Interim Results
Embargoed: 0700hrs, 21 February 2007
Avingtrans Plc
("Avingtrans," the "Group or the "Company")
Interim Results for the Six Months Ended 30 November 2006
Highlights Six months to 30 Six months to 30 Change
November 2006 November 2005
Turnover £17,159,000 £15,701,000 +9.3%
Operating Profit £1,505,000 £1,349,000 +11.7%
Profit after tax £901,000 £804,000 +12.1%
Earnings per share before 7.6p 6.9p +10%
goodwill
Dividend 0.5p 0.5p -
* Avingtrans has again recorded its highest level of first half order intake,
turnover, profitability, net assets and earnings per share since joining
AIM in June 2002
* Acquisitions during the period of 75% of Sigma from Group's cash reserves
and 100% of B&D have added significant weight to the Company's Aerospace
Division, which now includes an operational component manufacturing
facility in China
* C&H Precision Finishers enjoyed record order intake and sales
* Jena Companies' order book stands at its highest level to date
* Metalcraft receive UK sign off for Vista Telescope Coating Plant project
Chairman, Ken Baker, commented,
"The most significant development during the first half was the full
establishment of a strong aerospace component manufacturing and servicing
division. This has been achieved not only through the acquisitions of Sigma and
B&D, and the Chinese facility subsequently coming on-stream, but through the
continuous organic growth of C&H and the synergies and cross-selling
opportunities that arise from the coming together of these businesses."
For further information please contact,
Avingtrans Plc
Ken Baker, Chairman
Stephen King, Finance Director
Tel. 01159 499 020
Hansard Group
Ben Simons
Tel. 020 7245 1100
KBC Peel Hunt Ltd
Julian Blunt
David Anderson
Tel 020 7418 8900
Chairman's Statement
I am pleased to announce the results of Avingtrans Plc for the six months
ending 30 November 2006.
Demand for the Group's products was generally strong throughout the period with
order intake, sales, profitability, net assets and earnings per share higher
than in the corresponding period last year. The order book also increased
during the period to its highest level since joining AIM in June 2002. Sales of
some low margin medical equipment were replaced by higher margin work in the
same field with sales from acquisitions making up the difference and increasing
total output by some 9.3%.
Two acquisitions were completed in the period. A 75% holding in Sigma Precision
Components Limited on 19 June 2006 and 100% of B&D Patterns Limited on 21
September 2006. The process of integrating the two within the Group's Aerospace
Division is well underway and together with C&H they form a strong basic
aerospace components manufacturing and servicing division within Avingtrans.
Sigma's plan was to build and develop a new 30,000 sq. ft manufacturing
facility in Chengdu, China for the supply of precision components to the
adolescent Chinese aerospace industry and to cover existing and increasing
demand from the EU and USA. This facility was built and became operational in
December 2006 and has now produced and sold its first components. It is
anticipated that full aerospace accreditation will be gained in March 2007.
B&D is a manufacturer and supplier of critical jet engine components. It
specialises in precision engineered gas and fuel carrying rigid pipe
assemblies, which require manufacturing to the highest quality levels using
computer numerically controlled machining as well as non-destructive testing
and X-Ray procedures. It has prestigious customers such as Rolls Royce, Messier
Dowty and Dunlop Aerospace.
Financial performance
Turnover for the six months ended 30 November 2006 was £17,159,000 (2005: £
15,701,000) an increase of 9.3%. Earnings before interest, tax depreciation and
goodwill amortisation (EBITDA) were £2,398,000 (2005: £1,974,000 as restated)
an increase of 21.5%.
Operating Profit for the period was £1,505,000 (2005: £1,349,000 as restated)
an increase of 11.7%. Profit after tax for the period increased by 12.1% to £
901,000 (2005: £804,000 as restated).
The Company had a positive cash flow from operations during the period of £
671,000 (2005: £987,000). During the period, the Company made bank debt
repayments of £342,000. Primarily as a result of the two acquisitions in the
period the net debt at 30 November 2006 rose to £11,185,000 (2005: £4,584,000),
with gearing 71% (2005: 42%). Management expects gearing to reduce by the year
end.
The comparative figures for the 6 months ended 30 November 2005 and for the
year ended 31 May 2006 have been adjusted in respect of the adoption of FRS 20
'Share based payments' to the extent of £9,000 and £25,000 respectively.
During the period the Group incurred £535,000 on capital projects in particular
in the manufacturing facility in China.
Earnings per share
Earnings per share, for the period ended 30 November 2006, before goodwill
amortisation was 7.6p (2005: 6.9p as restated) a 10% increase. Basic earnings
per share was 5.6p (2005: 5.6p as restated) and fully diluted earnings per
share was 5.5p (2005: 5.3p as restated).
Dividend
The Board has decided to pay a dividend of 0.5p for the half year to be paid on
14 May 2007 to shareholders on the register at 13 April 2007.
Acquisitions and investments
The acquisition of 75% of Sigma for a consideration of £0.3 million was
completed on 19 June 2006. The funding for the acquisition and the subsequent
investment in the manufacturing facility in Chengdu, Sichuan Province, China
was satisfied from the Group's cash reserves.
Deferred consideration of up to £6.0m for the remaining 25% interest is payable
in October 2011 dependant on Sigma's earnings before interest, tax,
depreciation and amortisation for the year ended 31 May 2011 and the level of
net debt at that date. As at 30 November 2006 creditors due after more than one
year includes £3.9m for the Directors estimation of this deferred
consideration.
On 21 September 2006 the Group completed the acquisition of B&D Patterns
Limited for consideration of up to £10.5 million, of which an initial £6.6m was
paid in cash and £0.4m satisfied by the issue of shares to the vendors. The
funding of the £6.6m was through the placing of 1,426,000 shares with an
institutional investor raising £1.8 million at £1.25 per share, with the
remainder funded through debt. The deferred consideration is subject to an
earn-out calculated by reference to B&D's profit before tax for the years ended
31 May 2007 and 31 May 2008.
Six months review
Stainless Metalcraft, the Group's largest operating subsidiary, continued to
broaden its customer base and tendered for and secured several new projects
during the period. The continued weakening of the US dollar slowed growth in
its traditional MRI scanner markets although new opportunities continue to be
developed.
The UK sign off for the VISTA Telescope Coating Plant was received prior to
shipping to the ESO facility at Paranal in Chile, with on-site completion due
in the second half of this financial year. On this project Metalcraft was
responsible for the design, manufacture, factory assembly, testing, and
installation together with subsequent commissioning & training on site.
Activity at Crown UK was higher than in the corresponding period last year.
Although the railway work continued to be delayed, three sections of the West
Coast line were tendered for. During the period further overseas roadside speed
camera markets were developed. Several new Crown designs for the next
generation of digital speed cameras were introduced and adopted by the camera
manufacturers.
Product development continued with the Vehicle Occupancy Limited prototype
camera system for the detection of occupancy levels in motor vehicles.
Order intake and sales at Jena, through its operations in Germany the UK and
USA, continued to increase during the period largely due to the ongoing
improvement in the German economy and the development and continued expansion
of the Jena industrial products division. We are also investing in productivity
enhancing and range extending equipment in Germany for delivery in second half
of the current year. Several new customers have been won.
C&H sales and order intake grew strongly across all areas of its business
during the six months under review with the emphasis on developing and
expanding the recently introduced airframe business.
Two acquisitions in the aerospace division were completed with Sigma UK
subsequently relocating its offices to B&D in Hinckley. Sigma was founded in
2004 by two widely experienced aerospace professionals who saw an opportunity
to create a business from the globalisation into emerging markets of the $7
billion aerospace precision components market. Throughout their first year of
operation Sigma provided consultancy services from its offices in the UK and
China but following customer commitment from Umeco plc it has established a
30,000 sq. ft. precision component manufacturing facility in Chengdu, China.
The new facility has been equipped with an initial phase of CNC machine tools
and employed some 20 personnel. There have been no sales from Sigma in the
first half.
B&D Patterns Ltd, the manufacturer of critical jet engine components to the
aerospace industry has recorded improved sales on the corresponding period last
year and has opened a second facility to position itself for future growth.
Directors and senior management
There was no change in the composition of the main board of directors in the
period. However, Avingtrans has continued to strengthen its senior management
and welcomes Mark Johnson Managing Director of Avingtrans' Aerospace Division,
Nigel Spring Managing Director of B&D and Kevin Donnelly General Manager of
Chengdu Sigma Precision Components, China and their respective teams.
After the successful development of Avingtrans under the current executive
team, the Board and I have been planning my succession and I have indicated my
desire to stand down as Chairman with effect from 31 May 2007. The Board
following discussion with key shareholders and management has invited Jeremy
Hamer to take over as Non-Executive Chairman of the Group and I have agreed to
act as a consultant for a 12 month follow up period. Jeremy the Senior
Non-Executive Director since June 2002 is currently Non-Executive Chairman of
Inter Link Foods plc, Glisten plc and Access Intelligence plc and was awarded
Quoted Company Awards Chairman of the year in 2006 on behalf of Glisten plc.
Together with the existing Executive Directors I know I leave the guidance of
Avingtrans in strong and capable hands for the next stage of its development.
Outlook
Order intake continues to be encouraging and the Group now enjoys record order
books. The second half has already seen the 'maiden' sales from China, new
products being manufactured at Stainless Metalcraft and the opening of a site
in Bristol by C&H to satisfy growing demand. Alongside our organic developments
we continue to seek out suitable acquisitions particularly for our Aerospace
Division. Whilst needing to be constantly aware of raw material price
fluctuations and currency movements I remain confident of further success in
the second half.
In closing I should like once again on behalf of the Board to thank all of the
employees and co-workers for their ongoing successful efforts which gives rise
for optimism for the remainder of the year and the longer term future.
K.M.Baker
Chairman
21 February 2007
Consolidated Profit and Loss Account
6 mths to 6 mths to 12 mths to
30 Nov 30 Nov 31 May
2006 2005 2006
Note Unaudited Unaudited Audited
As As
£'000 restated restated
£'000 £'000
Turnover
Continuing operations 14,617 15,701 32,490
Current period acquisitions 2,542 - -
Group turnover 17,159 15,701 32,490
Operating profit before
amortisation
Continuing operations 1,578 1,528 3,163
Current period acquisitions 251 - -
Amortisation of goodwill (324) (179) (393)
Group operating profit 1,505 1,349 2,770
Profit on ordinary activities 1,505 1,349 2,770
before interest
Net interest payable and similar (222) (190) (345)
charges
Profit on ordinary activities 1,283 1,159 2,425
before taxation
Tax on profit on ordinary 3 (382) (355) (489)
activities
Profit on ordinary activities 901 804 1,936
after taxation
Equity minority interests 6 - -
Profit for the financial period 907 804 1,936
Earnings per share 4
Basic 5.6p 5.6p 13.3p
Diluted 5.5p 5.3p 12.4p
Statement of Total Recognised Gains and Losses
6 mths to 30 Nov 6 mths to 30 Nov 12 mths
2006 Unaudited 2005 Unaudited to
£'000 As restated 31 May
£'000 2006
Audited
As
restated
£'000
Profit for the 907 804 1,936
financial period
Other recognised
gains and losses
Currency translation (37) 52 8
(losses)/gain
Total recognised 870 856 1,944
gains/(loss)
relating to the
period
Summarised Consolidated Balance Sheet
At 30 Nov 2006 At 30 Nov At 31
Unaudited 2005 May
Unaudited 2006
£'000 As restated Audited
£'000 As
restated
£'000
Fixed assets
Intangible assets 15,000 6,560 6,777
Tangible assets 10,568 6,113 6,203
Investments 15 26 15
25,583 12,699 12,995
Current assets
Stocks 4,972 4,935 3,190
Debtors due within one year 8,310 5,270 4,931
Cash at bank and in hand 580 682 1,398
13,862 10,887 9,519
Creditors: Amounts falling due (11,728) (8,561) (6,284)
within one year
Net current assets 2,134 2,326 3,235
Total assets less current 27,717 15,025 16,230
liabilities
Creditors: Amounts falling due (11,575) (3,801) (3,334)
after
more than one year
Provisions for liabilities and (281) (190) (250)
charges
Net assets 15,861 11,034 12,646
Capital and reserves
Called up share capital 866 713 771
Share premium account 6,542 3,783 4,310
Capital redemption reserve 813 813 813
Other reserves 180 180 180
Profit and loss account 7,394 5,542 6,572
Equity shareholders' funds 15,795 11,034 12,646
Equity minority interests 66 - -
15,861 11,034 12,646
Consolidated Cash Flow Statement
6 mths to 6 mths to 12 mths to 31
30 Nov 30 Nov May
2006 2005 2006 Audited
Unaudited Unaudited £'000
£'000 £'000
Net cash inflow from operating 671 987 2,710
activities
Returns on investment and servicing
of finance
Net interest (227) (206) (365)
Net cash outflow from returns on (227) (206) (365)
investment and servicing of finance
Taxation paid (171) (275) (529)
Capital expenditure and financial
investment
Purchase of fixed assets (535) (57) (393)
Sale of fixed assets 127 3 6
Development costs (86) - (9)
Net cash outflow from capital (494) (54) (396)
expenditure
and financial investment
Acquisitions and disposals
Purchase of subsidiary undertakings (7,185) (100) (100)
Net overdraft acquired with (1,413) - -
subsidiaries
Net cash outflow from acquisitions (8,598) (100) (100)
and disposals
Equity dividends (77) (71) (148)
Financing
Issue of share capital 2,327 - 585
New Loans 4,643 - -
Repayment of loan capital (342) (292) (608)
Capital element of finance lease (484) (273) (664)
payments
Net cash inflow/(outflow) from 6,144 (565) (687)
financing
(Decrease)/increase in cash (2,752) (284) 485
Reconciliation of Operating Profit to Net Cash Flow from Operating Activities
6 mths to 6 mths to 12 mths to
30 Nov 30 Nov 31 May 2006
2006 2005 Audited
Unaudited Unaudited As restated
As restated £'000
£'000 £'000
Operating profit 1,505 1,349 2,770
Depreciation of tangible fixed assets 569 446 898
Amortisation of intangible assets and 324 179 393
goodwill
Share based payment 29 9 25
(Profit) on disposal of tangible fixed (121) (3) (6)
assets
Impairment of Investment - - 11
(Increase)/decrease in stocks (662) (314) 1,127
(Increase)/decrease in debtors (1,147) 261 595
Increase/(decrease) in creditors 174 (940) (3,103)
Net cash inflow from operating 671 987 2,710
activities
NOTES
1.This interim report was neither audited nor reviewed by the
auditors. It was approved by the Board on 20 February 2006. It has been
prepared using accounting policies that are consistent with those adopted in
the statutory accounts for the year ended 31 May 2006, with the exception of
the adoption of FRS 20 "Share-based payments".
The comparative figures for the 6 months ended 30 November 2005
and for the year ended 31 May 2006 have been adjusted in respect of the
adoption of FRS 20 'Share based payments' of £9,000 and £25,000 respectively.
The cumulative prior year adjustment at the close of the year ended 31 May 2006
was £42,000
The figures for the year to 31 May 2006 were derived from the
statutory accounts for that year. The statutory accounts for the year ended 31
May 2006 have been delivered to the Registrar of Companies and received an
audit report which was unqualified and did not contain statements under s237(2)
or (3) of the Companies Act 1985.
2.This statement is being sent to shareholders of the Company and
will be available at the Company's Registered Office.
3. The taxation charge is based upon the expected rate for the year
ended 31 May 2007.
4.Earnings per share has been calculated using the weighted average
number of 16,154,181 Ordinary Shares in issue during the period (2005:
14,262,086) (Audited 2006: 14,544,793).
The weighted average number of Ordinary Shares used in the
calculation of diluted earnings per share is 16,624,725 (2005: 15,263,598)
(Audited 2006 15,574,603). This has been adjusted to assume conversion of all
dilutive potential ordinary shares, being the warrants and EMI share options.
Basic earnings per share before goodwill amortisation was 7.6p
(2005: 6.9p as restated) (Audited 2006: 16.0p as restated)
5.Capitalised goodwill amounting to £4,013,000 and £4,447,000
arising from the purchase of Sigma Precision Components Limited and B&D
Patterns Limited respectively is being amortised over twenty years on a
straight line basis. Goodwill has been calculated on book value pending a
review of the fair value of assets acquired during the period.
6. Analysis of Net Debt
1 June Cash Acquisition Inception Exchange 30 Nov
2006 flow of of movement 2006
£'000 £'000 subsidiary loans £'000 £'000
excluding and
cash and finance
overdraft leases
£'000 £'000
Cash at 1,398 (1,145) 325 - 2 580
bank and
in hand
Bank (175) (194) (1,738) - 3 (2,104)
overdraft
Cash 1,223 (1,339) (1,413) - 5 (1,524)
Debt (2,860) 342 - (4,643) - (7,161)
Hire (1,654) 484 (1,271) (65) 6 (2,500)
purchase
leases
(4,514) 826 (1,271) (4,708) 6 (9,661)
Net debt (3,291) (513) (2,684) (4,708) 11 (11,185)
7. Reconciliation of movements in Shareholders' Funds
6 mths to 6 mths to 12 mths to
30 30 Nov 31 May
Nov 2006 2005 2006
Unaudited Unaudited Audited
£'000 As restated As restated
£'000 £'000
Opening shareholders' funds 12,646 10,240 10,240
Profit for the financial 907 804 1,936
period
Other recognised gains and
losses relating to the period (37) 52 8
Dividends (77) (71) (148)
Proceeds of share issue 2,327 - 585
Charge for share based payment 29 9 25
Increase in shareholders' 3,149 794 2,406
funds
Closing shareholders' funds 15,795 11,034 12,646
Friday, 17th May 2024
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