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AVESCO GROUP PLC ANNUAL REPORT 2011
www.avesco.com
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Chairman’s Statement Richard Murray
I am pleased to report that as we look back on 2011, the Avesco Group has made considerable progress. Our businesses are widely regarded as market leaders in their fields, increasingly providing our services at some of the most high profile events around the world and boasting a high quality customer base, including many blue chip corporations, major production companies and event organisers. Of course, good companies never stop innovating, adapting and growing, even through difficult economic times, and while there is still much hard work ahead, we are confident that we are positioning Avesco for further improvement and success.
RESULTS Our progress is reflected in these financial results which show a greatly improved performance. The Group grew revenue, improved margins, increased profitability, generated cash and reduced debt, all of which were achieved after a significant investment in the Group’s operations and equipment.
During the twelve months ended 30 September 2011, our revenue grew 7% to £125.5m (2010: £117.2m). If allowance is made for the fact that, in contrast to 2010, 2011 did not benefit from the inclusion of the Winter Olympics or the FIFA World Cup, a truer comparison would show that the underlying business has achieved a like-for-like growth in revenue of over 15%.
The trading profit (which excludes the amortisation of acquired intangible
assets, restructuring costs, and other non–recurring costs) rose 82% to £2.3m (2010: £1.3m). The trading profit less interest and current tax was £0.7m (2010: loss of £0.3m) and on this basis, the basic earnings per
share rose to 2.6p. The Group produced a 3%
improvement in EBITDA to £20.3m (2010: £19.7m). Cash generation
remained a key focus and, despite a cash investment of £18.0m (2010: £13.8m) in new equipment to support future growth, the Group
generated £1.7m in cash during the year. As a result the net debt at the year-end reduced to £12.1m (2010: £13.7m), resulting in a further strengthening of the Group’s financial position. Gearing (being net debt divided by net assets) also fell to 33% (2010: 37%). On 30 September 2011, the net assets of the Group were £37.1m (2010: £37.3m) or £1.46 per share (2010: £1.49).
DIVIDEND The Board is pleased to announce that it proposes to increase the dividend to 3.0p per share (2010: 1.0p) and it is our current intention to reintroduce an interim dividend for the forthcoming year. This rise is underpinned by the improved trading performance of the Group, continued cash generation and the strong balance sheet. Although we hope to continue to increase dividends over time, the actual level of payment will be determined by the Board’s assessment of the Group’s then balance sheet strength and future trading and prospects.
DISNEY The Group has an economic interest in the outcome of litigation brought by Celador International against the Walt Disney Company and others (“Disney”). Celador was awarded $319m in damages and pre judgement interest and, if paid in full, the Group’s share after costs is estimated to be $60m. Disney has appealed the decision and the case has been sent to the United States Court of Appeals for the Ninth Circuit. It is expected that the Appeal Court will schedule the oral argument to be heard in the summer of 2012, with the final decision being received within twelve months of that hearing.
CURRENT TRADING To date we have seen little, if any, impact on overall client spending from the current macro economic gloom and Avesco’s growth in revenue for the first quarter of 2012 continues the positive trends seen throughout 2011. In addition, we expect that demand for our services over the summer months should be boosted by the London 2012 Olympics and the UEFA Euro 2012 football championships. Although negative developments in the global economy still have the potential to affect our corporate business, we still believe that 2012 should mark another year of good progress for Avesco.
PEOPLE Our business has been built on the quality and expertise of our people. There are many occasions when the business places huge demands and pressures on them and I am very grateful to all our employees for the excellence and service they deliver time after time. When I see the calibre of the staff throughout the Avesco Group, I am confident that the productivity and growth of the last few years will continue strongly into the future.
FUTURE PROSPECTS We are very much focused on the challenges and opportunities ahead and we have defined our priorities for 2012 and beyond. First and foremost, we must continue to perform well in our core services business, providing our customers with a high quality service while maintaining a strict financial discipline. Secondly we must be ready to respond to developments within our markets such as the continued growth in both the number and the size of live events, the increasingly international nature of the industry and the trend towards ‘one- stop shopping’ where the client seeks to obtain a wider range of services from a single supplier. The first two play to the Group’s current strengths and structure while the last offers us an exciting opportunity to expand the breadth of services that we presently offer.
Our strategy continues to be centred around the organic growth and development of the business. Since 2005, the Group has grown revenues at around 15% annually while maintaining a strong conservative financial structure with modest levels of debt.
It is possible we are now approaching the point where our more recent start-up businesses begin to make a more significant contribution to the Group’s financial performance, particularly in terms of cash generation and profitability. The future looks very exciting as we position Avesco for significant and sustained growth.
RICHARD MURRAY CHAIRMAN 12 January 2012
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