20


AVESCO GROUP PLC ANNUAL REPORT 2011 www.avesco.com


DIRECTORS’ REPORT


For the year ended 30 September 2011 The Directors have pleasure in presenting their report and the financial statements for the year ended 30 September 2011.


Principal activities, review of the business and future developments The Group's principal activity during the year was the provision of services to the corporate presentation, entertainment and broadcast markets.


The Chairman's Statement on page 2, the Chief Executive’s Review on page 3 and the Financial Review on pages 4 to 5 give further information regarding the performance and prospects of the business and the risks therein.


Dividends The Directors recommend payment of a final dividend for the year ended 30 September 2011 of 3.0 pence per ordinary share to be paid on 31 May 2012 to shareholders on the Register at 6.00pm on 10 April 2012, making a total dividend for the year of 3.0 pence per ordinary share (2010: 1.0p). The shares will be quoted ex dividend from 4 April 2012. The proposed dividend is not covered by annual earnings. However the Directors believe that the payment is appropriate having regard to the positive cash generation of the Group during the year.


Share issues On 20 January 2011, a total of 348,151 ordinary shares were transferred out of treasury to satisfy the exercise of employee share options. Subject thereto, no shares were issued during the year and the Company did not exercise the authority given at the Annual General Meeting of the Company in 2010 to purchase its own shares. The existing authority for the Company to make purchases of its own shares is due to expire on 12 March 2012, the date of the forthcoming Annual General Meeting, when a resolution for its renewal will be proposed to shareholders.


Directors Details of the current Directors are given on pages 18 to 19. Mr Murray's full surname is Murray-Obodynski but he is referred to in the annual report by the name under which he is generally known in the industry. Mr Gibbins ceased to be a Director on 10 March 2011 and Mr Giniger was appointed to the Board on the same date. The other Directors have all served throughout the period.


In accordance with the Articles of Association of the Company, Mr Andrews and Mr Murray each retires by rotation and offers himself for re-election at the Annual General Meeting. The Articles of Association of the Company also require that any new Director appointed to the Board shall retire at the next Annual General Meeting when that Director becomes eligible for re-election by the shareholders. Mr Giniger, who was appointed to the Board during the year, will retire at the forthcoming Annual General Meeting of the Company and will offer himself for re-election.


Details of the current Directors’ emoluments together with the Directors’ Interests in shares and long term share incentives are provided in the Remuneration Report on pages 22 to 23.


Substantial interests At 12 January 2012, the Company had been notified or was aware of the following holdings of 3% or more of the total voting rights of the Company:


Shareholder


Taya Investment Company Ltd RA Murray


Herald Investment Management Limited


Ordinary shares 7,607,878


5,213,206 2,132,018


Percentage of voting rights 29.99%


20.55% 8.40%


Going concern After making appropriate enquiries, the Directors have formed a judgement, at the time of approving the financial statements, that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group holds £7.5m of net cash at the year end (2010: £6.9m) and has access to borrowing facilities with its bankers that were renewed during the year. The Group tests all banking covenants on a quarerly basis and report on these covenants quarterly to its bankers. Covenants are also tested based on the Group's financial forecasts. For these reasons, the Directors have adopted the going concern basis in preparing the financial statements.


Payment policy to suppliers The Group does not follow a published code on payment practice but has standard terms and conditions of purchase based on which it agrees terms and conditions for its business transactions with suppliers. It is our policy that, subject to the terms and conditions being met by the supplier, payment is made on those terms.


The Group had outstanding trade creditors of £11.5m at 30 September 2011 (30 September 2010: outstanding trade creditors of £8.4m).


Employee involvement The Board recognises the crucial role which quality, motivated employees play in the success of the Group. Employee involvement at all levels is encouraged. Employees receive a regular staff newsletter and are kept informed of financial and other developments around the Group through a series of presentations by senior management. Certain employees are able to share in the success of the Group through participation in the Company’s Long Term Incentive Plan and other incentive arrangements. It is the policy of the Group to recruit, develop and promote people on merit and to treat everyone equally regardless of their race, colour, ethnic origin or nationality, age, gender, marital status, sexual orientation, disability, religion or belief. The Group gives full consideration to the possibility of employing disabled persons wherever such opportunities exist. Those employees who become disabled are given the opportunity and assistance to continue in their employment or to be trained for other, more suitable positions.


Directors’ Indemnities The Company has purchased insurance to cover its Directors and officers against the costs of defending themselves in legal proceedings taken against them in that capacity and in respect of any damages resulting from those proceedings. The insurance does not provide cover where the Director has acted fraudulently or dishonestly.


The Company has also provided an indemnity for its Directors, which is a qualifying third party indemnity provision for the purposes of section 234 of the Companies Act 2006. A copy of the indemnity is available for inspection at the Company’s registered office during normal working hours.


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