LONDON (Alliance News) - Avesco Group PLC Tuesday said subsidiary Fountain Television Ltd has agreed to sell its television studios in Wembley for GBP16 million, and this sale is likely to lead to the closure of the Fountain Studios business, as it reported a swing to a pretax profit in its most recently ended financial year.
The studios are most well known as the venue for the live stages of 'The X Factor' and 'Britain's Got Talent'.
Fountain has agreed to sell the freehold land and buildings at the studios to Quintain Wembley Fulton Road Ltd for GBP16 million in cash, and at the same time has also agreed to enter into a lease back of the premises from the buyer at a nominal rent for up to give years.
In the year to end-September, Fountain made a pretax loss of GBP300,000 on sales of GBP5.3 million - around 4% of the Avesco's total turnover - and the board considered this result to be an "unacceptable return on the capital employed in the business compared to the market value of Fountain's premises."
The sale of the studios will likely result in the closure of the business, the media services company company said, and it has therefore begun a consultation with its staff.
"Fountain Studios and its outstanding team of people have a long and proud history of television programme making in Wembley and the Studios have over the years been home to many very successful television shows. However, the physical constraints of the Wembley site have limited Fountain's ability to grow while at the same time property values in Wembley have increased substantially," said Avesco Chairman Richard Murray in a statement.
Avesco believes the disposal of the site will allow it to reduce its net debt to "very modest levels".
The company also separately reported a swing to a pretax profit for its most recently ended financial year, as it said that it has now realised cost savings from previous restructuring programmes, and believes that its profitability has been "effectively rebased."
For the year to end-September the Avesco reported a pretax profit of GBP3.2 million, swung from a pretax loss of GBP430,000 a year before, as revenue rose to GBP133.7 million from GBP126.4 million.
Avesco attributed its revenue growth to a strong performance from its Creative Technologies division, helped by a "much lower" cost base in Europe, and a boost from the European Games in Baku.
The company proposed a final dividend of 5.0 pence, taking its total dividend for the year to 7.0 pence, up from 6.0 pence a year before, which it said reflected its continued confidence in its longer term prospects.
Avesco said its current financial year has started well, with Creative Technologies performing strongly in Europe and the US.
"With the group now carrying a much lower debt burden, streamlined and refocused, we expect to be able to continue our drive to increase profitability, to generate cash and to grow dividends," Murray said in a statement.
Shares in Avesco were up 7.8% at 229.00 pence Tuesday morning.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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