AVS.L Regulatory News (AVS)

28 Jun 2007 07:02

Avesco Group PLC28 June 2007 28 June 2007 AVESCO GROUP plc INTERIM RESULTS Avesco Group plc, the international provider of services to the corporatepresentation, entertainment and broadcast markets, announces its interim resultsfor the half year ended 31 March 2007. KEY HIGHLIGHTS • Complete Communications, owner of "Who Wants to be a Millionaire?" sold in December 2006, producing profit to the Group of approximately £31m • Nil premium merger with Avesco plc completed on 17 May 2007 and name changed from InvestinMedia plc to Avesco Group plc • Operating profit (InvestinMedia) of £0.5m (2006: loss £0.1m) - 6 months to 31 March 2007 • Pre-tax profit (InvestinMedia) of £31.1m (2006: £1.2m) - 6 months to 31 March 2007 • Operating profit of acquired Avesco businesses of £3.8m (2006: £2.6m) - year to 31 March 2007 • Pre-tax profit of acquired Avesco businesses of £2.9m (2006: £0.5m) - year to 31 March 2007 • Interim dividend of 2.5p per share (2006: 2.5p) • Pro-forma net assets of £47.3m for enlarged Group Ian Martin, Chief Executive, commented: "The six months figures, which are the results of the InvestinMedia operation,clearly show the significant impact of the profit from the disposal of theMillionaire business but are not representative of the Group going forward. Forthat, the focus should be on the twelve months' figures from the original Avescobusiness and I am very pleased with the strong growth from those core mediaservices operations with a 46% increase in operating profits. "Our strategy is clear and straightforward. We are going to build a mediaservices group that is recognised for the quality of its people, services andfinancial return to shareholders. The creation of the enlarged Avesco Group,bringing in the Fountain Studios business and significantly strengthening thebalance sheet, is a substantial step forward to achieving our goal. "In the near term, the general economic outlook for the remainder of this yearappears supportive for the Group. We have one or two key months to come butremain confident." For further information please contact: Avesco Group plc On the day: 0207067 0700Ian Martin, Chief Executive Thereafter:01293 583400John Christmas, Group Finance Director Weber Shandwick Financial Terry Garrett / Alex White / John Moriarty 020 7067 0700 J M Finn & Co 020 7997 8317Clive Carver KBC Peel Hunt Ltd 020 7418 5900James Bale CHAIRMAN'S STATEMENT I am pleased to present my first report to shareholders as chairman of AvescoGroup plc. The six months ended 31 March 2007 have been a most exciting periodfor the Company and, I believe, pave the way for the future development andexpansion of the group. In December 2006, we completed the sale of our interest in CompleteCommunications Corporation Limited ("Complete"), owner of the rights to the quizformat "Who Wants To Be A Millionaire?", producing a profit on our investment ofapproximately £31m. At the end of March 2007, we announced the terms of a nilpremium merger with Avesco plc, the acquisition of which was completed on 17 May2007. On the same date, the name of the Company was changed from InvestinMediaplc to Avesco Group plc. Avesco plc is one of the leading international suppliers to the corporatepresentation, entertainment and broadcast markets through its audio visual andbroadcast services operations. Together with Fountain Studios, which we acquiredin September 2006, the enlarged group is now a media services business employingsome 580 people and operating principally in the UK, mainland Europe and NorthAmerica. RESULTS The unaudited interim results for the six months ended 31 March 2007 include theresults for the whole of the period of Fountain Studios and our 20.74% share ofMedal Entertainment & Media plc ("MEM"). In addition, our 49% share of theresults of Complete are included for the period between 1 October 2006 and itsdisposal on 20 December 2006, together with the gain on that disposal. As MEMhas at the date of this report yet to announce its own results for the period,the financial information relating to MEM, which is incorporated in this report,is based on the latest unaudited management information provided to us by MEM. During the six months to 31 March 2007, group turnover rose to £3.1m (2006:£0.1m) and group operating profit to £0.5m (2006: loss £0.1m), mainly due to theinclusion of Fountain Studios. The group's share of Complete and MEM combined to produce an operating profitbefore exceptional items of £0.3m (2006: £1.3m) but respectively sufferedexceptional charges in respect of litigation claims and one-off costs associatedwith the acquisition and integration of UGD/Britannia Music (the DVD and CDdirect marketing business that MEM acquired in October 2006) where the group'sshare amounted to £1.4m (2006: nil). The gain on disposal of the Complete business remains in line with our previousestimates at approximately £31m. Your board has received advice that most ofthis gain should not be chargeable to corporation tax. In total, the group and share of associates' profits on ordinary activitiesbefore taxation was £31.1m (2006: £1.2m) and diluted earnings per share were181.7p (2006: 5.1p). Although Avesco plc and its subsidiaries now represent the bulk of the Group'strading businesses, they were not part of the group for the period ended 31March 2007. We have, therefore, included an unaudited 12 month consolidatedprofit and loss account of Avesco plc and its subsidiaries on the face of theGroup Profit and Loss Account. These numbers show the increasing strength of theAvesco plc companies with operating profit before goodwill and exceptional itemsof £3.8m (2006: £2.6m), representing a 46% increase from the prior year. Although there has been a dramatic change in the nature and structure of thegroup since the period end, as a sign of its confidence the Board is maintainingthe interim dividend at 2.5p (2006: 2.5p). REVIEW OF OPERATIONS Fountain Studios enjoyed a very successful first six months under the Company'sownership with good utilisation of its facilities. Of the businesses that were added to the group through the purchase of Avescoplc, Creative Technology (CT) is the largest. It is one of the premier stagingcompanies in the world with operations in North America, UK, Germany and Dubaiand with a new office due to open in the coming months in Shanghai. CT wasestablished over 20 years ago and provides the highest quality AV, staging,multimedia and video display services worldwide. In the full service sector Avesco has three regional businesses that have marketleading positions. Of these, JVR offers the broadest range of audiovisualservices from its branches in Amsterdam, Hilversum, Rotterdam and Roosendaal.Action has a strong presence on the Cote d'Azur, offering video, IT systems anddisplay services into the corporate events and exhibitions markets from its basein Monaco. From its branches across the UK, MCL provides a full range ofservices to the corporate market, including conferences and exhibitions togetherwith a thriving equipment hire business. Presteigne, a leading provider of broadcast equipment and system solutions tothe broadcast and entertainment markets sectors in Europe, is one of the fastestgrowing businesses within Avesco. Presteigne, which has offices in UK, Germanyand Holland, has established itself at the forefront of the market for therental of high definition broadcast television equipment in Europe after aperiod of significant investment and growth. MANAGEMENT AND STAFF On completion of the acquisition of Avesco plc, a number of the directors ofthat company joined the Avesco Group plc Board. I was appointed non-executiveChairman in place of Richard Murray, who becomes non-executive Deputy Chairman.Ian Martin was appointed as Chief Executive, John Christmas as Finance Director,David Nicholson and Graham Andrews as executive Directors and Laurence Blackallas a non-executive Director. Cameron Maxwell, who was previously ChiefExecutive, remains as a non-executive Director. At the same time, Alfred Stirling, who was a non-executive Director, steppeddown from the Board. Alfred has had a long association with the Company and Iwould like to thank him for his valuable advice and input to the Board over manyyears. The group has a growing and diverse international workforce. I would like tothank them on behalf of the Board for all their hard work, dedication andenthusiasm, which we recognise as fundamental to the future success of thegroup. STRATEGY The strategy of the Avesco Group remains to build a media services group that isrecognised for the quality of its people, its service and its financial returnto shareholders. We believe that the existing Avesco and Fountain Studios businesses, allied tothe financial resources of the Company, have combined to produce a financiallystrong media services group. We shall focus upon the key objectives of improvingprofit and cash flow. We will manage the operating cash flow to enhanceshareholder value by investing further in the growth of our business. A numberof new office openings are being progressed and we continue to evaluateacquisition opportunities as they arise. OUTLOOK The general economic outlook for the remainder of this year, which includes ourquieter summer season, appears supportive for the Group. We have one or two keymonths to come but remain confident. The combination of the Avesco and Fountain Studios businesses with the strengthof the Company's balance sheet leaves us well placed to drive the development ofthe group over the next few years. Michael GibbinsChairman28 June 2007 Unaudited consolidated profit and loss accountFor the six months ended 31 March 2007 Avesco plc Unaudited consolidated profit and loss account Six months ended 31 March Year ended 30 Year ended 31 September March 2007 2006 2006 2007 (restated*) (restated*) £'000 £'000 £'000 £'000------------------------------------------------------------------- ------------- Turnover 3,116 100 381 74,611Cost of sales (1,142) - (90) (45,960)------------------------------------------------------------------- -------------Gross Profit 1,974 100 291 28,651 Operating expensesbefore goodwillamortisation (1,412) (249) (653) (24,870)Goodwill amortisation (24) - - (28)------------------------------------------------------------------- -------------Total operatingexpenses (1,436) (249) (653) (24,898)------------------------------------------------------------------- -------------Group operatingprofit / (loss) 538 (149) (362) 3,753 Share ofassociates' operatingprofit beforeexceptional items 293 1,308 1,924 - Share ofassociates' operatingexceptional items (1,430) - - -------------------------------------------------------------------- -------------Share ofassociates'operating(loss) / profit (1,137) 1,308 1,924 -------------------------------------------------------------------- -------------Continuing operations 44 288 (540) 3,753Discontinued operations (643) 871 2,102 -------------------------------------------------------------------- -------------Group and shareof associates'operating(loss) / profit (599) 1,159 1,562 3,753------------------------------------------------------------------- ------------- Share ofassociates'non-operatingexceptional items 597 - - -Gain on disposalof associate 30,858 - - -------------------------------------------------------------------- -------------Group andshare of associates'profit on ordinaryactivities beforeinterest andtaxation 30,856 1,159 1,562 3,753 Group interestreceivable /(payable) 237 47 53 (835)Share ofassociates'net interest 20 10 67 -------------------------------------------------------------------- -------------Net interestreceivable / (payable) and similar items 257 57 120 (835)------------------------------------------------------------------- -------------Profit onordinary activitiesbefore taxation 31,113 1,216 1,682 2,918Taxation onprofit onordinary activities (310) (361) (844)------------------------------------------------------------------- Profit for theperiod 30,803 855 838------------------------------------------------------------------- Earnings per shareBasic 189.9p 5.3p 5.2pDiluted 181.7p 5.1p 5.0p------------------------------------------------------------------- * The periods ended 31 March 2006 and 30 September 2006 have been restatedfollowing the adoption of FRS20 "Share-based payment" (see Note 2 for furtherdetails). Unaudited consolidated statement of total recognised gains and lossesFor the six months ended 31 March 2007 Six months Six months ended ended Year ended 31 March 31 March 30 September 2007 2006 2006 (restated) (restated) £'000 £'000 £'000------------------------------------------------------------------------------ Profit for the period 30,803 855 838------------------------------------------------------------------------------Total recognised gains and lossesrelating to the period 30,803 855 838------------------------------------------------------------------------------Prior year adjustment (see Note2) (339)------------------------------------------------------------------------------Total recognised gains and lossessince last annual report 30,464-------------------------------------------- Unaudited consolidated balance sheetAs at 31 March 2007 31 March 31 March 30 September 2007 2006 2006 (restated*) (restated*) £'000 £'000 £'000------------------------------------------------------------------------------ Intangible assets 454 - -Tangible assets 6,797 - 7,232Investment in associates 1,076 6,131 5,174Other investments 1,872 - -------------------------------------------------------------------------------Fixed assets 10,199 6,131 13,121 Stocks 60 - 62Debtors: amounts falling due within oneyear 1,873 - 488Debtors: amounts falling due after morethan one year 9,490 15 133Cash 17,798 2,192 322------------------------------------------------------------------------------Current assets 29,221 2,207 1,005 Creditors: amounts falling due withinone year (1,968) (765) (6,939) ------------------------------------------------------------------------------Net current assets / (liabilities) 27,253 1,442 (5,934)------------------------------------------------------------------------------Net assets 37,452 7,573 7,187------------------------------------------------------------------------------ Share capital 1,632 1,632 1,632Treasury shares (91) (91) (91)Share premium 12,489 12,489 12,489Profit and loss account 23,422 (6,457) (6,843)------------------------------------------------------------------------------Equity shareholders' funds 37,452 7,573 7,187------------------------------------------------------------------------------ * The balance sheets at 31 March 2006 and 30 September 2006 have been restatedfollowing the adoption of FRS20 "Share-based payment" (see Note 2 for furtherdetails). Unaudited reconciliation of movements in equity shareholders' fundsFor the six months ended 31 March 2007 Six months Six months ended ended Year ended 31 March 31 March 30 September 2007 2006 2006 (restated) (restated) £'000 £'000 £'000------------------------------------------------------------------------------ Profit for the period 30,803 855 838Dividends* (568) (568) (973)------------------------------------------------------------------------------Retained profit for the period 30,235 287 (135) Share options 30 37 73------------------------------------------------------------------------------Net change in equity shareholders'funds 30,265 324 (62) Opening equity shareholders' funds aspreviously reported 7,336 6,706 6,706Restatement - FRS20** (149) (25) (25)Restatement - FRS21*** - 568 568------------------------------------------------------------------------------Opening equity shareholders' funds 7,187 7,249 7,249------------------------------------------------------------------------------Closing equity shareholders' funds 37,452 7,573 7,187------------------------------------------------------------------------------ * The prior year disclosure of dividends has been amended to reflect accountingfor distributions to equity holders directly within equity in accordance withFRS 25. This amendment has nil impact on the opening or closing position of thecompany. ** The periods ended 31 March 2006 and 30 September 2006 have been restatedfollowing the adoption of FRS20 "Share-based payment" (see Note 2 for furtherdetails). *** The periods ended 31 March 2006 and 30 September 2006 have been restated inaccordance with FRS21 "Events after the balance sheet date" where interimdividends are recognised when paid and final dividends are recognised onapproval at the Annual General Meeting. Unaudited consolidated cash flow statementFor the six months ended 31 March 2007 Six months Six months ended ended Year ended 31 March 31 March 30 September 2007 2006 2006 £'000 £'000 £'000------------------------------------------------------------------------------ Group operating profit / (loss) 538 (33) (165)Depreciation, amortisation andimpairment 78 - 8Change in working capital (734) 60 436------------------------------------------------------------------------------Net cash (outflow) / inflow fromoperating activities (118) 27 279 Dividends from associates - - 880Returns on investments and servicing offinance 142 42 53Taxation - - -------------------------------------------------------------------------------Net cash inflow before capitalexpenditure 24 69 1,212 Purchase of tangible assets (97) - (55)------------------------------------------------------------------------------Net cash outflow for capitalexpenditure (97) - (55) Purchase of trades and businesses - - (7,053)Investment in associate - - (435)Disposal of investments 23,049 - -------------------------------------------------------------------------------Net cash inflow / (outflow) fromacquisitions and disposals 23,049 - (7,488) Equity dividends paid - (2) (972)------------------------------------------------------------------------------Net cash inflow / (outflow) before useof liquid resources and financing 22,976 67 (7,303) Change in bank term deposits - 50 1,050 Change in bank loans (5,500) - 5,500------------------------------------------------------------------------------Change in cash 17,476 117 (753)------------------------------------------------------------------------------ ------------------------------------------------------------------------------Closing net funds / (debt) 17,798 2,192 (5,178)------------------------------------------------------------------------------ Notes to interim report and accounts 1 Status of interim report and accounts The interim report and accounts are unaudited but have been reviewed by theauditors and their independent review report is set out on page 10. The interimreport and accounts, which were approved by the Board of Directors on 28 June2007, are not full accounts within the meaning of section 240 of the CompaniesAct 1985. The figures for the year ended 30 September 2006, except for the effect of therestatement required on the adoption of FRS 20 (see Note 2 below), have beenextracted from the audited annual report and accounts that have been filed withthe Registrar of Companies. The audit report on that annual report and accountswas unqualified and did not contain a statement under Section 237(2) or (3) ofthe Companies Act 1985. 2 Accounting policies The interim report and accounts have been prepared using the accounting policiesto be applied in the annual report and accounts for the year ending 30 September2007. These are consistent with those included in the annual report and accountsfor the year ended 30 September 2006 with the exception of FRS20 "Share-basedpayment" which was adopted in the period. The adoption of FRS20 has resulted inthe numbers for the periods ended 31 March 2006 and 30 September 2006 beingrestated to recognise additional charges to the profit and loss account of£115,262 and £197,121 respectively in respect of outstanding share options. Thecreditors due within one year line of the balance sheets at 31 March 2006 and 30September 2006 have also been restated for the cumulative accrual for theNational Insurance element of these options of £103,562 and £148,648respectively. 3 Exceptional items Six months Six months ended ended Year ended 31 March 31 March 30 September 2007 2006 2006 £'000 £'000 £'000------------------------------------------------------------------------------ Share of associates'restructuring costs (732) - - Share of associates' provisionfor litigation claims (698) - -------------------------------------------------------------------------------Operating exceptional items (1,430) - ------------------------------------------------------------------------------- Share of associates profit ondisposal of investments 597 - -Gain on disposal of associate 30,858 - -------------------------------------------------------------------------------Non-operating exceptional items 31,455 - ------------------------------------------------------------------------------- 4 Gain on disposal of associate As previously announced, the investment in Complete Communications CorporationLtd ("Complete") was sold on 20 December 2006 to 2 Way Traffic N.V. The proceedswere 1,534,162 ordinary shares of €0.01 each in 2 Way Traffic N.V. issued at atotal subscription price of £1.9 million, £9.9 million held in a retentionaccount that is subject to warranty and indemnity claims, £20.9 million in cash(net of expenses) and a balance due from 2 Way Traffic N.V. based on the finalnet assets of Complete. Additional consideration may also be receivabledepending on the outcome of certain litigation in the United States. A gain ondisposal of £30.9 million has been recognised in the results to 31 March 2007but is subject to change pending any future adjustments in respect of the finalnet asset value of Complete, the final amount due from the retention account andthe results of litigation in progress. The pre disposal trading of Complete hasbeen disclosed within discontinued operations in the consolidated profit andloss account. 5 Earnings per share Six months Six months ended ended Year ended 31 March 31 March 30 September 2007 2006 2006 (restated*) (restated*) £'000 £'000 £'000------------------------------------------------------------------------------EarningsProfit for the period 30,803 855 838 Weighted average number of sharesFor basic earnings per share(000's) 16,223,797 16,223,797 16,223,797Effect of dilutive share options(000's) 732,853 612,852 654,226------------------------------------------------------------------------------For diluted earnings per share(000's) 16,956,650 16,836,649 16,878,023------------------------------------------------------------------------------ Earnings per shareBasic 189.9p 5.3p 5.2pDiluted 181.7p 5.1p 5.0p * The periods ended 31 March 2006 and 30 September 2006 have been restatedfollowing the adoption of FRS20 "Share-based payment" (see Note 2 for furtherdetails). Basic earnings per share have been calculated by dividing profit after taxationby the weighted average number of ordinary shares in issue during the period. Diluted earnings per share have been calculated by dividing profit aftertaxation by the weighted average number of ordinary shares in issue during theperiod adjusted to assume conversion of all dilutive potential ordinary shares. 6 Interim dividend An interim dividend of 2.5p per share will be paid on 1 October 2007 toshareholders on the register on 14 September 2007. At 31 March 2007, the interimdividend had not been paid and is therefore not recognised in the results forthe period to 31 March 2007. 7 Acquisition of Fountain Television Limited As reported in the annual report and accounts for the year ended 30 September2006, Fountain Television Limited was acquired on 6 September 2006. The fairvalue of the assets acquired has been reassessed which has had the effect ofreducing the value of these assets and the creation of goodwill. The fair valueexercise is due to complete by 30 September 2007 with further adjustments to theasset and goodwill values possible. The final fair values will be presented inthe annual report and accounts for the year ended 30 September 2007. 8 Post balance sheet events As previously announced, the nil-premium merger of InvestinMedia plc and Avescoplc completed on 17 May 2007. As a consequence of the completion of theacquisition, the name of the Company was changed to "Avesco Group plc". Theacquisition was satisfied by the issue of 9,669,602 new Avesco Group ordinaryshares of 10p each and a total cash consideration of £7,289,619. The Company nowhas 25,985,899 shares in issue of which 92,500 are held in treasury. 9 Distribution of interim report and accounts Copies of this interim report and accounts are being sent to all shareholdersand additional copies are available either from the Company's web site (www.avesco.com) or from the Company's registered office: Avesco Group plc, UnitE2, 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.co.uk Independent review report to Avesco Group Plc IntroductionWe have been instructed by the company to review the financial informationsolely in respect of the company for the six months ended 31 March 2007 whichcomprises the consolidated profit and loss account, consolidated statement oftotal recognised gains and losses, consolidated balance sheet, thereconciliation of movements in equity shareholders' funds, consolidated cashflow statement and the related notes. We have not reviewed the unauditedconsolidated profit and loss account for the year ended 31 March 2007 of Avescoplc. We have read the other information contained in the interim report andconsidered whether it contains any apparent misstatements or materialinconsistencies with the financial information. Directors' responsibilitiesThe interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the AIM Rulesfor Companies. The accounting policies are consistent with those that thedirectors intend to use in the preparation of the next annual financialstatements.The maintenance and integrity of the Avesco Group plc web site is theresponsibility of the directors; the work carried out by the auditors does notinvolve consideration of these matters and, accordingly, the auditors accept noresponsibility for any changes that may have occurred to the interim reportsince it was initially presented on the web site. Legislation in the UnitedKingdom governing the preparation and dissemination of financial information maydiffer from legislation in other jurisdictions. Review work performedWe conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom. A reviewconsists principally of making enquiries of management and applying analyticalprocedures to the financial information and underlying financial data and, basedthereon, assessing whether the disclosed accounting policies have been applied.A review excludes audit procedures such as tests of controls and verification ofassets, liabilities and transactions. It is substantially less in scope than anaudit and therefore provides a lower level of assurance. Accordingly we do notexpress an audit opinion on the financial information. This report, includingthe conclusion, has been prepared for and only for the company for the purposeof the AIM Rules for Companies and for no other purpose. We do not, in producingthis report, accept or assume responsibility for any other purpose or to anyother person to whom this report is shown or into whose hands it may come savewhere expressly agreed by our prior consent in writing. Review conclusionOn the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 31 March 2007. PricewaterhouseCoopers LLPChartered AccountantsGatwick28 June 2007 This information is provided by RNS The company news service from the London Stock Exchange