TIDMAVS
RNS Number : 4686N
Avesco Group PLC
09 September 2013
AVESCO GROUP plc
RESULTS FOR THE THREE MONTHS AND NINE MONTHS ENDED 30 JUNE
2013
Avesco Group plc (AIM: AVS), a leading international provider of
services to the corporate presentation, entertainment and broadcast
markets, announces its results for the three months and nine months
ended 30 June 2013.
KEY HIGHLIGHTS
Nine months to 30 June 2013
-- Revenue down 7% to GBP98.6m (nine months ended 30 June 2012: GBP105.8m)
-- Operating profit decreased to a loss of GBP0.5m (nine months
ended 30 June 2012: profit of GBP3.3m)
-- Trading profit decreased to GBP3.8m (nine months ended 30 June 2012: GBP4.1m)*
-- Trading EBITDA down 8% to GBP17.3m (nine months ended 30 June 2012: GBP18.7m)*
-- Basic loss per share from continuing operations of 14.5p
(nine months ended 30 June 2012: earnings per share of 7.6p)
-- Adjusted basic earnings per share of 9.6p (nine months ended 30 June 2012: 11.0p)*
Three months to 30 June 2013
-- Revenue down 15% to GBP32.7m (three months ended 30 June 2012: GBP38.3m)
-- Operating profit decreased to a loss of GBP3.3m (three months
ended 30 June 2012: profit of GBP1.5m)
-- Trading profit decreased to GBP1.0m (three months ended 30 June 2012: GBP2.1m)*
-- Trading EBITDA down 22% to GBP5.5m (three months ended 30 June 2012: GBP7.1m)*
-- Basic loss per share from continuing operations of 19.1p
(three months ended 30 June 2012: earnings per share of 3.9p)
-- Adjusted basic earnings per share of 2.0p (three months ended 30 June 2012: 5.9p)*
* As described in note 3, the Group uses certain non-GAAP
alternative measures to assess underlying operating
performance.
Court Case Settlement
-- Profit in respect of Disney litigation of GBP45.6m (net of tax)
-- A distribution will be made to shareholders and LTIP holders
(equivalent to GBP1.10 per share/LTIP) subject to shareholder
approval
Richard Murray, Chairman, commented:
"The results for the three and nine months ended 30 June 2013
include the receipt of the proceeds of the Disney litigation. As a
result, the overall profit for the Quarter of GBP40.6m was
substantial and the net assets of the Group have increased to
GBP3.09 per share as at 30 June 2013. However, when the significant
benefit of the litigation is removed, it is clear that the
difficult trading conditions indicated in my statement in June 2013
have continued to affect revenue and profit. While the Group is
still profitable at the trading level, pricing remains under
pressure in a number of markets while the pick-up in demand in the
UK has yet to reach the levels that we anticipated.
In Presteigne Charter, where trading in relation to major
projects has disappointed, we are planning to refocus the business
back to its dry hire roots, which should even out some of the
trading peaks and troughs experienced in recent years. In CT China,
significant year on year improvements have been made but we shall
not quite achieve the breakeven target that we set ourselves last
year. Our main issue, however, has been the departure of key staff
in CT Germany, resulting in a revenue and profit shortfall that has
proved very difficult to replace. As a result, and despite a strong
performance in our CT US business, we now believe that it is likely
that the Group's results for the full year to 30 September 2013
will be below previous market expectations.
The Group has previously announced that the Board is proposing,
subject to shareholder approval, to return GBP30.6m of the funds
received on the Disney settlement to shareholders by way of a B
& C Share Scheme ("The Scheme") and to LTIP holders by way of a
cash bonus. The Scheme will provide for a payment, equivalent to
GBP1.10 for each ordinary share, and is intended to be structured
in such a way as to allow shareholders, subject to applicable legal
and regulatory restrictions, to elect to receive their proceeds
either as income or capital. A detailed circular setting out the
full terms of The Scheme and detailed timings will be sent to
shareholders in November and, if approved, it is expected that
payments will be made in December to shareholders on the register
at that time."
For further information please contact:
Avesco Group plc
Richard Murray, Chairman 01293 583400
John Christmas, Group Finance Director
finnCap
Ed Frisby/Rose Herbert, Corporate
Finance
Brian Patient/Victoria Bates, Corporate
Broking 020 7220 0500
Chairman's Statement
The results for the three and nine months ended 30 June 2013
include the receipt of the proceeds of the Disney litigation. As a
result, the overall profit for the Quarter of GBP40.6m was
substantial and the net assets of the Group have increased to
GBP3.09 per share as at 30 June 2013. However, when the significant
benefit of the litigation is removed, it is clear that the
difficult trading conditions indicated in my statement in June 2013
have continued to affect revenue and profit. While the Group is
still profitable at the trading level, the underlying trading in
the third Quarter is below the Board's previous expectations. In
particular, the loss of key staff in our CT Germany operation and
the consequent restructuring, have affected results more than
expected.
Results
Revenue in the three months ended 30 June 2013 was down 15% to
GBP32.7m (three months ended 30 June 2012: GBP38.3m), leaving the
total revenue for the nine months to 30 June 2013 down 7% at
GBP98.6m (nine months ended 30 June 2012: GBP105.8m). If the
revenue from the 2012 London Olympics events and from CT Germany is
excluded, the prior period comparison shows that the underlying
business on a like for like basis over the nine month period has
been flat.
The US operations of our Creative Technology division and MCL in
our Full Service division have both continued to grow over the nine
month period. However, revenue in our other divisions was either
flat or showed some decline. CT Germany, with a GBP2.3m reduction
in revenue compared to the same nine month period last year,
experienced by far the largest decrease. The CT Germany management
team and business is undergoing an extensive reorganisation,
resulting in a GBP0.5m restructuring charge to date. Presteigne
Charter also experienced a decrease in revenue as a result of the
disappointing trading in major projects.
The operating loss for the three months ended 30 June 2013 was
GBP3.3m (three months ended 30 June 2012: profit of GBP1.5m) and
GBP0.5m for the nine months to the same date (nine months ended 30
June 2012: profit of GBP3.3m).
Trading profits (which exclude restructuring costs, compensation
for loss of office, payments to LTIP holders and bonuses in
connection with the Disney settlement, and other non-recurring
costs) for the three months ended 30 June 2013 were GBP1.0m (three
months ended 30 June 2012 GBP2.1m). The adjusted basic earnings per
share were 2.0p (three months ended 30 June 2012: 5.9p).
For the nine months ended 30 June 2013, the trading profit was
GBP3.8m (nine months ended 30 June 2012: GBP4.1m). The adjusted
basic earnings per share were 9.6p (three months ended 30 June
2012: 11.0p).
Due to the availability of trading losses in certain
territories, our current tax charge remains low. However, although
our continued profitability in the US means that historic losses in
that region are being utilised, we are unable to utilise losses in
other territories across borders. As a result, there has been an
increase in our total tax charge for the nine months ended 30 June
2013 to GBP2.0m (nine months ended 30 June 2012: GBP0.1m), although
the increase relates almost entirely to deferred tax rather than
current tax.
Disney
The Group has previously announced that the Board is proposing,
subject to shareholder approval, to return GBP30.6m of the funds
received on the Disney settlement to shareholders by way of a B
& C Share Scheme ("The Scheme") and to LTIP holders by way of a
cash bonus. The Scheme will provide for a payment, equivalent to
GBP1.10 for each ordinary share, and is intended to be structured
in such a way as to allow shareholders, subject to applicable legal
and regulatory restrictions, to elect to receive their proceeds
either as income or capital. A detailed circular setting out the
full terms of The Scheme and detailed timings will be sent to
shareholders in November and, if approved, it is expected that
payments will be made in December to shareholders on the register
at that time.
Net Debt and Assets per Share
We continue to spend significantly less on new equipment than
last year, with net investments in fixed assets during the first
nine months of the year amounting to GBP12.3m (nine months ended 30
June 2012: GBP24.7m).
Net cash generated from operating activities has been strong.
During the Quarter to 30 June 2013 the Group generated GBP8.3m of
cash from operating activities (three months ended 30 June 2012:
GBP4.0m), and GBP14.2m during the nine months ended on the same
date (nine months ended 30 June 2012: GBP10.0m).
Furthermore, on 4 June 2013 the Group received its share of the
Disney litigation award which, after making an immediate on account
corporation tax payment, amounted to a net receipt of GBP50.1m in
the period. Future outflows of GBP36.1m are earmarked for tax,
indemnities, bonuses, LTIP holders and shareholders.
Consequently, after paying dividends of GBP0.8m in April 2013,
the Group generated net funds of GBP55.2m in the Quarter ended 30
June 2013 (Quarter ended 30 June 2012: net funds outflow of
GBP2.8m), leaving the Group in a net cash position on 30 June 2013
of GBP25.1m (30 June 2012: net debt of GBP27.1m).
On 30 June 2013, the net assets of the Group were GBP80.3m (30
June 2012: GBP38.6m) or GBP3.09 per share (30 June 2012: GBP1.52
per share).
Outlook
Whilst the final settlement of the Disney litigation has seen a
substantial inflow of cash, the Board is committed to resolving the
various operational and trading issues around the Group.
In CT Germany, the process to restructure the business has
already begun. Our main issue there, however has been the departure
of key staff, resulting in a revenue and profit shortfall that has
proved very difficult to replace.
In Presteigne Charter, we are planning to refocus the business
back to its dry hire roots, which should even out some of the
trading peaks and troughs experienced in recent years, but will
necessitate some redundancies and other costs.
In CT China, significant year on year improvements have been
made but we shall not quite achieve the breakeven target that we
set ourselves last year.
Pricing remains under pressure in a number of markets, while the
pick-up in demand in the UK has yet to reach the levels that we
anticipated. As a result, and despite a strong performance in our
CT US business, we now believe that it is likely that the Group's
results for the full year to 30 September 2013 will be below
previous market expectations.
Looking ahead to 2014, the expected benefits of the headcount
and cost reductions arising from the restructuring work and other
measures that we are taking across the Group this year should flow
through to the results. We also look forward to an increase in
demand for our services with a number of major "even year" sporting
events being held, including the Winter Olympics in Russia, the
Commonwealth Games in Scotland and the FIFA World Cup in
Brazil.
We remain committed to our strategy of developing our core
businesses to provide cash generation and dividend growth for
shareholders. Our balance sheet has been significantly strengthened
by the receipt of the Disney funds, which, even after tax and
returns to shareholders and others, should see a net debt reduction
of over GBP14m, leaving gearing low, and the Group well placed for
the future.
Unaudited condensed consolidated income statement
For the three months and nine months ended 30 June 2013
Three months ended Nine months ended Year ended
30 June 30 June 30 September
2013 2012 2013 2012 2012
GBP000s GBP000s GBP000s GBP000s GBP000s
------------------- ----------------------- ----------------------- --------- --------------------- ----------------------
Continuing
operations
Revenue 32,686 38,349 98,564 105,811 143,452
Cost of sales (20,557) (25,524) (61,996) (69,398) (93,246)
------------------- ----------------------- ----------------------- --------- --------------------- ----------------------
Gross profit 12,129 12,825 36,568 36,413 50,206
Operating expenses (15,382) (11,296) (37,055) (33,144) (45,979)
Share of
associate's
(loss)/profit (7) - (47) - 271
------------------- ----------------------- ----------------------- --------- --------------------- ----------------------
Operating
(loss)/profit (3,260) 1,529 (534) 3,269 4,498
Finance income 1 1 2 3 51
Finance costs (419) (501) (1,231) (1,200) (1,586)
------------------- ----------------------- ----------------------- --------- --------------------- ----------------------
(Loss)/profit
before income
tax (3,678) 1,029 (1,763) 2,072 2,963
Income tax expense (1,271) (45) (1,955) (147) (1,108)
------------------- ----------------------- ---------
(Loss)/profit from
continuing
operations (4,949) 984 (3,718) 1,925 1,855
Profit on
discontinued
operation,
net of tax 45,568 - 45,568 - -
Profit for the
financial
period 40,619 984 41,850 1,925 1,855
------------------- ----------------------- ----------------------- --------- --------------------- ----------------------
Pence
Pence Pence per Pence Pence
per share per share share per share per share
Earnings per share
for profit
attributable to
the equity
holders of the
company
- basic 156.5p 3.9p 162.7p 7.6p 7.3p
- diluted 147.2p 3.7p 151.7p 7.3p 7.0p
(Losses)/earnings
per share
for profit
attributable
to the equity
holders of
the company from
continuing
operations
- basic (19.1)p 3.9p (14.5)p 7.6p 7.3p
- diluted (19.1)p 3.7p (14.5)p 7.3p 7.0p
Alternative performance measures (non-GAAP)
For the three months and nine months ended 30 June 2013
Three months ended Nine months ended Year ended
30 June 30 June 30 September
2013 2012 2013 2012 2012
GBP000s GBP000s GBP000s GBP000s GBP000s
----------------- ------------------------ ------------------------ ----------------------- ------------------------ -----------------------
Operating
(loss)/profit (3,260) 1,529 (534) 3,269 4,498
Adjusted to
exclude:
Restructuring
costs and
compensation
for loss
of office 937 672 998 672 2,458
Payments to LTIP
holders
and bonuses in
connection
with the Disney
settlement 3,058 - 3,058 - -
Other
non-recurring
costs/(credits) 284 (146) 284 204 428
Trading profit 1,019 2,055 3,806 4,145 7,384
Net finance
costs (418) (500) (1,229) (1,197) (1,535)
Trading profit
after
net finance
costs 601 1,555 2,577 2,948 5,849
----------------- ------------------------ ------------------------ ----------------------- ------------------------ -----------------------
Current tax
expense (71) (45) (115) (147) (346)
Trading profit
after
net finance
costs and
current tax
expense 530 1,510 2,462 2,801 5,503
----------------- ------------------------ ------------------------ ----------------------- ------------------------ -----------------------
Trading EBITDA 5,549 7,116 17,327 18,736 27,147
----------------- ------------------------ ------------------------ ----------------------- ------------------------ -----------------------
Adjusted
earnings per Pence per Pence per Pence per Pence per Pence per
share share share share share share
----------------- ------------------------ ------------------------ ----------------------- ------------------------ -----------------------
- basic 2.0p 5.9p 9.6p 11.0p 21.7p
- diluted 1.9p 5.7p 8.9p 10.6p 20.8p
Refer to note 3 for a full description of the alternative
performance measures adopted by the Group.
Unaudited condensed consolidated statement of comprehensive
income
For the three months and nine months ended 30 June 2013
Three months ended Nine months ended Year ended
30 June 30 June 30 September
2013 2012 2013 2012 2012
GBP000s GBP000s GBP000s GBP000s GBP000s
------------------------------------------ --------- --------- --------- -------- -------------
Profit for the period 40,619 984 41,850 1,925 1,855
Other comprehensive income/(expense)
Currency translation differences 3 152 523 (83) (143)
Total comprehensive income for the period 40,622 1,136 42,373 1,842 1,712
------------------------------------------ --------- --------- --------- -------- -------------
Unaudited condensed consolidated balance sheet
As at 30 June 2013
30 June 30 June 30 September
2013 2012 2012
GBP000s GBP000s GBP000s
------------------------------------- -------- ----------------------------- -------------
Assets
Non-current assets
Property, plant and equipment 60,601 64,449 61,786
Intangible assets 138 142 130
Investment in associate 124 - 271
Deferred income tax assets 4,896 6,087 6,707
Trade and other receivables 191 237 159
------------------------------------- -------- ----------------------------- -------------
65,950 70,915 69,053
Current assets
Inventories 1,451 1,728 1,794
Trade and other receivables 22,567 28,974 26,573
Current income tax assets 127 101 86
Cash and cash equivalents 48,153 6,010 4,345
72,298 36,813 32,798
------------------------------------- -------- ----------------------------- -------------
Total assets 138,248 107,728 101,851
------------------------------------- -------- ----------------------------- -------------
Liabilities
Non-current liabilities
Borrowings and loans 15,538 24,816 21,662
Deferred income tax liabilities 4,425 3,045 4,425
Provisions for other liabilities
and charges 311 482 432
------------------------------------- -------- ----------------------------- -------------
20,274 28,343 26,519
Current liabilities
Trade and other payables 26,062 31,903 28,540
Current income tax liabilities 4,064 454 544
Borrowings and loans 7,497 8,341 7,448
Provisions for other liabilities
and charges 51 75 189
-------------------------------------
37,674 40,773 36,721
------------------------------------- -------- ----------------------------- -------------
Total liabilities 57,948 69,116 63,240
------------------------------------- -------- ----------------------------- -------------
Total assets less total liabilities 80,300 38,612 38,611
------------------------------------- -------- ----------------------------- -------------
Equity
Capital and reserves attributable
to equity holders of the company
Ordinary shares 2,650 2,599 2,599
Share premium 23,286 23,286 23,286
Other reserves 496 33 (27)
Retained earnings 53,868 12,694 12,753
------------------------------------- -------- ----------------------------- -------------
Total equity 80,300 38,612 38,611
------------------------------------- -------- ----------------------------- -------------
Unaudited condensed consolidated statement of changes in
equity
For the three months and nine months ended 30 June 2013
Share Share
capital premium Other Retained
account account reserves earnings Total
GBP000s GBP000s GBP000s GBP000s GBP000s
-------------------------- ----------------- ---------------- ---------------- ----------------- ---------------
Balance at 1 April 2013 2,650 23,286 493 13,154 39,583
Profit for the period - - - 40,619 40,619
Other comprehensive
income net of tax - - 3 - 3
-------------------------- ----------------- ---------------- ---------------- ----------------- ---------------
Total comprehensive
income - - 3 40,619 40,622
Transactions with owners
in their capacity as
owners:
LTIP and share options - - - 95 95
-------------------------- ----------------- ---------------- ---------------- ----------------- ---------------
Balance at 30 June 13 2,650 23,286 496 53,868 80,300
-------------------------- ----------------- ---------------- ---------------- ----------------- ---------------
Share Share
capital premium Other Retained
account account reserves earnings Total
GBP000s GBP000s GBP000s GBP000s GBP000s
-------------------------- ----------------- ---------------- ---------------- ----------------- ---------------
Balance at 1 October
2012 2,599 23,286 (27) 12,753 38,611
Profit for the period - - - 41,850 41,850
Other comprehensive
income net of tax - - 523 - 523
-------------------------- ----------------- ---------------- ---------------- ----------------- ---------------
Total comprehensive
income - - 523 41,850 42,373
Transactions with owners
in their capacity as
owners:
External dividends paid - - - (1,032) (1,032)
LTIP and share options 51 - - 297 348
-------------------------- ----------------- ---------------- ---------------- ----------------- ---------------
Balance at 30 June 13 2,650 23,286 496 53,868 80,300
-------------------------- ----------------- ---------------- ---------------- ----------------- ---------------
Share Share
capital premium Other Retained
account account reserves earnings Total
GBP000s GBP000s GBP000s GBP000s GBP000s
-------------------------- ----------------- ---------------- ---------------- ----------------- ---------------
Balance at 1 April 2012 2,599 23,286 (119) 12,296 38,062
Profit for the period - - - 984 984
Other comprehensive
expense net of tax - - 152 - 152
-------------------------- ----------------- ---------------- ---------------- ----------------- ---------------
Total comprehensive
income - - 152 984 1,136
Transactions with owners
in their capacity as
owners:
External dividends paid - - - (761) (761)
LTIP and share options - - - 175 175
-------------------------- ----------------- ---------------- ---------------- ----------------- ---------------
Balance at 30 June 2012 2,599 23,286 33 12,694 38,612
-------------------------- ----------------- ---------------- ---------------- ----------------- ---------------
Share Share
capital premium Other Retained
account account reserves earnings Total
GBP000s GBP000s GBP000s GBP000s GBP000s
-------------------------- ---------------- ---------------- ----------------- ---------------- --------
Balance at 1 October
2011 2,599 23,286 116 11,072 37,073
Profit for the period - - - 1,925 1,925
Other comprehensive
expense net of tax - - (83) - (83)
-------------------------- ---------------- ---------------- ----------------- ---------------- --------
Total comprehensive
(expense)/income - - (83) 1,925 1,842
Transactions with owners
in their capacity as
owners:
External dividends paid - - - (761) (761)
LTIP and share options - - - 458 458
-------------------------- ---------------- ---------------- ----------------- ---------------- --------
Balance at 30 June 2012 2,599 23,286 33 12,694 38,612
-------------------------- ---------------- ---------------- ----------------- ---------------- --------
Share Share
capital premium Other Retained
account account reserves earnings Total
GBP000s GBP000s GBP000s GBP000s GBP000s
-------------------------- ---------------- ---------------- ----------------- ---------------- --------
Balance at 1 October
2011 2,599 23,286 116 11,072 37,073
Profit for the period - - - 1,855 1,855
Other comprehensive
expense net of tax - - (143) - (143)
-------------------------- ---------------- ---------------- ----------------- ---------------- --------
Total comprehensive
(expense)/income - - (143) 1,855 1,712
Transactions with owners
in their capacity as
owners:
External dividends paid - - - (761) (761)
LTIP and share options - - - 587 587
Balance at 30 September
2012 2,599 23,286 (27) 12,753 38,611
-------------------------- ---------------- ---------------- ----------------- ---------------- --------
Unaudited condensed consolidated cash flow statement
For the three months and nine months ended 30 June 2013
Three months ended Nine months ended Year ended
30 June 30 June 30 September
2013 2012 2013 2012 2012
GBP000s GBP000s GBP000s GBP000s GBP000s
-------------------- --------------------- --------------------- -------------------- -------------------- ---------------------
Cash flows from
operating
activities
Cash generated from
operations 8,725 4,566 15,685 11,518 19,715
Net interest paid (408) (439) (1,265) (1,161) (1,517)
Income tax paid (55) (142) (192) (373) (466)
Net cash generated
from operating
activities 8,262 3,985 14,228 9,984 17,732
-------------------- --------------------- --------------------- -------------------- -------------------- ---------------------
Cash flows from
investing
activities
Purchases of
property, plant
and equipment (2,623) (6,499) (13,819) (26,257) (32,539)
Proceeds from sale
of property,
plant and equipment 181 429 11,512 1,552 1,831
Proceeds from
disposal of
investments - - - 403 403
Group dividends
received 100 - 100 - -
Net cash used in
investing
activities (2,342) (6,070) (12,207) (24,302) (30,305)
-------------------- --------------------- --------------------- -------------------- -------------------- ---------------------
Cash flows from
financing
activities
Proceeds from
borrowings 3,101 4,693 12,900 18,542 18,128
Repayments of
borrowings (15,613) (3,610) (19,984) (5,970) (8,258)
Dividends paid to
Company's
shareholders (778) (761) (1,032) (761) (761)
--------------------- -------------------- --------------------
Net cash
(used)/generated in
financing
activities (13,290) 322 (8,116) 11,811 9,109
-------------------- --------------------- --------------------- -------------------- -------------------- ---------------------
Cash generated
by/(used from)
discontinued
operations 50,107 - 50,045 (245) (247)
-------------------- --------------------- --------------------- -------------------- -------------------- ---------------------
Net
increase/(decrease)
in
cash, cash
equivalents and
bank overdrafts 42,737 (1,763) 43,950 (2,752) (3,711)
Cash, cash
equivalents and
bank overdrafts at
beginning
of period 5,284 6,552 4,116 7,501 7,501
Exchange
(losses)/gains on
cash and bank
overdrafts (109) 125 (154) 165 326
Cash, cash
equivalents and
bank overdrafts at
end of
period 47,912 4,914 47,912 4,914 4,116
Bank overdrafts at
end of
period 241 1,096 241 1,096 229
Cash, cash
equivalents at
end of period 48,153 6,010 48,153 6,010 4,345
-------------------- --------------------- --------------------- -------------------- -------------------- ---------------------
Notes to the interim report and accounts
1. General information
Avesco Group plc ('the Company') and its subsidiaries (together
'the Group') is an international media services business. The Group
has subsidiaries around the world and sells in the UK, USA, Europe,
Asia Pacific and the Middle East.
The Company is a public limited company which is admitted to
trading on the AIM Market of the London Stock Exchange and is
incorporated and domiciled in the UK. The address of its registered
office is Unit E2, Sussex Manor Business Park, Gatwick Road,
Crawley, West Sussex, RH10 9NH.
The registered number of the Company is 01788363.
2. Status of interim report and accounts
The interim report and accounts are unaudited but have been
reviewed by the auditors, Ernst & Young LLP, and their
independent review report is appended to this document. The interim
report and accounts, which were approved by the Board of Directors
on 9 September 2013, are not full accounts within the meaning of
section 434 of the Companies Act 2006.
The figures for the year ended 30 September 2012 have been
extracted from the audited annual report and accounts that have
been delivered to the Registrar of Companies. The auditors, Ernst
& Young LLP, reported on those accounts under section 495 of
the Companies Act 2006. Their report was unqualified and did not
contain a statement under section 498 of that Act.
3. Basis of preparation
The interim report and accounts have been prepared using the
accounting policies to be applied in the annual report and accounts
for the year ending 30 September 2013. These are consistent with
those included in the previously published annual report and
accounts for the year ended 30 September 2012, which have been
prepared in accordance with IFRS as adopted by the European
Union.
The directors have a reasonable expectation that the Group has
adequate resources to continue operating for the foreseeable
future, and for this reason they have adopted the going concern
basis of preparation in the consolidated quarterly financial
statements.
Alternative performance measures
The Group uses alternative non-Generally Accepted Accounting
Practice ("non-GAAP") financial measures which are not defined
within IFRS. The Directors use these measures in order to assess
the underlying operational performance of the Group and as such,
these measures are important and should be considered alongside the
IFRS measures. The following non-GAAP measures are referred to in
these interim report and accounts.
a) Trading profit/loss
'Trading profit/loss' is separately disclosed, being defined as
operating profit adjusted to exclude restructuring costs and
compensation for loss of office and other non-recurring costs.
Other non-recurring costs relate to items which management believe
do not accurately reflect the underlying trading performance of the
business in the period. Examples of other non-recurring costs are
one off costs and charges incurred which management believe do not
accurately reflect the trading performance of the business. The
Directors believe that trading profit/loss is an important measure
of the underlying performance of the Group.
b) Adjusted earnings per share
'Adjusted earnings per share' is calculated by dividing the
profit for the period excluding restructuring costs and
compensation for loss of office, other non-recurring costs and the
deferred tax charge/credit by the weighted average number of
ordinary shares in issue during the period. The Directors believe
that adjusted earnings per share provides an important measure of
the underlying performance of the Group.
c) Trading EBITDA
Trading earnings before interest, taxation, depreciation and
amortisation ('EBITDA') is separately disclosed, being defined as
trading profit/loss adjusted to exclude depreciation and
amortisation of software. The Directors believe that trading EBITDA
is an important measure of the underlying performance of the
Group.
4. Segmental information
Three months ended Nine months ended Year ended
30 June 30 June 30 September
2013 2012 2013 2012 2012
GBP000s GBP000s GBP000s GBP000s GBP000s
-------------------------- -------- ---------------------- -------- ---------------------- ----------------------
Revenue
Creative Technology 23,295 26,457 69,518 72,548 96,232
Full Service 4,410 5,020 14,033 15,451 19,988
Broadcast 5,662 7,670 17,301 20,370 29,653
Inter Segment revenue (681) (798) (2,288) (2,558) (2,421)
-------------------------- ---------------------- ----------------------
Group revenue 32,686 38,349 98,564 105,811 143,452
-------------------------- -------- ---------------------- -------- ---------------------- ----------------------
Operating profit
Creative Technology 1,510 1,677 4,556 4,048 4,526
Full Service 122 290 564 922 1,055
Broadcast (556) 37 (1,279) (767) 2,293
Head Office (57) 51 (35) (58) (490)
-------------------------- ---------------------- ----------------------
Trading profit 1,019 2,055 3,806 4,145 7,384
Restructuring costs and
compensation for loss of
office (576) (672) (637) (672) (2,458)
Payments to LTIP holders
and bonuses in
connection
with the Disney
settlement (3,058) - (3,058) - -
Other non-recurring
costs/(credits) (645) 146 (645) (204) (428)
Operating (loss)/profit (3,260) 1,529 (534) 3,269 4,498
-------------------------- -------- ---------------------- -------- ---------------------- ----------------------
5. Trading earnings before interest, taxation, depreciation and amortisation ('EBITDA')
Three months ended Nine months ended Year ended
30 June 30 June 30 September
2013 2012 2013 2012 2012
GBP000s GBP000s GBP000s GBP000s GBP000s
-------------------------- ---------- --------- --------- --------- --------------
Trading profit 1,019 2,055 3,806 4,145 7,384
Depreciation 4,508 5,036 13,452 14,499 19,645
Amortisation of software 22 25 69 92 118
Trading EBITDA 5,549 7,116 17,327 18,736 27,147
-------------------------- ---------- --------- --------- --------- --------------
Trading EBITDA is defined in note 3.
6. Taxation
Three months ended Nine months ended Year ended
30 June 30 June 30 September
2013 2012 2013 2012 2012
GBP000s GBP000s GBP000s GBP000s GBP000s
-------------------------- -------------------- --------------------- -------- ------------------- --------------
Current tax:
Current tax on profits
for
the year 71 45 115 147 358
Adjustments in respect of
prior periods - - - - (12)
-------------------------- -------------------- --------------------- -------- ------------------- --------------
Total current tax 71 45 115 147 346
Deferred tax 1,200 - 1,840 - 762
-------------------------- --------------------- -------- ------------------- --------------
Income tax expense 1,271 45 1,955 147 1,108
-------------------------- -------------------- --------------------- -------- ------------------- --------------
7. Earnings per share
Three months ended Nine months ended Year ended
30 June 30 June 30 September
2013 2012 2013 2012 2012
GBP000s GBP000s GBP000s GBP000s GBP000s
------------------- --------------------- ---------------------- --------------------- ---------------------- ----------------------
Profit for the
financial
period 40,619 984 41,850 1,925 1,855
Profit on
discontinued
operation,
net of tax (45,568) - (45,568) - -
------------------- --------------------- ---------------------- --------------------- ---------------------- ----------------------
(Loss)/profit from
continuing
operations (4,949) 984 (3,718) 1,925 1,855
Restructuring
costs and
compensation
for loss of
office 576 672 637 672 2,458
Payments to LTIP
holders
and bonuses in
connection
with the Disney
settlement 3,058 - 3,058 - -
Other
non-recurring
costs/(credits) 645 (146) 645 204 428
Deferred tax
charge 1,200 - 1,840 - 762
Trading profit
after net
finance costs and
income
tax expense 530 1,510 2,462 2,801 5,503
------------------- --------------------- ---------------------- --------------------- ---------------------- ----------------------
Weighted average
number of
shares (net of
treasury shares)
For basic earnings
per share
(000's) 25,952 25,384 25,724 25,376 25,393
Effect of dilutive
share
options (000's) 1,634 1,020 1,862 1,020 1,020
For diluted
earnings per
share (000's) 27,586 26,404 27,586 26,396 26,413
------------------- --------------------- ---------------------- --------------------- ---------------------- ----------------------
Earnings/(losses)
per share
Basic 156.5p 3.9p 162.7p 7.6p 7.3p
Diluted 147.2p 3.7p 151.7p 7.3p 7.0p
------------------- --------------------- ---------------------- --------------------- ---------------------- ----------------------
Continuing
operations basic (19.1)p 3.9p (14.5)p 7.6p 7.3p
Continuing
operations
diluted (19.1)p 3.7p (14.5)p 7.3p 7.0p
------------------- --------------------- ---------------------- --------------------- ---------------------- ----------------------
Adjusted basic 2.0p 5.9p 9.6p 11.0p 21.7p
Adjusted diluted 1.9p 5.7p 8.9p 10.6p 20.8p
------------------- --------------------- ---------------------- --------------------- ---------------------- ----------------------
Discontinued
operations basic 175.6p 0.0p 177.1p 0.0p 0.0p
Discontinued
operations
diluted 165.2p 0.0p 165.2p 0.0p 0.0p
------------------- --------------------- ---------------------- --------------------- ---------------------- ----------------------
Basic earnings per share have been calculated by dividing
profit/loss for the period by the weighted average number of
ordinary shares in issue during the period.
Diluted earnings per share have been calculated by dividing
profit/loss for the period by the weighted average number of
ordinary shares in issue during the period, adjusted for any awards
under the Company's Long Term Incentive Plan ("LTIP") where
pre-specified performance conditions have been satisfied and any
required conversion of dilutive potential options.
Adjusted earnings per share have been calculated as per note
3.
8. Analysis of net debt
At 1 Other Currency At 30
April Cash non cash translation June
2013 flow changes differences 2013
GBP000s GBP000s GBP000s GBP000s GBP000s
--------------------------- --------- ---------------- ---------------- ------------- ---------
Cash at bank and
in hand 5,692 42,569 - (108) 48,153
Bank overdrafts (408) 168 - (1) (241)
--------------------------- --------- ---------------- ---------------- ------------- ---------
Net cash 5,284 42,737 - (109) 47,912
Bank loans due
in more than one
year (19,100) 11,291 - (45) (7,854)
Hire purchase obligations
due in less than
one year (7,619) 1,833 (1,469) (1) (7,256)
Hire purchase obligations
due in more than
one year (8,559) (612) 1,469 18 (7,684)
Net debt (29,994) 55,249 - (137) 25,118
--------------------------- --------- ---------------- ---------------- ------------- ---------
At 1 Other Currency At 30
October Cash non cash translation June
2012 flow changes differences 2013
GBP000s GBP000s GBP000s GBP000s GBP000s
--------------------------- --------- ---------------- ---------------- ------------- ---------
Cash at bank and
in hand 4,345 43,945 - (137) 48,153
Bank overdrafts (229) 5 - (17) (241)
--------------------------- --------- ---------------- ---------------- ------------- ---------
Net cash 4,116 43,950 - (154) 47,912
Bank loans due
in more than one
year (13,645) 6,238 - (447) (7,854)
Hire purchase obligations
due in less than
one year (7,219) 4,606 (4,376) (267) (7,256)
Hire purchase obligations
due in more than
one year (8,017) (3,760) 4,376 (283) (7,684)
Net debt (24,765) 51,034 - (1,151) 25,118
--------------------------- --------- ---------------- ---------------- ------------- ---------
At 1 Other Currency At 30
April Cash non cash translation June
2012 flow changes differences 2012
GBP000s GBP000s GBP000s GBP000s GBP000s
--------------------------- --------- ---------------- ---------------- ------------- ---------
Cash at bank and
in hand 6,704 (818) - 124 6,010
Bank overdrafts (152) (945) - 1 (1,096)
--------------------------- --------- ---------------- ---------------- ------------- ---------
Net cash 6,552 (1,763) - 125 4,914
Bank loans due
in more than one
year (16,853) - - 4 (16,849)
Hire purchase obligations
due in less than
one year (6,778) 1,266 (1,656) (77) (7,245)
Hire purchase obligations
due in more than
one year (7,198) (2,349) 1,656 (76) (7,967)
Net debt (24,277) (2,846) - (24) (27,147)
--------------------------- --------- ---------------- ---------------- ------------- ---------
At 1 Other Currency At 30
October Cash non cash translation June
2011 flow changes differences 2012
GBP000s GBP000s GBP000s GBP000s GBP000s
--------------------------- ---------------- --------- ---------------- ------------- -----------
Cash at bank and
in hand 7,501 (1,653) - 162 6,010
Bank overdrafts - (1,099) - 3 (1,096)
--------------------------- ---------------- --------- ---------------- ------------- -----------
Net cash 7,501 (2,752) - 165 4,914
Bank loans due
in more than one
year (10,020) (7,000) - 171 (16,849)
Hire purchase obligations
due in less than
one year (5,483) 2,123 (3,875) (10) (7,245)
Hire purchase obligations
due in more than
one year (4,137) (7,695) 3,875 (10) (7,967)
Net debt (12,139) (15,324) - 316 (27,147)
--------------------------- ---------------- --------- ---------------- ------------- -----------
At 1 Other Currency At 30
October Cash non cash translation September
2011 flow changes differences 2012
GBP000s GBP000s GBP000s GBP000s GBP000s
--------------------------- ---------------- --------- ---------------- ------------- -----------
Cash at bank and
in hand 7,501 (3,484) - 328 4,345
Bank overdrafts - (227) - (2) (229)
--------------------------- ---------------- --------- ---------------- ------------- -----------
Net cash 7,501 (3,711) - 326 4,116
Bank loans due
in more than one
year (10,020) (4,000) - 375 (13,645)
Hire purchase obligations
due in less than
one year (5,483) 3,549 (5,405) 120 (7,219)
Hire purchase obligations
due in more than
one year (4,137) (9,419) 5,405 134 (8,017)
-----------
Net debt (12,139) (13,581) - 955 (24,765)
--------------------------- ---------------- --------- ---------------- ------------- -----------
9. Interim and final dividends
A final dividend for the year ended 30 September 2012 of 3.0p
per share amounting to a total of GBP778,000 was approved and was
paid on 8 April 2013 to shareholders on the register at 6.00pm on
15 March 2013.
An interim dividend for the year ended 30 September 2012 of 1.0p
per share amounting to a total of GBP254,000 was approved and was
paid on 1 October 2012 to shareholders on the Register at 6.00pm on
14 September 2012.
An interim dividend of 1.0p per share will be paid on 1 October
2013 to shareholders on the Register at 6.00pm on 6 September 2013.
The shares were quoted ex dividend from 4 September 2013.
10. Discontinued operations
InvestinMedia Holdings Limited ("InvestinMedia"), a subsidiary
of the Company, sold its investment in Complete Communications
Corporation Limited ("Complete") on 20 December 2006. The buyer of
Complete pursued legal action in the United States against Disney
on behalf of InvestinMedia and other vendors. This legal action has
now concluded and as announced on 4 June 2013 the Group has
received its share of the Disney litigation award. Cash received
was GBP50.6m although this is reduced by estimated tax liabilities
of GBP4.1m and indemnities of GBP1.0m to GBP45.6m. Further
provision has been made in the accounts for returns to LTIP holders
of GBP2.1m and related bonuses of GBP1.0m, both of which have been
classified as other non-recurring costs.
The consolidated income statement and consolidated cash flow
statement include the following amounts in relation to discontinued
operations:
Three months ended Nine months ended Year ended
30 June 30 June 30 September
Consolidated income
statement 2013 2012 2013 2012 2012
GBP000s GBP000s GBP000s GBP000s GBP000s
------------------------- ---------- --------- --------- --------- --------------
Revenue 49,658 - 49,658 - -
Tax expense (4,090) - (4,090) - -
------------------------- ---------- --------- --------- --------- --------------
Profit on discontinued
operation, net of tax 45,568 - 45,568 - -
------------------------- ---------- --------- --------- --------- --------------
Consolidated cash flow
statement
Operating activities 50,107 - 50,045 - (247)
------------------------- ---------- --------- --------- --------- --------------
Cash generated by/(used
from) discontinued
operations 50,107 - 50,045 - (247)
------------------------- ---------- --------- --------- --------- --------------
11. Contingent liabilities and assets
Contingent liabilities
InvestinMedia Holdings Limited ("InvestinMedia"), a subsidiary
of the Company, sold its investment in Complete Communications
Corporation Limited ("Complete") on 20 December 2006. In connection
with the sale, InvestinMedia and other vendors gave certain
warranties and indemnities to the buyer, in respect of which the
period for notification of claims runs for periods of up to seven
years from the date of completion. So far as the Company is aware,
no legal claims have been brought against any company in the
Complete group that are outstanding and would give rise to
liability on the part of InvestinMedia and other vendors under the
warranties and indemnities.
Contingent assets
InvestinMedia has given certain indemnities to the buyer of
Complete in respect of the distribution of the Disney litigation
award. No revenue has been recognised for these indemnities which
amount to GBP990,982, and in respect of which the period of
notification runs to 7 April 2015.
12. Distribution of interim report and accounts
Copies of this interim report and accounts are available from
the Company's web site (www.avesco.com) or from the Company's
registered office: Avesco Group plc, Unit E2, Sussex Manor Business
Park, Gatwick Road, Crawley,
West Sussex, RH10 9NH. Telephone: +44 (0) 1293 583 400. Fax: +44 (0) 1293 583 410. E-mail: mail@avesco.com.
INDEPENDENT REVIEW REPORT TO AVESCO GROUP PLC
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the Interim Report and Accounts for the
three and nine months ended 30 June 2013, which comprises the
consolidated income statement, consolidated statement of
comprehensive income, consolidated balance sheet, consolidated
statement of changes in equity and consolidated cash flow statement
and the related explanatory notes that have been reviewed. We have
read the other information contained in the Interim Report and
Accounts and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the Company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
Company, for our work, for this report, or for the conclusions we
have formed.
Directors' Responsibilities
The Interim Report and Accounts is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the Interim Report and Accounts in accordance with
the AIM Rules issued by the London Stock Exchange which require
that it is presented and prepared in a form consistent with that
which will be adopted in the Company's annual accounts having
regard to the accounting standards applicable to such annual
accounts.
As disclosed in note 3, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this Interim Report and Accounts has been prepared in accordance
with the AIM Rules issued by the London Stock Exchange.
Our Responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the Interim Report and
Accounts based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the Interim Report and Accounts for the three and nine months
ended 30 June 2013 is not prepared, in all material respects, in
accordance with the accounting policies outlined in Note 3, which
comply with IFRS's as adopted by the European Union and in
accordance with the AIM Rules issued by the London Stock
Exchange.
Ernst & Young LLP
Reading
9 September 2013
This information is provided by RNS
The company news service from the London Stock Exchange
END
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Avesco (LSE:AVS)
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