Avesco third quarter leaves investors unimpressed

11th Sep 2012 11:16

Avesco Group, a provider of services to the corporate media markets, disappointed its investors after posting a decline in trading profit and earnings per share (EPS) for the three months ended June 30th. Trading profits fell from £2.9m to £2.1m year-on-year (y/y), although comparisons were negatively affected by the impact of £1.2m in profit on the sale of fixed assets during the quarter in 2011. The firm said the decline "masks substantial profits on the sale of equipment". The adjusted basic EPS for the quarter were 5.9p (Q3 2011: 9.3p), however for the nine months to the end of June EPS were 11p, up from 7.9p in the same period the previous year. Trading profit in this period came in at £4.1m compared to £3.2m in the same time frame the year before. Third quarter revenue rose from £35.4m to £38.3m, while the cost of sales increased from £23.2m to £25.5m y/y. Gross profit totalled £12.8m, up from £12.1m the same period in 2011. However, an increase in operating expenses, from £9.4m to £11.3m, resulted in a decline in operating profit to £1.5m (Q3 2011: £2.8m). Pre-tax profit fell from £2.3m to £1.0m y/y, while earnings before interest, tax, depreciation and amortisation (EBITDA) for the three month period dropped from £7.5m to £7.1m. Unsurprisingly, the firm was keen to focus on the nine rather than three month period to the end of June. This longer period delivered an increase in revenue from £97.4m to £105.8m, leading to pre-tax profit of £2.1m, compared to £1.7m the same period the previous year. Richard Murray, Chairman, said: "The Avesco Group has enjoyed another period of strong revenue and profit growth over the nine months ended June 30th 2012. "When this financial year started, we knew that it had the possibility to be one of the biggest and most rewarding in the group's history. As we approach the year-end our early optimism appears to have been well founded and we can look back on some outstanding accomplishments. "The long-term outlook for the group remains very positive and with management focused on capitalising on this year's success, maintaining strong underlying growth and generating cash, we believe that the outlook for the group has never been better." Cash and equivalent at the period end totalled £6.0m, compared to £5.4m at the same date in 2011. The share price fell 4.63% to 154.50p by 11:38.NR