23 Dec 2013 17:02
FOR IMMEDIATE RELEASE
AVESCO GROUP plc
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2013
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 year ended 30 September 2013.
KEY HIGHLIGHTS
Core Operations
· Revenue down 14% to £124.0m (2012: £143.5m)
· Operating loss of £8.4m (2012: profit of £4.5m)
· Trading profit of £0.5m (2012: £7.4m)*
· Trading EBITDA of £18.6m (2012: £27.1m)*
· Continuing operations loss per share of 41.2p (2012: earnings of 7.3p)
· Adjusted basic losses per share of 1.8p (2012: earnings of 21.7p)*
· Total dividend increased by 25% to 5.0p per share (2012: 4.0p)
Other items
· Successful conclusion of Disney litigation resulted in profit on discontinued operations of £45.7m (2012: nil)
· Positive impact of the Disney settlement resulted in total earnings per share of 136.2p (2012: 7.3p)
· As previously announced the Group is today announcing details of the proposals to return £28.5m (equivalent to £1.10/share) of the Disney settlement to shareholders by way of a B & C Share Scheme with payment to shareholders being made at the end of January 2014
· The Group is also announcing today it has entered into an agreement (subject to shareholders' approval) to buy-back 7,584,724 Ordinary Shares from Taya Communications Ltd, reducing their holding to 1.09% of the revised voting rights
* As described in note 9, the Group uses certain non-GAAP alternative measures to assess underlying operating performance.
Richard Murray, Chairman, commented:
"We have been fortunate that the receipt from the Disney litigation has more than compensated for a poor underlying trading performance during the year and the initial costs relating to the substantial reorganisation and re-positioning of the Group that will continue into the new financial year.
As we progress into 2014, the Group anticipates a return to profitability with the benefits of a reduced cost base and an expected increase in demand over 2013 for its services, with a number of major "even year" sporting events being held, including the Winter Olympics in Russia, the Commonwealth Games in Scotland and the FIFA World Cup in Brazil.
I am also pleased to have finalised details of the scheme to return cash to shareholders in connection with the receipt of the Company's share of the Disney settlement. This had been delayed by our discussions with Taya to buyback most of their 29.9% holding in the Company which has ultimately proved successful.
Further details of the proposed Return of Cash and the Share Buy-Back (which both require shareholders' consent) are contained in today's separate announcement and will be contained in the circular to shareholders which the Company expects to publish on Friday 27 December 2013."
For further information please contact:
Avesco Group plc | |
Richard Murray, Chairman | 01293 583400 |
John Christmas, Group Finance Director | |
finnCap Julian Blunt/Ed Frisby, Corporate Finance Brian Patient/Victoria Bates, Corporate Broking |
020 7220 0500 |
Avesco Group plc
Results
The Key Performance Indicators used to manage the business comprise revenue, margin, trading EBITDA, trading profit and net debt. Margin is the percentage derived by dividing the gross profit by the revenue. Trading EBITDA and trading profit are Alternative Performance Measures that better reflect our underlying trading performance by removing various non trading items from earnings before interest, taxation, depreciation and amortisation and operating profit, respectively.
We have been fortunate that the receipt from the Disney litigation has more than compensated for a poor underlying trading performance during the year and the initial costs relating to the substantial reorganisation and re-positioning of the Group that will continue into the new financial year.
During the 12 months ended 30 September 2013, our total revenue fell 14% to £124.0m (2012: £143.5m). A large part of this decline is attributable to the additional revenues brought by the Olympic Games and Paralympic Games, which took place in London in the comparator year of 2012. There was also a drop in underlying revenue of some 5%, mainly as a result of poor trading in CT Germany and Presteigne Charter, although this reduction was largely compensated for by the revenue from the Paris and Frankfurt motor shows both falling in the same financial year in 2013.
On the cost side, margins for the 12 months ended September 2013 held up at 35% (2012: 35%) despite the decline in revenue and operating expenses were reduced at the Trading Profit level reflecting the restructuring in CT Germany and Presteigne Charter.
Our operating loss was £8.4m (2012: £4.5m profit) and, after taking account of net interest costs of £1.5m (2012: £1.5m), the loss before income tax on continuing operations was £9.9m (2012: £3.0m profit). The profit from discontinued operations, net of tax (representing the result of the Disney litigation) was £45.7m (2012: nil). The basic earnings per share were 136.2p (2012: 7.3p), and the diluted earnings per share were 136.2p (2012: 7.0p).
The major non trading items removed from the operating results this year to calculate the trading profit comprise restructuring costs and compensation for loss of office of £4.8m (2012: £2.5m), payments to LTIP holders and bonuses in connection with the Disney settlement of £3.3m (2012: nil) and various other non-recurring costs totalling £0.7m (2012: £0.4m). The total of these restructuring and other non-recurring costs amounted to £8.9m (2012: £2.9m), or £5.6m excluding the Disney related payments.
The trading profit, excluding these items, was £0.5m (2012: £7.4m). Trading EBITDA was £18.6m (2012: £27.1m). The trading profit less interest and current tax was a loss of £0.5m (2012: £5.5m profit) and on this basis the adjusted basic loss per share was 1.8p (2012: earnings per share of 21.7p).
Creative Technology (CT)
Creative Technology saw revenues reduce to £87.3m (2012: £95.5m) and trading profit fall to £1.9m (2012: £4.5m). CTUS performed extremely well, growing revenue by 7%, with the decline in turnover coming from CT's European business. The absence in 2013 of any event on the scale of the London 2012 Olympics was the major factor. The balance of the shortfall was mainly attributable to staff departures suffered at our CT Germany business in December 2012, when the entire fee earning team of CT Germany's TV and film division left to set up their own business. Over the ensuing months we engaged in a substantial staff and equipment rationalisation plan (including the departure of the local managing director) resulting in restructuring costs in CT Germany of £0.6m. Unfortunately we have been unsuccessful in our attempts to replace the revenue lost in the TV and film sector and we expect to incur more restructuring costs in the current year as we retrench further.
Creative Technology Asia Pacific ("CTAP"), the business we set up in China five years ago, had a significantly improved performance over last year but failed to reach its break even target. With the reopening of our Singapore operation in October, we are hopeful that CTAP will prove to be both profitable and a significant asset to our other larger CT operations seeking to service their clients in the region.
Full Service
Our Full Service businesses were also affected by the absence of an event on the scale of the London 2012 Olympics with a reduced trading profit of £0.5m (2012: £1.1m) on revenues of £17.8m (2012: £19.4m). UK based MCL, the division's largest business, and Action, our Spanish business saw underlying revenue growth of 5% (i.e. excluding Olympic related revenues) and both had a profitable year, but JVR in Holland suffered in difficult local market conditions and made a small loss.
Broadcast Services
The absence of the London 2012 Olympics was most keenly felt in our Broadcast Services division where revenue dropped significantly to £18.9m (2012: £28.6m) resulting in a trading loss of £2.0m (2012: £2.3m profit). Of the two businesses that make up this division, a very quiet summer at Fountain Studios nevertheless saw modest profits produced. However, a much slimmed down projects division within Presteigne Charter was unable to generate a return, resulting in substantial trading losses. The Board therefore decided to de-risk Presteigne Charter by exiting the projects business completely and reverting to the company's dry hire roots. During 2012/13, we closed Presteigne Charter's projects-orientated Singapore office, we began a process to merge some of Presteigne Charter's UK's back office functions with those of CT London and we started to integrate more fully Presteigne Charter's German operations with those of CT Germany as we continue to reduce fixed costs to a level that can support profitable businesses. These decisions resulted in restructuring charges of £3.7m during the year, relating to staff losses and the impairment of the remaining projects related equipment.
Dividend
As indicated in the Group's Interim Report in June we were able to pay an interim dividend at the half year of 1.0p per share (2012: 1.0p), which was paid in October 2013. The Board is now pleased to announce that it proposes to increase the final dividend by a third to 4.0p per share, making a total dividend of 5.0p per share for the year (2012: 4.0p), reflecting our confidence in the longer term prospects for the Group.
The proposed dividend is expected to be paid on 7 April 2014 to shareholders on the register at the close of business on 14 March2014.
Proposed Return of Cash
The Company is today separately announcing full details of the proposed return of cash in connection with the receipt of the Company's share of the Disney settlement.
As shareholders may be aware from previous announcements by the Company, in December 2006 the Group sold its interest in Complete Communications Corporation Limited (the "Disposal"). Under the terms of the sale and purchase agreement relating to the Disposal, the Group retained the right to receive certain further deferred consideration arising from the outcome of litigation in the US brought by Celador against the Walt Disney Company and others ("Disney") over the US profits from the TV show 'Who Wants To Be A Millionaire?'.
In July 2010 Celador was awarded $319m in damages and pre judgement interest. Disney appealed the decision and their appeal was rejected on 3 December 2012. On 31 December 2012, Disney filed a petition to seek leave for a rehearing of the appeal by the United States Ninth Circuit Court of Appeals en banc. Subsequently the Ninth Circuit Court of Appeals issued its order returning the case to the trial court, an act which had the legal effect of making the judgement collectible by Celador. The Group finally received its share of the award on 4 June 2013.
The Group received £50.6m in cash and has given indemnities of £1.0m, incurred additional professional costs of £0.1m, estimated related tax liabilities of £4.1m and released professional fee accruals of £0.2m resulting in an after tax profit on discontinued operations of £45.7m. The net cash receipt, after related bonuses of £1.2m was £44.5m (the "Net Receipt').
As more particularly set out in today's separate announcement, the Group is proposing, subject to shareholder approval,to return £28.5m of these funds to shareholders by way of a B & C Share Scheme (the "Return of Cash" or "Scheme"). The Return of Cash will provide for a payment to shareholders, to be made at the end of January 2014, equivalent to £1.10 for each ordinary share (£28.5m in total), either as a return of capital or by way of an income dividend, and for our LTIP holders to receive an equivalent amount per LTIP share as a cash bonus (amounting in total to £2.1m) in February 2014. Payments to LTIP holders and bonuses were accrued for during the year and have been excluded from Trading Profit, as defined in note 9.
Further details on the proposed Return of Cash are contained in today's announcement and full details on the Scheme, together with a timetable to completion, will be contained in a circular to shareholders which the Company expects to publish on Friday 27 December 2013.
Proposed buy-back of shares from Taya
The Company is also today separately announcing the terms of a share buy-back between the Company and its largest shareholder, Taya Communications Ltd ("Taya") (the "Share Buy-Back").
Shareholders will be aware that Taya is the beneficial owner of 29.9% of the Company's issued share capital (excluding shares held in treasury) and has two representatives on the Board, Mr Amiram Giniger and Ms Carmit Hoomash. During the autumn, discussions have taken place between Taya and the Board concerning the possible disposal by Taya of its shareholding in the Company. Having discussed possible alternative transactions, simultaneous with the release of the Preliminary Results, the Company and Taya have entered into a buy-back agreement (the "Buy-Back Agreement") pursuant to which, and subject to shareholders' approval, the Company will buy back from Taya 7,584,724 ordinary shares of the Company (out of Taya's total holding of 7,784,878 ordinary shares) (the "Buy-Back Shares") at a price of 124p per ordinary share. This will leave Taya holding a balance of 200,154 Ordinary Shares, representing 1.09% of the 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 represents a five per cent. 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, less the amount of 110 pence (being the cash entitlement payable per Buy-back Share under the Return of Cash).
If the Share Buy-Back is approved by shareholders at the general meeting to be held on 22 January 2014, Mr Giniger and Ms Hoomash will resign from the Board immediately and, in addition, each of Taya and Mr Giniger have undertaken for a period of 30 months from completion of the Buy-Back Agreement not directly or indirectly to acquire any additional interest in the Company's securities or to make or cause to be made an offer for the Company's securities (the Standstill Agreement). The undertakings in this Standstill Agreement are subject to certain limited exceptions in the event that a third party makes a firm offer to acquire over 50% of the total voting rights or the Company provides its consent. The Board would like to thank Amiram Giniger and Carmit Hoomash for their contribution to the Group over the 3 years or so of Taya's involvement.
Provided both the B & C Share Scheme and the Share Buy-Back are approved by shareholders and in order to spread the impact of the payments, the Chairman has agreed to defer £3.4m of his entitlement under the Return of Cash (on an unsecured basis) until no later than 30 June 2014 and a further £2.0m of his entitlement (also on an unsecured basis) until no later than 30 September 2014. After all the payments have been made for the Return of Cash and the Buy-Back Agreement (including any deferred amounts) approximately £4m of the Net Receipt will remain in the Group. See note 7 for the pro-forma impact of these transactions on the balance sheet as at September 2013.
Further details of the Share Buy-Back are contained in today's announcement and will be contained in the circular to shareholders in connection with the Return of Cash and the Share Buy-Back which the Company expects to publish on Friday 27 December 2013.
Current Trading and Outlook
The first quarter of the current financial year has started in line with the Board's expectations. As we look further into 2014, the Group anticipates a return to profitability with the benefits of a reduced cost base and an expected increase in demand over 2013 for its services, with a number of major "even year" sporting events being held, including the Winter Olympics in Russia, the Commonwealth Games in Scotland and the FIFA World Cup in Brazil. We are in the process of restructuring our loss making businesses in Europe, which will be costly in the short term, but which should result in a stronger and more predictable business going forward. Throughout this period, the Board remains committed to its strategy of cash generation and dividend growth.
Richard Murray
23 December 2013
Avesco Group plcConsolidated Income StatementFor the year ended 30 September 2013
Year ended 30 September | |||
2013 | 2012 | ||
Note | £000s | £000s | |
Revenue | 1 | 124,033 | 143,452 |
Cost of sales | (80,408) | (93,246) | |
Gross profit | 43,625 | 50,206 | |
Operating expenses and income | (51,947) | (45,979) | |
Share of associate's (loss)/profit | (28) | 271 | |
Operating (loss)/profit | 1 | (8,350) | 4,498 |
Finance income | 3 | 51 | |
Finance costs | (1,532) | (1,586) | |
(Loss)/profit before income tax | (9,879) | 2,963 | |
Income tax expense | 3 | (744) | (1,108) |
(Loss)/profit from continuing operations | (10,623) | 1,855 | |
Profit on discontinued operation, net of tax | 45,729 | - | |
Profit for the financial year | 35,106 | 1,855 | |
Pence per share | Pence per share | ||
Earnings per share attributable to the equity holders of the company (note 4) | |||
- basic | 136.2p | 7.3p | |
- diluted | 136.2p | 7.0p | |
(Losses)/earnings per share for profit attributable to the equity holders of the company from continuing operations (note 4) | |||
- basic | (41.2)p | 7.3p | |
- diluted | (41.2)p | 7.0p | |
Avesco Group plc
Alternative Performance Measures (non-GAAP)For the year ended 30 September 2013
Year ended 30 September | |||||
2013 | 2012 | ||||
£000s | £000s | ||||
Operating (loss)/profit | (8,350) | 4,498 | |||
Adjusted to exclude: | |||||
Restructuring costs and compensation for loss of office | 4,845 | 2,458 | |||
Payments to LTIP holders and bonuses in connection with the Disney settlement | 3,298 | - | |||
Other non-recurring costs | 718 | 428 | |||
Trading profit | 511 | 7,384 | |||
Net finance costs | (1,529) | (1,535) | |||
Trading (loss)/profit after net finance costs | (1,018) | 5,849 | |||
Current tax credit/(charge) (note 3) | 566 | (346) | |||
Trading (loss)/profit after net finance costs and current tax expense | (452) | 5,503 | |||
Trading EBITDA (note 2) | 18,561 | 27,147 | |||
Adjusted (losses)/earnings per share (note 4) | Pence per share | Pence per share | |||
- basic | (1.8)p | 21.7p | |||
- diluted | (1.8)p | 20.8p | |||
Refer to note 9 for a full description of the alternative performance measures adopted by the Group.
Consolidated Statement of Comprehensive Income
For the year ended 30 September 2013
Year ended 30 September | |||
2013 | 2012 | ||
£000s | £000s | ||
Profit for the financial year | 35,106 | 1,855 | |
Other comprehensive income/(expense): | |||
Currency translation differences | 72 | (143) | |
Total comprehensive income for the year | 35,178 | 1,712 | |
Avesco Group plcConsolidated balance sheet
As at 30 September 2013
As at 30 September | |||
2013 | 2012 | ||
£000s | £000s | ||
Assets | |||
Non-current assets | |||
Property, plant and equipment | 55,822 | 61,786 | |
Intangible assets | 311 | 130 | |
Investment in associate | 143 | 271 | |
Deferred income tax assets | 5,219 | 6,707 | |
Trade and other receivables | 141 | 159 | |
61,636 | 69,053 | ||
Current assets | |||
Inventories | 1,353 | 1,794 | |
Trade and other receivables | 23,114 | 26,573 | |
Current income tax assets | 13 | 86 | |
Cash at bank and on hand | 43,699 | 4,345 | |
68,179 | 32,798 | ||
Total assets | 129,815 | 101,851 | |
Liabilities | |||
Non-current liabilities | |||
Borrowings and loans | 13,467 | 21,662 | |
Deferred income tax liabilities | 4,247 | 4,425 | |
Provisions for other liabilities and charges | 295 | 432 | |
18,009 | 26,519 | ||
Current liabilities | |||
Trade and other payables | 27,241 | 28,540 | |
Current income tax liabilities | 2,879 | 544 | |
Borrowings and loans | 7,895 | 7,448 | |
Provisions for other liabilities and charges | 592 | 189 | |
38,607 | 36,721 | ||
Total liabilities | 56,616 | 63,240 | |
Total assets less total liabilities | 73,199 | 38,611 | |
Equity | |||
Capital and reserves attributable to equity holders of the company | |||
Ordinary shares | 2,649 | 2,599 | |
Share premium | 23,286 | 23,286 | |
Translation reserve | 45 | (27) | |
Retained earnings | 47,219 | 12,753 | |
Total equity | 73,199 | 38,611 | |
Avesco Group plc
Consolidated Statement of Changes in Equity
For the year ended 30 September 2013
Share capital account | Share premium account | Translation reserves | Retained earnings | Total | |
£000s | £000s | £000s | £000s | £000s | |
Balance at 1 October 2012 | 2,599 | 23,286 | (27) | 12,753 | 38,611 |
Profit for the period | - | - | - | 35,106 | 35,106 |
Other comprehensive income, net of tax | - | - | 72 | - | 72 |
Total comprehensive income for the period | - | - | 72 | 35,106 | 35,178 |
Transactions with owners in their capacity as owners: | |||||
External dividends paid | - | - | - | (1,032) | (1,032) |
LTIP and share options | 50 | - | - | 392 | 442 |
Balance at 30 September 2013 | 2,649 | 23,286 | 45 | 47,219 | 73,199 |
Share capital account | Share premium account | Translation reserves | Retained earnings | Total | |
£000s | £000s | £000s | £000s | £000s | |
Balance at 1 October 2011 | 2,599 | 23,286 | 116 | 11,072 | 37,073 |
Profit for the period | - | - | - | 1,855 | 1,855 |
Other comprehensive expense, net of tax | - | - | (143) | - | (143) |
Total comprehensive (expense)/income for the period | - | - | (143) | 1,855 | 1,712 |
Transactions with owners in their capacity as owners: | |||||
External dividends paid | - | - | - | (761) | (761) |
LTIP and share options | - | - | - | 587 | 587 |
Balance at 30 September 2012 | 2,599 | 23,286 | (27) | 12,753 | 38,611 |
Avesco Group plcConsolidated cash flow statement
For the year ended 30 September 2013
Year ended 30 September | |||
2013 | 2012 | ||
£000s | £000s | ||
Cash flows from operating activities | |||
Cash generated from operations | 66,574 | 19,715 | |
Income tax paid | (1,157) | (466) | |
Net cash generated from operating activities | 65,417 | 19,249 | |
Cash flows from investing activities | |||
Purchases of property, plant and equipment and software | (16,061) | (32,539) | |
Proceeds from sale of property, plant and equipment | 637 | 1,831 | |
Proceeds from disposal of investments | - | 403 | |
Dividends from associate | 100 | - | |
Net cash used in investing activities | (15,324) | (30,305) | |
Cash flows from financing activities | |||
Net interest paid | (1,604) | (1,517) | |
Proceeds from external borrowings | 13,909 | 18,128 | |
Repayments of external borrowings | (22,162) | (8,258) | |
Dividends paid to Company's shareholders | (1,032) | (761) | |
Net cash (used in)/generated from financing activities | (10,889) | 7,592 | |
Cash used in discontinued operations | - | (247) | |
Net increase/(decrease) in cash and cash equivalents | 39,204 | (3,711) | |
Cash, cash equivalents and bank overdrafts at beginning of year | 4,116 | 7,501 | |
Exchange (losses)/gains on cash and bank overdrafts | (213) | 326 | |
Cash and cash equivalents at end of year | 43,107 | 4,116 | |
Avesco Group plc
Notes to the preliminary announcementFor the year ended 30 September 2013
1. Segmental information
Management has determined the operating segments based on the reports reviewed by the Board of Directors that are used to make strategic decisions.
The Board of Directors categorises Group companies based on the services they provide and as a result the business is split into four segments. These correspond to three operating segments (Creative Technology, Full Service and Broadcast Services) which together provide the Group's principal activity of services to the corporate presentation, entertainment and broadcast markets. In addition, the Group recognises a further segment, Head Office, which provides administrative support to the rest of the Group.
Creative Technology provides specialist AV services and equipment to the live events, broadcast and entertainment markets. The Full Service segment consists of companies which provide full technical support for conferences, sports, music, corporate and television programmes. Finally, the Broadcast Services segment provides broadcast equipment, systems and services to the broadcast industry.
The Board of Directors assesses performance of the operating segments based on trading profit (see note 9). As segmental performance does not therefore include finance costs and tax, such items are not allocated to segments.
The segmental results for the year ended 30 September 2013 are as follows:
Creative Technology | Full Service | Broadcast Services | Head Office | Group | |
£000s | £000s | £000s | £000s | £000s | |
Total segment revenue | 87,573 | 18,149 | 19,336 | - | 125,058 |
Inter segment revenue | (249) | (355) | (421) | - | (1,025) |
Revenue | 87,324 | 17,794 | 18,915 | - | 124,033 |
Trading EBITDA* | 14,057 | 1,544 | 2,895 | 65 | 18,561 |
Less depreciation | (12,053) | (1,003) | (4,875) | (13) | (17,944) |
Less amortisation | (74) | (12) | (20) | - | (106) |
Trading profit/(loss) | 1,930 | 529 | (2,000) | 52 | 511 |
Restructuring costs and compensation for loss of office | (901) | (86) | (3,820) | (38) | (4,845) |
Payments to LTIP holders and bonuses in connection with the Disney settlement | (1,401) | (380) | (272) | (1,245) | (3,298) |
Other non-recurring (costs)/credits | (868) | - | 150 | - | (718) |
Operating (loss)/profit | (1,240) | 63 | (5,942) | (1,231) | (8,350) |
Net finance costs | (1,529) | ||||
Loss before income tax | (9,879) | ||||
Income tax expense | (744) | ||||
Loss for the financial year from continuing operations | (10,623) |
\* Trading EBITDA includes profit on sale of property, plant and equipment of £405,000 for Creative Technology, £51,000 for Full Service and £322,000 for Broadcast Services.
The segmental results for the year ended 30 September 2012 are as follows:
Creative Technology | Full Service | Broadcast Services | Head Office | Group | |
£000s | £000s | £000s | £000s | £000s | |
Total segment revenue | 96,232 | 19,988 | 29,653 | - | 145,873 |
Inter segment revenue | (753) | (601) | (1,067) | - | (2,421) |
Revenue | 95,479 | 19,387 | 28,586 | - | 143,452 |
Trading EBITDA* | 17,512 | 1,874 | 8,238 | (477) | 27,147 |
Less depreciation | (12,932) | (787) | (5,914) | (12) | (19,645) |
Less amortisation | (54) | (32) | (31) | (1) | (118) |
Trading profit/(loss) | 4,526 | 1,055 | 2,293 | (490) | 7,384 |
Restructuring costs | (298) | (103) | (1,194) | (863) | (2,458) |
Other non-recurring costs | 7 | - | 10 | (445) | (428) |
Operating profit/(loss) | 4,235 | 952 | 1,109 | (1,798) | 4,498 |
Net finance costs | (1,535) | ||||
Profit before income tax | 2,963 | ||||
Income tax expense | (1,108) | ||||
Profit for the financial year from continuing operations | 1,855 |
* Trading EBITDA includes profit on sale of property, plant and equipment of £859,000 for Creative Technology, £21,000 for Full Service and £422,000 for Broadcast Services.
Inter-segment transactions are entered into under the normal commercial terms and conditions that would be available to unrelated third parties.
No single customer contributed revenues of greater than 5% of the Group's total revenue for 2013 or 2012.
The segmental assets and liabilities at 30 September 2013, external net debt at 30 September 2013 and capital expenditure cash flows for the year then ended are shown below.
Creative Technology | Full Service | Broadcast Services | Head Office | Unallocated | Group | ||
£000s | £000s | £000s | £000s | £000s | £000s | ||
Total assets | 60,346 | 8,499 | 31,658 | 24,080 | 5,232 | 129,815 | |
Non-current assets | 34,536 | 2,906 | 18,821 | 13 | 5,219 | 61,495 | |
Total liabilities | 26,323 | 3,645 | 7,392 | 12,130 | 7,126 | 56,616 | |
Capital expenditure | 11,609 | 1,510 | 2,942 | - | - | 16,061 | |
External net debt/(cash) | 2,019 | (1,476) | (3,136) | (19,744) | - | (22,337) |
Unallocated items relate to deferred tax and income tax. Non-current assets above does not agree to the balance sheet as it excludes non-current receivables.
The segmental assets and liabilities at 30 September 2012, external net debt at 30 September 2012 and capital expenditure cash flows for the year then ended are shown below.
Creative Technology | Full Service | Broadcast Services | Head Office | Unallocated | Group | ||
£000s | £000s | £000s | £000s | £000s | £000s | ||
Total assets | 62,127 | 8,456 | 34,662 | (10,187) | 6,793 | 101,851 | |
Non-current assets | 36,154 | 2,561 | 23,453 | 19 | 6,707 | 68,894 | |
Total liabilities | 29,081 | 3,805 | 10,081 | 15,304 | 4,969 | 63,240 | |
Capital expenditure | 26,069 | 1,629 | 4,840 | 1 | - | 32,539 | |
External net debt/(cash) | 5,371 | (1,968) | 613 | 20,749 | - | 24,765 |
Total assets in the 'Head Office' segment are shown as a credit balance primarily as a result of the offset arrangement the Group has with HSBC Bank plc. This is structured in such a way that every company in the pool is jointly and individually liable for the overdraft and, therefore, in practice the net position is applicable.
The Group's main business segments operate in four main geographical areas. Details of the segmental allocation of revenue can be found below.
2013 | 2012 | ||
£000s | £000s | ||
United Kingdom | 39,748 | 50,462 | |
Mainland Europe | 23,050 | 28,721 | |
United States of America | 46,444 | 43,705 | |
Rest of the World | 14,791 | 20,564 | |
124,033 | 143,452 |
2. Trading earnings before interest, taxation, depreciation and amortisation ('Trading EBITDA')
2013 | 2012 | ||
£000s | £000s | ||
Trading profit | 511 | 7,384 | |
Depreciation | 17,944 | 19,645 | |
Amortisation of software | 106 | 118 | |
Trading EBITDA | 18,561 | 27,147 |
Trading EBITDA is defined in note 9.
3. Income tax expense
2013 | 2012 | ||
£000s | £000s | ||
Current tax | |||
Current tax on profits for the year | (479) | 358 | |
Adjustments in respect of prior years | (87) | (12) | |
Total current tax | (566) | 346 | |
Deferred tax | |||
Origination and reversal of temporary differences | 1,046 | 515 | |
Impact of change in the UK tax rate | 264 | 247 | |
Total deferred tax | 1,310 | 762 | |
Income tax charge | 744 | 1,108 |
4. Earnings/(losses) per share
2013 | 2012 | |
£000s | £000s | |
Profit for the financial year | 35,106 | 1,855 |
Profit on discontinued operation, net of tax | (45,729) | - |
(Loss)/profit from continuing operations | (10,623) | 1,855 |
Restructuring costs and compensation for loss of office | 4,845 | 2,458 |
Payments to LTIP holders and bonuses in connection with the Disney settlement | 3,298 | - |
Other non-recurring costs | 718 | 428 |
Deferred tax charge | 1,310 | 762 |
Trading profit after net finance costs and current tax expense | (452) | 5,503 |
Weighted average number of shares (net of treasury shares) | ||
For basic earnings per share (000's) | 25,781 | 25,393 |
Effect of dilutive share options (000's) | 1,782 | 1,020 |
For diluted earnings per share (000's) | 27,563 | 26,413 |
Earnings/(losses) per share | ||
Basic | 136.2p | 7.3p |
Diluted | 136.2p | 7.0p |
Continuing operations basic | (41.2)p | 7.3p |
Continuing operations diluted | (41.2)p | 7.0p |
Adjusted basic | (1.8)p | 21.7p |
Adjusted diluted | (1.8)p | 20.8p |
Discontinued operations basic | 177.4p | 0.0p |
Discontinued operations diluted | 177.4p | 0.0p |
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 9.
5. Dividends
An interim dividend for the year ended 30 September 2013 of 1.0p per share amounting to a total of £259,000 was approved and was paid on 1 October 2013 to shareholders on the Register at 6.00pm on 4 September 2013.
A final dividend for the year ended 30 September 2013 of 4p per share has been proposed and, subject to shareholders' approval, will be paid on 7 April 2014 to shareholders on the register at the close of business on 14 March 2014.
A final dividend for the year ended 30 September 2012 of 3.0p per share amounting to a total of £778,000 was approved and was paid on 8 April 2013 to shareholders on the register at 6.00pm 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.
6. Analysis of net debt
At 1 October 2012 | Net cash flow | Other non cash changes | Currency translation differences | At 30 September 2013 | ||
£000s | £000s | £000s | £000s | £000s | ||
Cash at bank and in hand | 4,345 | 39,572 | - | (218) | 43,699 | |
Bank overdrafts | (229) | (368) | - | 5 | (592) | |
Net cash | 4,116 | 39,204 | - | (213) | 43,107 | |
Bank loans due in more than one year | (13,645) | 6,247 | - | (21) | (7,419) | |
HP obligations due in less than one year | (7,219) | 6,359 | (6,377) | (66) | (7,303) | |
HP obligations due in more than one year | (8,017) | (4,353) | 6,377 | (55) | (6,048) | |
Net (debt)/cash | (24,765) | 47,457 | - | (355) | 22,337 | |
At 1 October 2011 | Net cash flow | Other non cash changes | Currency translation differences | At 30 September 2012 | ||
£000s | £000s | £000s | £000s | £000s | ||
Cash at bank and in hand | 7,501 | (3,484) | - | 328 | 4,345 | |
Bank overdrafts | - | (227) | - | (2) | (229) | |
Net cash | 7,501 | (3,711) | - | 326 | 4,116 | |
Bank loans due in more than one year | (10,020) | (4,000) | - | 375 | (13,645) | |
HP obligations due in less than one year | (5,483) | 3,549 | (5,405) | 120 | (7,219) | |
HP obligations due in more than one year | (4,137) | (9,419) | 5,405 | 134 | (8,017) | |
Net (debt)/cash | (12,139) | (13,581) | - | 955 | (24,765) | |
Other non cash changes relate to the passage of time. | ||||||
7. Post balance sheet events
Following the year end and subject to shareholder approval, the Group is proposing to return £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"). The Return of Cash will provide for a payment to shareholders, to be made in or about the end of January 2014, equivalent to £1.10 for each ordinary share (£28.5m in total), either as a return of capital or by way of an income dividend.
The Company and Taya Communications Ltd ("Taya") entered into a Buy-back Agreement on 23 December 2013 pursuant to which and subject to shareholders' approval, the Company bought back from Taya 7,584,724 Ordinary Shares of the Company, out of Taya's total holding of 7,784,878 Ordinary Shares, at a price of 124p per ordinary share on 23 December 2013, leaving Taya holding a balance of 200,154 ordinary shares, representing 1.09% of the 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, less the amount of 110 pence (being the cash entitlement payable per Buy-back Share under the Return of Cash).
The impact of these transactions on the consolidated balance sheet as at 30 September 2013 is set out below:
Year Ended30 September 2013 | Impact ofreturn of cash* | Proforma after Return of Cash | Impact of Buy-back** | Final proforma | ||
£000s | £000s | £000s | £000s | £000s | ||
Non Current Assets | 61,636 | - | 61,636 | - | 61,636 | |
Current Assets | 24,480 | - | 24,480 | - | 24,480 | |
Current Liabilities | (30,712) | 2,052 | (28,660) | - | (28,660) | |
Non Current Liabilities | (4,542) | - | (4,542) | - | (4,542) | |
Net Debt | 22,337 | (30,599) | (8,262) | (9,850) | (18,112) | |
Net Assets/Equity | 73,199 | (28,547) | 44,652 | (9,850) | 34,802 | |
*the 30 September 2013 balance sheet has been adjusted for the final financial effects of the B/C share scheme. | ||||||
**the 30 September 2013 balance sheet has been adjusted for the final financial effects of the share Buy-back. | ||||||
8. Status of preliminary announcement
The financial information set out in this announcement for the year ended 30 September 2013 does not constitute the Group's statutory accounts as defined by s435 of the Companies Act but has been extracted from the 2013 statutory accounts on which an unqualified audit report has been made by the auditors, and which did not contain an emphasis of matter paragraph nor a statement under section 498(2) or (3) of the Companies Act 2006.
Statutory Accounts for the year ended 30 September 2012 have been delivered to the Registrar of Companies and the auditors' report on these accounts was unqualified and did not contain a statement under either Section 498(2) or (3) of the Companies Act 2006.
9. Basis of preparation
The preliminary results for the year ended 30 September 2013 have been prepared in accordance with the accounting policies set out in the annual report and accounts for the year ended 30 September 2012.
For the purposes of this preliminary announcement and the annual report and accounts, 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 the preliminary announcement:
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, 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 ('Trading EBITDA') is separately disclosed in note 2, 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.
10. Annual general meeting
The Annual General Meeting of the Company will be held at 10am on 6 March 2014 at Unit E2, Sussex Manor Business Park, Gatwick Road, Crawley, West Sussex, RH10 9NH.
11. Annual report and accounts
Copies of the full Statutory Accounts will be dispatched to shareholders in due course. Copies will also be available on the Company's website (www.avesco.com) and from the registered office of the Company: Unit E2, Sussex Manor Business Park, Gatwick Road, Crawley, West Sussex, RH10 9NH.