It's finally over - Disney ordered to payout!!

It's been a terrific two weeks regarding news stories for three stocks that are in my portfolio.

Firstly, let's start with Avesco. On Friday Avesco announced that Disney have finally run out of lifelines and now they need to pay up. At long last. Disney really do come out of this saga badly. Quite ironic if you think about their history and the wonderful films they have produced with moral story lines that children have enjoyed for years. It appears that Disney are more the 'Wicked Witch' rather than 'Snow White'.

One thing perhaps that they have got right though is their slogan, because on behalf of all shareholders, "Thanks Disney, dreams really do come true!", and the company can now look forward to a massive £40m payout, the majority of which will be paid to shareholders.

At Friday's close Avesco's share price stood at 221.5p.

What's the company worth now though?

There are all sorts of measures on which we could reach a valuation, but let's keep it simple. When media companies are sold they are valued on a multiple of EBITDA. No ifs or buts that's basically it. Avesco is slightly peculiar in that it tends to do better in even years rather than odd because business booms during major events e.g. Olympics, World Cups etc. In the last two years EBITDA has been £20.3m and £27.1m respectively. For arguments sake let's take the mean of these two figures £23.7m. Conservatively, let's apply a valuation of 4 times EBITDA. This gives a valuation of £94.8m (about £3.65 per share). Avesco's current market cap. is £57.5m with net assets amounting to £38.6m, and this is a growing business which already pays a good dividend which is set to increase year on year.

That's all before the the Disney payout. Now £40m amounts to about £1.57 per share. How much will shareholders get? Impossible to say. Tax calculations will be complex, and it depends what Avesco define as the "majority" of the money. However, one thing is for sure, a large percentage of the current market cap. will be returned to shareholders in due course.

I've read some absolute drivel on the BBs about this prospective payout with some posters speculating about possible scenarios on the negative side of any payout. Here are some things to consider on the positive side:-

Disney will already have paid tax on the profits that they made on the show, so this immediately clouds the picture, I would also be surprised if there wasn't nearly three years of interest to add to the payout since the case was won in 2010. However, I know nothing about these matters and clearly neither does anybody else.

In conclusion, the eventual payout will be substantial. Make no mistake.

I built most of my stake in Avesco between 20p-30p and I 've been fortunate that this has turned out to be such a rewarding investment. I haven't sold a single share. What am I going to do now? Do you really need to ask given the above.

One final little caveat on the Disney case. Will Celador now pursue the William Morris agency?

http://www.imdb.com/name/nm1140125/news?year=2010

Surely not another payout further down the line?

Finally, if you wish to recieve the 3p final dividend from the finals then ex-dividend date is 15th March. The AGM is on the 14th March and the first quarter results on either the 13th or 14th. So plenty of news due this week.

First quarter results will undoubtedly show a loss given the trading statement given in the finals, but looking forward, Avesco indicated that business had picked up again at the turn of the year. 2014 should again provide a bumper year.

In other news, Datong issued a trading statement last week to indicate that trading was in line with expectations. This should should help consderably in negotiations to sell the business should they find more potential offerees. However, it certainly wouldn't be a disaster if they don't sell the company in the near furture since longer term I believe that prospects for the company are very encouraging. Even after the rise in it's share price, Datong remains considerably undervalued

Finally, Angle have released Parsortix into the research market. This is another major step forward. Using the terminology, Angle might be described as a 'blue sky' company. I would describe it as a speculative investment, but so far so good. Fingers crossed because success with Parsortix will bring huge rewards.