Well it's finally arrived a massive windfall for Avesco from the Disney litigation via a third party. From my calculations it will work out at about £1.69 per share. If you take this amount away from Avesco's current share price of £2.21 then currently the shares are closer to 52p or a market cap. of £13m. Laughable really. 52p is about a third of Avesco's NTAV and, on an average of it's previous two years underlying earnings (Avesco does better in even years because of its reliance on major events), it puts the shares on a p/e ratio of 4. I expect they will continue to maintain or improve the current dividend pay-out which effectively gives a yield of around 7.7%-9.6% (based on a 4p pay-out last year and a 5p pay-out this year).
The Disney windfall is more than the anticipated $60m, and should be closer to $66m. This probably took some investors by surprise but I did mention this possibility back in March:-
http://michae1mouse.blogspot.co.uk/2013/03/its-finally-over-disney-ordered-to.html
"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."
The only negative in the update was that they may not meet market expectations for 2013.
Whilst that's unwelcome news, the material effect is negligible given the figures I've quoted above. Also, this is a highly cash generative business that should be viewed on a two year cycle, and 2014 sees the Winter Olympics, Commonwealth games and Football World Cup. As mentioned before, Avesco is sensitive to economic conditions, and has done remarkably well over the past two or three years. I fully expect conditions to improve over the next two or three years and Avesco to prosper.
Interim results will be published on Thursday 13th June and shareholders should receive more details about the Disney pay-out then, but they have always indicated that the majority of the monies would be distributed to shareholders and given that Taya and Richard Murray hold 50% plus of the shares between them, you wouldn't really expect them to renege on their promises. Unless of course they decide to bid for the entire share capital, which is something Taya have done in the recent past. See my previous comments below:-
http://michae1mouse.blogspot.co.uk/2013/02/interesting-development.html
Anyway, I am looking forward to what Thursday brings!!
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