AVS.L Regulatory News (AVS)

EMBARGOED UNTIL 7.00am, 14 March 2013

AVESCO GROUP plc

Results for the three months ended 31 December 2012

Avesco Group plc ("Avesco" or the "Group") (AIM: AVS), the international provider of services to the corporate presentation, entertainment and broadcast markets, announces its preliminary results for the three months ended 31 December 2012.

KEY HIGHLIGHTS

·; Revenue of £30.1m (three months ended 31 December 2011: £33.6m)

·; Operating loss of £0.2m (three months ended 31 December 2011: loss of £0.3m)

·; Trading loss of £0.1m (three months ended 31 December 2011: profit of £0.1m)*

·; Trading EBITDA of £4.3m (three months ended 31 December 2011: £4.7m)*

·; Basic losses per share of 2.2p (three months ended 31 December 2011: loss per share of 2.6p)

·; Adjusted basic losses per share of 2.1p (three months ended 31 December 2011: loss per share of 1.2p)*

·; Disney litigation funds now at the collection stage

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

Richard Murray, Chairman, commented:

"Although the financial year 2012/13 has started slowly, with lower capital expenditure requirements this year and promising signs for much improved trading in the Far East, we remain positive regarding the outlook for the year as a whole. Our focus remains to generate cash, reduce debt and grow dividends, whilst maintaining a sound balance sheet.

The Group is well positioned, with the financial and operational capabilities in place, to continue its progress through 2013 and beyond.

The judgement in the Disney litigation, in which the Group maintains an interest, is now collectible although it is expected that there may be a delay of a few months before receipt of funds by the Group. The Group's net interest in the award is estimated at approximately $60m."

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Chairman's statement

As reported in my statement in January, the financial year 2012/13 has started slowly. In the UK some corporations appeared to have used much of their 2012 budgets on the Olympics, while continuing economic problems in the Eurozone and uncertainties in the US linked to the presidential elections and the "fiscal cliff" have all contributed to a reduction in activity, which is reflected in the Group's results when compared to the equivalent quarter in 2011.

Results

Revenue in the three months ended 31 December 2012 fell 10% to £30.1m (three months ended 31 December 2011: £33.6m). The quarter did benefit from the inclusion of the Paris Motor show whereas the prior year included two major events in the Middle East (the Arab Games and the UAE 40th Anniversary celebrations). Excluding these events from the comparison between the two periods and adjusting for the disposal of our Full Service business in Monaco shows a 4% decrease in the underlying revenue.

Operating losses were £0.2m (three months ended 31 December 2011: operating loss of £0.3m). Gross margins improved to 35% (three months ended 31 December 2011: 32%). Excluding restructuring costs and the loss on disposal of the Monaco business, trading EBITDA reduced to £4.3m (three months ended 31 December 2011: £4.7m) and the trading loss was £0.1m, (three months ended 31 December 2011: trading profit of £0.1m). On this basis, the adjusted losses per share were 2.1p (three months ended 31 December 2011: loss of 1.2p).

After the Group's significant spend on new equipment last year, we are planning a much reduced net investment during 2012/13. As a result, net investment in fixed assets for the quarter fell to £6.2m (three months ended 31 December 2011: £10.6m). When combined with a reduction in working capital of £0.2m (three months ended 31 December 2011: an increase of £4.4m), the payment of an interim dividend in October 2012 of £0.3m (three months ended 31 December 2011: nil) and other minor factors, our net debt cash outflow reduced to £2.6m (three months ended 31 December 2011: £10.6m) leaving net debt of £27.7m at the end of the quarter (three months ended 31 December 2011: £22.7m). As a result, the Group's gearing (being net debt divided by net assets) ended the quarter at 73% (three months ended 31 December 2011: 62%), although we expect this level to reduce significantly by the end of the financial year.

On 31 December 2012, the net assets of the Group were £37.9m (31 December 2011: £36.4m) or £1.49 per share (31 December 2011: £1.44 per share).

The Group's underlying trading since the start of the second quarter has shown encouraging signs, and, with our operations in China now trading profitably, we remain positive regarding the outlook for the year as a whole.

On 27 February 2013, we announced that the United States Ninth Circuit Court of Appeals voted to deny Disney's petition for a rehearing en banc in relation to the judgment and award in the litigation in which the Group maintains an interest, and on 7 March 2013 the Court issued its order returning the case to the trial court, an act which had the legal effect of making the judgement collectible by Celador International Inc. ("Celador"). The Group's net interest in the award is estimated at approximately $60m. Payment to the Group is via a third party under the terms of a sale and purchase agreement dated 1 December 2006, by which Avesco sold its interest in Celador. It is expected that there may be a delay of a few months before receipt of funds by the Group.

The Avesco Group's businesses continue to be widely regarded as leaders in their fields and, following substantial investment in new equipment during 2012, the Group is well placed to maintain the high levels of service that our customers around the world have come to expect. With lower capital expenditure requirements this year and promising signs for much improved trading in the Far East, our focus remains to generate cash, reduce debt and grow dividends, whist maintaining a sound balance sheet. The Group is well positioned, with the financial and operational capabilities in place, to continue its progress through 2013 and beyond.

For the three months ended 31 December 2012

Alternative performance measures (non-GAAP)

For the three months ended 31 December 2012

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

Unaudited condensed consolidated statement of comprehensive income

For the three months ended 31 December 2012

Unaudited condensed consolidated balance sheet

As at 31 December 2012

For the three months ended 31 December 2012

For the three months ended 31 December 2012

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 14 March 2013, are not full accounts within the meaning of section 434 of the Companies Act 2006.

The figures for the year ended 30 September 2012 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 2013. These are consistent with those included in the previously published annual report and accounts for the year ended 30 September 2012, which have been prepared in accordance with IFRS as adopted by the European Union.

The directors have a reasonable expectation that the Group has adequate resources to continue operating for the foreseeable future, and for this reason they have adopted the going concern basis of preparation in the consolidated quarterly financial statements.

Alternative performance measures

The Group uses alternative non-Generally Accepted Accounting Practice ("non-GAAP") financial measures which are not defined within IFRS. The Directors use these measures in order to assess the underlying operational performance of the Group and as such, these measures are important and should be considered alongside the IFRS measures. The following non-GAAP measures are referred to in these interim report and accounts.

a) Trading profit/loss

'Trading profit/loss' is separately disclosed, being defined as operating profit adjusted to exclude restructuring costs and compensation for loss of office and other non-recurring costs. Other non-recurring costs relate to items which management believe do not accurately reflect the underlying trading performance of the business in the period. Examples of other non-recurring costs are profit/loss on disposal of investments and one off consultancy and legal costs incurred which management believe do not accurately reflect the trading performance of the business. The Directors believe that trading profit/loss is an important measure of the underlying performance of the Group.

b) Adjusted earnings per share

'Adjusted earnings per share' is calculated by dividing the profit for the period excluding restructuring costs and compensation for loss of office, 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.

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 2012 of 3.0p per share has been proposed and, subject to shareholders' approval, will be paid on 8 April 2013 to shareholders on the register at the close of business on 15 March 2013.

An interim dividend for the year ended 30 September 2012 of 1.0p per share amounting to a total of £254,000 was approved and was paid on 1 October 2012 to shareholders on the Register at 6.00pm on 14 September 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. Subsequent appeals and other motions by the defendant to set aside the judgement have been unsuccessful. On 7 March 2013, the United States Ninth Circuit Court of Appeals issued an order returning the case to the trial court, an act which had the legal effect of making the judgement collectible by Celador International Inc. ("Celador"). Payment to the Group is via a third party under the terms of a sale and purchase agreement dated 1 December 2006, by which Avesco sold its interest in Celador. It is expected that there may be a delay of a few months before receipt of funds by the Group. 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 as the appeal process had not concluded prior to 31 December 2012. Provision has already been made for the costs of this litigation and any additional costs are not expected to be material.

10. 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 2012, 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 2012 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

14 March 2013