RNS Number:1265T
Avesco PLC
11 December 2003
Embargoed until 7.00 a.m.
11 December 2003
Avesco plc
Interim results
For the six months ended 30 September 2003
Avesco plc, the provider of specialist services to the corporate presentation,
entertainment and broadcast markets, today announces its interim results for the
six months ended 30 September 2003.
Highlights
* Group's profit before tax, goodwill and exceptional items, increased
to #421,000 (2002: #265,000).
* Complete Communications' operating profit increased to #1.3 million
from #0.7 million.
* Core Services positioned for growth in 2004.
* CT California produces operating profit against nearly #1 million loss
last interim period.
* Loss on ordinary activities before tax of #1.9 million, stated after
goodwill amortisation of #1.1 million, restructuring costs of
#1.0 million and #0.2 million loss on disposal of a business.
* Interim dividend maintained at 2.0p per share.
* Current net debt below #7 million compared to a peak two years ago of
over #26 million.
Richard Murray, Chairman of Avesco, commented:
"Despite the weakness in the European markets in the first half, the Board views
the future of Avesco's Core Services with confidence. The major US West Coast
and UK operations have been restructured to reduce the operating cost bases
substantially. We continue to invest in our sales teams and to build on our
reputation for excellent service. Next year sees some larger events being held
in Europe and if there is just a small upturn in our international markets on
the back of improving confidence in the USA, the Board feels that a significant
improvement can be achieved in the results of the Core Services."
" Complete Communications has again produced another strong set of results and
continues to invest in its business."
For further information, please contact:
David Nicholson, Chief Executive, Avesco plc Tel: 01293 583400
David Brocksom, Finance Director, Avesco plc Tel: 01293 583400
Analysis of results
Six months Six months
ended ended Year ended
30 September 30 September 31 March
2003 2002 2003
#'000 #'000 #'000
Turnover
Continuing activities 26,826 28,917 56,122
Discontinued activities 314 2,565 4,013
Total Group turnover 27,140 31,482 60,135
EBITDA on continuing operations before
exceptional items, losses/profits on disposals
of operation, and excluding Complete & Medal 4,847 5,453 10,162
Operating result*
Core Services continuing operations -
trading 90 872 1,036
Complete 1,336 668 2,687
Medal (23) - -
1,403 1,540 3,723
Central costs (614) (605) (1,257)
Continuing operations before operating
exceptional items 789 935 2,466
Discontinued operations - trading (153) (442) (618)
Operating exceptional items:
Restructuring and reorganisation costs (986) (47) (105)
Impairment of tangible fixed assets in outside
broadcast division - - (413)
Group operating result* (350) 446 1,330
Net interest (215) (228) (397)
(Loss)/profit on disposal of operations (235) 1,061 1,061
Goodwill amortisation (1,089) (2,776) (5,146)
(Loss) on ordinary activities before tax (1,889) (1,497) (3,152)
Net debt (9,993) (9,432) (10,279)
Adjusted earnings per share*# 2.5p 3.0p 9.0p
Dividends per share 2.0p 2.0p 5.0p
* Excluding goodwill amortisation
# For continuing operations, excluding operating exceptional items and losses/
profits on disposals of operations, and at a notional 30% tax rate
Chairman's statement
Since the end of this interim reporting period, Avesco announced on 26 November
2003 that we intend to move from the Official List of the UK Listing Authority
to the Alternative Investment Market ("AIM"). The move to AIM, which we expect
to become effective on 24 December 2003, will simplify our ongoing
administration and reporting requirements. In addition, we believe that the
lower costs of complying with the continuing obligations of AIM will benefit the
Group in the event that we wish to enter into corporate transactions in the
future.
Following the move to AIM, we have also announced that the Board is considering
the possibility of demerging the Group's core business of the provision of
specialist services to the corporate, presentation, entertainment and broadcast
markets ("Core Services") from the investments in our associates, Complete
Communications Corporation Limited ("Complete Communications"), owner of the
worldwide rights to "Who Wants To Be A Millionaire?", and Medal Entertainment
and Media plc ("MEM"), an AIM quoted media company. We expect to be able to
announce the Board's decision on the demerger following Avesco's admission to
AIM, although any demerger would be subject to prior approval by Avesco's
shareholders. If the Group does indeed decide to demerge, shareholders would
receive shares in each of two AIM quoted companies, one holding all of Avesco's
Core Services interests and the other holding the media investments. The
separation of these two diverse interests would allow each entity to focus on
and pursue strategies more appropriate to their respective businesses.
I can report a number of significant actions taken by Avesco which, although in
some cases impacting on the Group's immediate financial results, I believe pave
the way for its future development and growth.
In Core Services, we have successfully relocated three of our businesses spread
over four sites in the South East of England, together with Head Office, onto a
single site near Gatwick. This major restructuring will enable us to make
considerable cost savings as well as improve operational efficiency in the UK
market.
We have seen a substantial upturn in the financial performance of our US
business, moving from a significant trading loss in 2002/03 to a significant
trading profit. We have benefited from a number of actions taken in our West
Coast operation by the new management team and have successfully relocated the
principal operations to Los Angeles from San Francisco, where we have retained a
small but important sales presence.
In June 2003, the Group disposed of its Outside Broadcast business for between
#1.1 million and #1.4 million, depending on future performance, to complete our
planned exit from broadcast television facilities.
Financial
Overall, Avesco performed in line with expectations for the six months ended 30
September 2003, despite continuing difficult trading conditions for the Group's
Core Services in Europe including the UK, which were compensated for by the much
improved performance of the US business and by another strong set of results
from Complete Communications.
Avesco's turnover in its Core Services' continuing operations in the six months
to 30 September 2003 was #26.8 million (2002: #28.9 million). Earnings before
interest, tax, depreciation and amortisation (EBITDA) on Core Services'
continuing operations, before operating exceptional items and losses/profits on
disposals of operations decreased to #4.8 million (2002: #5.5 million) and the
operating loss for Core Services' continuing operations excluding goodwill
amortisation and operating exceptional items was #524,000 (2002: profit of
#267,000). Avesco's share of the operating profits of its associates was #1.3
million (2003: #0.7 million).
The Group profit before taxation excluding goodwill amortisation, operating
exceptional items and losses/profits on disposal of operations was #421,000
(2002: #265,000). The Group incurred restructuring costs of #986,000 largely
in respect of the relocation in the UK to Gatwick. A further #235,000 loss was
recorded on the disposal of our outside broadcast business.
Earnings per share, stated before goodwill amortisation, operating exceptional
items and losses/profits on disposal of operations and at a constant 30% tax
rate, were 2.5p (2002: 3.0p). Overall the Group recorded a loss before taxation
of #1.9 million (2002: loss of #1.5 million) after #1.1 million of goodwill
amortisation (2002: #2.8 million).
The Group's net debt at 30 September 2003 stood at #10.0 million (30 September
2002: #9.4 million) representing gearing of 36% (2002: 29%). Following
completion of the sale of our Chessington site at the end of November 2003 for
#1.4 million, our net debt has been reduced further since the reporting period
end and now stands at less than #7 million. Given that net debt peaked in
Autumn 2001 at over #26 million and given the difficult trading conditions we
have endured since, it is pleasing to report that our efforts to reduce net debt
substantially have been so successful, whilst still meeting the replacement
capital expenditure requirements of the business.
The directors have decided to maintain the interim dividend at 2.0p (2002: 2.0p)
per share as a sign of our confidence in the future of the businesses.
Prospects - Core Services
We are beginning to see signs of the general optimism in the US economy feeding
through into our businesses there. However, underlying demand is still
relatively weak in the UK, especially in Creative Technology, while the second
half appears to be substantially stronger than the first half in Europe,
although, as in all our businesses, our forward visibility remains very limited.
In broadcast services, we expect Presteigne to have a better than anticipated
year.
Despite the weakness in the European markets in the first half, the Board views
the future of Avesco's Core Services with confidence. The major US West Coast
and UK operations have been restructured to reduce the operating cost bases
substantially. We continue to invest in our sales teams and to build on our
reputation for excellent service. Next year sees some larger events being held
in Europe and if there is just a small upturn in our international markets on
the back of improving confidence in the USA, the Board feels that a significant
improvement can be achieved in the results of the Core Services.
Prospects - Associates
Complete Communications continues to invest in the development of the business
and on 1 October 2003 two new subsidiaries commenced trading, one specialising
in music and events programming, and the other in the creation and provision of
on-air software and computer systems.
Following the critical acclaim received from Complete Communications' first film
"Dirty Pretty Things", its second film is now in post production and will be
co-financed by Complete Communications and DNA Films Limited.
Complete Communications has several television programmes commissioned in the UK
for 2004, and a number of partnerships established in respect of international
representation.
MEM looks to continuing progress over the coming months and continues to seek
other opportunities to develop its business.
Conclusion
With the Board considering a possible demerger following the announcement of our
intention to move to AIM, we view the future of both our Core Services business
and our associate company investments with confidence.
Richard Murray
11 December 2003
Unaudited consolidated profit and loss account
For the six months ended 30 September 2003
Six months Six months
ended 30 ended 30 Year ended
September September 31 March
2003 2002 2003
#'000 #'000 #'000
Turnover
Group and share of associates' turnover 36,663 39,430 81,117
Less: share of associates' turnover (9,523) (7,948) (20,982)
Group turnover 27,140 31,482 60,135
Continuing operations 26,826 28,917 56,122
Discontinued operations 314 2,565 4,013
Group turnover 27,140 31,482 60,135
Operating (loss) / profit
Continuing operations (2,599) (2,556) (5,472)
Discontinued operations (153) (442) (1,031)
Group operating loss (2,752) (2,998) (6,503)
Share of associates' operating profit 1,313 668 2,687
Group and share of associates' operating loss (1,439) (2,330) (3,816)
(Loss) / profit on disposal of operations (235) 1,061 1,061
Loss on ordinary activities before interest and
taxation (1,674) (1,269) (2,755)
Net interest payable and similar items (215) (228) (397)
Loss on ordinary activities before taxation (1,889) (1,497) (3,152)
Taxation on ordinary activities (525) (204) (624)
Loss on ordinary activities after taxation (2,414) (1,701) (3,776)
Equity minority interest (2) - 20
Loss for the period (2,416) (1,701) (3,756)
Dividends (326) (326) (816)
Retained loss for the financial period (2,742) (2,027) (4,572)
(Losses) / earnings per share
Basic and diluted (14.8p) (10.4p) (23.0p)
Adjusted 2.5p 3.0p 9.0p
Adjusted earnings per share are stated before goodwill amortisation, operating
exceptional items, and losses/profits on disposals of operations and are in
respect of continuing operations only, at a notional 30% tax rate.
Unaudited consolidated balance sheet
As at 30 September 2003
30 September 30 September 31 March 2003
2003 2002 #'000
#'000 #'000
Intangible assets 3,948 7,626 4,998
Tangible assets 24,885 28,698 28,141
Investments in associates 5,259 4,067 4,067
Other investments - 1,500 1,472
Fixed assets 34,092 41,891 38,678
Stocks 851 838 698
Debtors 13,583 8,882 12,402
Cash 593 1,216 1,301
Current assets 15,027 10,936 14,401
Borrowings (8,293) (5,238) (6,446)
Other creditors (10,389) (9,031) (10,914)
Creditors: amounts falling due within
one year (18,682) (14,269) (17,360)
Net current liabilities (3,655) (3,333) (2,959)
Total assets less current liabilities 30,437 38,558 35,719
Borrowings (2,293) (5,410) (5,134)
Other creditors - - -
Creditors: amounts falling due after
more than one year (2,293) (5,410) (5,134)
Provisions for liabilities and charges (425) (231) -
Net assets 27,719 32,917 30,585
Share capital and share premium 32,901 32,901 32,901
Profit and loss account (5,182) 16 (2,316)
Equity shareholders' funds 27,719 32,917 30,585
Unaudited consolidated cash flow statement
For the six months ended 30 September 2003
Six months Six months
ended 30 ended 30 Year ended
September September 31 March
2003 2002 2003
#'000 #'000 #'000
Group operating loss (2,752) (2,998) (6,503)
Depreciation of tangible assets 5,558 5,755 11,261
Amortisation of intangible assets 1,089 2,776 5,146
Profit on sale of tangible assets (174) (188) (390)
Change in working capital (306) 3,740 1,553
Change in provisions (425) - -
Impairment of tangible fixed asset - - 413
Net cash flow from operating activities 2,990 9,085 11,480
Dividends from associates 487 25 1,514
Returns on investments and servicing of finance (324) (383) (619)
Taxation 67 369 831
Net cash flow before capital expenditure 3,220 9,096 13,206
Purchase of tangible assets (3,523) (5,658) (11,554)
Sale of tangible assets 942 2,785 3,781
Capital expenditure (2,581) (2,873) (7,773)
Acquisition of subsidiaries and businesses - (106) (106)
Disposal of subsidiaries and businesses - 5,135 5,135
Acquisitions and disposals - 5,029 5,029
Equity dividends paid (329) (2,109) (2,120)
Net cash flow before financing 310 9,143 8,342
Issue of share capital - - -
Issue of shares in subsidiaries to minority - - 20
interests
Change in bank loans 1,052 (5,042) (5,922)
Change in hire purchase obligations (2,057) (2,492) (2,329)
Financing (1,005) (7,534) (8,231)
Change in cash (695) 1,609 111
Net debt (9,993) (9,432) (10,279)
Unaudited consolidated statement of total recognised gains and losses
For the six months ended 30 September 2003
Six months Six months
ended 30 ended 30 Year ended
September September 31 March
2003 2002 2003
#'000 #'000 #'000
(Loss) for the period (2,416) (1,701) (3,756)
Currency translation differences before taxation (124) (252) (39)
Total recognised gains and losses relating to the
period (2,540) (1,953) (3,795)
Unaudited reconciliation of movements in equity shareholders' funds
For the six months ended 30 September 2003
Six months Six months
ended 30 ended 30 Year ended
September September 31 March
2003 2002 2003
#'000
#'000 #'000
(Loss) for the period (2,416) (1,701) (3,756)
Dividends (326) (326) (816)
Retained loss for the financial period (2,742) (2,027) (4,572)
Currency translation differences (124) (252) (39)
Net reduction in equity shareholders' funds (2,866) (2,279) (4,611)
Opening equity shareholders' funds 30,585 35,196 35,196
Closing equity shareholders' funds 27,719 32,917 30,585
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 the
auditors and their independent review report is set out below. The interim
report and accounts are not full accounts within the meaning of section 240 of
the Companies Act 1985.
The figures for the year ended 31 March 2003 have been extracted from the
audited annual report and accounts that have been filed with the Registrar of
Companies. The audit report on that annual report and accounts was unqualified
and did not contain a statement under Section 237(2) or (3) of the Companies Act
1985.
2. Accounting policies
The interim report and accounts have been prepared using the accounting policies
set out in the annual report and accounts for the year ended 31 March 2003. As
stated in those accounts, from April 2003, the investment in Medal Entertainment
and Media plc has been treated as an associate undertaking.
3. Discontinued operations
In June 2003 the Group disposed of its outside broadcast television business to
NMT Outside Broadcast (UK) Limited for a consideration of between #1.0 million
and #1.4 million depending on certain levels of business in the three years from
completion. The results of this operation, together with those of Fountain
Television Limited which was sold last year, have been classified as
discontinued operations in the profit and loss account.
4 Turnover by origin
30 September 30 September 31 March
2003 2002 2003
#'000 #'000 #'000
United Kingdom 10,420 13,419 25,274
Mainland Europe 4,556 3,436 6,682
United States of America 11,850 12,062 24,166
Continuing turnover 26,826 28,917 56,122
Discontinued turnover 314 2,565 4,013
Group turnover 27,140 31,482 60,135
Share of Complete 8,398 7,948 20,982
Share of Medal 1,125 - -
Total turnover 36,663 39,430 81,117
5 (Loss) on ordinary activities before taxation
30 September 30 September 31 March 2003
2003 2002 #'000
#'000 #'000
United Kingdom (1,091) 265 (123)
Mainland Europe 65 513 655
United States of America 502 (511) (753)
Continuing core services* (524) 267 (221)
Operating exceptional items (986) (47) (105)
Discontinued core services * (153) (442) (1,031)
Group operating (loss)* (1,663) (222) (1,357)
Complete 1,336 668 2,687
Medal (23) - -
Group and share of associates operating (350) 446 1,330
(loss) / profit*
(Loss) / profit on disposal of operation (235) 1,061 1,061
Goodwill amortisation (1,089) (2,776) (5,146)
Net interest payable (215) (228) (397)
Loss on ordinary activities before (1,889) (1,497) (3,152)
taxation
* Excluding goodwill amortisation
Head office costs of #614,000 (six months ended 30 September 2002: #605,000,
year ended 31 March 2003: #1,257,000) are included above within the figures for
the United Kingdom.
6 Operating exceptional items
Continuing Core Services operating losses above are stated after charging
#986,000 of restructuring costs (six months ended 30 September 2002: #47,000,
year ended 31 March 2003: #105,000) of which #425,000 represent the write off of
leasehold improvements.
7 Net debt
30 September 30 September 31 March 2003
2003 2002 #'000
#'000 #'000
Cash 593 1,216 1,301
Bank overdrafts (1,719) (151) (1,707)
(1,126) 1,065 (406)
Bank loans (4,032) (3,819) (2,986)
Hire purchase obligations (4,835) (6,678) (6,887)
Net debt (9,993) (9,432) (10,279)
8 (Losses) / earnings per share
Six months Six months
ended 30 ended 30 Year ended
September September 31 March
2003 2002 2003
#'000 #'000 #'000
Earnings
(Loss) for the period (2,416) (1,701) (3,756)
Discontinued operations excluding goodwill
amortisation 153 442 1,031
Operating exceptional items 986 47 105
Loss / (profit) on disposal of operation 235 (1,061) (1,061)
Goodwill amortisation 1,089 2,776 5,146
Notional 30% tax rate adjustment 353 (8) 3
Profit for the period excluding operating
exceptional items, losses/profits on disposals of
operations, goodwill amortisation and at a
notional 30% tax rate 400 495 1,468
Weighted average number of shares
For basic earnings per share 16,316 16,316 16,316
Effect of dilutive share options - 1 -
For diluted earnings per share 16,316 16,317 16,316
Adjusted earnings per share figures are stated before goodwill amortisation,
operating exceptional items and losses/profits on disposals of operations, and
are in respect of continuing operations only, at a notional 30% tax rate.
9 Interim dividend
The interim dividend of 2.0p per share (2002: 2.0 pence per share) will be paid
on 6 April 2004 to shareholders on the register at 5 March 2004.
10 Distribution of interim report and accounts
Copies of the interim report and accounts are being sent to all shareholders and
additional copies are available either from the Company's web site
(www.avesco.com) or from the Company's registered office:
Avesco plc
E2, Sussex Manor Business Park
Gatwick Road, Crawley
West Sussex RH10 9NH
Telephone: +44 (0) 1293 583 400
Fax: +44 (0) 1293 583 410
E-mail: mail@avesco.co.uk
Independent review report by KPMG Audit Plc to Avesco plc
Introduction
We have been engaged by the company to review the financial information set out
above and we have read the other information contained in the interim report and
considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.
This report is made solely to the company in accordance with the terms of our
engagement to assist the company in meeting the requirements of the Listing
Rules of the Financial Services Authority. Our review has been undertaken so
that we might state to the company those matters we are required to state to it
in this report and for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone other than the company
for our review work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules which require that the accounting policies and presentation applied to the
interim figures should be consistent with those applied in preparing the
preceding annual accounts except where they are to be changed in the next annual
accounts in which case any changes, and the reasons for them, are to be
disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/
4: Review of interim financial information issued by the Auditing Practices
Board for use in the United Kingdom. A review consists principally of making
enquiries of group management and applying analytical procedures to the
financial information and underlying financial data and, based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review is substantially less
in scope than an audit performed in accordance with Auditing Standards and
therefore provides a lower level of assurance than an audit. Accordingly we do
not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 September 2003.
KPMG Audit Plc
Chartered Accountants
Crawley
11 December 2003
This information is provided by RNS
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