Final Results
Embargoed: 0700hrs, 7 September 2005
Avingtrans plc
('Avingtrans' or the 'Group')
Final Results for the Year Ended 31 May 2005
Highlights
* Acquisition of Metalcraft for £8.1 million
* Trading performance up across whole group
* Turnover up significantly to £24.3m (2004: £5,533,000)
* Profit before tax increased to £2m (2004: £140,000)
* EPS of 13.6p (2004: 3.1p)
* Gearing 41% (2004: 37%)
* Maiden dividend proposed - 0.5p per share
Ken Baker, Chairman, commented,
'The year under review has been a period of positive transformation for the
Group and has resulted in a step-change in revenues, profitability, earnings
per share, profile and future prospects.'
Contacts:
Avingtrans plc Hansard Communications
Tel. 01159 499 020 Tel. 020 7245 1100
Ken Baker, Chairman Ben Simons
Stephen King, Finance Director
Chairman's statement
I am, on behalf of the Board of Directors, pleased to present the results for
Avingtrans plc for the year ended 31 May 2005.
The year under review has been a period of positive transformation for the
Group and has resulted in a step-change in revenues, profitability, earnings
per share, profile and future prospects.
Trading conditions in all our major markets improved and despite the continued
weakness of the U.S Dollar against the Pound Sterling and Euro, we have been
able to maintain attractive margins across all the Group's products whilst
enjoying the benefits of adding to each of the subsidiary's client base.
The Jena Group (Jena) benefited from a growth in demand for its ballscrew
products, spindles and services as the machinery sector recovered in Germany,
and new customers came on stream in the USA and China with demand for serviced
aerospace turbine blades continuing at a high level.
Crown UK Limited (Crown) completed its first full year with the Group with
supply of its highway products and rail-side products continuing to meet
expectations.
The acquisition of Stainless Metalcraft Limited (Metalcraft) on 13 October 2004
for £8.1million was the major event for the Group during the year. Metalcraft
has made a significant contribution to sales and revenue in the subsequent
seven and a half months of the financial year. Metalcraft is based in
Chatteris, Cambridgeshire, and makes machined and fabricated components for the
worldwide medical, scientific and research communities. It specialises in the
manufacturing of vacuum and cryogenic components for the MRI scanner industry.
The demand for the latter continued strongly during the period due to the
medical benefits that accompany this technology and its non-invasive nature.
Metalcraft continues to benefit from this thriving market. This increase in
demand is forecast to continue and Avingtrans has consequently continued to
invest funds into production enhancing machinery, equipment and the upgrading
of the premises during the period.
Financial performance
Earnings before interest, tax, depreciation and goodwill amortisation (EBITDA)
was £3,169,000 (2004: £531,000) on 340% improved turnover of £24,329,000 (2004:
£5,533,000).
Operating profit for the period was £2,264,000 (2004: £187,000). Profit before
tax was £1,969,000 (2004: £140,000) an increase of 1,306%.
Earnings per share (EPS) before goodwill amortisation for the year was 13.6p
(2004: 3.1p).
Cash flow from operating activities for the year was £3,917,000 (2004: £
196,000) with net cash at bank and in hand at the year-end of £736,000 (2004: £
517,000). The net debt at year-end was £4,217,000 (2004: £1,740,000) resulting
in gearing of 41%.
An exchange rate gain of £37,000 (2004: loss of £163,000) was recorded through
the reserves during the year on currency translation of foreign subsidiaries.
Dividend
In light of the financial performance highlighted above and with the agreement
of Group's bankers the Board is recommending to the shareholders at the AGM a
final dividend of 0.5p per share for the year under review.
Acquisitions and investment
The Group worked on a number of acquisition opportunities during the period
under review. The acquisition of Metalcraft for £8.1 million was completed on
13 October 2004. The funding for the acquisition included the raising of £4
million through a placing of new shares and bank lending of £4.3 million from
HSBC. At the same time, the Group raised funds for working capital of £327,000
through a one for ten limited open offer to existing shareholders.
The Group increased its investment at Metalcraft and other subsidiaries through
placing orders for £1.8 million of new robots, computer controlled production
machinery and other equipment to support increasing order books and improvement
of productivity.
Review of the year
Aside from the increase in trading resulting from the acquisition of Metalcraft
described previously, progress in the other areas of the Group has also been
very positive. This improved overall Group progress resulted in Avingtrans
indicating better than expected profits in a trading statement post year-end.
At Jena Group both Jena Tec and C&H Precision Finishers enjoyed a significant
recovery in orders. This led to a record sales year at C&H due to the increased
demand for finishing processes on turbine and compressor blades from both the
aerospace and power generation industries. One of the more high-profile events
in this division's year was its involvement in the finishing of the compressor
blades and vanes for the new Rolls Royce Trent engine used on the Airbus A380
which recently made its successful maiden flight in France.
In line with our policy, stated in the last annual report, to seek new markets
for our products, it is encouraging to report new demand for Jena's miniature
ball screw products in the Far-East and many new customers in existing markets
for spindle repairs and upgrades for Jena Tec in the UK and USA.
Our Bristol-based subsidiary, Crown, was acquired on 31 May 2004 and is now
fully integrated within the Group. The much publicised increase in demand for
roadside speed cameras all over Europe continues to have a most positive impact
on this division which manufactures, repairs and services the complex stands
and housings for these devices. Crown is the only UK government accredited
supplier of the poles for the roadside speed cameras, and is the market leader
in this field. Plans for the migration from existing analogue-based devices to
digital-based camera equipment and the use of the pole technology for rail-side
signalling, both requiring new pole and housing components, developed strongly
during the period.
Negotiations with our primary collaborator in Europe led to Crown being able to
market its speed cameras posts and housings to other speed camera makers. This
led to a significant increase in the level of enquiries from both European and
North American companies and some immediate growth in sales of our components
overseas.
Crown has attracted new customers and is penetrating new territories for both
speed and red light enforcement products. In November, Crown was awarded
accreditation from network rail for railside signal posts, alongside its gantry
product that it continues to supply to the railway industry.
Directors and senior management
Whilst the composition of the main board of directors remained unchanged during
the year, Avingtrans continued to strengthen its senior management team. We
welcomed a new commercial and financial controller to the Group as well as
welcoming new Managing Directors to a number of the subsidiaries of Avingtrans.
In accordance with the Articles of Association, Kenneth Baker and Stephen King
retire from the Board in rotation and offer themselves for re-election at the
AGM scheduled for 5 October 2005.
Outlook
The positive momentum in the year under review has continued into the current
year with enquiry levels and order intake remaining strong. The Board is keen
to continue to nurture this organic growth but also recognises the benefits of
further acquisitions. The Board is seeking complementary and earnings enhancing
companies, within the precision engineering area that operate in a niche market
or produce a niche product and demonstrate differentiation. This is a strategy
that is serving us well within each of our existing subsidiaries as it reduces
the exposure to the wider economic forces that influence the more general
engineering sectors.
The acquisition of Crown, followed by Metalcraft, combined with an upturn in
economic conditions and a significantly more efficient operation has led to a
Group that, today, enjoys a portfolio of subsidiaries which are each performing
profitably and have real potential to achieve further growth. This is in no
small part due to the skill and dedication of every member of Avingtrans and,
on behalf of the Board I would like to thank them for their efforts.
Together we have every reason to look forward to the current year and beyond
with confidence.
K M Baker
Chairman
7 September 2005
Consolidated profit and loss account
for the year ended 31 May 2005
2005 2004
Note Existing Acquisition Total
operations
£'000 £'000 £'000 £'000
Turnover -continuing 1 9,454 14,875 24,329 5,533
operations
Cost of sales (5,416) (12,405) (17,821) (3,140)
______ ______ ______ ______
Gross profit 4,038 2,470 6,508 2,393
Selling and distributing (493) (272) (765) (315)
expenses
Administration expenses (2,791) (688) (3,479) (1,891)
______ ______ ______ ______
Continuing operations 894 1,648 2,542 268
Goodwill amortisation (140) (138) (278) (81)
______ ______ ______ ______
Operating profit-continuing 754 1,510 2,264 187
operations
Interest receivable 5 2
Interest payable (300) (49)
_______ _______
Profit on ordinary activities 1 1,969 140
before taxation
Taxation on profit on 2 (668) 1
ordinary activities
_______ _______
Profit for the financial year 1,301 141
Dividend 3 (71) -
_______ _______
Retained profit transferred 1,230 141
to reserves
Earnings per share - basic 4 11.2p 2.0p
Earnings per share (before 4 13.6p 3.1p
goodwill amortisation) -
basic
Earnings per share - diluted 4 10.6p 3.1p
Consolidated statement of total recognised gains and losses
for the year ended 31 May 2005
2005 2004
£'000 £'000
Profit for the financial year 1,301 141
Other recognised gains and losses
- exchange gains/(losses) on translation of foreign 37 (163)
subsidiaries
________ ________
Total recognised gains and losses relating to the year 1,338 (22)
Reconciliation of movements in shareholders' funds
2005 2004
£'000 £'000
Profit for the financial year 1,301 141
Issue of shares 4,144 -
Exchange gains/(losses) on translation of foreign 37 (163)
subsidiaries
Dividends (71) -
_______ _______
Net change to shareholders' funds 5,411 (22)
Shareholders' funds at 1 June 4,758 4,780
_______ ______
Shareholders' funds at 31 May 10,169 4,758
Summarised consolidated cash flow statement
for the year ended 31 May 2005
2005 2004
£'000 £'000
Net cash inflow from operating activities (see below) 3,917 196
Returns on investment and servicing of finance (249) (47)
Taxation (266) (31)
________ ________
3,402 180
Capital expenditure and financial investment (558) (194)
Acquisitions (8,154) (1,862)
Equity dividends paid to shareholders - -
Management of liquid resources - -
Financing 5,521 1,544
________ ________
Increase/(decrease) in net cash (see note 5) 211 (332)
Note: reconciliation of operating profit to net cash inflow from operating
activities
2005 2004
£'000 £'000
Operating profit 2,264 187
Depreciation charges 627 263
Goodwill amortisation 278 81
Loss on sale of tangible fixed assets 1 -
Impairment if investment 33 -
Increase in stocks (764) (237)
Increase in debtors (1,016) (246)
Increase in creditors 2,494 148
______ ______
Net cash inflow from operating activities 3,917 196
Summarised consolidated balance sheet
at 31 May 2005
2005 2004
£'000 £'000
Fixed assets
Intangible assets 6,739 2,625
Tangible assets 5,869 1,791
Investments 26 59
______ ______
12,634 4,475
______ ______
Current assets
Stocks 4,566 1,908
Debtors 5,495 1,593
Cash at bank and in hand 909 687
______ ______
10,970 4,188
Creditors: amounts falling due within (9,437) (2,544)
one year
______ ______
Net current assets 1,533 1,644
______ ______
Total assets less current liabilities 14,167 6,119
Creditors: amounts falling due after (3,801) (1,358)
more than one year
Provisions for liabilities and charges (197) (3)
______ ______
Net assets 10,169 4,758
Capital and reserves
Called up share capital 713 352
Share premium account 3,783 -
Capital redemption account 813 813
Other reserves 180 180
Profit and loss account 4,680 3,413
_______ ______
Equity shareholders' funds 10,169 4,758
Notes to the preliminary statement
31 May 2005
1. Segmental analysis
Class of business
Turnover Profit before Tax Net Assets
2005 2004 2005 2004 2005 2004
£'000 £'000 £'000 £'000 £'000 £'000
By class of business
Precision 9,454 5,533 819 250 3,385 3,140
Engineering
Medical and 14,875 - 1,510 - 4,042 -
Scientific
Unallocated central - - (65) (63) 2,813 1,618
items
Net interest - - (295) (47) - -
______ _______ _______ _______ _______ ________
Total 24,329 5,533 1,969 140 10,240 4,758
Turnover by geographical market
Precision Medical Total Total
Engineering and
Scientific
2005 2005 2005 2004
£'000 £'000 £'000 £'000
Turnover by geographical
origin
United Kingdom 5,252 14,875 20,127 1,439
Europe 4,124 - 4,124 4,018
North America 78 - 78 76
Rest of World - - - -
_______ _______ _______ ______
9,454 14,875 24,329 5,533
Turnover by geographical
destination
United Kingdom 5,110 13,373 18,483 2,081
Europe 3,402 1,253 4,655 2,913
North America 825 249 1,074 469
Rest of World 117 - 117 70
______ _______ ______ ______
9,454 14,875 24,329 5,533
2. Taxation
2005 2004
£'000 £'000
UK corporation tax 645 (2)
Foreign Tax - 1
_______ _______
Current taxation 645 (1)
Deferred taxation 23 -
_______ _______
Group tax on profit on ordinary 668 (1)
activities
3. Dividend
The Board is proposing a final dividend of 0.5p per share (2004: £Nil).
4. Earnings per share
Earnings per share has been calculated on the profit for the year of £1,301,000
(2004: £141,000) and on 11,594,530 (2004: 7,049,804) ordinary shares, being the
weighted average number of ordinary shares in issue during the year. An
adjustment of 653,485 shares (2004: Nil) has been made for the assumed
conversion of all dilutive potential ordinary shares, being the warrants and
EMI share options had been made for diluted earnings per share.
5. Analysis of net debt
1 June Cashflow Acquisition Other Exchange 31 may
2004 non-cash movements 2005
Changes
£'000 £'000 £'000 £'000 £'000 £'000
Cash at bank and in 687 211 - - 11 909
hand
Bank overdrafts and (170) - - - (3) (173)
loans
______ _______ _______ ______ ________ _______
517 211 - - 8 736
Bank loans (1,737) (1,731) - - - (3,468)
Hire purchase leases (520) 354 (463) (848) (8) (1,485)
_______ _______ _______ _______ ________ ________
(2,257) (1,377) (463) (848) (8) (4,953)
_______ _______ _______ _______ ________ ________
Net debt (1,740) (1,166) (463) (848) - (4,217)
6. Preliminary statement
This preliminary statement, which has been agreed with the auditors, was
approved by the Board on 1 September 2005. It is not the company's statutory
accounts. Statutory accounts will be sent to shareholders shortly.
The statutory accounts for the two years ended 31 May 2004 and 2005 received
audit reports which were unqualified and did not contain statements under s237
(2) or (3) of the Companies Act 1985. The statutory accounts for the year ended
31 May 2004 have been delivered to the Registrar of Companies but the 31 May
2005 accounts have not yet been filed.
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