Edison Investment Research - AVESCO GROUP (AVGPF) Update: Restructuring pays dividends

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Edison Investment Research

Update: Restructuring pays dividends

Avescoâ€™s FY14 restructuring is paying off, with the AGM statement signalling a material upgrade to FY15 estimates â€“ we have increased FY15e PBT by Â£1m or 33%, to Â£4m. More efficient resource utilisation and loss elimination is minimising the usual â€˜oddâ€™ year effect in Europe, while CTUS continues to enjoy buoyant trading conditions. The balance sheet is strong, with a NAV of 167p underpinned by high-quality rental assets. The progressive dividend policy and FY15e yield of 5.4% is very attractive.

05/03/2015 3 EN

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AVESCO GROUP

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GB0000653229 United Kingdom

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Edison Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisors and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting.

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Olympic gold

Avesco’s trading update outlines continued strong trading over the summer at Creative Technology in the US and at the Rio Olympics and Paralympics. FY16 results (to end September) will be “comfortably” ahead of previous expectations. Positive momentum continues into FY17, when a good schedule of sporting and commercial events, along with currency benefit, will buoy what would normally have been a weaker, odd-numbered year. With a rising dividend and asset backing, the valuation multiple remains very modest, despite the increase in the share price on this news.

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A good H116 from Creative Technology, particularly in the US, underpins our maintained profit forecast for the full year. Avescoâ€™s FY14 restructuring is clearly delivering on the promise to smooth results between odd and even years, while the recent sale of Fountain Studios has realised cash to pay down debt and increase targeted investment in equipment. With a progressive dividend, a discount to net assets and a very modest multiple, the group is an attractive and coherent investment proposition.

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Update: Restructuring pays dividends

Ford Equity International Rating and Forecast Report

Olympic gold

Outlook: Good projections

Zalaris - Continuing contract momentum in FY24

BlackRock Sustainable American Income Trust - Unique value/ESG fund at an attractive valuation

Northern Data Group - Continued progress as a diversified HPC provider

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