Avesoro Resources Regulatory News (ASO)

15 Jun 2006 07:00

Avesco PLC15 June 2006 Under embargo 7.00am, Thursday 15 June 2006 Avesco plc Preliminary Results for the year ended 31 March 2006 Avesco plc ("Avesco"), the international provider of services to the corporatepresentation, entertainment and broadcast markets, announces its preliminaryresults for the year ended 31 March 2006. Key Highlights •Turnover up by 11% to £65.3m (2005: £58.9m) •EBITDA up by 16% to £12.5m (2005: £10.7m) •Operating profit of £2.6m (2005: £2.1m) before exceptional items and goodwill amortisation •Adjusted earnings per share of 10.7p (2005: 9.1p) and basic earnings per share of 2.2p (2005: 2.3p) •Increase in final dividend proposed to 1.5p per share (2005: 1.0p per share paid) •Net cash inflow of £8.7m (2005: £9.3m) before net capital expenditure of £15.1m (2005: £8.8m) and financing inflow of £5.3m (2005: outflow £0.3m) •Net debt at £12.3m (2005: £7.8m) following a substantial investment programme in new equipment and new office openings, leaving gearing at 63% (2005: 47%) Ian Martin, Chairman, commented: "It has been a particularly pleasing year. Not only have we delivered a strongoperational performance, all achieved through organic growth, but the Group hasalso established powerful foundations to help us drive future progress. We haveopened new offices in Las Vegas and Cologne, relocated two others, strengthenedour management and sales teams and made significant investments in new productsand technology to ensure that we remain at the forefront of our markets. "We are in good shape to continue our progress. Our strategy is to build uponthe significant specialist video and audio based services we have in the UK,North America and Europe while there are exciting opportunities in broadcastservices, not least with the migration to high definition TV. "Trading in the early part of the current year has been very encouraging and Iremain as confident as I can be at this early stage about prospects for 2006/2007." For further information please contact: Ian Martin, Chairman, Avesco plc Tel: 01293 583400John Christmas, Group Finance Director, Avesco plc Terry Garrett, Alex White, John MoriartyWeberShandwick Square Mile Tel: 020 7067 0700 Avesco plcChairman's statement I am pleased to report that the results for the Avesco Group for the year ended31 March 2006 were in line with your Board's expectations. Although thefinancial performance was good, the numbers themselves fail to reveal theconsiderable progress that has been made and which lays the foundation andshould provide the momentum for the Group's future performance. During the year we have increased turnover by 11% purely as a result of organicgrowth while still producing a small increase in margins. We have opened newoffices in Las Vegas and Cologne, both of which are expected to become importantprofit centres for the Group. We have relocated another two offices, with athird soon to follow, thereby providing a significant upgrade in facilities forthose businesses and room for future expansion. We have made a number of newappointments to strengthen our management and sales teams around the Group andwe have made significant investments in new products and technology to ensurethat we remain at the forefront of the audio visual presentations and broadcastservices equipment rental markets. Results The Group's financial performance reflected the generally healthy economicconditions across the globe. Key to Avesco is the level of corporateprofitability, liquidity, new business activity and confidence which remained athigh levels throughout the year. The result for the year ended the 31 March 2006 is a pre-tax profit of £0.5m(2005: £0.5m). Pre-tax profit on continuing operations before operating andnon-operating exceptional items and goodwill amortisation is £2.1m (2005:£1.6m). This equates to basic earnings per share of 2.2p (2005: 2.3p) andadjusted earnings per share of 10.7p (2005: 9.1p). Operating profit beforeexceptional items and goodwill amortisation is £2.6m (2005: £2.1m). The Groupcontinued to be highly cash generative at the operating level even aftersignificant working capital investments in our new offices, producing a net cashinflow from operating activities of £9.3m (2005: £9.9m). A share placing at theend of July 2005 raised £2.4m (net of expenses) and with an increase in our bankfacilities enabled us to fund a substantial increase in net capital expenditureto £15.1m (2005: £8.8m). Although net debt rose to £12.3m at the year end (2005:£7.8m), this increase was in line with the Group's forecasts with gearing at 63%(2005: 47%). Dividend The Board recommends a final dividend of 1.5p per share (2005: 1.0p),representing a substantial increase over the prior year. We intend, subject tothe continued progress of the business and while maintaining a sensible earningscover, to increase the dividend in a progressive manner. Strategy Avesco's strategy is clear and straightforward - to build a media services groupthat is recognised for the quality of its people, its services and its financialreturn to shareholders. We are primarily focused on identifying profitableopportunities to exploit the knowledge, skills and resources attaching to ourexisting businesses. While we continue to review opportunities to broaden theservice capability and geographic spread of the Group, we place greaterimportance on long term profitability and the provision of a first class servicein our specialist markets than on expansion for the sake of increased sizealone. I believe that the current shape of our business can drive the development ofthe Group over the next few years. We aim to build upon the significantspecialist video and audio based services businesses we have in the UK, NorthAmerica and Europe while in Broadcast Services the migration to high definitiontelevision, the development of our new Systems business and demand in themainland European markets all present exciting opportunities. We aim to maintain a sound financial discipline and a focus on cash generation.These cash flows will be applied to enhance the capital value of the Groupthrough investment in our rental stock and operations and to reducing debt. People Our absolute focus remains on building value over the long term through our corebusinesses. Everyone involved has worked extremely hard over the last few yearsto build a wonderful company of which we are all justifiably proud and throughtheir efforts we have successfully completed an extraordinary number, diversityand range of events around the world. We try never to underestimate the difference that a quality, motivated workforcecan make. We strongly believe that attracting, developing and retaining goodpeople is fundamentally important to Avesco's long term future. The resultspresented in this report are the accomplishment of all the Group's employees andthey should be acknowledged as the source of our success last year. Many thanksto everyone that made it happen. Current trading and Prospects A continuation of the general economic conditions into 2007 should be supportiveof steady growth for the Group's business. Trading in the early part of thecurrent financial year has been very encouraging, driven primarily by our NorthAmerican business and the full benefits of the substantial capital investmentmade during the course of last year. Pricing still remains competitive althoughwe are seeing signs that certain clients may be increasing the size and scope ofthe events that they wish to hold. I believe that we have the right strategy which over time should createsubstantial value for our shareholders and I remain as confident as I can be atthis early stage about the prospects for the current year. We have great people,an improving spread of business, momentum and increasing opportunities. Ian MartinChairman15 June 2006 Avesco plcChief Executive's review of operations Avesco aims to provide the optimum level of service across all the variousfields in which we operate. We use some of the latest state of the arttechnology and employ high quality people who share our commitment and desire toachieve a level which sets us above our nearest competitors. Our services are provided for a huge range of events, from the largest liveshows down to a single plasma screen on an exhibition stand. The small jobs arejust as important to us as the large ones and this range of activity provides abroad base to our business. While our companies are managed and operate largelyindependently, when the opportunity arises they will work together allowing usto support our customers all over the world and across several servicedisciplines, sharing the Group's equipment and people resources. Performance 2005/2006 saw Avesco continue to build on the achievements of the last couple ofyears. Turnover increased by 11% to £65.3m, all of which was derived fromorganic growth. We have maintained a strong focus on our sales activities and indelivering a high quality of customer service. We have been successful inattracting new customers and in the recruitment of high calibre people, somebringing new customer relationships with them. Whilst costs have inevitablyincreased with the rollout of our new offices, they continue to be tightlycontrolled. Controls over margins have also been improved, helping to generate astrong increase in operating profit before exceptional items and goodwill to£2.6m (2005: £2.1m). Net capital expenditure increased to £15.1m (2005: £8.8m),ensuring that we are able to offer our customers the very latest and best interms of technology. This increase in expenditure was in part funded by oursuccessful share placing in July 2005, which raised £2.4m net of expenses. Asimilar amount was also made available to the Group by way of increased bankingfacilities, enabling us to position the Group favourably in the rapidly growinghigh definition television ("HDTV") broadcast services and equipment rentalmarket. Operational Review of The North American business Creative Technology North America ("CT North America") provides specialist videoand audio based services to production companies, event organizers and creativeagencies. These services are used on a broad range of events such asconventions, product launches, exhibitions and entertainment. A number of positive changes to the US management team took place last year insales, operations and finance. We also began the task of integrating theseparate US operations into a more cohesive, single business unit. This is achallenging undertaking but the benefits in terms of the potential cost savingsand improvements in the utilisation of equipment and people resources areexpected to be considerable. It is pleasing to report that the response andcommitment of everyone involved is already yielding positive results and beingreflected in improving margins. Competitive pricing, the start-up costs of the new Las Vegas operation and thestaff costs arising from the strengthening of the US management team have meantthat operating profits in North America were held back in 2005/2006. However,the financial numbers mask the considerable progress that was made during thesecond half of the year and which has seen CT North America start the newfinancial year as strongly as it ended the last. We are committed to doing theright thing for the long term benefit of the business. We believe that theinvestments and changes, which have been made, although impacting in the shortterm, should yield an upside in future performance. The new Las Vegas office has been established to service the ever increasingamount of convention and exhibition business that is conducted there. Althoughnot without rival among other US cities, Las Vegas has certainly become thefavoured location for many large conventions. CT Las Vegas opened its doors forbusiness in June 2005 and has successfully exceeded its first year sales budget.The Las Vegas operation not only provides the opportunity to service the localmarket more efficiently and cost effectively but is already introducing CT NorthAmerica to many new customers and events. The US market appears to be fairly buoyant and the current indications are thatthe summer will be busier than in 2005. Activity in conventions and exhibitions,the main sector in which CT North America operates, is encouraging with anincrease in both the size and the number of events. However, while budgets forsome events are growing, clients remain very sensitive to pricing. CT North America has a strong management team and an impressive stock of rentalequipment which, combined with the continuing improvements in the operationalefficiency of the business, provide considerable optimism for the future. Operational Review of UK Businesses Creative Technology London ("CT London") provides a range of specialist video,audio, IT and large screen display services to the corporate, entertainment andsports markets around the globe. CT London's performance in the year was outstanding, significantly exceeding itsinternal targets for both turnover and operating profit. Clients continue to beattracted by the strong emphasis which the management team places on quality ofservice and their success was recognised when CT London was voted 'FavouriteVideo Services Company' at the TPI Awards 2006. CT London's services were provided during the year to events as diverse as theinternational motor shows in Europe and the Far East, the Live 8 concert in HydePark, the Rod Stewart, Elton John and Oasis tours and Endemol's Big Brothertelevision show. CT London has started the new year well and looks forward to another successful12 months. MCL provides a full range of audio visual services to the corporate market,including conferences, exhibitions and also a thriving equipment hire sector.MCL operates on a local, national and occasionally international basis from itsbranches in Birmingham, Manchester, Edinburgh, Glasgow and the NEC exhibitionsite. The business successfully increased profits over the previous year.Particularly strong performances came from Edinburgh and Manchester, whilst theNEC and Glasgow branches turned losses last year into operating profits thisyear. Birmingham's result was satisfactory although down on last year with anumber of large one-off shows from 2004/2005 not repeating. MCL has made an encouraging start to the new financial year, during which itplans to open a London branch to target the local exhibition and event venues inand around the capital. Presteigne is a leading provider of broadcast television equipment and systemsolutions to the broadcast and entertainment market sectors in Europe.Presteigne had another profitable year, benefiting from substantial investmentsin HDTV equipment in both its equipment hire and systems operations. Presteigne consolidated its strong position in the outside broadcast sector andcontinued to expand its customer base in mainland Europe. The business hasestablished itself at the forefront of the market for the rental of HDTVequipment in Europe and, as the major European broadcasters increase theircommitment to the HDTV format, Presteigne is well placed to take advantage ofthe opportunities that will arise. From mid-2006, Sky's major sports coverage,including premiership football and cricket, will be in HDTV. The BBC is due tobroadcast the 2006 Wimbledon tennis championships in HDTV while the footballWorld Cup in Germany will provide further encouragement to the uptake of theformat. The huge opportunity in HDTV led to the establishment of Presteigne's systemsbusiness in April 2005. Systems services have already been provided byPresteigne at major sports events such as the Winter Olympics in Turin and theWest Asian Games in Doha, as well as to a number of entertainment events such asthe filming of the BBC television show "Green Green Grass". Presteigne's growing revenues from customers in mainland Europe led to theestablishment of Presteigne Germany in September 2005. This new operation, basedin Cologne, has achieved profitability in just six months. The German market isextremely exciting for Presteigne as there are very few companies specialisingin the rental of broadcast equipment. Presteigne is now actively planning the opening of further branches in Europeand is strengthening the management team to cope with this expansion. 2006 willsee a number of large events which should result in strong demand forPresteigne's services. Operational Review of Continental European Businesses JVR provides a range of audio visual services from its branches in Amsterdam,Rotterdam and Roosendaal. In addition to the corporate sector served by all ofJVR's branches, JVR provides its services to a number of major events oftenutilising its large screen displays. JVR has established an important positionin the television sector, leading to the recent opening of a sales office inHilversum, the heart of the Dutch broadcast industry. Although operating in an environment of slowing economic growth and a highlycompetitive local market, JVR managed to increase its operating profitssignificantly over the previous year. The company has a strong management andsales team and is actively pursuing new opportunities for further market growth. Action is a market leader on the Cote d'Azur, offering specialist video anddisplay services into the corporate events and exhibition market sectors fromits main base in Monaco. Action also has equipment storage facilties in Cannes,its principal exhibition market, where it supplies the major events at thePalais des Festivals, including MIPTV, MIDEM and MIPCOM. Other important eventsfor Action include the Cannes Film Festival and the Monaco Grand Prix. Last yearAction supplied a wide range of customers at the GSM telecommunications show inBarcelona, an event previously held in Cannes. Action achieved a good operating profit in the year despite intensivecompetition putting pressure on prices and margins in its local market. Actionhas a good base from which to develop its activities and is actively pursuingopportunities to broaden its range of services. CT Germany, Creative Technology's mainland European operation, providesspecialist video and large screen display services to the corporate andentertainment markets from its main base in Stuttgart and a sales office inDusseldorf. Despite another year of intense competition in a difficult economicclimate, CT Germany increased its turnover and operating profits in the year,benefiting from new client wins in its principal sectors coupled with improvedmargin controls, especially in the second half of the year. The television and agency business, which is generated through the Dusseldorfoffice, provides a good balance to the main exhibitions business. CT Germanyplans to grow its presence in the television and agency sector and has beenadding more sales staff in this area since the year end. Group Outlook During 2006/2007 we plan to continue the drive for further sales growth throughour existing sales teams, supplemented by the recruitment of new clientrelationship people and from the establishment of additional operations andservices. The market remains competitive but we shall continue to invest in our businessesand to focus on our quality of service. It is important that we develop ourmanagement to support this growth and this is a continuous process in the Group.We have talented teams and boundless enthusiasm at all levels to succeed whichbodes well for the future. Our businesses have made an encouraging start to theyear and we look forward to another successful 12 months. David NicholsonChief Executive15 June 2006 Avesco plcConsolidated profit and loss accountFor the year ended 31 March 2006 ______________________________________________________________________________________________________ 2006 (unaudited) 2005 (audited & restated*)______________________________________________________________________________________________________ Before Exceptional Total Before Exceptional Total exceptional items and exceptional items and items and goodwill items and goodwill goodwill amortisation goodwill amortisation amortisation amortisation______________________________________________________________________________________________________ £'000 £'000 £'000 £'000 £'000 £'000 Turnover (note 1) 65,338 - 65,338 58,867 - 58,867Cost of sales (42,019) - (42,019) (37,971) - (37,971)_____________________________________________________________________________________________________Gross profit 23,319 23,319 20,896 - 20,896 Operating expenses (20,675) (1,507) (22,182) (18,771) (1,884) (20,655)______________________________________________________________________________________________________Operatingprofit (note 3) 2,644 (1,507) 1,137 2,125 (1,884) 241 (Loss)/profit on disposal of fixed assets (note 3) (43) 767______________________________________________________________________________________________________Profit on ordinaryactivities beforeinterest and taxation 1,094 1,008 Net interest payable and similar items (550) (526)______________________________________________________________________________________________________Profit on ordinaryactivities beforetaxation (note 1) 544 482 Taxation on profit onordinary activities(note 4) (151) (110)______________________________________________________________________________________________________Profit on ordinaryactivities after taxation 393 372 Equity minorityinterests - (2)______________________________________________________________________________________________________Profit for thefinancial year 393 370 Dividends (note 6) (191) -______________________________________________________________________________________________________Retained profit for the financial year 202 370______________________________________________________________________________________________________Earnings per share(note 5) Basic and diluted 2.2p 2.3p______________________________________________________________________________________________________ There is no difference between the results stated above and their historicalcost equivalents. All turnover and operating profit relates to continuingoperations. * 2005 has been restated to recognise the dividend paid in October 2005 in theyear ended 31 March 2006 in accordance with FRS21 "Events after the balancesheet date" (see Note 9 for further details). Avesco plcConsolidated balance sheetAs at 31 March 2006 _______________________________________________________________________________ 2006 2005 (audited & (unaudited) restated*) £'000 £'000_______________________________________________________________________________ Intangible assets - 1,507Tangible assets 29,497 21,646_______________________________________________________________________________Fixed assets 29,497 23,153 Stocks 844 918Debtors 15,715 13,869Cash at bank and in hand 808 1,147_______________________________________________________________________________Current assets 17,367 15,934 Borrowings (5,307) (2,821)Other creditors (13,462) (12,357)_______________________________________________________________________________Creditors: amounts falling duewithin one year (18,769) (15,178)_______________________________________________________________________________ Net current(liabilities)/assets (1,402) 756_______________________________________________________________________________Total assets less currentliabilities 28,095 23,909 Borrowings (7,821) (6,157)_______________________________________________________________________________Creditors: amounts falling dueafter more than one year (7,821) (6,157) Provisions for liabilities andcharges (716) (1,078)_______________________________________________________________________________Net assets (note 1) 19,558 16,674_______________________________________________________________________________ Share capital 1,909 1,632Share premium 2,106 -Capital redemption reserve 50 50Other reserve 29,551 29,551Profit and loss account (14,058) (14,559)_______________________________________________________________________________Equity shareholders' funds 19,558 16,674_______________________________________________________________________________ * The 2005 Group balance sheet has been restated to recognise the dividend paidin October 2005 in the year ended 31 March 2006 in accordance with FRS21 "Eventsafter the balance sheet date" (see Note 9 for further details). Avesco plcConsolidated cashflow statementFor the year ended 31 March 2006 2006 2005 (unaudited) (audited) £'000 £'000_______________________________________________________________________________ Net cash inflow from operating activities 9,256 9,851 Interest received 86 19Interest paid (356) (313)Interest element of hire purchase payments (240) (232)_______________________________________________________________________________Net cash outflow from returns on investments andservicing of finance (510) (526) Overseas taxation (60) (74)_______________________________________________________________________________Taxation (60) (74)_______________________________________________________________________________Net cash inflow before capital expenditure 8,686 9,251 Purchase of tangible fixed assets (17,258) (10,679)Sale of tangible fixed assets 2,155 1,914_______________________________________________________________________________Net cash outflow for capital expenditure (15,103) (8,765) Equity dividends paid (191) -_______________________________________________________________________________Net cash (outflow)/inflow before financing (6,608) 486 Issue of ordinary shares 2,383 -New bank loans 5,339 9Repayment of bank loans (4,096) -New hire purchase obligations 4,409 2,206Repayment of hire purchase obligations (2,737) (2,540)_______________________________________________________________________________Net cash inflow/(outflow) from financing 5,298 (325)_______________________________________________________________________________(Decrease)/increase in cash in the year (1,310) 161_______________________________________________________________________________ Net debt (note 7) (12,320) (7,831)_______________________________________________________________________________ Avesco plcConsolidated statement of total recognised gains and lossesFor the year ended 31 March 2006 2006 2005 (unaudited) (audited) £'000 £'000_______________________________________________________________________________ Profit for the year 393 370 Currency translation differences 157 2_______________________________________________________________________________Total recognised gains relating to the year 550 372_______________________________________________________________________________ Consolidated reconciliation of movements in equity shareholders' fundsFor the year ended 31 March 2006 2006 2005 (unaudited) (audited & restated*) £'000 £'000_______________________________________________________________________________ Profit for the year 393 370Dividends (191) -_______________________________________________________________________________Retained profit for the financial year 202 370 Proceeds of ordinary shares issued for cash 2,383 -Currency translation differences 157 2Long Term Incentive Plan 142 156_______________________________________________________________________________Net change in equity shareholders' funds 2,884 528 Opening equity shareholders' funds aspreviously reported 16,511 16,146Restatement - FRS 21 163 -_______________________________________________________________________________Opening equity shareholders' funds asrestated 16,674 16,146_______________________________________________________________________________Closing equity shareholders' funds 19,558 16,674_______________________________________________________________________________ * 2005 has been restated to recognise the dividend paid in October 2005 in theyear ended 31 March 2006 in accordance with FRS21 "Events after the balancesheet date" (see Note 9 for further details). Avesco plcNotes to the preliminary announcementFor the year ended 31 March 2006 1 Segmental analysis by geographical location The Group only has one class of business, being the provision of audio visualservices to the corporate, entertainment, sport and broadcast events markets. Turnover by Turnover by origin destination 2006 2005 2006 2005 £'000 £'000 £'000 £'000_______________________________________________________________________________ United Kingdom 27,420 23,420 23,820 23,076 Mainland Europe 13,215 12,561 14,802 13,228United States of America 24,703 22,886 26,008 21,976Rest of the World - - 708 587_______________________________________________________________________________Group turnover 65,338 58,867 65,338 58,867_______________________________________________________________________________ Profit on ordinary activities before taxation by origin Excluding Including exceptional exceptional items and items and goodwill goodwill amortisation amortisation 2006 2005 2006 2005 £'000 £'000 £'000 £'000_______________________________________________________________________________United Kingdom 1,927 860 1,207 (309)Mainland Europe 452 270 (335) (436)United States of America 265 995 265 986_______________________________________________________________________________ 2,644 2,125 1,137 241 Operating exceptional items - (432) - -Goodwill amortisation (1,507) (1,452) - -_______________________________________________________________________________Group operating profit 1,137 241 1,137 241Non-operating exceptional items (43) 767Net interest payable and similar items (550) (526)_______________________________________________________________________________Profit on ordinary activities beforetaxation 544 482_______________________________________________________________________________ Net assets by location Excluding goodwill Including goodwill 2006 2005 2006 2005 £'000 £'000 £'000 £'000_______________________________________________________________________________ United Kingdom 15,966 11,776 15,966 12,459Mainland Europe 5,799 5,453 5,799 6,277United States of America 10,829 6,847 10,829 6,847_______________________________________________________________________________ 32,594 24,076 32,594 25,583Goodwill - 1,507 - -_______________________________________________________________________________ Capital employed 32,594 25,583 32,594 25,583Net debt (12,320) (7,831)Provisions for liabilities and charges (716) (1,078)_______________________________________________________________________________Net assets 19,558 16,674_______________________________________________________________________________ 2 Earnings before interest, taxation, depreciation and amortisation ('EBITDA') EBITDA 2006 2005 £'000 £'000_______________________________________________________________________________ Operating profit before exceptional items and goodwillamortisation 2,644 2,125Depreciation 9,819 9,049_______________________________________________________________________________EBITDA before exceptional items 12,463 11,174Exceptional items - (432)_______________________________________________________________________________EBITDA 12,463 10,742_______________________________________________________________________________ Operating profit 1,137 241Depreciation 9,819 9,049Goodwill amortisation 1,507 1,452_______________________________________________________________________________EBITDA 12,463 10,742_______________________________________________________________________________ 3 (Loss)/profit on disposal of fixed assets, exceptional charges and goodwill amortisation 2006 2005 £'000 £'000_______________________________________________________________________________ Restructuring and reorganisation costs (i) - (109)Demerger costs (ii) - 10Relocation and onerous lease costs (iii) - (291)Aborted acquisition costs (iv) - (42)_______________________________________________________________________________Operating exceptional items - (432)Goodwill amortisation (1,507) (1,452)_______________________________________________________________________________Total operating exceptional charges and goodwillamortisation (1,507) (1,884)_______________________________________________________________________________ (Loss)/profit on disposal of fixed assets (v) (43) 767_______________________________________________________________________________Total non-operating exceptional items (43) 767_______________________________________________________________________________ (i) Restructuring and reorganisation costsThe restructuring and reorganisation costs in the year ended 31 March 2005result from the strategic reorganisation and relocation of personnel across theGroup and headcount reductions which in total cost £109,372. (ii) Demerger costsFor the year ended 31 March 2005, this relates to the release of excessprovisions once the final costs for the Group's demerger on 18 February 2004were known. (iii) Relocation and onerous lease costsFollowing the Group's relocation to new premises, exceptional costs wereincurred in the year ended 31 March 2005 in respect of impairments of leaseholdimprovements at vacated properties of £129,204, surplus property costs of£216,905 and provisions for onerous lease and dilapidations costs release of£54,516. (iv) Aborted acquisition costsFor the year ended 31 March 2005, these costs represent the legal andprofessional fees for due diligence undertaken during the year on a potentialacquisition in Europe. The findings of the due diligence exercise resulted inthe project being aborted. (v) (Loss)/profit on sale of fixed assetsOn 5 July 2005 NMT Outside Broadcast (UK) Limited completed the exercise of itsoption to purchase the fixed assets of a Group company for a consideration of£433,334. This created a loss on disposal of £43,343. This amount is regarded asa non-operating exceptional item as it relates to the remaining disposal of thebusiness of Creative Technology Outside Broadcast Limited which was treated asan exceptional item in the year ended 31 March 2004. The proceeds of sale havebeen included within sale of tangible fixed assets on the face of the cash flowstatement. On 15 March 2005 the Group completed the sale of its freehold premises in NewMalden, Surrey, for a consideration of £1,600,000 realising a profit on disposalof £766,908. Cash of £1,200,000 was received on completion with £400,000 beingdeferred and paid on the first anniversary of completion. 4 Taxation Analysis of taxation charge for the year 2006 2005 £'000 £'000_______________________________________________________________________________United Kingdom taxationCorporation tax - -_______________________________________________________________________________ - -Overseas taxationCorporation taxes 151 115Adjustments in respect of previous years - (5)_______________________________________________________________________________ 151 110_______________________________________________________________________________Total current taxation 151 110 Deferred taxation - -_______________________________________________________________________________Taxation on profit on ordinary activities 151 110_______________________________________________________________________________ 5 Earnings per share Basic earnings per share have been calculated by dividing profit after taxationand minority interests by the weighted average number of ordinary shares inissue during the year. None of the contingently issuable shares under the long term incentive plan giverise to a dilution in the earnings per share because the performance conditionattached to them has not yet been met. Therefore, the basic earnings per shareand the diluted earnings per share are identical. Adjusted earnings per share have been calculated by dividing profit aftertaxation and minority interests and excluding goodwill amortisation andexceptional items, by the weighted average number of ordinary shares in issueduring the year. The Directors consider that the adjusted earnings per sharefigure provides a useful additional indication of performance. Earnings 2006 2005 £'000 £'000_______________________________________________________________________________ Profit for the year 393 370Operating exceptional items - 432Non-operating exceptional items 43 (767)Goodwill amortisation 1,507 1,452_______________________________________________________________________________Adjusted earnings 1,943 1,487_______________________________________________________________________________ Weighted average number of sharesFor basic and diluted earnings per share (000's) 18,204 16,316_______________________________________________________________________________ Earnings per shareBasic and diluted 2.2p 2.3pAdjusted 10.7p 9.1p 6 Dividends Dividends paid 2006 2005 £'000 £'000______________________________________________________________________________ Final dividend of 1.0p per share (2005: nil pence per share) 191 -______________________________________________________________________________Total dividend 191 -______________________________________________________________________________ The final dividend of 1.0p per share in respect of the year ended 31 March 2005was paid on 3 October 2005. A final dividend for the year ended 31 March 2006 of 1.5p per share has beenproposed and, subject to shareholders' approval, will be paid on 2 October 2006to shareholders on the register on 15 September 2006. 7 Analysis of net debt At 1 Other Currency At 31 April Cash non-cash translation March 2005 flow changes differences 2006 £'000 £'000 £'000 £'000 £'000_______________________________________________________________________________ Cash at bank and in hand 1,147 (388) - 49 808Bank overdrafts (539) (922) - (13) (1,474)_______________________________________________________________________________Cash 608 (1,310) - 36 (666) Bank loans due in less thanone year - (818) - - (818)Bank loans due in more thanone year (4,009) (425) - (294) (4,728)Hire purchase obligationsdue in less than one year (2,282) 837 (1,564) (6) (3,015)Hire purchase obligationsdue in more than one year (2,148) (2,509) 1,564 - (3,093)_______________________________________________________________________________Net debt (7,831) (4,225) - (264) (12,320)_______________________________________________________________________________ 8 Status of preliminary announcement The preliminary results for the year to 31 March 2006 are unaudited. Thefinancial information set out in the announcement does not constitute theGroup's statutory accounts for the year ended 31 March 2006. The statutory accounts for the year to 31 March 2006 will be finalised on thebasis of the financial information presented by the Directors in thispreliminary announcement and will be delivered to the Registrar of Companiesfollowing the Company's Annual General Meeting. Statutory Accounts for the year ended 31 March 2005 have been delivered to theRegistrar of Companies and the auditors' report on these accounts wasunqualified and did not contain a statement under either Section 237(2) or (3)of the Companies Act 1985. 9 Basis of Preparation The preliminary results for the year ended 31 March 2006 have been prepared inaccordance with the accounting policies set out in the annual report andaccounts for the year ended 31 March 2005 with the following exceptions. The adoption of FRS 21 "Events after the balance sheet date" resulted in theMarch 2005 year end numbers being restated to remove the £163,163 proposeddividend from the profit and loss account and the other creditors line in thebalance sheet. This dividend has now been recognised in the current year sinceshareholder approval was obtained on 8 September 2005. The final value of thedividend was £190,941 as the new shares issued in July 2005 were fully entitledto the dividend. FRS 22 "Earnings per share" was also adopted and has not had a material impacton the results in the current or prior years but requires adjusted earnings pershare to be disclosed in the notes to the accounts rather than on the face ofthe profit and loss account (see Note 5). The Group also adopted FRS 25 "Financial Instruments: Disclosure andpresentation" and FRS 28 "Corresponding amounts" in these preliminary results.The adoption of these standards has had no impact on the current or comparativefigures. 10 Annual General Meeting The Annual General Meeting of the Company will be held at 10.00am on 7 September2006 at Unit E2, Sussex Manor Business Park, Gatwick Road, Crawley, West Sussex,RH10 9NH. 11 Annual Report and Accounts Copies of the full Statutory Accounts will be dispatched to shareholders in duecourse. Copies will also be available on the Company's website (www.avesco.co.uk) and from the registered office of the Company: Unit E2,Sussex Manor Business Park, Gatwick Road, Crawley, West Sussex, RH10 9NH. This information is provided by RNS The company news service from the London Stock Exchange