Avesco puts sheen on results with Fountain Studio sale

12th Jan 2016 15:16

(ShareCast News) - Full year profits hit record levels at AIM-listed Avesco, while the events, television and broadcast equipment and services group also announced a £16m property disposal to transform its balance sheet.The offloading of the land and buildings at Fountain Studios in Wembley to Quintain for £16m cash, in a sale and five-year leaseback deal.Chairman Richard Murray said the funds would be used to slash net debt from its year-end £17.5m and that management believed "a far better return on capital is now available from investment in other parts of the group where there are greater opportunities".Results for the year to end-September showed revenue up 6% to £133.7m, with trading profit before exceptionals up 18% to £7.4m thanks to a major reduction of costs in Germany helping to offset the odd-year effect, as Avesco usually enjoys better trading in even years due to the timing of major sporting and biennial trade events.Though earnings per share from continuing operations were roughly flat at 12.4p, the full year dividend was hiked 17% to 7.0p.Operating profits of £4.9m were lifted by a strong performance by the Creative Technology division, which produced a £9.1m trading profit driven by the inaugural European Games in Baku in June, restructuring in CT Germany and continued strong profit contributions from the US.The Broadcast Services division performed poorly, however, with revenue dropping 21% to £12.5m to produce a trading loss of £1.9m as the Presteigne rental unit struggled in a very competitive market."Steps have been taken to bolster the sales team in Presteigne and we expect to see an improved performance in 2016, an even year."Murray added that the new financial year had started well, with CT continuing to perform well in both Europe and the US."With the group now carrying a much lower debt burden, streamlined and refocused, we expect to be able to continue our drive to increase profitability, to generate cash and to grow dividends."Broker FinnCap said the Fountain disposal was the big news. "The transaction will transform the balance sheet, reducing net debt substantially and bringing group gearing down from 50% to below 10%.""The financial standing and long-term dividend paying prospects of the group are much enhanced."