Avesoro Resources Regulatory News (ASO)

23 Jun 2005 07:01

Avesco PLC23 June 2005 Under embargo 7.00am, Thursday 23 June 2005 Avesco plc Preliminary Results for the year ended 31 March 2005 Avesco plc ("Avesco"), an international provider of services to the corporatepresentation, entertainment and broadcast markets, announces preliminary resultsfor the year ended 31 March 2005; its first full year as an independent companysince de-merger from InvestinMedia plc Key Highlights •Turnover up by 9% to £58.9m (2004: £54.0m) •Operating profit of £2.1m (2004: loss of £1.4m) before exceptional items and goodwill •Pre-tax profit of £0.5m (2004: loss £7.6m) •Basic earnings per share of 2.3p (2004: loss of 46.8p) and adjusted earnings per share of 6.7p (2004: loss of 6.1p) •Final dividend of 1.0p per share proposed •Net cash inflow of £9.3m before net capital expenditure of £8.8m •Net debt reduced from £8.3m to £7.8m Ian Martin, Chairman, commented:"Avesco has delivered a dramatic turnaround. We have been able to deliverresults beyond our original expectations in terms of improved financialperformance and the development of a solid infrastructure on which to buildfuture growth. "Our planned organic growth includes both geographic and product expansion andwe are beginning to see a number of attractive opportunities present themselves.In particular, during the coming year we expect to see the start of an industrytechnology shift towards high-definition equipment. We intend to be a leader inthis product field and we are already positioning the Group to benefitsubstantially as this upgrade cycle begins. "Looking forward, we have a broader product platform, a growing population oftalented individuals, and a more diverse franchise than before. We shouldbenefit from the favourable climate of economic growth and high levels ofcorporate profitability." 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 Chairman's Statement This report covers the first full year since Avesco became an independent quotedcompany upon our de-merger from InvestinMedia plc. It is very pleasing to reportthat we have been able to deliver results beyond our original expectations, bothin terms of improved financial performance and the development of a solidinfrastructure on which to build future growth. Throughout the year, most of the markets in which the company operates showedimprovement, mirroring the wider progress in economic conditions across theglobe. Against this backdrop, Avesco delivered a dramatic turnaround in financialresults; this turnaround reflects not only the quality but also the strength indepth of Avesco's management and workforce. A key factor underlying our successis the improving use of technology and associated management information systemswhich have become embedded into the daily activities of the company. I cannotover emphasise how this supports our efforts to create value and allows ourmanagement to stay focussed on the key business drivers. Results The result for the year ended the 31 March 2005 is a pre-tax profit of £0.5m(2004: loss of £7.6m). Pre-tax profit on continuing operations beforeexceptional items and goodwill amortisation is £2.4m (2004: loss of £1.6m). Thisequates to basic earnings per share of 2.3p (2004: loss of 46.8p) and adjustedearnings per share of 6.7p (2004: loss 6.1p). The Group continued to be cashgenerative and debt reduced further from £8.3m to £7.8m, even after substantialnet capital expenditure of £8.8m (2004: £4.8m). It is pleasing to report a solid profit and as a sign of increased confidence inthe business the Board recommends payment of a final dividend of 1.0p per share(2004: 2.0p paid by InvestinMedia plc following the demerger). We intend,subject to the continued progress of the business, to increase the dividendsteadily over time to reward long term holders of our shares. Whatever the measure, it is clear to me that our level of success is directlyattributable to the quality of our people and the strength of our culture. Theseexcellent results could not have been achieved without the exceptionalcommitment and dedication of our staff and the continued strong support of ourclients and shareholders and I would personally like to thank them all. Topquality businesses depend on the talents of many people. It is our objective toinvest in, and to create, a culture that combines individual skills with acohesive high-energy, demanding environment which is conducive to the profitablegrowth of the business. Business Strategy, Current Trading and Prospects Looking forward, we have a broader product platform, a growing population oftalented individuals, and a more diverse franchise than before. We shouldbenefit from the favourable climate of economic growth and high levels ofcorporate profitability; counter to this, I expect little change to thecompetitive landscape. We are beginning to see a number of attractive opportunities present themselvesand will continue to investigate and pursue such opportunities across the Group.Whilst the taking of some of these may require increased capital expenditure, wewill maintain sound financial disciplines and a focus on the cash generationsuch opportunities will produce. The Group's debt will be maintained at prudentand manageable levels. Our organic growth will include both geographic and product expansion. Since theyear-end, CT North America has established a presence in Las Vegas (with themajority of the new management team transferring from within the Group) andPresteigne has announced plans to open an office in Germany both to service itsexisting clients and to develop new business in the region. Whilst operatingcosts are likely to exceed revenue initially, our approach in each case has beento target significant markets where we believe we have the opportunity to becomeprofitable in the short term and to establish a major presence. During the coming year we also expect to see the start of an industry technologyshift towards high-definition equipment. Avesco intends to be a leader in thisproduct field and we are already positioning the Group to benefit substantiallyas this upgrade cycle begins. Avesco has emerged from a period of consolidation and retrenchment and isfocused upon the achievement of prudent and profitable growth. Our strategy isprimarily aimed at producing organic growth, facilitated by our financialstrength, the delivery of exceptional service to our clients and the continuedhiring of competent individuals who bring quality business with them. I amconfident that we have put in place the foundations on which to build anddevelop the Group for the future. This combination will, we believe, positionAvesco to generate a quality revenue stream and grow the Group's profitabilityand shareholder value. Ian MartinChairman23 June 2005 Chief Executive's Review of Operations After some very difficult times in recent years, if not the most difficult theindustry has faced, these results are a highly visible sign that the belief wehave is well placed and the direction we are moving is correct. The future islooking very promising. People It is the people that distinguish Avesco from others. These results reflect thehard work of the 400 plus people who work within the organisation. Making it Happen Avesco plc is primarily a service business with a "We make it happen" philosophyand an international structure that enables us to offer our customers a globalreach. Avesco is made up of distinct companies with a common culture, each anexpert, a leader and above all trusted by its clients to deliver. Thesecompanies work separately, or together, to deliver the highest quality serviceand production to all our customers from the smallest project to the largestlive event. The Group operates in many parts of the world, although we report our financialinformation on a geographical basis, the businesses fall into threemarketplaces. Creative Technology is a leading audio visual equipment rental and stagingcompany, has operations in both Europe and the USA and works for clients aroundthe world. CT specialises in supplying multimedia presentation solutions forconferences, exhibitions and live events. Presteigne Broadcast Hire is a leader in equipment hire and support for studios,outside broadcast and production applications. Presteigne's solutions andequipment are involved in the world's top sporting and entertainment events. We also operate through a number of more regionally focused companies. Eachoffers a broader range of solutions than the more specialised areas of the Groupbut still uses the best technology and offers expertise and service forconferences, presentations and live events. Each is a leading player in itsfield JVR (Holland), Action (South of France) and MCL (Edinburgh, Birmingham,Manchester, NEC and Glasgow). Performance Last year was a year of considerable achievement. Turnover rose by 9% to £58.9m.Organic growth has been delivered by a focus on our sales activity and winningnew business. This was achieved using two simple strategies. First, by doingwhat we do well, new customers were won over, attracted by our product andsolutions and converted by our proven service culture. Parallel to this was ourability to attract high calibre individuals to the Group with their own clientrelationships, and who complement and add to our established talent. A tight hold on costs, improving margins and an increase in the top lineresulted in a dramatic turnaround in the bottom line, as the Group moved from anoperating loss of £7.2m in 2004 to an operating profit of £0.2m. In broad terms,turnover in North America represents 40% of total Group revenue, the UK 40% andcontinental Europe 20%. In local currency, all regions showed improved operatingprofit. The weakness of the US Dollar after conversion to Sterling masked theunderlying improvement in operating performance from the North Americanbusiness.. Even after significant net investment in our businesses of £8.8m, we were cashgenerative and net debt further reduced to £7.8m. The future is looking promising and we are beginning to see a number ofopportunities to advance the whole Group. Operational Review of the North American Business Creative Technology North America ("CT North America") had a good year andperformed better than budget in both sales and profits. The market has certainlystarted to show strong signs of recovery, as many corporations in the US startto increase spending on promotion, launch and incentive programmes.Nevertheless, the market is still price sensitive and our margins continue to beunder pressure. Last year the US operations comprised three locations based in Los Angeles, SanFrancisco and Chicago. The overall performance was driven by the strongCalifornian businesses held back by Chicago which was in a period ofconsolidation after having to rebuild the management structure last year. The business predominantly services the corporate communications sector which issplit across conventions, product launches and exhibitions. We also supply anincreasing number of broadcast and entertainment events. CT North America supplies to these market sectors a wide range of video andaudio equipment rental services supported by one of the most experiencedengineering and project management teams in the industry. Our projects span a wide and diverse customer base and we are a supplier,directly or indirectly, to some of the largest corporations in the world,covering a wide range of market sectors such as automotive, entertainment, ITand computing and consumer electronics. We have wanted to expand and diversify our North American operations for sometime and our first choice was always Las Vegas. Las Vegas is undeniably one ofthe world's most exciting meeting and convention destinations. It is also agrowing marketplace. CT Las Vegas opened in June 2005 with a strong andexperienced industry team in place, backed by an extensive investment in highend audio visual equipment. The potential for this operation is considerable. For CT North America, there has been a solid start to trading in the firstquarter of this financial year. We do expect a quieter summer than last year butforecast a strong second half performance. Together with an improving resultfrom the rejuvenated Chicago team, a repeat performance from California shouldmake for a reasonable year, even after allowing for the launch costs of LasVegas. Operational review of United Kingdom Businesses Creative Technology ("CT") provides a range of specialist video, audio, IT andlarge screen display services to the corporate, entertainment and sports marketsat events across the globe. Following the major reorganisation in 2004, weachieved a substantial turnaround in CT's performance last year. The relocationof four operations to a single site has produced planned overhead savings andCT's management has very successfully and quickly forged a cohesive andintegrated feel amongst the merged operations. This was the first year that CT London operated under its new managementstructure and the company has been transformed. CT won significant newcustomers, returned to profitability and is currently going from strength tostrength. The whole team at CT has got off to a strong start in the new financial year andwe have high expectations that the best is still to come. MCL provides a full range of audio visual services largely to the corporatemarket. It predominantly offers a local service to a local marketplace althoughmany of its customers are international in their scope. The company has branchesin Birmingham, Birmingham NEC, Manchester, Edinburgh and Glasgow. MCL achieved asubstantial improvement in profit in 2005; significant contributors to thisoverall performance were the Birmingham, Edinburgh and Manchester branches. TheBirmingham NEC started slowly and performance improved as the year went on andthis more positive trend has carried through to the current year. New managementwas installed at Glasgow and costs reduced, despite a move to brand newpremises. The early signs for Glasgow are encouraging with the team alreadydelivering improved results. MCL has had a slower start to the year than we would like but we are confidentthat this will be recovered during the remainder of the year. Presteigne hires broadcast equipment and systems to the broadcast, entertainmentand corporate markets. The past year has seen a substantial increase in profit,with Presteigne benefiting from the significant investment we made during theyear in new equipment, particularly in the field of high definition. High definition (HD) technology is set to revolutionise television broadcastingworldwide. It is being described by the industry as the biggest developmentsince the introduction of colour television. Market research suggests that morethan 4.5m people will switch onto HDTV by 2008. The BBC intends to produce allof its content in HD by 2010. Sky in the UK and M6, TPS and TF1 in France areall planning HD services. Most high profile events are now being recorded in HDin order to preserve their archive value. Broadcasters intend to record nextyear's Football World Cup, Winter Olympics and Asian Games in HD. Sky hascommitted to produce much of its Premier League football in HD next season.There is a significant opportunity for Presteigne to capitalise upon as thewhole recording and transmission upgrade cycle begins. Presteigne has alreadyestablished itself as a market leader in Europe for the rental of highdefinition broadcast equipment and we have the intention to continue this heavyinvestment in equipment to meet the increasing market demand for this newtechnology. Having made significant new business gains in mainland Europe during the year wehave decided to establish an operation in Cologne to develop our growth in theimportant German market. We anticipate that the new company will be operationalin early autumn of this year. At the end of the financial year, we launched Presteigne Broadcast Systems witha high definition capable multi-format de-rig facility system, the first to bebuilt in Europe. A specialist team has been put in place to attack this marketsector. We have successfully completed a number of events with the system, thefirst of which was the Cream reunion concert at the Royal Albert Hall. Asignificant level of interest and excitement has been generated placingPresteigne's Special Projects Division at the forefront of the developing HDmarket. Presteigne is a significant profit contributor to the Group and has started thenew financial year well. We have the ambition, together with the belief in theopportunity, to build Presteigne rapidly into a significant player in the supplyof high definition product and services. However, fulfilment of this ambition islikely to require a step change in the level of capital expenditure for thebusiness and this is now under consideration. Review of Continental European operations JVR provides a range of audio visual services including large screen displaysfrom its branches in Amsterdam, Rotterdam and Roosendaal. JVR increasedoperating profits substantially during the year. JVR's Amsterdam branch, which only opened in the autumn of 2004, exceeded itstargets for the period, winning important new business while its screen basedevents business also had a good year. JVR has steadily built its position in the Dutch market so that it is nowperceived as a market leader, not only in its traditional large screen displaybusiness but also in the corporate sector which we see as the principal driverfor future growth. JVR has not proven to be isolated from the slower economic growth in Europe and,with a quieter summer forecast, this may make this year more challenging. Action supplies its customers with, largely, specialist video services from itsoperating bases in Monaco and Cannes. Action has long been established as themarket leader on the Cote d'Azur and despite intense competition in recentyears, has retained that market leading position. Action regularly managesevents in the area for other Group company customers. The Action team achieved astrong increase in profits during the year. Action is a major supplier to its principal markets in Cannes, including thePalais des Festivals conference and exhibition centre, and in Monaco for anumber of high profile events. Action is currently evaluating opportunities todevelop its activities so as to benefit from its strong position in its regionalmarket sector. CT Germany, which we started in January 2003, provides specialist video andlarge screen display services to the corporate and entertainment markets. CTGermany had another year of operating profits, during which it successfullyexpanded its customer base in the face of intense competition and a difficulteconomic climate in the country. The Dusseldorf office, which was established during the year to target thetelevision and agency market in the area, exceeded its sales targets andsucceeded in providing utilisation for our equipment in the quieter months forour large exhibition based business. CT Germany has started the new financial year ahead of its targets and weanticipate a good year. The company's management has done well to establish thebusiness in the marketplace with many prestigious corporations as clients. Nowthat we have successfully completed the start-up phase, the company is becomingmore margin and cash flow focused. Outlook The market, although very competitive, has stabilised and is now showing somereal signs of improvement. Whilst it will not be an easy year, we are wellplaced to build on last year's results and continue to deliver improvingfinancial performance. Through the quality of our people, products and services we will continue tostrive to deliver a continued growth in the value of the business in the timeahead. David NicholsonChief Executive23 June 2005 Consolidated profit and loss accountFor the year ended 31 March 2005 ________________________________________________________________________________________________________ 2005 2004 (restated*)________________________________________________________________________________________________________ Before Exceptional Before Exceptional Total exceptional items and Total exceptional items and items and goodwill items and goodwill goodwill amortisation goodwill amortisation amortisation amortisation________________________________________________________________________________________________________ £'000 £'000 £'000 £'000 £'000 £'000Turnover (note 1)Continuing operations 58,867 - 58,867 53,665 - 53,665Discontinued operations - - - 314 - 314________________________________________________________________________________________________________ 58,867 - 58,867 53,979 - 53,979________________________________________________________________________________________________________ Cost of salesContinuing operations (37,971) - (37,971) (35,195) (336) (35,531)Discontinued operations - - - (525) - (525)________________________________________________________________________________________________________ (37,971) - (37,971) (35,720) (336) (36,056)________________________________________________________________________________________________________ Gross profit/(loss)Continuing operations 20,896 - 20,896 18,470 (336) 18,134Discontinued operations - - - (211) - (211)________________________________________________________________________________________________________ 20,896 - 20,896 18,259 (336) 17,923________________________________________________________________________________________________________ Operating expenses (18,771) (1,884) (20,655) (19,689) (5,437) (25,126) ________________________________________________________________________________________________________Continuing operations 2,125 (1,884) 241 (1,277) (5,773) (7,050)Discontinued operations - - - (153) - (153)________________________________________________________________________________________________________Operating profit/(loss) (note 2) 2,125 (1,884) 241 (1,430) (5,773) (7,203)________________________________________________________________________________________________________ Loss on disposal ofoperations (note 2) - (235)Profit on disposal offixed assets (note 2) 767 -Dividends from investments - 487________________________________________________________________________________________________________Profit/(loss) on ordinaryactivities before interest and taxation 1,008 (6,951)Net interest payable andsimilar items (526) (613)________________________________________________________________________________________________________Profit/(loss) on ordinaryactivities before taxation (note 1) 482 (7,564)Taxation on ordinaryactivities (note 3) (110) (52)________________________________________________________________________________________________________Profit/(loss) on ordinaryactivities after taxation 372 (7,616)Equity minority interests (2) (12)________________________________________________________________________________________________________Profit/(loss) for the year 370 (7,628) Dividends proposed (note 5) (163) -Dividend paid post demergerby InvestinMedia plc - (326)________________________________________________________________________________________________________Retained profit/(loss)for the financial year 207 (7,954)________________________________________________________________________________________________________ Earnings/(losses) per share (note 4) Basic and diluted 2.3p (46.8)pAdjusted 6.7p (6.1)p________________________________________________________________________________________________________ There is no difference between the results stated above and their historicalcost equivalents. Adjusted earnings per share are stated before goodwillamortisation, exceptional items and are in respect of continuing operationsonly, at a notional 30% tax rate. * 2004 has been restated to reflect a reclassification of costs from operatingexpenses to cost of sales. All other figures, including the operating profit/(loss), remain unaltered. Consolidated balance sheetAs at 31 March 2005 2005 2004 £'000 £'000_______________________________________________________________________________ Intangible assets 1,507 2,959Tangible assets 21,646 21,110_______________________________________________________________________________Fixed assets 23,153 24,069 Stocks 918 968Debtors 13,869 11,003Cash at bank and in hand 1,147 1,900_______________________________________________________________________________Current assets 15,934 13,871 Creditors: amounts falling due within one year (15,341) (13,861)_______________________________________________________________________________Net current assets 593 10_______________________________________________________________________________Total assets less current liabilities 23,746 24,079 Creditors: amounts falling due after more than one year (6,157) (6,464) Provisions for liabilities and charges (1,078) (1,469)_______________________________________________________________________________Net assets (note 1) 16,511 16,146_______________________________________________________________________________ Called up share capital 1,632 1,632Other reserve 29,551 29,551Capital redemption reserve 50 50Profit and loss account (14,722) (15,087)_______________________________________________________________________________Equity shareholders' funds 16,511 16,146_______________________________________________________________________________ Consolidated cashflow statementFor the year ended 31 March 2005 2005 2004 £'000 £'000_______________________________________________________________________________ Continuing operations 9,851 7,658Discontinued operations - 687_______________________________________________________________________________Net cash flow from operating activities 9,851 8,345 Interest received 19 14Interest paid (313) (381)Dividends from investment - 487Interest element of hire purchase payments (232) (246)_______________________________________________________________________________Returns on investments and servicing of finance (526) (126) Overseas taxation (74) 24_______________________________________________________________________________Taxation (74) 24_______________________________________________________________________________Net cash inflow before capital expenditure 9,251 8,243 Purchase of tangible assets (10,679) (7,460)Sale of tangible assets 1,914 2,684_______________________________________________________________________________Capital expenditure (8,765) (4,776) Disposal of subsidiaries and businesses - (167)_______________________________________________________________________________Acquisitions and disposals - (167) Equity dividends paid - (1,155)_______________________________________________________________________________Net cash inflow before financing 486 2,145 Net change in bank loans 9 1,027Net change in hire purchase obligations (334) (2,118)_______________________________________________________________________________Net cash outflow from financing (325) (1,091)_______________________________________________________________________________Increase in cash in the year 161 1,054_______________________________________________________________________________ Net debt (note 6) (7,831) (8,301)_______________________________________________________________________________ Consolidated statement of total recognised gains and lossesFor the year ended 31 March 2005 2005 2004 £'000 £'000_______________________________________________________________________________ Profit/(loss) for the year 370 (7,628) Currency translation differences 2 (699)LTIP provision 156 -Net reduction on demerger - (247)_______________________________________________________________________________Total recognised gains and (losses) relating to the year 528 (8,574)_______________________________________________________________________________ Consolidated reconciliation of movements in equity shareholders' fundsFor the year ended 31 March 2005 2005 2004 £'000 £'000_______________________________________________________________________________ Profit/(loss) for the year 370 (7,628)Dividend proposed (163) -Dividend paid post demerger by InvestinMedia plc - (326)_______________________________________________________________________________Retained profit/(loss) for the financial year 207 (7,954) Currency translation differences 2 (699)LTIP Provision 156 -Net reduction on demerger - (247)Issue of redeemable preference shares - 50Redemption of preference shares - (50)_______________________________________________________________________________Net change in equity shareholders' funds 365 (8,900) Opening equity shareholders' funds 16,146 25,046_______________________________________________________________________________Closing equity shareholders' funds 16,511 16,146_______________________________________________________________________________ Notes to the preliminary announcementFor the year ended 31 March 2005 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 origin Turnover by destination_______________________________________________________________________________ 2005 2004 2005 2004 £'000 £'000 £'000 £'000_______________________________________________________________________________Continuing operationsUnited Kingdom 23,420 21,313 23,076 19,777Mainland Europe 12,561 9,753 13,228 10,491United States of America 22,886 22,599 21,976 23,286Rest of the World - - 587 111_______________________________________________________________________________ 58,867 53,665 58,867 53,665Discontinued operationsUnited Kingdom - 314 - 314_______________________________________________________________________________Group turnover 58,867 53,979 58,867 53,979_______________________________________________________________________________ Profit/(loss) on ordinary activities before taxation by origin Excluding exceptional items Including exceptional items and goodwill and goodwill amortisation amortisation________________________________________________________________________________ 2005 2004 2005 2004 £'000 £'000 £'000 £'000_______________________________________________________________________________United Kingdom 860 (2,575) (309) (6,841)MainlandEurope 270 206 (436) (672)United States of America 995 1,092 986 463_______________________________________________________________________________Continuing operations 2,125 (1,277) 241 (7,050)Discontinued operations - (153) - (153)_______________________________________________________________________________ 2,125 (1,430) 241 (7,203) Operating exceptional items (432) (3,734) - -Goodwill amortisation (1,452) (2,039) - -_______________________________________________________________________________Group operating profit/(loss) 241 (7,203) 241 (7,203) Non-operating exceptional items 767 (235)Dividends from investments - 487Net interest payable andsimilar items (526) (613)_______________________________________________________________________________Profit/(loss) on ordinaryactivities before taxation 482 (7,564)_______________________________________________________________________________ Net assets by location Excluding goodwill Including goodwill 2005 2004 2005 2004 £'000 £'000 £'000 £'000_______________________________________________________________________________ United Kingdom 11,613 11,511 12,296 12,940Mainland Europe 5,453 5,628 6,277 7,158United States of America 6,847 5,818 6,847 5,818_______________________________________________________________________________ 23,913 22,957 25,420 25,916 Goodwill 1,507 2,959 - -_______________________________________________________________________________Capital employed 25,420 25,916 25,420 25,916 Net debt (7,831) (8,301)Provisions for liabilities and charges (1,078) (1,469)_______________________________________________________________________________Net assets 16,511 16,146_______________________________________________________________________________ 2 Profits/(losses) on disposal of businesses and fixed assets, exceptional charges and goodwill amortisation 2005 2004 £'000 £'000_______________________________________________________________________________ Restructuring and reorganisation costs (i) (109) (686)Demerger costs (ii) 10 (648)Relocation and onerous lease costs (iii) (291) (1,843)Impairment of tangible fixed assets (iv) - (557)Aborted acquisition costs (v) (42) -_______________________________________________________________________________Operating exceptional items (432) (3,734)Goodwill amortisation (1,452) (2,039)_______________________________________________________________________________Total operating exceptional items and goodwillamortisation (1,884) (5,773)_______________________________________________________________________________ Loss on disposal of CT Outside Broadcast (vi) - (235)Profit on disposal of fixed assets (vii) 767 -_______________________________________________________________________________Total non-operating exceptional items 767 (235)_______________________________________________________________________________ (i) Restructuring and reorganisation costsThe restructuring and reorganisation costs result from the strategicreorganisation and relocation of personnel across the Group and headcountreductions which in total cost £109,000 (2004: £686,000). These costs areincluded within continuing operations. (ii) Demerger costsOn 18 February 2004, the Group undertook a demerger to separate its Audio VisualServices Business from the Media Rights Business, which comprised theinvestments in the two associated undertakings of Complete CommunicationsCorporation Limited ("Complete") and Medal Entertainment and Media plc("Medal"). The demerger was effected by the transfer of the Audio VisualServices Business by the company previously known as Avesco plc ('Old Avesco')to New Avesco plc, a new holding company incorporated on 2 December 2004, andsubsequently renamed Avesco plc. The investments in Complete and Medal wereretained by Old Avesco, which was then separately admitted to the AlternativeInvestment Market of the London Stock Exchange as InvestinMedia plc. (iii) Relocation and onerous lease costsFollowing the Group's relocation to new premises, exceptional costs wereincurred in respect of impairments of leasehold improvements at vacatedproperties £129,000 (2004: £425,000), relocation costs £nil (2004: £203,000),surplus property costs £217,000 (2004: £237,000) and provisions for onerouslease and dilapidations costs release of £55,000 (2004 charge: £978,000). (iv) Impairment of tangible fixed assetsIn the year ended 31 March 2004, following a review of certain tangible fixedassets of the Group, it was considered appropriate to write down these assets tothe lower of their value in use and estimated recoverable amount. The impairmentarose as a result of changes in technology and market conditions. (v) Aborted acquisition costsThese costs represent the legal and professional fees for due diligenceundertaken during the year on a potential acquisition in Europe. The findings ofthe due diligence exercise resulted in the project being aborted. (vi) Loss on disposal of CT Outside BroadcastIn June 2003 the Group disposed of the business of Creative Technology OutsideBroadcast Limited ('CT Outside Broadcast') for consideration of between £1.0million and £1.4 million depending on certain levels of business in the threeyears from completion. The turnover and operating loss to the date of disposalwere £314,000 and £153,000 respectively and are included within discontinuedactivities in the profit and loss account for the year ended 31 March 2004. Thecosts in respect of this transaction resulted in a loss on disposal of £235,000. (vii) Profit on sale of fixed assetsOn 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 £767,000. Cash of £1,200,000 was received on completion with £400,000 beingdeferred until the first anniversary of completion. This profit does not giverise to a taxable gain. 3 Taxation Analysis of taxation charge for the year 2005 2004 £'000 £'000_______________________________________________________________________________United Kingdom taxationCorporation tax - -Adjustments in respect of previous years - -_______________________________________________________________________________ - -Overseas taxationCorporation taxes 115 30Adjustments in respect of previous years (5) 22_______________________________________________________________________________ 110 52_______________________________________________________________________________Total current taxation 110 52 Deferred taxation - -_______________________________________________________________________________Group taxation 110 52_______________________________________________________________________________ 4 Earnings / (losses) per share Basic earnings/(losses) per share have been calculated by dividing profit/(loss)after taxation and minority interests by the weighted average number of ordinaryshares in issue during the year. None of the contingently issuable shares under the long term incentive plan giverise to a dilution in the earnings/(losses) per share because the performancecondition attached to them has not yet been met. Therefore, the basic earnings/losses per share and the diluted earnings/losses per share are identical. Adjusted earnings/(losses) per share have been calculated by dividing profit/(loss) after taxation and minority interests in respect of continuing operationsand excluding goodwill amortisation and exceptional items, by the weightedaverage number of ordinary shares in issue during the year. A notional tax rateof 30% is applied to the adjusted earnings/losses for each year. The Directorsconsider that the adjusted earnings/(losses) per share figures provide a usefuladditional indication of performance. Earnings/(losses) 2005 2004 £'000 £'000_______________________________________________________________________________ Profit/(loss) for the year 370 (7,628)Discontinued operations excluding goodwill amortisation - 153Operating exceptional items 432 3,734Non-operating exceptional items (767) 235Goodwill amortisation 1,452 2,039Notional 30% tax rate adjustment (391) 473_______________________________________________________________________________Adjusted earnings/(losses) 1,096 (994)_______________________________________________________________________________ Weighted average number of shares_______________________________________________________________________________For basic and diluted earnings per share (000's) 16,316 16,316_______________________________________________________________________________ Earnings/(losses) per shareBasic and diluted 2.3p (46.8)pAdjusted 6.7p (6.1)p 5 Dividends Equity dividends paid and proposed 2005 2004 £'000 £'000_______________________________________________________________________________ Dividend paid in respect of demerged operations at 2.0p pershare - 326Proposed final dividend of 1.0p per share (2004: nil pence pershare) 163 -_______________________________________________________________________________Total dividend 163 326_______________________________________________________________________________ The proposed final dividend for the year ended 31 March 2005, subject to shareholders' approval, will be paid on 3 October 2005 to shareholders on the register on 2 September 2005. The 2004 dividend in respect of the demerged operations related to an interimdividend declared by Old Avesco prior to the demerger and paid in April 2004.This dividend was funded via a cash transfer under the terms of the demergeragreement, from New Avesco to Old Avesco. 6 Analysis of net debt At 1 Cash Other Currency At 31 April flow non-cash translation March 2004 £'000 changes differences 2005 £'000 £'000 £'000 £'000_______________________________________________________________________________ Cash at bank and in hand 1,900 (749) - (4) 1,147Bank overdrafts (1,449) 910 - - (539)_______________________________________________________________________________Cash 451 161 - (4) 608 Bank loans due in more thanone year (4,000) (9) - - (4,009)Hire purchase obligationsdue in less than one year (2,288) 1,490 (1,472) (12) (2,282)Hire purchase obligationsdue in more than one year (2,464) (1,156) 1,472 - (2,148)_______________________________________________________________________________Net debt (8,301) 486 - (16) (7,831)_______________________________________________________________________________ 7 Status of preliminary announcement The preliminary results for the year to 31 March 2005 are unaudited. Thefinancial information set out in the announcement does not constitute theGroup's statutory accounts for the year ended 31 March 2005. The statutory accounts for the year to 31 March 2005 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 2004 have been delivered to theRegistrar of Companies and the auditors report on these accounts was unqualifiedand did not contain a statement under either Section 237(2) or (3) of theCompanies Act 1985. 8. Basis of Preparation The financial statements for the year ended 31 March 2005 have been prepared inaccordance with the accounting policies set out in the annual report andaccounts for the year ended 31 March 2004 with the exception of the adoption ofFRS 20 "Share-based Payment". 9. Annual General Meeting The Annual General Meeting of the Company will be held at 10.00am on 8 September2005 at Unit E2, Sussex Manor Business Park, Gatwick Road, Crawley, West Sussex,RH10 9NH. 10. Annual Report and Accounts Copies of the full Statutory Accounts will be dispatched to shareholders in duecourse. Copies will also be available on the website (www.avesco.com) and fromthe 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