For a company that claimed at the end of September that it had a very strong balance sheet, was "cash generative at an operational level” and had “considerable unused bank facilities”, it seems slightly surprising that the AIM listed specialist marketing company Adventis Group has chosen to raise an extra £825,000 in share capital this week.
Fund-raising is never cheap and the amount of cash raised on this occasion was relatively small.
The management continues to assert that it is looking for acquisition opportunities although the extra capital is hardly enough to fund anything other than a very modest transaction. It may be pertinent that the group had net debt of £1.8 million at 30 June – a new experience for a historically cash positive group – and has some relatively modest outstanding earnout commitments to settle this year. And there may be more earnouts to settle next year too.
Even so, the level of bank borrowings is very small by comparison with the £13 million that shareholders have invested in the company. But bankers also like to see healthy profits and, while chief executive Charles Phillpot points out that the group remains profitable (it made amost £0.5 million in the half year to 30 June), the current economic climate inevitably will be having a dampening effect.
The new capital has been subscribed by a Baronsmead venture capital trust with the backing of Arbuthnot Securities. So at least two experienced financial institutions seem happy to support the company’s strategy.
© Fintellect Ltd
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BOB WILLOTT
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