AVESCO GROUP plc RESULTS FOR THE SIX MONTHS ENDED 31

AVESCO GROUP plc
RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2015
Avesco Group plc (AIM: AVS), a leading international provider of services to the corporate
presentation, entertainment and broadcast markets, announces its results for the six months
ended 31 March 2015.
KEY HIGHLIGHTS FOR THE SIX MONTHS TO 31 MARCH 2015

Revenues increased to £66.0m (six months ended 31 March 2014: £65.4m)

Operating profit increased to £5.5m (six months ended 31 March 2014: loss of £0.5m)

Trading profit increased to £5.5m (six months ended 31 March 2014: £4.7m)*

Trading EBITDA up 9% to £14.6m (six months ended 31 March 2014: £13.5m)*

Profit before tax of £4.6m (six months ended 31 March 2014: loss of £1.1m)

Basic earnings per share from continuing operations of 13.3p (six months ended 31 March
2014: loss per share of 12.4p)

Trading ahead of plan with full year results likely to exceed the Board’s prior expectations

Interim dividend increased by a third to 2.0p (six months ended 31 March 2014: 1.5p)
* As described in note 3, the Group uses certain non-GAAP alternative measures to assess
underlying operating performance.
Richard Murray, Chairman, commented:
“I am delighted to be able to report another strong performance from the Avesco Group, with
Interim trading profits for the six month period to 31 March 2015 at their highest levels since 2001
(when the Group still maintained an interest in “Who Wants To Be A Millionaire?”). The main
drivers behind the successful first half of the year were a continuation of the previous excellent
results from our Creative Technology (“CT”) division in the US and the virtual elimination of trading
losses in our CT business in Germany.
The outlook for the final six months of the financial year is just as encouraging, with the inaugural
edition of the European Games expected to generate significant income for the Group.
As a result the full year results are again likely to exceed the Board’s prior expectations. With
continuing forward momentum in the businesses, we are able to maintain our focus on increasing
profitability, generating cash and growing dividends.”
For further information please contact:
Avesco Group plc
Richard Murray, Chairman
John Christmas, Group Finance Director
01293 583400
finnCap
Julian Blunt/Scott Mathieson, Corporate Finance
Malar Velaigam, Corporate Broking
020 7220 0500
Chairman’s Statement
I am delighted to be able to report another strong performance from the Avesco Group, with
Interim trading profits for the six month period to 31 March 2015 at their highest levels since 2001
(when the Group still maintained an interest in “Who Wants To Be A Millionaire?”). The main
drivers behind the successful first half of the year were a continuation of the previous excellent
results from our Creative Technology (“CT”) division in the US and the virtual elimination of trading
losses in our CT business in Germany.
Results
Revenue in the six months ended 31 March 2015 saw a small increase to £66.0m (six months
ended 31 March 2014: £65.4m). This increase in revenue was achieved despite the scaling down
of our restructured businesses and the lack of any major events in the period (the six months to 31
March 2014 benefited from revenues associated with the Winter Olympics in Sochi).
With the Group’s restructuring programme largely complete, the operating profit for the six months
ended 31 March 2015 of £5.5m (six months ended 31 March 2014: £0.5m loss) included no
exceptional items. The six months ended 31 March 2014 included £5.2m of such charges, the vast
majority of which related to the restructuring of our CT business in Germany.
Trading profits (which exclude restructuring costs, compensation for loss of office, payments to
LTIP holders and bonuses in connection with the Disney litigation receipt, and other non-recurring
costs) for the six months ended 31 March 2015 were, therefore, the same as the operating profit of
£5.5m, representing a 17% improvement on the same period last year (six months ended 31
March 2014: £4.7m).
The basic earnings per share from continuing operations increased to 13.3p (six months ended 31
March 2014: loss per share of 12.4p).
Our main trading division, CT, saw revenues grow by £2.0m to £51.6m (six months ended 31
March 2014: £49.6m) and trading profit by £2.2m to £5.5m (six months ended 31 March 2014:
£3.3m). CTUS again provided the bulk of CT’s profits, growing revenue by 14% in the process,
and there were good performances from CT in the Middle East and in Spain. CT Asia Pacific,
however, continues to struggle, and our objective of getting that business to breakeven is likely to
take longer than anticipated. It was especially pleasing to note the turnaround at CT Germany
where we have largely eliminated the significant losses and de-risked the business by reducing
fixed costs.
In mclcreate, our full service business, higher revenue of £7.9m (six months ended 31 March
2014: £7.4m) and an improved margin enabled trading profits to grow to £0.6m (six months ended
31 March 2014: £0.2m), with the Scottish branches performing particularly well.
In our Broadcast Services division, Presteigne Broadcast Hire’s profits benefitted last year from
the disposal of a significant quantity of equipment as the company sought to reposition itself away
from the projects side of its business and to focus much more on dry hire work. With Fountain
Studios, the other business in the division, having just a steady opening period, overall revenue
dipped to £6.8m (six months ended 31 March 2014: £8.8m) although last year included revenue
from the overseas Presteigne businesses that were closed prior to the current year. The divisional
trading profit reduced to a loss of £0.4m (six months ended 31 March 2014: £0.8m profit).
Taxation continues to be relatively significant, with an effective rate of 45% as high taxable profits
earned in the US (which are taxed at around 40%) cannot be offset against taxable losses
elsewhere in the world. As our US profits have increased, so there has been an increase in our
total tax charge to £2.1m for the six months ended 31 March 2015 (six months ended 31 March
2014: £1.9m).
There is normally a modest debt outflow in the first half year as we invest in new equipment and
this year is no different. However net debt of £25.1m as at 31 March 2015 (31 March 2014:
£21.7m) remains comfortably covered by trading EBITDA of £26.5m for the 12 months to 31
March 2015. Net investment in fixed assets during the first half year was £10.1m (six months
ended 31 March 2014: £7.4m), with over 80% of the funds going to support CT in the US.
As at 31 March 2015, the net assets of the Group were £34.3m (31 March 2014: £31.5m) or £1.80
per share (31 March 2014: £1.67 per share).
As a sign of the Board’s confidence in the outcome for the current year, we are again increasing
the interim dividend, this time to 2.0p per share (2014: 1.5p per share). This payment will be made
on 1 October 2015 to shareholders on the register on 4 September 2015 and the shares will be
quoted ex dividend from 3 September 2015
Outlook
Trading in the six months to 31 March 2015 has exceeded our expectations and the outlook for the
final six months of the financial year is just as encouraging, with the inaugural edition of the
European Games (scheduled to be held in Baku, Azerbaijan in June) expected to generate
significant income for CT London and the Group. The restructuring measures that we took last
year have also enabled us to produce a more stable and less volatile set of trading results, closing
the gap in performance previously seen between the odd and even years.
As a result of the improved outlook and trading, the full year results are again likely to exceed the
Board’s prior expectations. With continuing forward momentum in the businesses, we are able to
maintain our focus on increasing profitability, generating cash and growing dividends.
Richard Murray
June 2015
Unaudited condensed consolidated income statement
For the six months ended 31 March 2015
Six months ended 31 March
2015
2014
£000s
£000s
Year ended
30 September
2014
£000s
Continuing operations
Revenue
Cost of sales
Gross profit
65,974
(40,060)
25,914
65,366
(40,572)
24,794
126,391
(80,186)
46,205
Operating expenses and income
Share of associate's (loss)/profit
(20,407)
(28)
(25,574)
280
(45,721)
384
Trading profit
Exceptional items
5,479
-
4,681
(5,181)
6,253
(5,385)
Operating profit/(loss)
5,479
(500)
868
Finance income
Finance costs
Profit/(loss) before income tax
3
(863)
4,619
21
(623)
(1,102)
23
(1,321)
(430)
(2,098)
2,521
-
(1,859)
(2,961)
1,192
(2,310)
(2,740)
1,192
2,521
(1,769)
(1,548)
2,542
(21)
2,521
(1,769)
(1,769)
(1,548)
(1,548)
Pence per
share
Pence per
share
Pence per
share
Earnings/(losses) per share for profit attributable to the equity
holders of the company
- basic
- diluted
13.3p
13.1p
(7.4)p
(7.4)p
(7.2)p
(7.2)p
Earnings/(losses) per share for profit attributable to the equity
holders of the company from continuing operations
- basic
- diluted
13.3p
13.1p
(12.4)p
(12.4)p
(12.8)p
(12.8)p
Income tax expense
Profit/(loss) from continuing operations
Profit on discontinued operation, net of tax
Profit/(loss) for the financial period
Attributable to:
Owners of the Company
Non-controlling interests
Alternative performance measures (non-GAAP)
For the six months ended 31 March 2015
Six months ended 31 March
2015
2014
£000s
£000s
Operating profit/(loss)
Adjusted to exclude:
Year ended 30
September
2014
£000s
5,479
(500)
868
Restructuring costs and compensation for
loss of office
-
5,017
5,738
Payments to LTIP holders and bonuses in
connection with the Disney settlement
-
(162)
(246)
Other non-recurring costs
Exceptional items
-
326
5,181
(107)
5,385
Trading profit
5,479
4,681
6,253
Net finance costs
(860)
(602)
(1,298)
Trading profit after net finance costs
4,619
4,079
4,955
(2,098)
(1,859)
(2,310)
2,521
2,220
2,645
14,611
13,458
24,968
Pence per
share
13.3p
13.1p
Pence per
share
9.3p
9.3p
Pence per
share
12.4p
12.4p
Income tax expense
Trading profit after net finance costs and
income tax expense
Trading EBITDA
Adjusted earnings per share
- basic
- diluted
Refer to note 3 for a full description of the alternative performance measures adopted by the Group.
Unaudited condensed consolidated statement of comprehensive income
For the six months ended 31 March 2015
Six months ended 31 March
2015
2014
£000s
£000s
Profit/(loss) for the period
Year ended
30 September
2014
£000s
2,521
(1,769)
(1,548)
965
(199)
187
3,486
(1,968)
(1,361)
Owners of the Company
3,507
(1,968)
(1,361)
Non-controlling interests
(21)
-
-
3,486
(1,968)
(1,361)
Other comprehensive income/(expense)
Currency translation differences
Total comprehensive income/(expense) for the
period
Attributable to:
All items in other comprehensive income will be recycled subsequently to the income statement.
Unaudited condensed consolidated balance sheet
As at 31 March 2015
31 March
2015
£000s
31 March
2014
£000s
30 September
2014
£000s
58,748
121
3,793
147
62,809
56,428
146
423
3,384
119
60,500
57,787
130
327
3,919
148
62,311
757
30,210
10,398
41,365
104,174
1,385
29,574
119
6,994
38,072
98,572
596
23,801
9,065
33,462
95,773
26,507
4,933
1,770
33,210
20,749
3,926
2,760
27,435
22,602
5,292
2,477
30,371
Total liabilities
25,079
1,870
8,948
768
36,665
69,875
29,573
1,262
7,920
898
39,653
67,088
24,543
384
7,902
430
33,259
63,630
Total assets less total liabilities
34,299
31,484
32,143
Capital and reserves attributable to equity holders of
the company
Ordinary shares
Share premium
Capital redemption
Translation reserves
Retained earnings
2,095
11,194
12,646
1,197
7,141
2,095
11,194
12,646
(154)
5,703
2,095
11,194
12,646
232
5,976
Equity attributable to owners of the Company
34,273
31,484
32,143
26
-
-
34,299
31,484
32,143
Assets
Non-current assets
Property, plant and equipment
Intangible assets
Investment in associate
Deferred income tax assets
Trade and other receivables
Current assets
Inventories
Trade and other receivables
Current income tax assets
Cash and cash equivalents
Total assets
Liabilities
Non-current liabilities
Borrowings and loans
Deferred income tax liabilities
Provisions
Current liabilities
Trade and other payables
Current income tax liabilities
Borrowings and loans
Provisions
Equity
Non-controlling interests
Total equity
Unaudited condensed consolidated statement of changes in equity
For the six months ended 31 March 2015
Balance at 1 October 2014
Profit/(loss) for the period
Other comprehensive income net
of tax
Total comprehensive income
Transactions with owners in their
capacity as owners:
Non-controlling interest acquired
External dividends paid
LTIP and share options
Balance at 31 March 2015
Balance at 1 October 2013
Loss for the period
Other comprehensive expense net
of tax
Total comprehensive expense
Transactions with owners in their
capacity as owners:
Issue of B and C shares
Redemption of B shares
Dividend on C shares
Purchase of ordinary shares
External dividends paid
LTIP and share options
Balance at 31 March 2014
Balance at 1 October 2013
Loss for the period
Other comprehensive income net
of tax
Total comprehensive
income/(expense)
Transactions with owners in their
capacity as owners:
Issue of B and C shares
Redemption of B shares
Dividend on C shares
Purchase of ordinary shares
External dividends paid
LTIP and share options
Balance at 30 September 2014
Share
capital
account
£000s
Share
premium
account
£000s
Capital
redemption
reserve
£000s
Other
reserves
£000s
Retained
earnings
£000s
Total
£000s
Noncontrolling
interest
£000s
Total
equity
£000s
2,095
-
11,194
-
12,646
-
232
-
5,976
2,542
32,143
2,542
(21)
32,143
2,521
-
-
-
965
965
2,542
965
3,507
(21)
965
3,486
2,095
11,194
12,646
1,197
(1,141)
(236)
7,141
(1,141)
(236)
34,273
47
26
47
(1,141)
(236)
34,299
Share
capital
account
£000s
Share
premium
account
£000s
Capital
redemption
reserve
£000s
Other
reserves
£000s
Retained
earnings
£000s
Total
£000s
Noncontrolling
interest
£000s
Total
equity
£000s
2,649
-
23,286
-
-
45
-
47,219
(1,769)
73,199
(1,769)
-
73,199
(1,769)
-
-
-
(199)
(199)
(1,769)
(199)
(1,968)
-
(199)
(1,968)
12,092
(12,092)
(554)
2,095
(12,092)
11,194
12,092
554
12,646
(154)
(12,092)
(16,455)
(9,763)
(1,013)
(424)
5,703
(12,092)
(16,455)
(9,763)
(1,013)
(424)
31,484
-
(12,092)
(16,455)
(9,763)
(1,013)
(424)
31,484
Share
capital
account
£000s
Share
premium
account
£000s
Capital
redemption
reserve
£000s
Other
reserves
£000s
Retained
earnings
£000s
Total
£000s
Noncontrolling
interest
£000s
Total
equity
£000s
2,649
-
23,286
-
-
45
-
47,219
(1,548)
73,199
(1,548)
-
73,199
(1,548)
-
-
-
187
-
187
-
187
-
-
-
187
(1,548)
(1,361)
-
(1,361)
12,092
(12,092)
(554)
2,095
(12,092)
11,194
12,092
554
12,646
232
(12,092)
(16,455)
(9,769)
(1,013)
(366)
5,976
(12,092)
(16,455)
(9,769)
(1,013)
(366)
32,143
-
(12,092)
(16,455)
(9,769)
(1,013)
(366)
32,143
Unaudited condensed consolidated cash flow statement
For the six months ended 31 March 2015
Six months ended 31 March
Cash flows from operating activities
Cash generated from operations
Income tax paid
Net cash generated from operating activities
Cash flows from investing activities
Purchases of property, plant and equipment
Proceeds from sale of property, plant and equipment
Dividends from associate
Acquisition of subsidiary
Net cash used in investing activities
Cash flows from financing activities
Net interest paid
Proceeds from borrowings
Repayments of borrowings
Purchase of ordinary shares
Redemption of B shares
Dividends paid to Company's shareholders
Net cash generated from/(used in) financing
activities
Net increase/(decrease) in cash, cash equivalents
and bank overdrafts
Cash, cash equivalents and bank overdrafts at
beginning of period
Exchange gains on cash and bank overdrafts
Cash, cash equivalents and bank overdrafts at
end of period
Bank overdrafts at end of period
Cash, cash equivalents at end of period
Year ended
30 September
2015
£000s
2014
£000s
2014
£000s
9,286
(1,488)
7,798
1,000
(846)
154
16,415
(1,268)
15,147
(12,439)
2,296
-
(10,591)
3,214
-
(23,492)
4,450
200
634
(9,509)
(7,377)
(18,842)
(836)
15,381
(11,807)
(283)
(529)
12,141
(4,229)
(9,763)
(10,192)
(16,775)
(1,224)
23,361
(13,544)
(9,769)
(12,092)
(17,468)
2,455
(29,347)
(30,736)
744
(36,570)
(34,431)
8,968
686
43,107
11
43,107
292
10,398
6,548
8,968
-
446
97
10,398
6,994
9,065
Notes to the interim report and accounts
1. General information
Avesco Group plc (‘the Company’) and its subsidiaries (together ‘the Group’) is an international media services
business. The Group has subsidiaries around the world and sells in the UK, USA, Europe, Asia Pacific and the Middle
East.
The Company is a public limited company which is admitted to trading on the AIM Market of the London Stock Exchange
and is incorporated and domiciled in the UK. The address of its registered office is Unit E2, Sussex Manor Business
Park, Gatwick Road, Crawley, West Sussex, RH10 9NH.
The registered number of the Company is 01788363.
2. Status of interim report and accounts
The interim report and accounts are unaudited but have been reviewed by the auditors, Ernst & Young LLP, and their
independent review report is appended to this document. The interim report and accounts, which were approved by the
Board of Directors on 11 June 2015, are not full accounts within the meaning of section 435 of the Companies Act 2006.
The figures for the year ended 30 September 2014 have been extracted from the audited annual report and accounts
that have been delivered to the Registrar of Companies. The auditors, Ernst & Young LLP, reported on those accounts
under section 495 of the Companies Act 2006. Their report was unqualified and did not contain a statement under
section 498 of that Act.
3. Basis of preparation
The interim report and accounts have been prepared using the accounting policies to be applied in the annual report and
accounts for the year ending 30 September 2015. These are consistent with those included in the previously published
annual report and accounts for the year ended 30 September 2014, which have been prepared in accordance with IFRS
as adopted by the European Union.
The directors have a reasonable expectation that the Group has adequate resources to continue operating for the
foreseeable future, and for this reason they have adopted the going concern basis of preparation in the consolidated
interim financial statements.
Alternative performance measures
The Group uses alternative non-Generally Accepted Accounting Practice (“non-GAAP”) financial measures which are
not defined within IFRS. The Directors use these measures in order to assess the underlying operational performance of
the Group and as such, these measures are important and should be considered alongside the IFRS measures. The
following non-GAAP measures are referred to in these interim report and accounts.
a)
Trading profit/loss
‘Trading profit/loss’ is separately disclosed, being defined as operating profit adjusted to exclude restructuring costs and
compensation for loss of office, payments to LTIP holders and bonuses in connection with the Disney settlement, and
other non-recurring costs. Other non-recurring costs relate to items which management believe do not accurately reflect
the underlying trading performance of the business in the period. Examples of other non-recurring costs are one off
costs and charges incurred which management believe do not accurately reflect the trading performance of the
business. The Directors believe that trading profit/loss is an important measure of the underlying performance of the
Group.
b)
Adjusted earnings per share
‘Adjusted earnings per share’ is calculated by dividing the profit for the period excluding restructuring costs and
compensation for loss of office, payments to LTIP holders and bonuses in connection with the Disney settlement, and
other non-recurring costs by the weighted average number of ordinary shares in issue during the period. The Directors
believe that adjusted earnings per share provides an important measure of the underlying performance of the Group.
Previously adjusted earnings per share excluded the deferred tax charge/credit, the directors believe that this change
better reflects the underlying performance of the business. The comparative figures have been restated for consistency.
c)
Trading EBITDA
Trading earnings before interest, taxation, depreciation and amortisation (‘EBITDA’) is separately disclosed, being
defined as trading profit/loss adjusted to exclude depreciation and amortisation of software. Trading EBITDA includes
profits on disposal of property, plant and equipment. The Directors believe that trading EBITDA is an important measure
of the underlying performance of the Group.
4. Segmental information
Year ended
30 September
2014
£000s
Six months ended 31 March
2015
2014
£000s
£000s
Revenue
Creative Technology
Full Service
Broadcast
Inter Segment revenue
Group revenue
Operating profit
Creative Technology
Full Service
Broadcast
Head Office
Trading profit
Restructuring costs and compensation for loss of
office
Payments to LTIP holders and bonuses in
connection with the Disney settlement
Other non-recurring costs
Operating profit/(loss)
51,624
7,889
6,756
(295)
65,974
49,556
7,426
8,760
(376)
65,366
96,258
14,446
16,266
(579)
126,391
5,478
558
(431)
(126)
5,479
3,341
239
810
291
4,681
4,420
229
1,680
(76)
6,253
-
(5,017)
(5,738)
5,479
162
(326)
(500)
246
107
868
5. Trading earnings before interest, taxation, depreciation and amortisation (‘EBITDA’)
Year ended
30 September
Six months ended 31 March
Trading profit
Depreciation
Impairment
Amortisation of software
Trading EBITDA
2015
£000s
2014
£000s
2014
£000s
5,479
9,093
39
14,611
4,681
8,706
71
13,458
6,253
17,880
726
109
24,968
Trading EBITDA is defined in note 3.
6. Taxation
Six months ended 31 March
Year ended 30
September
2015
2014
2014
£000s
£000s
£000s
2,653
319
393
Current tax:
Current tax charge on profits for the year
Adjustments in respect of prior periods
-
-
(428)
Total current tax
2,653
319
(35)
Deferred tax (credit)/charge
(555)
1,540
2,345
Income tax expense
2,098
1,859
2,310
7. Earnings per share
Six months ended 31 March
2015
2014
£000s
£000s
Profit/(loss) for the financial period
Profit on discontinued operations, net of tax
Profit/(loss) from continuing operations
Year ended
30 September
2014
£000s
2,521
2,521
(1,769)
(1,192)
(2,961)
(1,548)
(1,192)
(2,740)
Restructuring costs and compensation for loss of office
-
5,017
5,738
Payments to LTIP holders and bonuses in connection
with the Disney settlement
Other non-recurring costs
-
(162)
326
(246)
(107)
Trading profit after net finance costs and income tax
expense
2,521
2,220
2,645
Weighted average number of shares (net of treasury
shares)
For basic earnings per share (000’s)
Effect of dilutive share options (000’s)
For diluted earnings per share (000’s)
18,930
298
19,228
23,891
1,250
25,141
21,361
848
22,209
Earnings/(losses) per share
Basic
Diluted
13.3p
13.1p
(7.4)p
(7.4)p
(7.2)p
(7.2)p
Continuing basic
Continuing diluted
13.3p
13.1p
(12.4)p
(12.4)p
(12.8)p
(12.8)p
Adjusted basic
Adjusted diluted
13.3p
13.1p
9.3p
9.3p
12.4p
12.4p
0.0p
0.0p
5.0p
5.0p
5.6p
5.6p
Discontinued operations basic
Discontinued operations diluted
Basic earnings per share have been calculated by dividing profit/loss for the period by the weighted average number of
ordinary shares in issue during the period.
Diluted earnings per share have been calculated by dividing profit/loss for the period by the weighted average number of
ordinary shares in issue during the period, adjusted for any awards under the Company's Long Term Incentive Plan
(“LTIP”) where pre-specified performance conditions have been satisfied and any required conversion of dilutive
potential options.
Adjusted earnings per share have been calculated as per note 3.
8. Analysis of net debt
Cash at bank and in hand
Bank overdrafts
Net cash
Bank loans due in more than
one year
At 1
October
2014
£000s
Cash flow
£000s
Other non
cash
changes
£000s
Currency
translation
differences
£000s
At 31
March
2015
£000s
9,065
(97)
8,968
636
108
744
-
697
(11)
686
10,398
10,398
(16,848)
1,000
-
(634)
(16,482)
Hire purchase obligations due in
less than one year
(7,805)
2,241
(2,988)
(396)
(8,948)
Hire purchase obligations due in
more than one year
Net debt
(5,754)
(21,439)
(6,815)
(2,830)
2,988
-
(444)
(788)
(10,025)
(25,057)
At 1
October
2013
£000s
Cash flow
£000s
Other non
cash
changes
£000s
Currency
translation
differences
£000s
At 31
March
2014
£000s
Cash at bank and in hand
Bank overdrafts
Net cash
43,699
(592)
43,107
(36,710)
140
(36,570)
-
5
6
11
6,994
(446)
6,548
Bank loans due in more than
one year
(7,419)
(7,269)
-
235
(14,453)
Finance lease obligations due in
less than one year
(7,303)
2,594
(2,886)
121
(7,474)
Finance lease obligations due in
more than one year
Net cash/(debt)
(6,048)
22,337
(3,237)
(44,482)
2,886
-
103
470
(6,296)
(21,675)
At 1
October
2013
£000s
Cash flow
£000s
Other non
cash
changes
£000s
Currency
translation
differences
£000s
At 30
September
2014
£000s
Cash at bank and in hand
Bank overdrafts
Net cash
43,699
(592)
43,107
(34,859)
428
(34,431)
-
225
67
292
9,065
(97)
8,968
Bank loans due in more than
one year
(7,419)
(9,492)
-
63
(16,848)
Hire purchase obligations due in
less than one year
(7,303)
5,613
(6,182)
67
(7,805)
Hire purchase obligations due in
more than one year
Net cash/(debt)
(6,048)
22,337
(5,938)
(44,248)
6,182
-
50
472
(5,754)
(21,439)
9. Interim and final dividends
A final dividend for the year ended 30 September 2014 of 4.5p per ordinary share amounting to a total of £858,000 was
approved and was paid on 8 April 2015 to shareholders on the register on 12 March 2015.
An interim dividend for the year ended 30 September 2014 of 1.5p per ordinary share amounting to a total of £283,000
was approved and was paid on 1 October 2014 to shareholders on the Register on 5 September 2014.
A special dividend of £1.10 per C share was approved and was paid on 24 January 2014 under the Return of Cash (see
note 10).
An interim dividend of 2p per ordinary share will be paid on 1 October 2015 to shareholders on the Register at 6.00pm
on 4 September 2015. The shares will be quoted ex dividend from 3 September 2015.
10. Return of cash and buy-back agreement
The Company returned £28.5m of the net cash receipt from the Disney litigation funds to shareholders by way of a B &
C Share Scheme (the “Return of Cash” or “Scheme). On 24 January 2014 10,992,850 B shares and 14,958,700 C
shares were allotted to shareholders through the capitalisation of the share premium reserve. On 24 January 2014 the
Company redeemed the B shares for £1.10 per share, totalling £12.1m, and a dividend of £1.10 per share was declared
on each C share, totalling £16.4m. Following redemption of the B Shares, all of the B Shares were then cancelled.
Following the declaration of dividend on the C shares, these shares became deferred shares which carried no rights to
participate in the profits of the Company or a return of capital. The deferred shares were purchased by the Company for
an aggregate sum of 1p, and cancelled. None of the B shares, C shares and deferred shares were admitted to trading
on AIM or admitted to listing or trading on any recognised investment exchange.
The Company and Taya Communications Ltd (“Taya”) entered into a Buy-back agreement on 23 December 2013
pursuant to which the Company bought back from Taya 7,584,724 ordinary shares of the Company (“Buy-back Shares”),
out of Taya’s total holding of 7,784,878 ordinary shares, at a price of 124p per ordinary share on 5 February 2014,
leaving Taya holding a balance of 200,154 ordinary shares, representing 1.09% of the then total voting rights of the
Company as reduced by the cancellation or transfer to treasury of the Buy-back Shares. The price payable for the Buyback Shares represented a five percent premium over the average closing mid-market price per ordinary share for the
forty-five business day period ending on 17 December 2013, being the latest practicable date prior to the date of the
release of the Company’s Preliminary Results in respect of the year ended 30 September 2014, less the amount of 110
pence (being the cash entitlement payable per Buy-back Share under the Return of Cash). The total consideration
payable was £9.4m plus legal and professional fees of £0.4m. Of the 7,584,724 ordinary shares bought back from Taya,
5,539,149 were cancelled immediately and the balance transferred to treasury. As at 31 March 2015, 1,877,318 shares
were held in treasury.
11. Discontinued operations
InvestinMedia Holdings Limited (“InvestinMedia”), a subsidiary of the Company, sold its investment in Complete
Communications Corporation Limited (“Complete”) on 20 December 2006. The buyer of Complete pursued legal action
in the United States against Disney on behalf of InvestinMedia and other vendors. This legal action concluded in the
year ended 30 September 2013 and the Group has received its share of the Disney litigation award. Cash received was
£50.6m although this was reduced by estimated tax liabilities of £4.1m and indemnities of £1.0m, offset by a net credit of
£0.2m in relation to professional fees resulting in a profit on discontinued operations of £45.7m. As a result of further
refinement of the tax base cost on the associated chargeable gain the Group’s estimated tax liability was reduced by
£1.2m in the prior period.
The consolidated income statement and consolidated cash flow statement include the following amounts in relation to
discontinued operations:
Six months ended 31 March
Consolidated income statement
Year ended 30
September
2015
2014
2014
£000s
£000s
£000s
Revenue
-
-
-
Tax credit
-
1,192
1,192
Profit on discontinued operation, net of tax
-
1,192
1,192
Operating activities
-
(553)
(1,144)
Cash used from discontinued operations
-
(553)
(1,144)
Consolidated cash flow statement
12. Acquisitions
On 7 November 2014 Sports Technology Ltd, an associate of the Group, repurchased 40 of its own shares from Delta
Sound Incorporated (UK) Ltd for £109,578. The shares were cancelled immediately following their repurchase. The
Group now holds 66.67% of the issued share capital of Sports Technology Ltd, which is therefore a subsidiary of the
Group.
The exercise to determine the fair value of the identifiable assets acquired and liabilities assumed was completed during
the period and the amounts recognised are as follows:
Recognised amounts of identifiable assets acquired and liabilities
assumed
Book Value
Fair Value
£000s
£000s
Property, plant and equipment
1
1
Intangible assets
1
1
Trade and other receivables
86
86
Cash and cash equivalents
634
634
Trade and other payables
(339)
(339)
Current tax liabilities
(243)
(243)
140
140
Identifiable net assets acquired
Non-controlling interest in Sports Technology Limited
Goodwill
(47)
7
100
Consideration
Fair value of equity interest in Sports Technology Limited
100
100
Goodwill of £7,000 has been charged to the consolidated income statement on the basis that it is immaterial.
13. Contingent liabilities
InvestinMedia Holdings Limited (“InvestinMedia”), a subsidiary of the Company, sold its investment in Complete
Communications Corporation Limited (“Complete”) on 20 December 2006. In connection with the sale, InvestinMedia
and other vendors gave certain warranties and indemnities to the buyer. So far as the Company is aware, no legal
claims have been brought against any company in the Complete group that are outstanding and would give rise to
liability on the part of InvestinMedia and other vendors under the warranties and indemnities.
14. Post balance sheet events
As at 31 March 2015 the Group had an unrecognised contingent gain of £1.0m in respect of the receipt of its share of
funds received from the historic Disney litigation (See Note 11). The gain was contingent on indemnities given in
respect of the settlement.
No notice of claim has been received under these indemnities and, subsequent to the period end, the Group believes
that any claim under the indemnities would now be time barred. The post period end lapse of the indemnities, and
hence the ability to recognise the contingent gain, is a non adjusting post balance sheet event and as such no
adjustment has been included in these accounts. The gain of £1.0m will be reflected in the second half of the year.
15. Distribution of interim report and accounts
Copies of this interim report and accounts are available from the Company’s web site (www.avesco.com) or from the
Company’s registered office: Avesco Group plc, Unit E2, Sussex Manor Business Park, Gatwick Road, Crawley, West
Sussex, RH10 9NH. Telephone: +44 (0) 1293 583 400. Fax: +44 (0) 1293 583 410. E-mail: mail@avesco.com.
INDEPENDENT REVIEW REPORT TO AVESCO GROUP PLC
Introduction
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial
report for the six months ended 31 March 2015, which comprises the consolidated income statement, consolidated
statement of comprehensive income, consolidated balance sheet, consolidated statement of changes in equity and
consolidated cash flow statement and the related explanatory notes that have been reviewed. We have read the other
information contained in the half-yearly financial report and considered whether it contains any apparent misstatements
or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with guidance contained in International Standard on Review
Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of
the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are
responsible for preparing the half-yearly financial report in accordance with the AIM Rules issued by the London Stock
Exchange which require that it is presented and prepared in a form consistent with that which will be adopted in the
Company’s annual accounts having regard to the accounting standards applicable to such annual accounts.
As disclosed in note 3, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted
by the European Union. The condensed set of financial statements included in this half-yearly financial report has been
prepared in accordance with the AIM Rules issued by the London Stock Exchange.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the halfyearly financial report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410,
"Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards
on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of
all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial
statements in the half-yearly financial report for the six months ended 31 March 2015 is not prepared, in all material
respects, in accordance with the accounting policies outlined in Note 3, which comply with IFRS’s as adopted by the
European Union and in accordance with the AIM Rules issued by the London Stock Exchange.
Ernst & Young LLP
Reading
11 June 2015