24th Nov 2005 07:01
Avesco PLC24 November 2005 EMBARGOED UNTIL 7.00am, 24 November 2005 AVESCO plc INTERIM RESULTS Avesco plc, the international provider of services to the corporatepresentation, entertainment and broadcast markets, announces its interim resultsfor the half year ended 30 September 2005. KEY HIGHLIGHTS • Group turnover was £29.1m (2004: £28.1m) • Pre-tax loss of £0.8m (2004: loss £0.1m) • Loss per share of 5p (2004: loss 1.3p) • New operations opened in Las Vegas and Cologne • Share placing raised £2.4m net in July • £7m of new equipment purchased in the period • Net debt reduced to £6.3m (2004: £7.9m) Ian Martin, Chairman, commented: "The results for the half year are comfortably in line with the Board'sexpectations. The small loss reflects the start up costs of new operations andthe absence of major international events in the period compared to 2004 whenevents such as the Olympics and European Football Championships were staged. "We have achieved strong progress with operational improvements and madesignificant investments in state of the art equipment, particularly in the areaof High Definition Television. We now have a portfolio of flourishing businessesto capitalise on the numerous growth opportunities that are presentingthemselves. "Prospects for the second half of the year are encouraging and we are wellplaced to take advantage of a number of forthcoming major events such as theWinter Olympics in Turin and the West Asian Games. Overall, at no other timesince I became involved with Avesco have I seen as much opportunity for theGroup as I can see today". For further information please contact Ian Martin, Chairman, Avesco plc Tel: 020 7067 0700 orJohn Christmas, Group Finance Director, Avesco plc Tel: 01293 583400 Terry Garrett, Alex White, John MoriartyWeber Shandwick Square Mile Tel: 020 7067 0700 Chairman's statement The results of the Avesco Group for the half year ended 30 September 2005 arecomfortably in line with the Board's expectations, the small loss reflecting thestart up costs of new operations and the absence of major international eventsin the period. The Group continues to make operational improvements, to deliveragainst financial targets and to drive forward its growth strategy. We have agood spread of flourishing business opportunities throughout the Group - it is atime of great activity for Avesco. Results The unaudited interim results for the six months ended 30 September 2005 sawturnover rise slightly to £29.1m (2004: £28.1m) producing a pre-tax loss of£0.8m (2004: loss of £0.1m) and operating profits before exceptional items andgoodwill amortisation of £0.2m (2004: £1.0m). After taking account ofexceptional items, goodwill amortisation, interest and tax, the loss for theperiod was £0.9m (2004: loss of £0.2m). This equates to a basic loss per shareof 5.0p (2004: loss 1.3p). The results include the dividend declared at the endof the last financial year and approved at the Annual General Meeting held inSeptember 2005. No interim dividend is proposed. The first half year included the start up costs of the Group's new operations inLas Vegas (CT Las Vegas) and Cologne (Presteigne Germany). In addition, thesummer was, as we anticipated, quieter than the comparative period with theabsence of high profile international events of comparable stature to theOlympics and the European Football Championships held in 2004. The slightreduction in operating margins to 35.2% (2004: 36.7%) was, in part, due toextremely aggressive pricing by some of our competitors over the quiet summer. Net debt reduced to £6.3m (2004: £7.9m) mainly as a result of the share placingin July 2005, which raised £2.4m net of expenses. Although this new fundingremained largely unspent at the end of the period, £7m of equipment waspurchased in the six months. The share placing, together with the expansion ofour banking facilities, gives the Group the financial strength to pursue itsgrowth orientated strategy while still maintaining a prudent financialstructure. Market Overview Although market conditions remain competitive, activity levels are encouragingas clients show signs of increasing the size and scope of future events. Our strategy for some time has been to build our business to counteract thecyclicality, volatility and vagaries of any one individual market resulting in amore resilient Group. Underneath the headline numbers we have made strongprogress in the first half year to position the Group to capitalise on thenumerous growth opportunities that are presenting themselves. Review of Operations Whilst the overall performance matched expectations, there were some changes tothe geographical spread in the first half of the financial year, when comparedto 2004.Following a good start to the year, our North American operations experienced aquiet summer, which was reflective of the US market in general, although theChicago operation continued to advance and delivered a much improvedperformance. The results for the first six months were also impacted by thestart up costs of our new Las Vegas office and some management changes inCalifornia. However, we believe that these developments will create greatervalue in the longer term. The US business has a record order book alreadyconfirmed for its key month of January and we look forward to an upturn inmomentum in the second half of the year. Our UK operations increased both profits and turnover. The major driving forcewas CT London which produced an outstanding performance. The management team'sambition is to create the highest quality staging company; they understand whatthat takes and have established a team culture that delivers. The MCL group of businesses produced a satisfactory result overall, with astrong performance from Manchester, Edinburgh and NEC. The revitalised Glasgowoperation continued to make progress but Birmingham was quieter in comparison tolast year, as a road show for a major client came to an end. Presteigne is developing its business on several fronts. It has established anew systems business in Broadcast Services, opened its first overseas office inCologne and begun a significant investment in High Definition Television (HDTV)equipment. We have stated previously that we see the technology shift to HDTV asan exciting opportunity for the Group. The recent announcements by the BBC andSky only reinforce our commitment to the technology. It is difficult to predictprecisely the speed of take up and development of HDTV but the calendar year2006 looks particularly promising for Presteigne, with a positive impactexpected from events such as the FIFA World Cup and the Winter Olympics inTurin. Presteigne is a notable area of focus and activity for the Group, as weseek to execute an aggressive growth plan and to broaden the business. The mainland European businesses as a whole performed in line with ourexpectations. Our businesses in France (Action) and Holland (JVR) ended theperiod slightly below budget and CT Germany ahead, the latter reflecting theimprovements management have made to that business. Europe continues to be aregion which we believe offers much potential and we now have a wonderfulplatform from which to develop. Current Trading Prospects for trading in the second half of the financial year remainencouraging and, providing the local economies in which we operate remainsteady, we fully expect the Group overall to continue to perform in line withexpectations for the rest of the year. However, we have some key months to comein the second half which should incorporate some exciting but technicallyadvanced projects. We do not expect any change in the current market trend ofincreasing activity set against a highly competitive environment and our normallimited visibility in the order book. The Group's capital investment programme is expected to lead to improvedprofitability by reducing our reliance on sub hired equipment and by opening upnew business opportunities with clients attracted by our ownership of thelatest, state of the art equipment, in particular in the area of HDTV. Theinvestment to support our Auto show clients has already started to benefit theGroup with a solid order book for the major shows taking place in the next fewmonths. Presteigne is anticipating significant business from a number of majorevents in the second half and by the end of the financial year we expect to seethe beginnings of positive contributions from CT Las Vegas and PresteigneGermany. Conclusion We remain committed to pursuing growth across the Group's portfolio ofbusinesses. In addition to our substantial capital investment programme andgeographic expansion, the Group regularly reviews a number of other organic andsmall acquisition opportunities. The business is only as good as its people and it is highly satisfactory to beable to report the addition of a number of very high quality individuals overthe last six months. They have joined what we all believe to be a business onthe threshold of a new era. We are confident that our strategy will deliver enhanced returns and that wehave started the process of growing and transforming Avesco over the longer terminto a broadly based media services group. Since my first involvement withAvesco, I have not seen as much opportunity as I see today. Our successfulcapital raising in July has added further strength to our balance sheet andenabled the Group to invest in equipment and offices that we believe will be keydrivers to our future growth. I believe that we are now extremely well placed totake advantage of the opportunities that have been created. Ian MartinChairman24 November 2005 Unaudited consolidated profit and loss accountFor the six months ended 30 September 2005 Six months ended 30 September 2005 Six months ended 30 September 2004 (restated*) __________________________________________________________________________ Before Before exceptional Exceptional exceptional Exceptional items and items and items and items and goodwill goodwill goodwill goodwill amortisation amortisation Total amortisation amortisation Total £'000 £'000 £'000 £'000 £'000 £'000__________________________________________________________________________________________ Turnover 29,058 - 29,058 28,108 - 28,108Cost of sales (18,839) - (18,839) (17,805) - (17,805)__________________________________________________________________________________________Gross Profit 10,219 - 10,219 10,303 - 10,303 Operating expenses (9,990) (729) (10,719) (9,278) (862) (10,140)__________________________________________________________________________________________Operating profit /(loss) 229 (729) (500) 1,025 (862) 163 (Loss) / profit on disposal of fixed assets (43) -__________________________________________________________________________________________(Loss) / profit on ordinary activities before interest and taxation (543) 163Net interest payable and similar items (218) (257)__________________________________________________________________________________________(Loss) / profit on ordinary activities before taxation (761) (94)Taxation on ordinary activities (106) (113)__________________________________________________________________________________________(Loss) / profit on ordinary activities after taxation (867) (207)Equity minority interest - (2)__________________________________________________________________________________________(Loss) / profit for the financial period (867) (209)Dividends (190) -__________________________________________________________________________________________(Loss) / retained profit for the financial period (1,057) (209)__________________________________________________________________________________________ (Losses) / Earnings per shareBasic and diluted (5.0)p (1.3)p__________________________________________________________________________________________ All turnover and operating profit relates to continuing operations. *September 2004 has been restated to reflect a reclassification of costs from operating expenses to cost of sales. All other figures in 2004, including the operating profit/(loss), remain unaltered. Consolidated profit and loss accountFor the year ended 31 March 2005 Year ended 31 March 2005 (restated**) ______________________________________________ Before exceptional Exceptional items and items and goodwill goodwill amortisation amortisation Total £'000 £'000 £'000________________________________________________________________________________ Turnover 58,867 - 58,867Cost of sales (37,971) - (37,971)________________________________________________________________________________Gross Profit 20,896 - 20,896 Operating expenses (18,771) (1,884) (20,655)________________________________________________________________________________Operating profit / (loss) 2,125 (1,884) 241 (Loss) / profit on disposal of fixed assets 767________________________________________________________________________________(Loss) / profit on ordinary activities before interest and taxation 1,008Net interest payable and similar items (526)________________________________________________________________________________(Loss) / profit on ordinary activities before taxation 482Taxation on ordinary activities (110)________________________________________________________________________________(Loss) / profit on ordinary activities after taxation 372Equity minority interest (2)________________________________________________________________________________(Loss) / profit for the financial period 370Dividends -________________________________________________________________________________(Loss) / retained profit for the financial period 370________________________________________________________________________________ (Losses) / Earnings per shareBasic and diluted 2.3p________________________________________________________________________________ All turnover and operating profit relates to continuing operations. **March 2005 has been restated to reallocate the proposed dividend into the current period (see Note 2 for further details). Unaudited consolidated balance sheetAs at 30 September 2005 30 September 30 September 31 March 2005 2004 2005 £'000 £'000 (restated*) £'000________________________________________________________________________________ Intangible assets 781 2,233 1,507Tangible assets 25,872 23,404 21,646________________________________________________________________________________Fixed assets 26,653 25,637 23,153 Stocks 1,472 824 918Debtors 11,339 9,417 13,869Cash 4,262 770 1,147________________________________________________________________________________Current assets 17,073 11,011 15,934 Borrowings (3,097) (2,342) (2,821)Other creditors (13,883) (10,527) (12,357)________________________________________________________________________________Creditors: amounts falling due within one year (16,980) (12,869) (15,178)________________________________________________________________________________Net current assets / (liabilities) 93 (1,858) 756________________________________________________________________________________Total assets less current liabilities 26,746 23,779 23,909 Borrowings (7,425) (6,305) (6,157)________________________________________________________________________________Creditors: amounts falling due after more than one year (7,425) (6,305) (6,157) Provisions for liabilities and charges (1,001) (1,295) (1,078)________________________________________________________________________________Net assets 18,320 16,179 16,674________________________________________________________________________________ Share capital 1,909 1,632 1,632Share premium 2,106 - -Capital redemption reserve 50 50 50Other reserve 29,551 29,551 29,551Profit and loss account (15,296) (15,054) (14,559)________________________________________________________________________________Equity shareholders' funds 18,320 16,179 16,674________________________________________________________________________________ *March 2005 has been restated to reallocate the proposed dividend into the current period (see Note 2 for further details). Unaudited consolidated cash flow statementFor the six months ended 30 September 2005 Six months Six months ended ended Year ended 30 September 30 September 31 March 2005 2004 2005 £'000 £'000 £'000________________________________________________________________________________ Group operating (loss) / profit (500) 163 241Depreciation of tangible assets 4,621 4,576 9,049Amortisation of intangible assets 729 721 1,452LTIP charge 126 80 156Profit on sale of tangible assets (202) (92) (333)Change in working capital 638 1,448 (452)Change in provisions (77) (174) (391)Impairment of tangible fixed asset - - 129________________________________________________________________________________Net cash flow from operating activities 5,335 6,722 9,851 Returns on investments and servicing of finance (218) (257) (526)Taxation (59) (53) (74)________________________________________________________________________________Net cash flow before capital expenditure 5,058 6,412 9,251 Purchase of tangible assets (7,033) (6,201) (10,679)Sale of tangible assets 1,239 194 1,914________________________________________________________________________________Capital expenditure (5,794) (6,007) (8,765)________________________________________________________________________________Net cash flow before financing (736) 405 486 Issue of ordinary shares 2,383 - -Change in bank loans 1,585 - 9Change in hire purchase obligations (589) (272) (334)________________________________________________________________________________Financing 3,379 (272) (325)________________________________________________________________________________Change in cash 2,643 133 161________________________________________________________________________________ Net debt: Cash 4,262 770 1,147Bank overdrafts (982) (157) (539)________________________________________________________________________________ 3,280 613 608 Bank loans (5,702) (4,000) (4,009)Hire purchase obligations (3,838) (4,490) (4,430)________________________________________________________________________________Net debt (6,260) (7,877) (7,831)________________________________________________________________________________ Unaudited consolidated statement of total recognised gains and lossesFor the six months ended 30 September 2005 Six months Six months ended ended Year ended 30 September 30 September 31 March 2005 2004 2005 £'000 £'000 £'000________________________________________________________________________________ (Loss) / profit for the period (867) (209) 370 Currency translation differences 194 162 2________________________________________________________________________________Total recognised gains and losses relating to the period (673) (47) 372________________________________________________________________________________ Unaudited reconciliation of movements in equity shareholders' fundsFor the six months ended 30 September 2005 Six months Six months ended ended Year ended 30 September 30 September 31 March 2005 2004 2005 (restated*) £'000 £'000 £'000________________________________________________________________________________ (Loss) / profit for the period (867) (209) 370 Dividends (190) - -________________________________________________________________________________(Loss) / profit for the financial period (1,057) (209) 370 Proceeds of ordinary shares issued for cash 2,383 - -Currency translation differences 194 162 2LTIP 126 80 156________________________________________________________________________________Net change in equity shareholders' funds 1,646 33 528 Opening equity shareholders' funds 16,674 16,146 16,146________________________________________________________________________________Closing equity shareholders' funds 18,320 16,179 16,674________________________________________________________________________________ *March 2005 has been restated to reallocate the proposed dividend into the current period (see Note 2 for further details). 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 13. The interimreport and accounts are not full accounts within the meaning of section 240 ofthe Companies Act 1985. The figures for the year ended 31 March 2005 have been extracted from theaudited annual report and accounts that have been filed with the Registrar ofCompanies. The audit report on that annual report and accounts was unqualifiedand did not contain a statement under Section 237(2) or (3) of the Companies Act1985. 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 31 March2006. These are consistent with those included in the annual report and accountsfor the year ended 31 March 2005 with the following exceptions. Since the yearend FRS 21 "Events after the balance sheet date" has been adopted. This resultedin the March 2005 year end accounts being restated to remove the £163,000proposed dividend from the profit and loss account and the other creditors linein the balance sheet. This dividend has now been recognised in the currentperiod since shareholder approval was obtained on 8 September 2005. The finalvalue of the dividend was £190,000 as the new shares issued post year end inJuly 2005 are fully entitled to the dividend. FRS 22 "Earnings per share" wasalso adopted and has not had a material impact on the results in the current orprior periods but requires adjusted earnings per share to be disclosed in thenotes to the accounts rather than on the face of the profit and loss account(see Note 7). 3 (Loss) / profit on sale of fixed assets On 5 July 2005 NMT Outside Broadcast (UK) Limited completed the exercise of itsoption to purchase the fixed assets of a Group company for a consideration of£433,000. This created a loss on disposal of £43,000. On 15 March 2005 the Group completed the sale of its freehold premises in NewMalden, Surrey, for a consideration of £1,600,000 realising a profit on disposalof £767,000. Cash of £1,200,000 was received on completion with £400,000 beingdeferred until the first anniversary of completion. 4 Turnover by origin Six months Six months ended ended Year ended 30 September 30 September 31 March 2005 2004 2005 £'000 £'000 £'000________________________________________________________________________________ United Kingdom 13,047 11,754 23,420Mainland Europe 6,442 5,685 12,561United States of America 9,569 10,669 22,886________________________________________________________________________________Group turnover 29,058 28,108 58,867________________________________________________________________________________ 5 (Loss) / profit on ordinary activities before taxation by origin Excluding exceptional items and goodwill amortisation Six months Six months ended ended Year ended 30 September 30 September 31 March 2005 2004 2005 £'000 £'000 £'000________________________________________________________________________________ United Kingdom 373 (69) 860Mainland Europe 238 560 270United States ofAmerica (382) 534 995________________________________________________________________________________Group operating profit 229 1,025 2,125________________________________________________________________________________ Including exceptional items and goodwill amortisation Six months Six months ended ended Year ended 30 September 30 September 31 March 2005 2004 2005 £'000 £'000 £'000________________________________________________________________________________ United Kingdom (37) (578) (309)Mainland Europe (81) 212 (436)United States of America (382) 529 986________________________________________________________________________________Group operating (loss)/ profit (500) 163 241Non-operating exceptional items (43) - 767Net interest payable and similar items (218) (257) (526)________________________________________________________________________________(Loss) / profit on ordinary activities before taxation (761) (94) 482________________________________________________________________________________ 6 (Loss) / profit on disposal of fixed assets, exceptional charges and goodwill amortisation Six months Six months ended ended Year ended 30 September 30 September 31 March 2005 2004 2005 £'000 £'000 £'000________________________________________________________________________________ Restructuring and reorganisation - (14) (109)costsDemerger costs - - 10Relocation and onerous lease costs - (127) (291)Aborted acquisition costs - - (42)________________________________________________________________________________Operating exceptional items - (141) (432)Goodwill amortisation (729) (721) (1,452)________________________________________________________________________________Total operating exceptional charges and goodwill amortisation (729) (862) (1,884)________________________________________________________________________________(Loss) / profit on disposal of fixed assets (43) - 767________________________________________________________________________________Total non-operating exceptional items (43) - 767________________________________________________________________________________ 7 (Losses) / earnings per share Six months Six months ended ended Year ended 30 September 30 September 31 March 2005 2004 2005 (restated*) £'000 £'000 £'000________________________________________________________________________________(Losses) / earnings(Loss) / profit for the period (867) (209) 370Operating exceptional items - 141 432Non-operating exceptional items 43 - (767)Goodwill amortisation 729 721 1,452Notional 30% tax rate adjustment 106 (117) (391)________________________________________________________________________________Adjusted earnings 11 536 1,096________________________________________________________________________________ Weighted average number of sharesFor basic and diluted earningsper share (000's) 17,318 16,316 16,316 (Losses) / earnings per shareBasic and diluted (5.0)p (1.3)p 2.3pAdjusted 0.1p 3.3p 6.7p Basic (losses) / earnings per share have been calculated by dividing (loss) /profit after taxation and minority interests by the weighted average number ofordinary shares in issue during the period. Adjusted earnings per share have been calculated by dividing (loss) / profitafter taxation and minority interests in respect of continuing operations andexcluding goodwill amortisation and exceptional items, by the weighted averagenumber of ordinary shares in issue during the period. A notional tax rate of 30%is applied to the adjusted profit for each period. *September 2004 has been restated to remove the adjustment for the LTIP charge from the calculation of adjusted earnings per share. 8 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 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:[email protected] Independent review report to Avesco plc Introduction We have been instructed by the company to review the financial information forthe six months ended 30 September 2005 which comprises the summarised profit andloss account, statement of recognised gains and losses, summarised balance sheetinformation as at 30 September 2005, summarised cash flow statement and therelated notes. We have read the other information contained in the interimreport and considered whether it contains any apparent misstatements or materialinconsistencies with the financial information. Directors' responsibilities The 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 rules.The accounting policies are consistent with those that the directors intend touse in the preparation of the next annual financial statements.The maintenance and integrity of the Avesco plc web site is the responsibilityof the directors; the work carried out by the auditors does not involveconsideration 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 performed We 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 group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the disclosed accounting policies havebeen applied. A review excludes audit procedures such as tests of controls andverification of assets, liabilities and transactions. It is substantially lessin scope than an audit and therefore provides a lower level of assurance.Accordingly we do not express an audit opinion on the financial information.This report, including the conclusion, has been prepared for and only for thecompany for the purpose of compliance with the AIM rules and for no otherpurpose. We do not, in producing this report, accept or assume responsibilityfor any other purpose or to any other person to whom this report is shown orinto whose hands it may come save where expressly agreed by our prior consent inwriting Review conclusion On 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 30 September 2005. PricewaterhouseCoopers LLPChartered AccountantsGatwick24 November 2005 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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