AVS.L Regulatory News (AVS)

RNS Number : 8300P

Avesco Group PLC

11 June 2015

 

 

AVESCO GROUP plc

 

RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2015

 

Avesco Group plc (AIM: AVS), a leading international provider of services to the corporate presentation, entertainment and broadcast markets, announces its results for the six months ended 31 March 2015.

 

KEY HIGHLIGHTS FOR THE SIX MONTHS TO 31 MARCH 2015

 

· Revenues increased to £66.0m (six months ended 31 March 2014: £65.4m)

· Operating profit increased to £5.5m (six months ended 31 March 2014: loss of £0.5m)

· Trading profit increased to £5.5m (six months ended 31 March 2014: £4.7m)*

· Trading EBITDA up 9% to £14.6m (six months ended 31 March 2014: £13.5m)*

· Profit before tax of £4.6m (six months ended 31 March 2014: loss of £1.1m)

· Basic earnings per share from continuing operations of 13.3p (six months ended 31 March 2014: loss per share of 12.4p)

· Trading ahead of plan with full year results likely to exceed the Board's prior expectations

· Interim dividend increased by a third to 2.0p (six months ended 31 March 2014: 1.5p)

 

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

 

Richard Murray, Chairman, commented:

 

"I am delighted to be able to report another strong performance from the Avesco Group, with Interim trading profits for the six month period to 31 March 2015 at their highest levels since 2001 (when the Group still maintained an interest in "Who Wants To Be A Millionaire?"). The main drivers behind the successful first half of the year were a continuation of the previous excellent results from our Creative Technology ("CT") division in the US and the virtual elimination of trading losses in our CT business in Germany.

 

The outlook for the final six months of the financial year is just as encouraging, with the inaugural edition of the European Games expected to generate significant income for the Group.

 

As a result the full year results are again likely to exceed the Board's prior expectations. With continuing forward momentum in the businesses, we are able to maintain our focus on increasing profitability, generating cash and growing dividends."

 

For further information please contact:

Avesco Group plc
Richard Murray, Chairman	01293 583400
John Christmas, Group Finance Director
finnCap Julian Blunt/Scott Mathieson, Corporate Finance Malar Velaigam, Corporate Broking	020 7220 0500

Chairman's Statement

 

I am delighted to be able to report another strong performance from the Avesco Group, with Interim trading profits for the six month period to 31 March 2015 at their highest levels since 2001 (when the Group still maintained an interest in "Who Wants To Be A Millionaire?"). The main drivers behind the successful first half of the year were a continuation of the previous excellent results from our Creative Technology ("CT") division in the US and the virtual elimination of trading losses in our CT business in Germany.

 

Results

 

Revenue in the six months ended 31 March 2015 saw a small increase to £66.0m (six months ended 31 March 2014: £65.4m). This increase in revenue was achieved despite the scaling down of our restructured businesses and the lack of any major events in the period (the six months to 31 March 2014 benefited from revenues associated with the Winter Olympics in Sochi).

 

With the Group's restructuring programme largely complete, the operating profit for the six months ended 31 March 2015 of £5.5m (six months ended 31 March 2014: £0.5m loss) included no exceptional items. The six months ended 31 March 2014 included £5.2m of such charges, the vast majority of which related to the restructuring of our CT business in Germany.

 

Trading profits (which exclude restructuring costs, compensation for loss of office, payments to LTIP holders and bonuses in connection with the Disney litigation receipt, and other non-recurring costs) for the six months ended 31 March 2015 were, therefore, the same as the operating profit of £5.5m, representing a 17% improvement on the same period last year (six months ended 31 March 2014: £4.7m).

 

The basic earnings per share from continuing operations increased to 13.3p (six months ended 31 March 2014: loss per share of 12.4p).

 

Our main trading division, CT, saw revenues grow by £2.0m to £51.6m (six months ended 31 March 2014: £49.6m) and trading profit by £2.2m to £5.5m (six months ended 31 March 2014: £3.3m). CTUS again provided the bulk of CT's profits, growing revenue by 14% in the process, and there were good performances from CT in the Middle East and in Spain. CT Asia Pacific, however, continues to struggle, and our objective of getting that business to breakeven is likely to take longer than anticipated. It was especially pleasing to note the turnaround at CT Germany where we have largely eliminated the significant losses and de-risked the business by reducing fixed costs.

 

In mclcreate, our full service business, higher revenue of £7.9m (six months ended 31 March 2014: £7.4m) and an improved margin enabled trading profits to grow to £0.6m (six months ended 31 March 2014: £0.2m), with the Scottish branches performing particularly well.

 

In our Broadcast Services division, Presteigne Broadcast Hire's profits benefitted last year from the disposal of a significant quantity of equipment as the company sought to reposition itself away from the projects side of its business and to focus much more on dry hire work. With Fountain Studios, the other business in the division, having just a steady opening period, overall revenue dipped to £6.8m (six months ended 31 March 2014: £8.8m) although last year included revenue from the overseas Presteigne businesses that were closed prior to the current year. The divisional trading profit reduced to a loss of £0.4m (six months ended 31 March 2014: £0.8m profit).

 

Taxation continues to be relatively significant, with an effective rate of 45% as high taxable profits earned in the US (which are taxed at around 40%) cannot be offset against taxable losses elsewhere in the world. As our US profits have increased, so there has been an increase in our total tax charge to £2.1m for the six months ended 31 March 2015 (six months ended 31 March 2014: £1.9m).

 

There is normally a modest debt outflow in the first half year as we invest in new equipment and this year is no different. However net debt of £25.1m as at 31 March 2015 (31 March 2014: £21.7m) remains comfortably covered by trading EBITDA of £26.5m for the 12 months to 31 March 2015. Net investment in fixed assets during the first half year was £10.1m (six months ended 31 March 2014: £7.4m), with over 80% of the funds going to support CT in the US.

 

As at 31 March 2015, the net assets of the Group were £34.3m (31 March 2014: £31.5m) or £1.80 per share (31 March 2014: £1.67 per share).

 

As a sign of the Board's confidence in the outcome for the current year, we are again increasing the interim dividend, this time to 2.0p per share (2014: 1.5p per share). This payment will be made on 1 October 2015 to shareholders on the register on 4 September 2015 and the shares will be quoted ex dividend from 3 September 2015

 

Outlook

 

Trading in the six months to 31 March 2015 has exceeded our expectations and the outlook for the final six months of the financial year is just as encouraging, with the inaugural edition of the European Games (scheduled to be held in Baku, Azerbaijan in June) expected to generate significant income for CT London and the Group. The restructuring measures that we took last year have also enabled us to produce a more stable and less volatile set of trading results, closing the gap in performance previously seen between the odd and even years.

 

As a result of the improved outlook and trading, the full year results are again likely to exceed the Board's prior expectations. With continuing forward momentum in the businesses, we are able to maintain our focus on increasing profitability, generating cash and growing dividends.

 

Richard Murray

June 2015

 

 

Unaudited condensed consolidated income statement

For the six months ended 31 March 2015

 

	Six months ended 31 March		Year ended 30 September
	2015	2014	2014
	£000s	£000s	£000s
Continuing operations
Revenue	65,974	65,366	126,391
Cost of sales	(40,060)	(40,572)	(80,186)
Gross profit	25,914	24,794	46,205
Operating expenses and income	(20,407)	(25,574)	(45,721)
Share of associate's (loss)/profit	(28)	280	384
Trading profit	5,479	4,681	6,253
Exceptional items	-	(5,181)	(5,385)
Operating profit/(loss)	5,479	(500)	868
Finance income	3	21	23
Finance costs	(863)	(623)	(1,321)
Profit/(loss) before income tax	4,619	(1,102)	(430)
Income tax expense	(2,098)	(1,859)	(2,310)
Profit/(loss) from continuing operations	2,521	(2,961)	(2,740)
Profit on discontinued operation, net of tax	-	1,192	1,192
Profit/(loss) for the financial period	2,521	(1,769)	(1,548)
Attributable to:
Owners of the Company	2,542	(1,769)	(1,548)
Non-controlling interests	(21)	-	-
	2,521	(1,769)	(1,548)
	Pence per share	Pence per share	Pence per share
Earnings/(losses) per share for profit attributable to the equity holders of the company
- basic	13.3p	(7.4)p	(7.2)p
- diluted	13.1p	(7.4)p	(7.2)p
Earnings/(losses) per share for profit attributable to the equity holders of the company from continuing operations
- basic	13.3p	(12.4)p	(12.8)p
- diluted	13.1p	(12.4)p	(12.8)p

 

Alternative performance measures (non-GAAP)

For the six months ended 31 March 2015

 

	Six months ended 31 March		Year ended 30 September
	2015	2014	2014
	£000s	£000s	£000s
Operating profit/(loss)	5,479	(500)	868
Adjusted to exclude:
Restructuring costs and compensation for loss of office	-	5,017	5,738
Payments to LTIP holders and bonuses in connection with the Disney settlement	-	(162)	(246)
Other non-recurring costs	-	326	(107)
Exceptional items	-	5,181	5,385
Trading profit	5,479	4,681	6,253
Net finance costs	(860)	(602)	(1,298)
Trading profit after net finance costs	4,619	4,079	4,955
Income tax expense	(2,098)	(1,859)	(2,310)
Trading profit after net finance costs and income tax expense	2,521	2,220	2,645
Trading EBITDA	14,611	13,458	24,968
Adjusted earnings per share	Pence per share	Pence per share	Pence per share
- basic	13.3p	9.3p	12.4p
- diluted	13.1p	9.3p	12.4p

 

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 six months ended 31 March 2015

 

	Six months ended 31 March		Year ended 30 September
	2015	2014	2014
	£000s	£000s	£000s
Profit/(loss) for the period	2,521	(1,769)	(1,548)
Other comprehensive income/(expense)
Currency translation differences	965	(199)	187
Total comprehensive income/(expense) for the period	3,486	(1,968)	(1,361)
Attributable to:
Owners of the Company	3,507	(1,968)	(1,361)
Non-controlling interests	(21)	-	-
	3,486	(1,968)	(1,361)

 

All items in other comprehensive income will be recycled subsequently to the income statement.Unaudited condensed consolidated balance sheet

As at 31 March 2015

 

		31 March	31 March	30 September
		2015	2014	2014
		£000s	£000s	£000s
Assets
Non-current assets
Property, plant and equipment		58,748	56,428	57,787
Intangible assets		121	146	130
Investment in associate		-	423	327
Deferred income tax assets		3,793	3,384	3,919
Trade and other receivables		147	119	148
		62,809	60,500	62,311
Current assets
Inventories		757	1,385	596
Trade and other receivables		30,210	29,574	23,801
Current income tax assets		-	119	-
Cash and cash equivalents		10,398	6,994	9,065
		41,365	38,072	33,462
Total assets		104,174	98,572	95,773
Liabilities
Non-current liabilities
Borrowings and loans		26,507	20,749	22,602
Deferred income tax liabilities		4,933	3,926	5,292
Provisions		1,770	2,760	2,477
		33,210	27,435	30,371
Current liabilities
Trade and other payables		25,079	29,573	24,543
Current income tax liabilities		1,870	1,262	384
Borrowings and loans		8,948	7,920	7,902
Provisions		768	898	430
		36,665	39,653	33,259
Total liabilities		69,875	67,088	63,630
Total assets less total liabilities		34,299	31,484	32,143
Equity
Capital and reserves attributable to equity holders of the company
Ordinary shares		2,095	2,095	2,095
Share premium		11,194	11,194	11,194
Capital redemption		12,646	12,646	12,646
Translation reserves		1,197	(154)	232
Retained earnings		7,141	5,703	5,976
Equity attributable to owners of the Company		34,273	31,484	32,143
Non-controlling interests		26	-	-
Total equity		34,299	31,484	32,143

 

 

Unaudited condensed consolidated statement of changes in equity

For the six months ended 31 March 2015

 

		Share capital account	Share premium account	Capitalredemptionreserve	Other reserves	Retained earnings	Total	Non-controlling interest	Total equity
		£000s	£000s	£000s	£000s	£000s	£000s	£000s	£000s
Balance at 1 October 2014		2,095	11,194	12,646	232	5,976	32,143	-	32,143
Profit/(loss) for the period		-	-	-	-	2,542	2,542	(21)	2,521
Other comprehensive income net of tax		-	-	-	965	-	965	-	965
Total comprehensive income		-	-	-	965	2,542	3,507	(21)	3,486
Transactions with owners in their capacity as owners:
Non-controlling interest acquired		-	-	-	-	-	-	47	47
External dividends paid		-	-	-	-	(1,141)	(1,141)	-	(1,141)
LTIP and share options		-	-	-	-	(236)	(236)	-	(236)
Balance at 31 March 2015		2,095	11,194	12,646	1,197	7,141	34,273	26	34,299
		Share capital account	Share premium account	Capitalredemptionreserve	Other reserves	Retained earnings	Total	Non-controlling interest	Total equity
		£000s	£000s	£000s	£000s	£000s	£000s	£000s	£000s
Balance at 1 October 2013		2,649	23,286	-	45	47,219	73,199	-	73,199
Loss for the period		-	-	-	-	(1,769)	(1,769)	-	(1,769)
Other comprehensive expense net of tax		-	-	-	(199)	-	(199)	-	(199)
Total comprehensive expense		-	-	-	(199)	(1,769)	(1,968)	-	(1,968)
Transactions with owners in their capacity as owners:
Issue of B and C shares		12,092	(12,092)	-	-	-	-	-	-
Redemption of B shares		(12,092)	-	12,092	-	(12,092)	(12,092)	-	(12,092)
Dividend on C shares		-	-	-	-	(16,455)	(16,455)	-	(16,455)
Purchase of ordinary shares		(554)	-	554	-	(9,763)	(9,763)	-	(9,763)
External dividends paid		-	-	-	-	(1,013)	(1,013)	-	(1,013)
LTIP and share options		-	-	-	-	(424)	(424)	-	(424)
Balance at 31 March 2014		2,095	11,194	12,646	(154)	5,703	31,484	-	31,484
		Share capital account	Share premium account	Capitalredemptionreserve	Other reserves	Retained earnings	Total	Non-controlling interest	Total equity
		£000s	£000s	£000s	£000s	£000s	£000s	£000s	£000s
Balance at 1 October 2013		2,649	23,286	-	45	47,219	73,199	-	73,199
Loss for the period		-	-	-	-	(1,548)	(1,548)	-	(1,548)
Other comprehensive income net of tax		-	-	-	187	-	187	-	187
Total comprehensive income/(expense)		-	-	-	187	(1,548)	(1,361)	-	(1,361)
Transactions with owners in their capacity as owners:
Issue of B and C shares		12,092	(12,092)	-	-	-	-	-	-
Redemption of B shares		(12,092)	-	12,092	-	(12,092)	(12,092)	-	(12,092)
Dividend on C shares		-	-	-	-	(16,455)	(16,455)	-	(16,455)
Purchase of ordinary shares		(554)	-	554	-	(9,769)	(9,769)	-	(9,769)
External dividends paid		-	-	-	-	(1,013)	(1,013)	-	(1,013)
LTIP and share options		-	-	-	-	(366)	(366)	-	(366)
Balance at 30 September 2014		2,095	11,194	12,646	232	5,976	32,143	-	32,143

Unaudited condensed consolidated cash flow statement

For the six months ended 31 March 2015

 

	Six months ended 31 March		Year ended 30 September
	2015	2014	2014
	£000s	£000s	£000s
Cash flows from operating activities
Cash generated from operations	9,286	1,000	16,415
Income tax paid	(1,488)	(846)	(1,268)
Net cash generated from operating activities	7,798	154	15,147
Cash flows from investing activities
Purchases of property, plant and equipment	(12,439)	(10,591)	(23,492)
Proceeds from sale of property, plant and equipment	2,296	3,214	4,450
Dividends from associate	-	-	200
Acquisition of subsidiary	634	-	-
Net cash used in investing activities	(9,509)	(7,377)	(18,842)
Cash flows from financing activities
Net interest paid	(836)	(529)	(1,224)
Proceeds from borrowings	15,381	12,141	23,361
Repayments of borrowings	(11,807)	(4,229)	(13,544)
Purchase of ordinary shares	-	(9,763)	(9,769)
Redemption of B shares	-	(10,192)	(12,092)
Dividends paid to Company's shareholders	(283)	(16,775)	(17,468)
Net cash generated from/(used in) financing activities	2,455	(29,347)	(30,736)
Net increase/(decrease) in cash, cash equivalents and bank overdrafts	744	(36,570)	(34,431)
Cash, cash equivalents and bank overdrafts at beginning of period	8,968	43,107	43,107
Exchange gains on cash and bank overdrafts	686	11	292
Cash, cash equivalents and bank overdrafts at end of period	10,398	6,548	8,968
Bank overdrafts at end of period	-	446	97
Cash, cash equivalents at end of period	10,398	6,994	9,065

 

  Notes to the interim report and accounts

 

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 11 June 2015, are not full accounts within the meaning of section 435 of the Companies Act 2006.

 

The figures for the year ended 30 September 2014 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 2015. These are consistent with those included in the previously published annual report and accounts for the year ended 30 September 2014, 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 interim 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, payments to LTIP holders and bonuses in connection with the Disney settlement, 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 one off costs and charges 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, payments to LTIP holders and bonuses in connection with the Disney settlement, and other non-recurring costs 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. Previously adjusted earnings per share excluded the deferred tax charge/credit, the directors believe that this change better reflects the underlying performance of the business. The comparative figures have been restated for consistency.

 

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. Trading EBITDA includes profits on disposal of property, plant and equipment. The Directors believe that trading EBITDA is an important measure of the underlying performance of the Group.

4. Segmental information

 

	Six months ended 31 March		Year ended 30 September
	2015	2014	2014
	£000s	£000s	£000s
Revenue
Creative Technology	51,624	49,556	96,258
Full Service	7,889	7,426	14,446
Broadcast	6,756	8,760	16,266
Inter Segment revenue	(295)	(376)	(579)
Group revenue	65,974	65,366	126,391
Operating profit
Creative Technology	5,478	3,341	4,420
Full Service	558	239	229
Broadcast	(431)	810	1,680
Head Office	(126)	291	(76)
Trading profit	5,479	4,681	6,253
Restructuring costs and compensation for loss of office	-	(5,017)	(5,738)
Payments to LTIP holders and bonuses in connection with the Disney settlement	-	162	246
Other non-recurring costs	-	(326)	107
Operating profit/(loss)	5,479	(500)	868

 

 

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

 

 

	Six months ended 31 March		Year ended 30 September
	2015	2014	2014
	£000s	£000s	£000s
Trading profit	5,479	4,681	6,253
Depreciation	9,093	8,706	17,880
Impairment	-	-	726
Amortisation of software	39	71	109
Trading EBITDA	14,611	13,458	24,968

 

Trading EBITDA is defined in note 3.

 

 

 

6. Taxation

 

	Six months ended 31 March		Year ended 30 September
	2015	2014	2014
	£000s	£000s	£000s
Current tax:
Current tax charge on profits for the year	2,653	319	393
Adjustments in respect of prior periods	-	-	(428)
Total current tax	2,653	319	(35)
Deferred tax (credit)/charge	(555)	1,540	2,345
Income tax expense	2,098	1,859	2,310

 

 

7. Earnings per share

 

	Six months ended 31 March		Year ended 30 September
	2015	2014	2014
	£000s	£000s	£000s
Profit/(loss) for the financial period	2,521	(1,769)	(1,548)
Profit on discontinued operations, net of tax	-	(1,192)	(1,192)
Profit/(loss) from continuing operations	2,521	(2,961)	(2,740)
Restructuring costs and compensation for loss of office	-	5,017	5,738
Payments to LTIP holders and bonuses in connection with the Disney settlement	-	(162)	(246)
Other non-recurring costs	-	326	(107)
Trading profit after net finance costs and income tax expense	2,521	2,220	2,645
Weighted average number of shares (net of treasury shares)
For basic earnings per share (000's)	18,930	23,891	21,361
Effect of dilutive share options (000's)	298	1,250	848
For diluted earnings per share (000's)	19,228	25,141	22,209
Earnings/(losses) per share
Basic	13.3p	(7.4)p	(7.2)p
Diluted	13.1p	(7.4)p	(7.2)p
Continuing basic	13.3p	(12.4)p	(12.8)p
Continuing diluted	13.1p	(12.4)p	(12.8)p
Adjusted basic	13.3p	9.3p	12.4p
Adjusted diluted	13.1p	9.3p	12.4p
Discontinued operations basic	0.0p	5.0p	5.6p
Discontinued operations diluted	0.0p	5.0p	5.6p

 

Basic 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.

 

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.

 

 

 

8. Analysis of net debt

 

			At 1 October 2014	Cash flow	Other non cash changes	Currency translation differences	At 31March2015
			£000s	£000s	£000s	£000s	£000s
Cash at bank and in hand			9,065	636	-	697	10,398
Bank overdrafts			(97)	108	-	(11)	-
Net cash			8,968	744	-	686	10,398
Bank loans due in more than one year			(16,848)	1,000	-	(634)	(16,482)
Hire purchase obligations due in less than one year			(7,805)	2,241	(2,988)	(396)	(8,948)
Hire purchase obligations due in more than one year			(5,754)	(6,815)	2,988	(444)	(10,025)
Net debt			(21,439)	(2,830)	-	(788)	(25,057)
			At 1 October 2013	Cash flow	Other non cash changes	Currency translation differences	At 31March 2014
			£000s	£000s	£000s	£000s	£000s
Cash at bank and in hand			43,699	(36,710)	-	5	6,994
Bank overdrafts			(592)	140	-	6	(446)
Net cash			43,107	(36,570)	-	11	6,548
Bank loans due in more than one year			(7,419)	(7,269)	-	235	(14,453)
Finance lease obligations due in less than one year			(7,303)	2,594	(2,886)	121	(7,474)
Finance lease obligations due in more than one year			(6,048)	(3,237)	2,886	103	(6,296)
Net cash/(debt)			22,337	(44,482)	-	470	(21,675)
			At 1 October 2013	Cash flow	Other non cash changes	Currency translation differences	At 30 September 2014
			£000s	£000s	£000s	£000s	£000s
Cash at bank and in hand			43,699	(34,859)	-	225	9,065
Bank overdrafts			(592)	428	-	67	(97)
Net cash			43,107	(34,431)	-	292	8,968
Bank loans due in more than one year			(7,419)	(9,492)	-	63	(16,848)
Hire purchase obligations due in less than one year			(7,303)	5,613	(6,182)	67	(7,805)
Hire purchase obligations due in more than one year			(6,048)	(5,938)	6,182	50	(5,754)
Net cash/(debt)			22,337	(44,248)	-	472	(21,439)

 

 

 

9. Interim and final dividends

 

A final dividend for the year ended 30 September 2014 of 4.5p per ordinary share amounting to a total of £858,000 was approved and was paid on 8 April 2015 to shareholders on the register on 12 March 2015.

 

An interim dividend for the year ended 30 September 2014 of 1.5p per ordinary share amounting to a total of £283,000 was approved and was paid on 1 October 2014 to shareholders on the Register on 5 September 2014.

 

A special dividend of £1.10 per C share was approved and was paid on 24 January 2014 under the Return of Cash (see note 10).

 

An interim dividend of 2p per ordinary share will be paid on 1 October 2015 to shareholders on the Register at 6.00pm on 4 September 2015. The shares will be quoted ex dividend from 3 September 2015.

 

 

10. Return of cash and buy-back agreement

 

The Company returned £28.5m of the net cash receipt from the Disney litigation funds to shareholders by way of a B & C Share Scheme (the "Return of Cash" or "Scheme). On 24 January 2014 10,992,850 B shares and 14,958,700 C shares were allotted to shareholders through the capitalisation of the share premium reserve. On 24 January 2014 the Company redeemed the B shares for £1.10 per share, totalling £12.1m, and a dividend of £1.10 per share was declared on each C share, totalling £16.4m. Following redemption of the B Shares, all of the B Shares were then cancelled. Following the declaration of dividend on the C shares, these shares became deferred shares which carried no rights to participate in the profits of the Company or a return of capital. The deferred shares were purchased by the Company for an aggregate sum of 1p, and cancelled. None of the B shares, C shares and deferred shares were admitted to trading on AIM or admitted to listing or trading on any recognised investment exchange.

 

The Company and Taya Communications Ltd ("Taya") entered into a Buy-back agreement on 23 December 2013 pursuant to which the Company bought back from Taya 7,584,724 ordinary shares of the Company ("Buy-back Shares"), out of Taya's total holding of 7,784,878 ordinary shares, at a price of 124p per ordinary share on 5 February 2014, leaving Taya holding a balance of 200,154 ordinary shares, representing 1.09% of the then total voting rights of the Company as reduced by the cancellation or transfer to treasury of the Buy-back Shares. The price payable for the Buy-back Shares represented a five percent premium over the average closing mid-market price per ordinary share for the forty-five business day period ending on 17 December 2013, being the latest practicable date prior to the date of the release of the Company's Preliminary Results in respect of the year ended 30 September 2014, less the amount of 110 pence (being the cash entitlement payable per Buy-back Share under the Return of Cash). The total consideration payable was £9.4m plus legal and professional fees of £0.4m. Of the 7,584,724 ordinary shares bought back from Taya, 5,539,149 were cancelled immediately and the balance transferred to treasury. As at 31 March 2015, 1,877,318 shares were held in treasury.

 

 

11. Discontinued operations

 

InvestinMedia Holdings Limited ("InvestinMedia"), a subsidiary of the Company, sold its investment in Complete Communications Corporation Limited ("Complete") on 20 December 2006. The buyer of Complete pursued legal action in the United States against Disney on behalf of InvestinMedia and other vendors. This legal action concluded in the year ended 30 September 2013 and the Group has received its share of the Disney litigation award. Cash received was £50.6m although this was reduced by estimated tax liabilities of £4.1m and indemnities of £1.0m, offset by a net credit of £0.2m in relation to professional fees resulting in a profit on discontinued operations of £45.7m. As a result of further refinement of the tax base cost on the associated chargeable gain the Group's estimated tax liability was reduced by £1.2m in the prior period.

 

The consolidated income statement and consolidated cash flow statement include the following amounts in relation to discontinued operations:

 

	Six months ended 31 March		Year ended 30 September
Consolidated income statement	2015	2014	2014
	£000s	£000s	£000s
Revenue	-	-	-
Tax credit	-	1,192	1,192
Profit on discontinued operation, net of tax	-	1,192	1,192
Consolidated cash flow statement
Operating activities	-	(553)	(1,144)
Cash used from discontinued operations	-	(553)	(1,144)

 

 

12. Acquisitions

 

On 7 November 2014 Sports Technology Ltd, an associate of the Group, repurchased 40 of its own shares from Delta Sound Incorporated (UK) Ltd for £109,578. The shares were cancelled immediately following their repurchase. The Group now holds 66.67% of the issued share capital of Sports Technology Ltd, which is therefore a subsidiary of the Group.

 

The exercise to determine the fair value of the identifiable assets acquired and liabilities assumed was completed during the period and the amounts recognised are as follows:

 

Recognised amounts of identifiable assets acquired and liabilities assumed	Book Value	Fair Value
	£000s	£000s
Property, plant and equipment	1	1
Intangible assets	1	1
Trade and other receivables	86	86
Cash and cash equivalents	634	634
Trade and other payables	(339)	(339)
Current tax liabilities	(243)	(243)
Identifiable net assets acquired	140	140
Non-controlling interest in Sports Technology Limited		(47)
Goodwill		7
		100
Consideration
Fair value of equity interest in Sports Technology Limited		100
		100

 

Goodwill of £7,000 has been charged to the consolidated income statement on the basis that it is immaterial.

 

 

13. 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. 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.

 

14. Post balance sheet events

 

As at 31 March 2015 the Group had an unrecognised contingent gain of £1.0m in respect of the receipt of its share of funds received from the historic Disney litigation (See Note 11). The gain was contingent on indemnities given in respect of the settlement.

 

No notice of claim has been received under these indemnities and, subsequent to the period end, the Group believes that any claim under the indemnities would now be time barred. The post period end lapse of the indemnities, and hence the ability to recognise the contingent gain, is a non adjusting post balance sheet event and as such no adjustment has been included in these accounts. The gain of £1.0m will be reflected in the second half of the year.

 

15. 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 half-yearly financial report for the six months ended 31 March 2015, 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 half-yearly financial report 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 half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report 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 half-yearly financial report 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 half-yearly financial report 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 half-yearly financial report for the six months ended 31 March 2015 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

11 June 2015

 

 

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