AVS.L Regulatory News (AVS)

EMBARGOED UNTIL 7.00am, 13 March 2012

AVESCO GROUP plc

RESULTS FOR THE THREE MONTHS ENDED 31 DECEMBER 2011

Avesco Group plc (AIM: AVS), the international provider of services to the corporate presentation, entertainment and broadcast markets, announces its results for the three months ended 31 December 2011.

KEY HIGHLIGHTS

·; Revenue of £33.6m (three months ended 31 December 2010: £30.5m)

·; Trading EBITDA of £4.7m (three months ended 31 December 2010: £4.5m)*

·; Trading profit of £0.1m (three months ended 31 December 2010: £0.0m)

·; Adjusted basic losses per share of 1.2p (three months ended 31 December 2010: losses of 1.4p)*

* As described in note 3, the Group uses certain non-GAAP alternative measures to assess underlying operating performance.

Ian Martin, Chief Executive, commented:

2012 promises to be a busy and exciting 12 months for Avesco. During the three months ended 31 December 2011, the Avesco Group continued to benefit from positive market trends, driven by the increasing confidence of our customers and their desire to stage live events.

Trading since the start of the second quarter remains positive and, as we progress through the year, the benefits of the considerable investment we have made should begin to flow through into much improved financial results. With the additional demand expected to arise from the staging of a number of major events this summer, the Board remains confident regarding the outlook for the remainder of the financial year.

For further information please contact:

Chairman's statement

I am pleased to report that during the three months ended 31 December 2011, the Avesco Group continued to benefit from positive market trends, driven by the increasing confidence of our customers and their desire to stage live events.

2012 promises to be a busy and exciting 12 months for Avesco and so it is encouraging to see the Group make a good start to the year. During the quarter we have made some significant investments in both additional equipment and people to ensure we have the right level of resource in place to support our customers and to build for the future.

Results

Traditionally the first quarter of the Group's financial year has been a quieter period as fewer events tend to be staged in the weeks prior to Christmas and the New Year. Nevertheless, revenue in the three months ended 31 December 2011 rose 10% to £33.6m (three months ended 31 December 2010: £30.5m).The quarter benefited from two substantial events in the Middle East (the Arab Games and the UAE 40th Anniversary celebrations) while the prior year included the Paris Motor show and part of the Commonwealth Games. Excluding each of these events from the comparison between the two periods shows that that the underlying business made even better progress, achieving a 12% increase in revenue. This growth reflects a continuation of the strong sales momentum that we have built up within the Group as well as improved confidence among our corporate clients, most notably in the USA, and an increasing demand for our services in the Middle East.

The trading profit (which excludes restructuring and other non-recurring costs) was £0.1m, a slight improvement on the prior period (three months ended 31 December 2010: trading profit of £0.0m). On this basis, the adjusted losses per share were 1.2p (three months ended 31 December 2010: loss of 1.4p).

The Group produced a 5% increase in EBITDA to £4.7m (three months ended 31 December 2010: £4.5m).

On 19 December 2011, the Group successfully completed the sale of its Full Service business in Monaco, Action SAM, to 4Cast. A loss on disposal of £0.3m has been recognised in relation to the sale.

After a net investment of £10.6m (three months ended 31 December 2010: £4.9m) in the business and an increase in working capital of £4.4m (three months ended 31 December 2010: £1.6m), the net debt at the end of the period rose from the year end position of £12.1m to £22.7m (three months ended 31 December 2010: £16.3m). As a result, the Group's gearing (being net debt divided by net assets) ended the quarter at 62% (three months ended 31 December 2010: 44%).

On 31 December 2011, the net assets of the Group were £36.5m (31 December 2010: £36.7m) or £1.44 per share (31 December 2010: £1.47 per share).

Trading since the start of the second quarter remains positive and, as we progress through the year, the benefits of the considerable investment we have made should begin to flow through into much improved financial results. Assuming that the underlying growth in the business continues as we have planned and with the additional demand expected to arise from the staging this summer of major events, such as the London 2012 Olympics, the Queen's Diamond Jubilee and the UEFA Euro 2012 football championships, the Board remains confident regarding the outlook for the remainder of the financial year.

There have been no further developments in the Disney litigation in which the Group maintains an interest. The Appeal Court is expected to schedule the oral arguments concerning Disney's appeal for this summer, with its decision likely to follow within 12 months of that hearing.

The Avesco Group's businesses are widely regarded as leaders in their fields, providing top quality services at some of the highest profile events and projects around the world. Clients have come to expect the same high level of service whether at a local, national or international level and the Group's businesses continually provide that level of service on a global scale. With new markets opening up across the world and existing markets continuing to grow, Avesco is well positioned, with the financial and technical capabilities in place, to continue its progress throughout 2012 and beyond.

Richard Murray

Chairman

13 March 2012

For the three months ended 31 December 2011

Alternative performance measures (non-GAAP)

For the three months ended 31 December 2011

Refer to note 3 for a full description of the alternative performance measures adopted by the Group.

Unaudited consolidated statement of comprehensive income

For the three months ended 31 December 2011

Unaudited consolidated balance sheet

As at 31 December 2011

For the three months ended 31 December 2011

For the three months ended 31 December 2011

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 13 March 2012, are not full accounts within the meaning of section 434 of the Companies Act 2006.

The figures for the year ended 30 September 2011 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 2012. These are consistent with those included in the previously published annual report and accounts for the year ended 30 September 2011, which have been prepared in accordance with IFRS as adopted by the European Union.

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 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. 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, other non-recurring costs and the deferred tax charge/credit by the weighted average number of ordinary shares in issue during the period. The Directors believe that adjusted earnings per share provides an important measure of the underlying performance of the Group.

c) Trading EBITDA

Trading earnings before interest, taxation, depreciation and amortisation ('EBITDA') is separately disclosed, being defined as trading profit/loss adjusted to exclude depreciation and amortisation of software. The Directors believe that trading EBITDA is an important measure of the underlying performance of the Group.

4. Segmental information

5. Trading earnings before interest, taxation, depreciation and amortisation ('EBITDA')

Trading EBITDA is defined in note 3.

6. Earnings per share

Basic earnings per share have been calculated by dividing 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. Losses are not subject to dilution. The adjusted earnings per share for the year ended 30 September 2011 have not been diluted as the performance conditions for awards made under the LTIP had not been satisfied at that date.

Adjusted earnings per share have been calculated as per note 3.

7. Analysis of net debt

8. Interim and final dividends

A final dividend for the year ended 30 September 2010 of 1.0p per share amounting to a total of £254,000 was approved by shareholders and was paid on 6 April 2011 to shareholders on the register at 6.00pm on 11 March 2011.

A final dividend for the year ended 30 September 2011 of 3.0p per share has been approved and will be paid on 31 May 2012 to shareholders on the register at 6.00pm on 10 April 2012.

9. 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, liability in respect of which runs for periods of up to seven years from the date of completion. So far as the Company is aware, no legal claims have been brought against any company in the Complete group that are outstanding and would give rise to liability on the part of InvestinMedia and other vendors under the warranties and indemnities.

Contingent assets

On 8 July 2010 the Company announced that the jury in a US legal action had reached a unanimous verdict favourable to InvestinMedia and the other vendors of Complete. On 21 December 2010, the defendants' alternative motions for a new trial and for judgement as a matter of law were denied. On 14 January 2011 the defendants filed their notice of appeal. If the award is paid in full, the Group's interest (after costs but including pre-judgement interest) is estimated at approximately $60m. No credit has been taken in these accounts to reflect this verdict, pending completion of the appeal process. Provision has already been made for the costs of this litigation and any additional costs are not expected to be material.

10. Disposal of investment

On 19 December 2011, the Group successfully completed the sale of its Full Service business in Monaco, Action SAM, to 4Cast. The Group sold all of its shares in Action SAM for €480,000 before disposal costs. A loss on disposal of investment of £275,000 has been recognised within 'Operating expenses' in the consolidated income statement. This amount has also been included in the "Other non-recurring costs" in calculating the trading profit/loss the Alternative Performance Measures (non GAAP) table.

11. Distribution of interim report and accounts

Copies of this interim report and accounts are available from the Company's web site (www.avesco.com) or from the Company's registered office: Avesco Group plc, Unit E2, Sussex Manor Business Park, Gatwick Road, Crawley, West Sussex, RH10 9NH. Telephone: +44 (0) 1293 583 400. Fax: +44 (0) 1293 583 410. E-mail: mail@avesco.com.

INDEPENDENT REVIEW REPORT TO AVESCO GROUP PLC

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the Interim Report and Accounts for the three months ended 31 December 2011, which comprises the consolidated income statement, consolidated statement of comprehensive income, consolidated balance sheet, consolidated statement of changes in equity and consolidated cash flow statement and the related explanatory notes that have been reviewed. We have read the other information contained in the Interim Report and Accounts and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed.

Directors' Responsibilities

The Interim Report and Accounts is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the Interim Report and Accounts in accordance with the AIM Rules issued by the London Stock Exchange which require that it is presented and prepared in a form consistent with that which will be adopted in the Company's annual accounts having regard to the accounting standards applicable to such annual accounts.

 As disclosed in note 3, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this Interim Report and Accounts has been prepared in accordance with the AIM Rules issued by the London Stock Exchange.

Our Responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the Interim Report and Accounts based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the Interim Report and Accounts for the three months ended 31 December 2011 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

13 March 2012