the acquisition of Alpha Anodising Ltd were
largely completed and I am pleased to report that completion took place on 27
March 2008. We expect to achieve some synergies and cost savings as the Alpha
business is integrated into the group during the second half of this year. This
should enable the sales force at Electro-mec to broaden the services offered to
existing clients and for some sub-contracted engineering services purchased by
Alpha to be brought back into the group.
Board Changes
The Board, at 24 June 2008 comprised Jonathan Bobbett as Chief Executive,
Jonathan Neal as Finance Director, David Walton Masters as a non-executive
member of the Board and myself as non-executive Chairman, all of whom continue
to serve the company. Mike Nash, a non-Executive Director, decided to step down
in March having completed his contract and we are most grateful to him for his
valuable contribution.
My continuing aim is to maintain the quality of our talented Board and high
standards of corporate governance. The Board meets regularly as a group and the
Non-Executive Directors serve on the Audit Committee, the Remuneration
Committee and the recently formed AIM Compliance Committee. We intend to comply
with the provisions of The Combined Code as far as practicable and appropriate
for a public company of our size.
It is the Board's intention to add a further Director who will bring additional
engineering skills in the short to medium term. A sub-committee comprising
David Walton Masters and Jonathan Bobbett has been appointed to draft a paper
defining the Board's requirements.
Outlook
The challenges faced by small companies are well known, especially in a period
of external economic decline. Avid Holdings plc has achieved a significant
first step in building the group with the successful acquisition of Electro-mec
(Reading) Ltd last year followed by Alpha Anodising Ltd in March 2008.
The Board is continuing to search for appropriate acquisitions and the success
of our acquisitions to date should open the door to new sources of funds, which
could accelerate acquisitions in our target sector.
I would like to take this opportunity to thank the Directors and each and every
member of the team for their dedicated hard work throughout the year and our
advisers and shareholders for their continuing support and encouragement.
Michael Walter
Chairman
CHIEF EXECUTIVE OFFICER'S STATEMENT
The Group continues to perform in line with expectations. Recent investments in
personnel have strengthened the management team and will allow for the
efficient execution of the business model.
Due to exceptional costs for the re-organisation of Electro-mec, which is now
running profitably, the Group is still operating at a loss, as predicted.
However, with the recent contract wins, the current trends in prospects and
with new products in the latter stages of development, the Board believes that
the Group should move into positive cash flow by the end of 2008.
Main achievements:
* Turnover up from �71,467 (year ending 2006) to �1,746,105
* Acquisition of Electro-mec completed in March 2007
* Electro-mec wins a �480,000 contract for a defence project
* Pill protect successfully develops a bespoke product for a key European
retailer aimed to launch in late 2008
* Patent granted in the UK for heat sealed products
* Pill protect makes first pre-tax profits for the final quarter of 2007
Post balance sheet events:
* Electro-mec secures a contract for 12 electropacTM machines worth over �
190,000 prior to product launch
* Acquisition of Alpha Anodising Ltd completed in March 2008
OPERATIONAL REVIEW
Electro-mec (Reading) Limited
Post-acquisition, Electro-mec continues to perform well. Management information
systems have been implemented to enable effective and timely performance
measurement and KPI reporting. A fully automated and accurate estimating system
has recently been installed. Efficiency increases have been achieved, resulting
in a �180,000 reduction in overheads per annum. A recently announced contract
win worth �480,000 has resulted in a revenue increase for the Company for the
first half of 2008.
In June 2007, David Whitaker was appointed as Managing Director of Electro-mec.
David was formerly Operations Director at Business Direct Group plc, an AIM
listed plc. He brings with him a proven track record of achieving growth within
a fixed timetable.
Electro-mec continues to develop new and innovative products. The electropac(tm)
is currently in the latter stages of development and testing. It will be one of
the first automated in-pharmacy dispensers for daily packed drugs required by
the elderly.
The dispensing of monthly drugs for elderly patients currently requires
pharmacists to fill plastic packs by hand, resulting in unnecessary costs for
pharmacies as well as increasing the occurrence of human error. In response to
these issues, Electro-mec has developed a fully automated system for the
production of patient packs that can be used for all solid and semi-solid
formulations. UK patent protection and trademarks are at the application stage.
In the first quarter of 2008 an order worth in excess of �190,000 was placed by
a major chain of pharmacies for 12 feeders for installation by July 2008.
Throughout 2008, Electro-mec is expected to maintain and win contracts. The
systems and structure that have been put in place will in future enable the
company to become profitable and build on its success.
Pill protect Limited
Pill protect Ltd, the Avid Group's first acquisition, offers a leading solution
to UK legislation covering the packaging of drugs containing aspirin,
paracetamol and elemental iron. The Pill protect solution comprises a specially
perforated paper which covers the usual foil base of conventional blister
packs. This makes the surface harder to leverage, increasing the difficulty for
children to access the medication but enabling access by less dextrous senior
citizens.
Major pharmaceutical companies have been slow to adopt compliant solutions.
Despite this having a negative impact on demand for Pill protect products, the
company has developed a bespoke solution for a key European client who will
launch it onto the market in 2008. The company continues to supply a number of
clients including Reckitt Benkiser and Brecon Pharmaceuticals Ltd.
The future performance of Pill protect is heavily dependent on the willingness
of major pharmaceutical manufacturers to comply with relevant legislation and/
or regulations. The Directors believe the Pill protect solution, in many
respects, to be superior to the competition, which places the Company in a
strong position to provide compliant solutions in domestic and export markets.
Pill protect's new heat sealed products were granted a UK patent on 29 August
2007. This bodes well for other applications that are in progress. Following a
re-structure of the business, which was completed in September 2007, the
company generated a pre-tax profit in the final quarter of the year.
Acquisitive expansion
In line with the Board's strategy for expansion through organic growth and
acquisitions of complimentary businesses in the precision engineering sector,
Avid acquired the entire issued share capital of Alpha Anodising Limited on 27
March 2008.
Alpha Anodising Limited
The company was established in 1972 and has remained in family ownership ever
since, building a solid reputation in the field of high quality metal
finishing. Alpha, based in Buckinghamshire, are counted amongst the UK's market
leaders in the field of quality metal finishing, having developed a highly
diversified customer base due to their specialised expertise and reputation.
Its offerings include a wide range of production techniques, such as mechanical
and chemical finishes, high quality surface and sub-surface printing, as well
as professional design and prototyping services. The company supplies to the
medical, scientific, defence and audio industries.
Outlook
In the year under review we have continued to develop and grow the Group under
difficult market conditions. The Directors anticipate that the Group will be
able to make further acquisitions in 2008 to deliver improved shareholder
value. Turnover is expected to grow significantly along with improved gross
margins over the next 12 months reducing losses.
Key Performance Indicators
The Directors consider that the results of the Group are dependent on the
number of contracts maintained and won by its companies. Turnover and gross
profits grew well during the year but the losses widened in line with
expectations.
Principal Risks
Adverse market conditions are likely to prevail for the forthcoming year which
may make fund raising for acquisitions more difficult. The economic downturn
has the potential to drive prices down whilst inflation has pushed essential
costs, such as power and labour, up considerably. The Directors are trying to
minimize the risks and have agreed fixed rate electricity deals for the Group
over the next 12 months allowing us to keep price increases to only 4.5%.
Jonathan Bobbett
Chief Executive Officer
AVID HOLDINGS PLC
PRELIMINARY ANNOUNCEMENT OF RESULTS YEAR ENDED 31 DECEMBER 2007
CONSOLIDATED GROUP INCOME STATEMENT
For The Year Ended 31 December 2007
Year Ended Year Ended
31.12.07 31.12.06
(as restated)
� �
REVENUE
-continuing operations 125,348 71,467
-acquired operations 1,620,757 -
TOTAL REVENUE 1,746,105 71,467
Cost of Sales (1,336,499) (31,301)
GROSS PROFIT
-continuing operations 95,264 40,166
-acquired operations 314,342 -
TOTAL GROSS PROFIT 409,606 40,166
Administrative expenses (1,234,709) (489,495)
OPERATING LOSS
-continuing operations (605,342) (449,329)
-acquired operations (219,761) -
TOTAL OPERATING LOSS (825,103) (449,329)
Finance income 33,162 19,649
(791,941) (429,680)
Finance expenses 56,684 76,200
LOSS ON ORDINARY ACTIVITES
BEFORE TAXATION (848,625) (505,880)
Tax on loss on ordinary activities 60,058 -
LOSS FOR THE FINANCIAL YEAR
AFTER TAXATION (788,567) (505,880)
Earnings/(Loss) per share (0.25)p (0.39)p
Earnings per share represent basic and diluted earnings per share from
continuing and total operations.
CONSOLIDATED GROUP STATEMENT OF CHANGES IN EQUITY
For The Year Ended 31 December 2007
Share Other Share Retained Total
capital equity premium earnings
reserve
� � � � �
Equity as at 1 191,667 - 195,627 (187,431) 199,863
January 2006
Loss for the year - - - (505,880) (505,880)
Shares issued 878,333 - 1,731,667 - 2,610,000
Costs associated with - - (80,694) - (80,694)
share issues
Equity as at 31 1,070,000 - 1,846,600 (693,311) 2,223,289
December 2006
Loss for the year - - - (788,567) (788,567)
Shares issued 1,008,334 - 591,666 - 1,600,000
Costs associated with - - (54,530) - (54,530)
share issues
Share based payments - 17,887 - - 17,887
provision
Equity as at 31 2,078,334 17,887 2,383,736 (1,481,878) 2,998,079
December 2007
CONSOLIDATED GROUP BALANCE SHEET
31 December 2007
2007 2006
(as
restated)
� �
ASSETS
Non-current assets
Intangible assets 2,792,468 2,192,402
Property, plant and equipment 477,557 52,241
3,270,025 2,244,643
Current assets
Inventories 407,064 6,996
Trade and other receivables 450,176 101,517
Current tax receivable 14,487 1,546
Cash and cash equivalents 96,113 235,617
967,840 345,676
TOTAL ASSETS 4,237,865 2,590,319
EQUITY
Capital and reserves attributable to equity
holders
Share capital 2,078,334 1,070,000
Other equity reserve 17,887 -
Share premium reserve 2,383,736 1,846,600
Retained earnings (1,481,878) (693,311)
TOTAL EQUITY 2,998,079 2,223,289
LIABILITIES
Non-current liabilities
Long-term borrowings 248,140 175,726
Deferred tax 7,452 -
Total non-current liabilities 255,592 175,726
Current liabilities
Trade and other payables 644,255 159,824
Short term borrowings 224,931 -
Current portion of long-term borrowings 115,008 31,480
Total current liabilities 984,194 191,304
TOTAL LIABILITIES 1,239,786 367,030
TOTAL EQUITY AND LIABILITIES 4,237,865 2,590,319
CONSOLIDATED GROUP CASH FLOW STATEMENT
For The Year Ended 31 December 2007
2007 2006
(as
restated)
� �
Cash flows from operating activities
Operating loss (825,103) (449,329)
Depreciation of property, plant and equipment 63,142 7,666
Loss on disposal of property, plant and 7,797 -
equipment
Amortisation of intangible assets 20,077 10,984
Changes in working capital:
Inventories (173,142) -
Trade and other receivables 10,669 329,417
Trade and other payables 79,845 (271,119)
Income taxes 14,547 -
Net cash flows used in operating activities (802,168) (372,381)
Cash flows from investing activities
Acquisition of subsidiary net of cash acquired (554,557) (495,726)
Purchases of property, plant and equipment (60,631) -
Proceeds from sale of property, plant and 21,774 1,715
equipment
Purchases of intangible fixed assets (28,267) (13,765)
Net cash flows used in investing activities (621,681) (507,776)
Cash flows from financing activities
Proceeds from issue of ordinary shares 1,200,000 963,491
Costs of issuing shares (36,643) -
Proceeds from long-term borrowings 165,066 202,930
Repayments of borrowings (20,556) -
Interest received 33,162 19,649
Interest paid (56,684) (76,200)
Net cash flows from financing activities 1,284,345 1,109,870
Net (decrease)/increase in cash and cash (139,504) 229,713
equivalents
Cash, cash equivalents and bank overdrafts at 235,617 5,904
beginning of year
Cash, cash equivalents and bank overdrafts at 96,113 235,617
end of year
AVID HOLDINGS PLC
NOTES TO THE FINANCIAL STATEMENTS
For The Year Ended 31 December 2007
1. The financial information set out above does not constitute statutory
accounts as defined in s.240 of the Companies Act 1985. The auditors have
issued an unqualified opinion on the statutory financial statements for 2007
under IFRS for the year ended 31 December 2007 which will be delivered to the
Register of companies following the Company's Annual General Meeting.
2. Revenue by Primary Segment
Year ended 31 Year ended 31
December 2007 December 2006
(as restated)
� �
Revenue
Packaging solutions 121,148 68,317
Precision tooling 1,620,757 -
Group activities 4,200 3,150
1,746,105 71,467
3. Loss Per Share
The calculation of the basic and diluted loss per share of 0.25p (2006: 0.39p)
is based on the loss for the year of �848,625 (2006: �505,880) and on a
weighted average number of shares of 0.5p in issue during the year of
345,108,057 and 349,588,869 diluted (2006: 129,952,511). There were no
discontinued operations in the year so the loss per share from continuing
operations is equal to the loss per share from total operations.
The effect of the options was to dilute the weighted average number of shares
in December 2007 by 4,480,812. Under the terms of IAS 33, options have no
dilutive effect in loss making years hence the diluted loss per share is the
same as the basic loss per share.
4. Share Based Payments
Share options - during the period the Company granted options to purchase
ordinary shares of the company to the following:
Number Exercise
price
Directors 24,650,000 0.75p
The Company recognised the following total expenses and costs in respect of
payments settled by options in the period:
Recognised immediately and charged as an expense to 17,887
the profit and loss account
The inputs into a modified Black-Scholes model used to calculate the fair
values are as follows:
Expected volatility * 70%
Expected life 5 years
Discount for newly listed company 20%
Dividend yield 0%
Market value of shares at date of grant 20 June 2006 - 1.5p;
15 March 2007 - 1.25p
* Expected volatility has been determined by looking at the share price since
flotation.
5. Related Party Transactions
The Group owed J Bobbett �nil (2006: �2,392) at the year end, this balance was
interest free and unsecured.
6. 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
Practice (GAAP). AIM rules require that the annual consolidated financial
statements of the company for the year ended 31 December 2007 be prepared in
accordance with IFRS. The financial statements to 31 December 2006 have been
restated.
7. Events After The Balance Sheet Date
On 28 March 2008 Avid Holdings plc announced that it had acquired the entire
share capital of Alpha Anodising Ltd for an initial consideration of �627,000,
which was satisfied by the issue of 6.4m new Ordinary Shares at a price of 0.5
pence and a cash payment of �595,000. Deferred consideration of up to �120,000,
to be satisfied by the payment of cash, will be due, dependent on the future
profits of Alpha Anodising for the six months following completion.
8. The Annual Report and Accounts will been sent to shareholders at their
registered address on 27th June 2008 and copies of the Annual Report will be
available to the public free of charge on Avid's website at
www.avidholdingsplc.com and for one month at the Company's registered office;
10 Woodfalls Business Park, Gravelly Ways, Laddingford, Kent ME18 6DA and at
the offices of Zeus Capital Ltd; 3 Ralli Courts, West Riverside, Manchester M3
5FT.
9. The Annual General Meeting of the Company has been convened for 11.00 am at
the offices of Blake Lapthorn Tarlo Lyons, Watchmaker Court, 33 St John's Lane,
London EC1M 4DB on 12 August 2008.
END
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