TIDMAVS
RNS Number : 7383J
Avesco Group PLC
17 June 2014
AVESCO GROUP plc
RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2014
Avesco Group plc (AIM: AVS), a leading international provider of
services to the corporate presentation, entertainment and broadcast
markets, announces its results for the six months ended 31 March
2014.
KEY HIGHLIGHTS FOR THE SIX MONTHS TO 31 MARCH 2014
Financial highlights
-- Revenues broadly flat at GBP65.4m (six months ended 31 March 2013: GBP65.9m)
-- Operating profit decreased to a loss of GBP0.5m (six months
ended 31 March 2013: profit of GBP2.7m)
-- Trading profit increased to GBP4.7m (six months ended 31 March 2013: GBP2.8m)*
-- Trading EBITDA up 13% to GBP13.5m (six months ended 31 March 2013: GBP12.0m)*
-- Interim dividend increased to 1.5p (six months ended 31 March 2013: 1.0p)
-- Basic loss per share from continuing operations of 12.4p (six
months ended 31 March 2013: earnings per share of 4.8p)
-- Adjusted basic earnings per share of 15.7p (six months ended 31 March 2013: 7.5p)*
* As described in note 3, the Group uses certain non-GAAP
alternative measures to assess underlying operating
performance.
Operational highlights
-- Trading ahead of plan during the first half with full year
results likely to exceed the Board's prior expectations
-- Restructuring of European based operations substantially complete
-- Increased focus of equipment in fewer locations, with
consequential overhead savings and improved gross margins (up 1%
point at 38%) already in evidence
-- Bank facilities renewed on improved terms
Return of Cash to Shareholders and Buy-back of Shares from
Taya
-- A distribution equivalent to GBP1.10 per share was made to
shareholders and LTIP holders on 31 January 2014 totalling
GBP30.4m
-- Buy-back of 7,584,724 ordinary shares of the Company from
Taya for a total consideration of GBP9.4m completed on 5 February
2014
Richard Murray, Chairman, commented:
Trading in the six months to 31 March 2014 has exceeded our
expectations and the outlook for the final six months of the
financial year is similarly encouraging with some major sporting
events due to take place in the second half, including the World
Cup in Brazil and the 2014 Ryder Cup. As a sign of the Board's
confidence in the outcome for the current year, we are increasing
the interim dividend to 1.5p per share (2013: 1.0p per share).
We believe that the difficult steps we have taken in the period
to eliminate or restructure those businesses that have been a drag
on the Group's performance will leave us in good stead to produce
more stable and less volatile trading results, not only in even
years where we have the benefit of major sporting events, but also
in the odd years which have traditionally been more challenging for
the Group."
For further information please contact:
Avesco Group plc
Richard Murray, Chairman 01293 583400
John Christmas, Group Finance Director
finnCap
Julian Blunt/Scott Mathieson, Corporate
Finance
Brian Patient/Victoria Bates, Corporate
Broking 020 7220 0500
Chairman's Statement
I am very pleased to report that the Group's restructuring plan
is now almost complete and already bearing fruit, with a
significant improvement in trading profits in the six month period
to 31 March 2014, compared to the equivalent period last year.
Results
Revenue in the six months ended 31 March 2014 was down very
slightly at GBP65.4m (six months ended 31 March 2013: GBP65.9m). If
the effect of major events in each of these periods is excluded,
the prior period comparison shows that the underlying business on a
like for like basis continued to make progress, with 5% growth over
the six month period.
The main driver behind the improved performance was the
continued strong results produced by our Creative Technology
division in the US. We also saw the benefits of the recent
restructuring in Presteigne and, in addition, results in our
Creative Technology business in China continued to improve as it
approaches profitability.
The operating loss for the six months ended 31 March 2014 of
GBP0.5m (six months ended 31 March 2013: GBP2.7m profit) includes
GBP5.2m in charges of a non-operational nature, the vast majority
of which relate to the restructuring of our CT business in Germany
("CTG"). This restructuring is discussed in more detail below.
Trading profits (which exclude restructuring costs, compensation
for loss of office, payments to LTIP holders and bonuses in
connection with the Disney litigation receipt, and other
non-recurring costs) for the six months ended 31 March 2014 grew
strongly to GBP4.7m (six months ended 31 March 2013: GBP2.8m). The
adjusted basic earnings per share increased to 15.7p (six months
ended 31 March 2013: 7.5p).
Our continued profitability in the US means that historic tax
losses there are close to being fully utilised. As a result, there
has been an increase in our total tax charge for the six months
ended 31 March 2014 to GBP1.9m (six months ended 31 March 2013:
GBP0.7m), although the increase relates almost entirely to deferred
tax rather than current tax.
We continue to manage our cash resources carefully and have
reduced our spend on new equipment compared to the same period last
year, with net investment in fixed assets during the first half
year of GBP7.4m (six months ended 31 March 2013: GBP10.1m).
On 31 March 2014, the net assets of the Group were GBP31.5m (31
March 2013: GBP39.6m) or GBP1.67 per share (31 March 2013: GBP1.53
per share).
As a sign of the Board's confidence in the outcome for the
current year, we are increasing the interim dividend to 1.5p per
share (2013: 1.0p per share). This payment will be made on 1
October 2014 to shareholders on the register on 5 September 2014
and the shares will be quoted ex dividend from 3 September
2014.
Disney, Return of Cash to Shareholders and Buy-back of Shares
from Taya
During the six months ended 31 March 2014, we completed two
significant transactions funded by our share of the proceeds of the
Disney litigation.
The cash received, after deductions for estimated tax
liabilities, indemnities, and related bonuses, was GBP44.5m or
$68.1m ("Net Receipt"). An amount of GBP1.10 per ordinary share,
representing 68% (GBP30.4m) of the total Net Receipt, was returned
to shareholders in cash by way of a B & C Share Scheme and to
LTIP holders by way of a cash bonus on 31 January 2014. The return
of cash was structured in such a way as to allow shareholders,
subject to applicable legal and regulatory restrictions, to elect
to receive their proceeds as either income or capital.
On 5 February 2014, we also completed the buy-back of 7,584,724
ordinary shares of the Company from Taya Communications Ltd
("Taya") for a total consideration of GBP9.4m. Upon completion of
the share buy-back, the Taya representatives on the Board, Mr
Amiram Giniger and Ms Carmit Hoomash, both resigned. I would very
much like to thank them for their contribution to the Company in
recent years.
After allowing for GBP0.4m of costs for these two transactions
(full details of which were included in the circular to
shareholders dated 27 December 2013), we have applied the remaining
GBP4.3m of the Disney litigation receipt to reduce the Group's
debt. Net debt as at 31 March 2014 was GBP21.7m (31 March 2013:
GBP30.0m).
CT Germany
CTG was originally set up in 2003 to service our German clients
(mainly from the auto industry) in territories all over the world.
Traditionally these clients have required German-speaking staff and
German-owned equipment at each global venue and we had built up a
substantial operation in Germany to service their needs. Over the
last 12 to 18 months, however, we have seen these clients change
their policies and they now wish to source equipment and personnel
closer to the venue in question, with a smaller German-speaking
requirement and a consequent cost saving for the client.
In addition, our CTG business last year was adversely affected
by the departure of the entire fee earning team from its TV and
film division to set up their own business. The activities of this
division had previously generated useful infill revenue between the
auto shows. With the loss of this revenue and the change in our
clients' preferences as outlined above, it became clear that CTG in
its then form was no longer viable. Consequently we have reduced
staffing levels at CTG by almost 80% from their peak of 68 in
October 2013, and we are relocating the bulk of CTG's equipment to
our other subsidiaries around the world where we expect to achieve
greater utilisation, with business both from our German auto
industry clients and from our other local customers.
We plan to vacate our 66,000 square feet warehouse facility near
Stuttgart and to relocate to smaller premises more suitable to the
size of CTG's new operation. We have provided for the costs
associated with this onerous lease, which expires in 2023, as we
seek to sublet the Stuttgart warehouse.
In the Strategic Report contained in our 2012/13 Annual Report,
we indicated that we were in the process of restructuring all our
loss making businesses in Europe, of which CTG was by far the
largest. This process is now virtually complete, with the
Presteigne businesses in Holland and Germany and the CTG business
in Dusseldorf all closed down and the restructuring of the CTG
Stuttgart operation well advanced.
Of the total restructuring costs of GBP5.0m booked in the first
six months of the year, those for CTG amount to GBP4.3m, with a
further GBP0.5m of costs to come in the second half of the
financial year.
Group Strategy
The restructuring of our European businesses reflects the
Board's desire to focus the Group on those operations capable of
generating sustainable profits, even if sometimes at the expense of
a reduction in revenue. We have sought to improve our margins by
concentrating our equipment in fewer locations, with a consequent
reduction in overheads, thus de-risking the business substantially.
The early signs are that this strategy is already proving to be
beneficial, with gross margins increasing in the six months to 31
March 2014 to 38% (31 March 2013: 37%), and trading operating
expenses reducing down from GBP21.6m to GBP20.4m over the same
period.
The Group is now better placed to pursue its aim of developing
the Group's core businesses to provide cash generation and dividend
growth for shareholders.
Financing
For many years the Group's lead bank has been HSBC and we were
pleased earlier this month to renew our facilities with them,
totalling GBP32m until June 2018, on improved terms.
Outlook
Trading in the six months to 31 March 2014 has exceeded our
expectations and the outlook for the final six months of the
financial year is similarly encouraging with some major sporting
events due to take place in the second half, including the World
Cup in Brazil and the 2014 Ryder Cup. As a result of the improved
trading, full year results are likely to exceed the Board's prior
expectations.
We believe that the difficult steps we have taken this year to
eliminate or restructure those businesses that have been a drag on
the Group's performance will leave us in good stead to produce more
stable and less volatile trading results, not only in even years
where we have the benefit of major sporting events, but also in the
odd years which have traditionally been more challenging for the
Group.
Unaudited condensed consolidated income statement
For the six months ended 31 March 2014
Six months ended Year ended
31 March 30 September
2014 2013 2013
GBP000s GBP000s GBP000s
------------------------------------------ ----------- --------------------- --------------
Continuing operations
Revenue 65,366 65,878 124,033
Cost of sales (40,572) (41,439) (80,408)
------------------------------------------ ----------- --------------------- --------------
Gross profit 24,794 24,439 43,625
Operating expenses and income (25,574) (21,673) (51,947)
Share of associate's profit/(loss) 280 (40) (28)
------------------------------------------ ----------- --------------------- --------------
Trading profit 4,681 2,787 511
Exceptional items (5,181) (61) (8,861)
------------------------------------------ ----------- --------------------- --------------
Operating (loss)/profit (500) 2,726 (8,350)
Finance income 21 1 3
Finance costs (623) (812) (1,532)
------------------------------------------ ----------- --------------------- --------------
(Loss)/profit before income tax (1,102) 1,915 (9,879)
Income tax expense (1,859) (684) (744)
------------------------------------------ ----------- --------------------- --------------
(Loss)/profit from continuing operations (2,961) 1,231 (10,623)
Profit on discontinued operation,
net of tax 1,192 - 45,729
(Loss)/profit for the financial
period (1,769) 1,231 35,106
------------------------------------------ ----------- --------------------- --------------
Pence Pence Pence
per share per share per share
(Losses)/earnings per share for
profit attributable to the equity
holders of the company
- basic (7.4)p 4.8p 136.2p
- diluted (7.4)p 4.5p 136.2p
(Losses)/earnings per share for
profit attributable to the equity
holders of the company from continuing
operations
- basic (12.4)p 4.8p (41.2)p
- diluted (12.4)p 4.5p (41.2)p
Alternative performance measures (non-GAAP)
For the six months ended 31 March 2014
Six months ended Year ended
31 March 30 September
2014 2013 2013
GBP000s GBP000s GBP000s
------------------------------ ---------------------- ------------------------ -------------------
Operating (loss)/profit (500) 2,726 (8,350)
Adjusted to exclude:
Restructuring costs and
compensation for loss
of office 5,017 61 4,845
Payments to LTIP holders
and bonuses in connection
with the Disney settlement (162) - 3,298
Other non-recurring costs 326 - 718
------------------------------ ---------------------- ------------------------ -------------------
Exceptional items 5,181 61 8,861
Trading profit 4,681 2,787 511
Net finance costs (602) (811) (1,529)
Trading profit/(loss)
after net finance costs 4,079 1,976 (1,018)
------------------------------ ---------------------- ------------------------ -------------------
Current tax (expense)/credit (319) (44) 566
Trading profit/(loss)
after net finance costs
and current tax expense 3,760 1,932 (452)
------------------------------ ---------------------- ------------------------ -------------------
Trading EBITDA 13,458 11,962 18,943
------------------------------ ---------------------- ------------------------ -------------------
Adjusted earnings per Pence per Pence per Pence per
share share share share
------------------------------ ---------------------- ------------------------ -------------------
- basic 15.7p 7.5p (1.8)p
- diluted 15.7p 7.0p (1.8)p
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 six months ended 31 March 2014
Six months ended Year ended
31 March 30 September
2014 2013 2013
GBP000s GBP000s GBP000s
-------------------------------------- --------- -------- --------------
(Loss)/profit for the period (1,769) 1,231 35,106
Other comprehensive (expense)/income
Currency translation differences (199) 520 72
Total comprehensive (expense)/income
for the period (1,968) 1,751 35,178
-------------------------------------- --------- -------- --------------
Unaudited condensed consolidated balance sheet
As at 31 March 2014
31 March 31 March 30 September
2013 2013
2014 Restated Restated
GBP000s GBP000s GBP000s
------------------------------------- --------- ----------------------------- -----------------------------
Assets
Non-current assets
Property, plant and equipment 56,428 63,908 56,346
Intangible assets 146 138 311
Investment in associate 423 231 143
Deferred income tax assets 3,384 6,091 5,219
Trade and other receivables 119 210 141
------------------------------------- --------- ----------------------------- -----------------------------
60,500 70,578 62,160
Current assets
Inventories 1,385 876 829
Trade and other receivables 29,574 27,720 23,114
Current income tax assets 119 131 13
Cash and cash equivalents 6,994 5,692 43,699
38,072 34,419 67,655
------------------------------------- --------- ----------------------------- -----------------------------
Total assets 98,572 104,997 129,815
------------------------------------- --------- ----------------------------- -----------------------------
Liabilities
Non-current liabilities
Borrowings and loans 20,749 27,659 13,467
Deferred income tax liabilities 3,926 4,434 4,247
Provisions for other liabilities
and charges 2,760 513 295
------------------------------------- --------- ----------------------------- -----------------------------
27,435 32,606 18,009
Current liabilities
Trade and other payables 29,573 24,278 27,241
Current income tax liabilities 1,262 492 2,879
Borrowings and loans 7,920 8,027 7,895
Provisions for other liabilities
and charges 898 11 592
-------------------------------------
39,653 32,808 38,607
------------------------------------- --------- ----------------------------- -----------------------------
Total liabilities 67,088 65,414 56,616
------------------------------------- --------- ----------------------------- -----------------------------
Total assets less total liabilities 31,484 39,583 73,199
------------------------------------- --------- ----------------------------- -----------------------------
Equity
Capital and reserves attributable
to equity holders of the company
Ordinary shares 2,095 2,649 2,649
Share premium 11,194 23,286 23,286
Capital redemption 12,646 - -
Other reserves (154) 493 45
Retained earnings 5,703 13,155 47,219
------------------------------------- --------- ----------------------------- -----------------------------
Total equity 31,484 39,583 73,199
------------------------------------- --------- ----------------------------- -----------------------------
Refer to Note 3 for a description of the prior period
restatements.
Unaudited condensed consolidated statement of changes in
equity
For the six months ended 31 March 2014
Share Share Capital
capital premium redemption Other Retained
account account reserve reserves earnings Total
GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
--------------- ----------------- ---------------- ---------------- ---------------- ---------------- ----------------
Balance at 1
October
2013 2,649 23,286 - 45 47,219 73,199
Loss for the
period - - - - (1,769) (1,769)
Other
comprehensive
expense net
of tax - - - (199) - (199)
--------------- ----------------- ---------------- ---------------- ---------------- ---------------- ----------------
Total
comprehensive
expense - - - (199) (1,769) (1,968)
Transactions
with owners
in their
capacity as
owners:
Issue of B and
C shares 12,092 (12,092) - - - -
Redemption of
B shares (12,092) - 12,092 - (12,092) (12,092)
Dividend on C
shares - - - - (16,455) (16,455)
Purchase of
ordinary
shares (554) - 554 - (9,763) (9,763)
External
dividends
paid - - - - (1,013) (1,013)
LTIP and share
options - - - - (424) (424)
--------------- ----------------- ---------------- ---------------- ----------------
Balance at 31
March
2014 2,095 11,194 12,646 (154) 5,703 31,484
--------------- ----------------- ---------------- ---------------- ---------------- ---------------- ----------------
Share Share Capital
capital premium redemption Other Retained
account account reserve reserves earnings Total
GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
--------------- ----------------- ---------------- ---------------- ---------------- ---------------- ----------------
Balance at 1
October
2012 2,599 23,286 - (27) 12,753 38,611
Profit for the
period - - - - 1,231 1,231
Other
comprehensive
income net of
tax - - - 520 - 520
--------------- ----------------- ---------------- ---------------- ---------------- ---------------- ----------------
Total
comprehensive
income - - - 520 1,231 1,751
Transactions
with owners
in their
capacity as
owners:
External
dividends
paid - - - - (1,032) (1,032)
LTIP and share
options 50 - - - 203 253
--------------- ----------------- ---------------- ---------------- ---------------- ---------------- ----------------
Balance at 31
March
2013 2,649 23,286 - 493 13,155 39,583
--------------- ----------------- ---------------- ---------------- ---------------- ---------------- ----------------
Share Share Capital
capital premium redemption Other Retained
account account reserve reserves earnings Total
GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
--------------- ----------------- ---------------- ---------------- ---------------- ---------------- ----------------
Balance at 1
October
2012 2,599 23,286 - (27) 12,753 38,611
Profit for the
period - - - - 35,106 35,106
Other
comprehensive
income net of
tax - - - 72 - 72
--------------- ----------------- ---------------- ---------------- ---------------- ---------------- ----------------
Total
comprehensive
income - - - 72 35,106 35,178
Transactions
with owners
in their
capacity as
owners:
External
dividends
paid - - - - (1,032) (1,032)
LTIP and share
options 50 - - - 392 442
Balance at 30
September
2013 2,649 23,286 - 45 47,219 73,199
--------------- ----------------- ---------------- ---------------- ---------------- ---------------- ----------------
Unaudited condensed consolidated cash flow statement
For the six months ended 31 March 2014
Six months ended Year ended
31 March 30 September
2013 2013
2014 Restated Restated
GBP000s GBP000s GBP000s
----------------------------------- --------------------- --------------------- ---------------------
Cash flows from operating
activities
Cash generated from operations 1,000 7,105 66,916
Income tax paid (846) (137) (1,157)
Net cash generated from operating
activities 154 6,968 65,759
----------------------------------- --------------------- --------------------- ---------------------
Cash flows from investing
activities
Purchases of property, plant
and equipment (10,591) (11,403) (16,403)
Proceeds from sale of property,
plant and equipment 3,214 1,331 637
Dividends from associate - - 100
Net cash used in investing
activities (7,377) (10,072) (15,666)
----------------------------------- --------------------- --------------------- ---------------------
Cash flows from financing
activities
Net interest paid (529) (857) (1,604)
Proceeds from borrowings 12,141 9,799 13,909
Repayments of borrowings (4,229) (4,371) (22,162)
Purchase of ordinary shares (9,763) - -
Redemption of B shares (10,192) - -
Dividends paid to Company's
shareholders (16,775) (254) (1,032)
--------------------- ---------------------
Net cash (used in)/generated
from financing activities (29,347) 4,317 (10,889)
----------------------------------- --------------------- --------------------- ---------------------
Net (decrease)/increase in
cash, cash equivalents and
bank overdrafts (36,570) 1,213 39,204
Cash, cash equivalents and
bank overdrafts at beginning
of period 43,107 4,116 4,116
Exchange gains/(losses) on
cash and bank overdrafts 11 (45) (213)
Cash, cash equivalents and
bank overdrafts at end of
period 6,548 5,284 43,107
Bank overdrafts at end of
period 446 408 592
Cash, cash equivalents at
end of period 6,994 5,692 43,699
----------------------------------- --------------------- --------------------- ---------------------
Refer to Note 3 for a description of the prior period
restatements.
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 17 June 2014, are not full accounts within the meaning of
section 434 of the Companies Act 2006.
The figures for the year ended 30 September 2013 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 2014. Except as set out below,
these are consistent with those included in the previously
published annual report and accounts for the year ended 30
September 2013, 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.
Change in accounting policy
In the current period the Group has adopted the amendment to IAS
16 Property, Plant and Equipment which clarifies that major spare
parts and servicing equipment that meet the definitions of
property, plant and equipment should not be classified as
inventory. As a result of this amendment the Group has revised its
accounting policy for the classification of cable. The balance of
GBP524,000 as at 30 September 2013 was previously classified as
inventory, and in light of this amendment has been reclassified as
property, plant and equipment.
There has been no impact on the equity or results of the Group
as a result of this change in policy. The consolidated balance
sheet and cash flow statement have been restated as a result of
this change in policy.
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, payments to LTIP holders and
bonuses in connection with the Disney settlement, 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, payments to LTIP holders and
bonuses in connection with the Disney settlement, 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. Trading EBITDA includes profits on
disposal of property, plant and equipment. The Directors believe
that trading EBITDA is an important measure of the underlying
performance of the Group.
d) Trading operating expenses
'Trading operating expenses' is separately disclosed, being
defined as operating expenses adjusted to exclude restructuring
costs and compensation for loss of office, payments to LTIP holders
and bonuses in connection with the Disney settlement, and other
non-recurring costs. The Directors believe that trading operating
expenses are an important measure of the underlying performance of
the Group.
4. Segmental information
Following a review of the Group's continental European
businesses, the allocation of the Group's subsidiaries to operating
segments was changed to align them with the revised organisational
reporting structure. Our Spanish and Dutch Full Service businesses
have now been integrated in to the operations of Creative
Technology. These segments are set out below. Results for prior
periods have been restated to facilitate comparison.
Six months ended Year ended
31 March 30 September
2013 2013
2014 Restated Restated
GBP000s GBP000s GBP000s
----------------------------- -------- ------------------------ --------------
Revenue
Creative Technology 49,556 48,292 91,988
Full Service 7,426 7,435 13,445
Broadcast 8,760 10,536 19,336
Inter Segment revenue (376) (385) (736)
----------------------------- ------------------------ --------------
Group revenue 65,366 65,878 124,033
----------------------------- -------- ------------------------ --------------
Operating profit
Creative Technology 3,341 2,855 1,806
Full Service 239 633 653
Broadcast 810 (723) (2,000)
Head Office 291 22 52
----------------------------- ------------------------ --------------
Trading profit 4,681 2,787 511
Restructuring costs and
compensation for loss of
office (5,017) (61) (4,845)
Payments to LTIP holders
and bonuses in connection
with the Disney settlement 162 - (3,298)
Other non-recurring costs (326) - (718)
Operating (loss)/profit (500) 2,726 (8,350)
----------------------------- -------- ------------------------ --------------
5. Trading earnings before interest, taxation, depreciation and amortisation ('EBITDA')
Six months ended Year ended
31 March 30 September
2013 2013
2014 Restated Restated
GBP000s GBP000s GBP000s
-------------------------- -------- ---------- --------------
Trading profit 4,681 2,787 511
Depreciation 8,706 9,128 18,326
Amortisation of software 71 47 106
Trading EBITDA 13,458 11,962 18,943
-------------------------- -------- ---------- --------------
Trading EBITDA is defined in note 3.
6. Taxation
Six months ended Year ended
31 March 30 September
2014 2013 2013
GBP000s GBP000s GBP000s
----------------------------- --------- -------- --------------
Current tax:
Current tax charge/(credit)
on profits for the year 319 44 (479)
Adjustments in respect of
prior periods - - (87)
----------------------------- --------- -------- --------------
Total current tax 319 44 (566)
Deferred tax 1,540 640 1,310
----------------------------- --------- -------- --------------
Income tax expense 1,859 684 744
----------------------------- --------- -------- --------------
7. Earnings per share
Six months ended Year ended
31 March 30 September
2014 2013 2013
GBP000s GBP000s GBP000s
-------------------------------------- -------------------- ---------------------- --------------------
(Loss)/profit for the financial
period (1,769) 1,231 35,106
Profit on discontinued operations,
net of tax (1,192) - (45,729)
-------------------------------------- -------------------- ---------------------- --------------------
(Loss)/profit from continuing
operations (2,961) 1,231 (10,623)
Restructuring costs and compensation
for loss of office 5,017 61 4,845
Payments to LTIP holders
and bonuses in connection
with the Disney settlement (162) - 3,298
Other non-recurring costs 326 - 718
Deferred tax charge 1,540 640 1,310
Trading profit/(loss) after
net finance costs and income
tax expense 3,760 1,932 (452)
-------------------------------------- -------------------- ---------------------- --------------------
Weighted average number of
shares (net of treasury shares)
For basic earnings per share
(000's) 23,891 25,609 25,781
Effect of dilutive share
options (000's) 1,250 2,028 1,782
For diluted earnings per
share (000's) 25,141 27,637 27,563
-------------------------------------- -------------------- ---------------------- --------------------
(Losses)/earnings per share
Basic (7.4)p 4.8p 136.2p
Diluted (7.4)p 4.5p 136.2p
-------------------------------------- -------------------- ---------------------- --------------------
Continuing basic (12.4)p 4.8p (41.2)p
Continuing diluted (12.4)p 4.5p (41.2)p
-------------------------------------- -------------------- ---------------------- --------------------
Adjusted basic 15.7p 7.5p (1.8)p
Adjusted diluted 15.7p 7.0p (1.8)p
-------------------------------------- -------------------- ---------------------- --------------------
Discontinued operations basic 5.0p 0p 177.4p
Discontinued operations diluted 5.0p 0p 177.4p
-------------------------------------- -------------------- ---------------------- --------------------
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 31
October Cash non cash translation March
2013 flow changes differences 2014
GBP000s GBP000s GBP000s GBP000s GBP000s
--------------------------- --------- --------- ---------------- ------------- -----------
Cash at bank and
in hand 43,699 (36,710) - 5 6,994
Bank overdrafts (592) 140 - 6 (446)
--------------------------- --------- --------- ---------------- ------------- -----------
Net cash 43,107 (36,570) - 11 6,548
Bank loans due
in more than one
year (7,419) (7,269) - 235 (14,453)
Hire purchase obligations
due in less than
one year (7,303) 2,594 (2,886) 121 (7,474)
Hire purchase obligations
due in more than
one year (6,048) (3,237) 2,886 103 (6,296)
Net cash/(debt) 22,337 (44,482) - 470 (21,675)
--------------------------- --------- --------- ---------------- ------------- -----------
At 1 Other Currency At 31
October Cash non cash translation March
2012 flow changes differences 2013
GBP000s GBP000s GBP000s GBP000s GBP000s
--------------------------- --------- --------- ---------------- ------------- -----------
Cash at bank and
in hand 4,345 1,376 - (29) 5,692
Bank overdrafts (229) (163) - (16) (408)
--------------------------- --------- --------- ---------------- ------------- -----------
Net cash 4,116 1,213 - (45) 5,284
Bank loans due
in more than one
year (13,645) (5,053) - (402) (19,100)
Finance lease obligations
due in less than
one year (7,219) 2,773 (2,907) (266) (7,619)
Finance lease obligations
due in more than
one year (8,017) (3,148) 2,907 (301) (8,559)
Net debt (24,765) (4,215) - (1,014) (29,994)
--------------------------- --------- --------- ---------------- ------------- -----------
At 1 Other Currency At 30
October Cash non cash translation September
2012 flow changes differences 2013
GBP000s GBP000s GBP000s GBP000s GBP000s
--------------------------- --------- --------- ---------------- ------------- -----------
Cash at bank and
in hand 4,345 39,572 - (218) 43,699
Bank overdrafts (229) (368) - 5 (592)
--------------------------- --------- --------- ---------------- ------------- -----------
Net cash 4,116 39,204 - (213) 43,107
Bank loans due
in more than one
year (13,645) 6,247 - (21) (7,419)
Hire purchase obligations
due in less than
one year (7,219) 6,359 (6,377) (66) (7,303)
Hire purchase obligations
due in more than
one year (8,017) (4,353) 6,377 (55) (6,048)
-----------
Net (debt)/cash (24,765) 47,457 - (355) 22,337
--------------------------- --------- --------- ---------------- ------------- -----------
9. Interim and final dividends
A final dividend for the year ended 30 September 2013 of 4.0p
per ordinary share amounting to a total of GBP754,000 was approved
and was paid on 7 April 2014 to shareholders on the register on 14
March 2014.
An interim dividend for the year ended 30 September 2013 of 1.0p
per ordinary share amounting to a total of GBP259,000 was approved
and was paid on 1 October 2013 to shareholders on the Register on 6
September 2013.
An interim dividend of 1.5p per ordinary share will be paid on 1
October 2014 to shareholders on the Register at 6.00pm on 5
September 2014. The shares will be quoted ex dividend from 3
September 2014.
A special dividend of GBP1.10 per C share was approved and was
paid on 24 January 2014 under the Return of Cash (see note 10).
10. Return of cash and buy-back agreement
The Company returned GBP28.5m of the net cash receipt from the
Disney litigation funds to shareholders by way of a B & C Share
Scheme (the "Return of Cash" or "Scheme). On 24 January 2014
10,992,850 B shares and 14,958,700 C shares were allotted to
shareholders through the capitalisation of the share premium
reserve. On 24 January 2014 the Company redeemed the B shares for
GBP1.10 per share, totalling GBP12.1m, and a dividend of GBP1.10
per share was declared on each C share, totalling GBP16.4m.
Following redemption of the B Shares, all of the B Shares were then
cancelled. Following the declaration of dividend on the C shares,
these shares became deferred shares which carried no rights to
participate in the profits of the Company or a return of capital.
The deferred shares were purchased by the Company for an aggregate
sum of 1p, and cancelled. None of the B shares, C shares and
deferred shares were admitted to trading on AIM or admitted to
listing or trading on any recognised investment exchange.
The Company and Taya Communications Ltd ("Taya") entered into a
Buy-back agreement on 23 December 2013 pursuant to which the
Company bought back from Taya 7,584,724 ordinary shares of the
Company, out of Taya's total holding of 7,784,878 ordinary shares,
at a price of 124p per ordinary share on 5 February 2014, leaving
Taya holding a balance of 200,154 ordinary shares, representing
1.09% of the total voting rights of the Company as reduced by the
cancellation or transfer to treasury of the Buy-back Shares. The
price payable for the Buy-back Shares represented a five percent
premium over the average closing mid-market price per ordinary
share for the forty-five business day period ending on 17 December
2013, being the latest practicable date prior to the date of the
release of the Company's Preliminary Results, less the amount of
110 pence (being the cash entitlement payable per Buy-back Share
under the Return of Cash). The total consideration payable was
GBP9.4m plus legal and professional fees of GBP0.4m. Of the
7,584,724 ordinary shares brought back from Taya, 5,539,149 were
cancelled immediately and the balance transferred to treasury,
leaving 2,095,475 shares held in treasury as at 31 March 2014.
11. 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
concluded in the prior year and the Group has received its share of
the Disney litigation award. Cash received was GBP50.6m although
this was reduced by estimated tax liabilities of GBP4.1m and
indemnities of GBP1.0m, offset by a net credit of GBP0.2m in
relation to professional fees resulting in a profit on discontinued
operations of GBP45.7m. Further provision was made in the prior
year for returns to LTIP holders of GBP2.1m and related bonuses of
GBP1.2m, both of which were classified as non-recurring costs. As a
result of further refinement of the tax base cost on the associated
chargeable gain the Group's estimated tax liability has been
reduced by GBP1.2m in the current period.
The consolidated income statement and consolidated cash flow
statement include the following amounts in relation to discontinued
operations:
Six months ended Year ended
31 March 30 September
Consolidated income statement 2014 2013 2013
GBP000s GBP000s GBP000s
----------------------------------- --------- -------- --------------
Revenue - - 49,658
Operating income* - - 160
Tax credit/(expense) 1,192 - (4,089)
----------------------------------- --------- -------- --------------
Profit on discontinued operation,
net of tax 1,192 - 45,729
----------------------------------- --------- -------- --------------
Consolidated cash flow statement
Operating activities (553) (62) 49,448
----------------------------------- --------- -------- --------------
Cash (used from)/generated
by discontinued operations (553) (62) 49,448
----------------------------------- --------- -------- --------------
*Includes release of accrual for legal
costs of GBP215,000.
12. 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. 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.
13. 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 half-yearly financial report for the
six months ended 31 March 2014, 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 half-yearly financial report 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 half-yearly financial report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the half-yearly financial report 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 half-yearly financial report 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 half-yearly
financial report 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 half-yearly financial report for the six months ended 31
March 2014 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
17 June 2014
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFIERFIRLIS
Avesco (LSE:AVS)
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