Final Results
Avingtrans PLC
15 September 2004
Avingtrans plc
Results for the year to 31 May 2004
15 September 2004
Avingtrans plc is pleased to announce its results for the year to 31 May 2004.
Highlights
• Acquisition of Stainless Metalcraft (Chatteris) Limited announced today
• Improvement in numbers of orders during the fourth quarter, which has
continued into the first quarter of the current year
• Turnover for the year of £5.5 million (2003: £4.6 million)
• EBITDA of £0.53 million (2003: £0.56 million)
• Earnings per share before goodwill amortisation of 3.1 pence (2003: 4.2
pence)
• Net cash balance of £0.5 million (2003: £0.8 million)
• Crown (UK) Limited, a manufacturer of roadside speed camera housings,
acquired on 28 May 2004.
Commenting on the results, Ken Baker, Chairman of Avingtrans said:
'The past year has been one of challenging markets and severe pressure has been
put on the sales and margins of the company's products. However, I am pleased
that the level of orders and enquiries increased in the fourth quarter and that
this improvement has continued into the new financial year. The acquisition of
Stainless Metalcraft, announced today, represents a continuation of the
acquisition strategy that has seen B+T Spindles and Crown acquired during the
year. I look forward to to harnessing the benefits of our recent acquisitions
and the prospects for growth in the coming year.'
Contacts
Avingtrans plc 01159 499 020
Ken Baker / Steve Lawrence
Hansard Communications 020 7245 1100
Adam Reynolds / Ben Simons
Chairman's Statement
On behalf of your Directors I am pleased to announce the results of Avingtrans
plc for the year ended 31 May 2004.
In a year where trading activity remained low in all our major markets and the
value of the US Dollar against the Euro and Pound Sterling, severe pressure was
put on the sales and margins of the company's products. The trading downturn
intensified during the third quarter of the year, despite forecasts for a
recovery, and continued almost to the year-end when order intake started to
pick-up. This increase in orders has continued during the first quarter of the
current year.
Against this difficult trading background, sales for the year at £5.5 million
were an adjusted 9% up on the previous year. Increased costs reduced Earnings
per Share before goodwill to 3.1 p against 4.2p.
Two acquisitions were successfully completed during the year. Certain assets of
a precision machine spindle manufacturing and servicing company located in
Mansfield, Nottingham and a Bristol based manufacturer of roadside speed camera
poles and housings and poles for railway signalling equipment. Both acquisitions
hold leading positions in their own market place and have broadened our presence
in the supply of precision equipment and critical services to manufacturing in
the UK, Germany and USA. Following the spindle asset acquisition its operations
were integrated with those of the two existing facilities into a new 15000 sq.
ft. technology centre at Sherwood Park, Nottinghamshire.
In addition, the Company has today announced the acquisition of Stainless
Metalcraft (Chatteris) Limited for consideration of £8.1 million, including the
assumption of approximately £500,000 of debt. This acquisition will be financed
in part through a Firm Placing, which will raise £4 million and through
additional debt finance facilities. The acquisition is conditional on approval
by shareholders at an extraordinary general meeting, which will be held on 11
October 2004.
The results listed below include the full cost and cash flow effect of the
purchase of both acquisitions and the relocation to Sherwood Park.
Financial Performance
For the twelve months ended 31 May 2004, earnings before interest, tax,
depreciation and goodwill amortisation (EBITDA) was £531,000 (2003: £559,000) on
a turnover of £5,533,000 (2003: £4,647,000).
Operating profit for the period was £187,000 (2003: £293,000). Profit before tax
was £140,000 (2003: £291,000).
Earnings per share before goodwill amortisation for the year ended 31 May 2004,
was 3.1p (2003: 4.2p). Earnings per share after goodwill amortisation and full
dilution were 2.0p (2003: 3.3p).
Cash flow from operating activities for the year was £196,000 (2003: £281,000)
with cash at bank and in hand at the year-end of £687,000 (2003: £1,083,000).
The net cash balance on the 31 May 2004 was £517,000 (2003: £856,000).
The Board is not recommending a dividend (2003: nil).
Tax charges were lower than normal during the year due to losses carried forward
from prior years.
An exchange rate loss of £163,000 (2003: gain of £111,000) was recorded through
the reserves during the year on currency translation of foreign subsidiaries,
largely due to the unfavourable movement in the value of the US Dollar to the
Pound and Euro.
Review of the Year
Trading during the whole of the period under review was below expectations
across all operations. Business in the first half of the year was difficult due
to the continuing de-stocking and low level of business activity in all our
principal markets but particularly in Germany and the USA. An uplift in economic
and manufacturing activity widely forecast for the end of calendar year 2003 did
not happen and the decline in the value of the US Dollar affected the sales and
profitability. The main trading objectives during the year have been to maintain
relationships with our customers and to seek other markets for our products and
services.
The Company acquisition programme continued during the year and included the
assets and ongoing business interests of Boneham & Turner Spindles (B&T) that
were acquired in September 2003 for £400,000 and the business known as Crown
(UK) Ltd was acquired on 28 May 2004 the last day of trading of the year under
review for £1.56 million.
B&T, formerly a division of Boneham & Turner Limited, Mansfield, is a supplier
of precision powered spindles for industrial applications in the automation and
machinery markets of the EU, USA and Asia. Following the acquisition, B&T was
combined with the two existing Jena Rotary Technology Limited operations in a
new facility at Sherwood Park, North Nottinghamshire and has contributed to
sales and profits during its nine months in the Group.
Crown is based in Portishead, Bristol, and designs and manufactures housings and
stands for roadside speed cameras and gantry and trackside poles for railway
signalling. Crown, whose products carry Home Office approval, supply roadside
posts and housings for camera installations in the UK. Poles are also supplied
to the EU, Canada and Australia. Crown's audited accounts for the year to
December 2003 disclosed turnover of £2.8 million and pre-tax profits of
£614,000. At completion Crown had net assets of £564,000 and cash balances of
approximately £256,000.
Both of the acquisitions reported upon are seen as profitable growth
opportunities and a good fit for Avingtrans. The search for other suitable
acquisitions remains a strong element in the Company's growth strategy and this
is reflected in the announcement of the acquisition of Stainless Metalcraft
(Chatteris) Limited.
Capital expenditure on essential items and replacement equipment was maintained
at the planned level.
Directors and senior management
In view of the increasing workload on the senior management caused by our
accelerating acquisition programme I agreed to become Executive Chairman of the
Company with effect from 1 October 2003.
In accordance with the Articles of Association, Steven Lawrence and Stephen Bruh
retire from the Board in rotation and offer themselves for re-election at the
AGM scheduled for 11 October 2004.
Revenue Reserves
The High Court of Justice Chancery Division approved the cancellation of the
Share Premium Account of the Company on the 20 August 2003 and its transfer to
the Profit and Loss Reserve. Shareholders approved this proposal on 17 July
2003. There is no impact on the net assets of the Group. This action releases
the Company from the constraints on the payment of future dividends.
Share Options
During the year RSM Robson Rhodes LLP has drawn up a new EMI scheme in
accordance with best practice corporate governance and ABI guidelines. The new
scheme was implemented during October 2003. Copies of the Scheme are available
for inspection at Avingtrans' Registered Office during normal working hours.
Prospects
Whilst business activity continued well below expected levels during 2004, a
steady improvement in enquiry levels and order intake was experienced in the
last quarter of the year under review and this has strengthened in the first
quarter of the new year. With the acquisition of Crown the Company's outlook in
this new field is very strong and significant benefits are anticipated in the
future. Actuators, which are designed and produced at our modern factory in
Jena, Germany and distributed in both the EU and the USA, continue to be the
Company's main business line. Demand for this product remains strong, and is
once again on the increase. C&H the Group's precision finishing operation for
turbine and compressor blades has seen a significant uplift in activities since
the year end. The acquisition of Stainless Metalcraft (Chatteris) Limited
represents a significant step in the development of the Company and is expected
to increase the scale of Avingtrans' revenue materially in the coming year.
The Company is well placed to take advantage of a sustained upturn in economic
conditions in all its divisions .
On behalf of the Board of Directors I should like to thank all the employees of
the Company for their continuing efforts during the year and their contribution
to its success.
Your Board looks forward to the new year and the prospects of continued
profitable growth with cautious optimism.
K.M.Baker
Chairman
14 September 2004
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 31 May 2004
Note 2004 2003
£ '000 £ '000
Turnover -continuing operations 1 5,533 4,647
Cost of sales (3,140) (2,661)
Gross profit 2,393 1,986
Net operating expenses (2,206) (1,693)
Continuing operations 268 360
Goodwill amortisation (81) (67)
Profit on ordinary activities 1 187 293
Interest receivable 2 66
Interest payable (49) (68)
Profit on ordinary activities before taxation 1 140 291
Taxation on profit on ordinary activities 2 1 (63)
Profit for the financial year 141 228
Retained profit transferred to reserves 141 228
Earnings per share:
Basic and diluted 3 2.0p 3.3p
Basic and diluted - before goodwill amortisation 3 3.1p 4.2p
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the year ended 31 May 2004
2004 2003
£'000 £'000
Profit for the financial year 141 228
Other recognised gains and losses
- exchange (losses)/gains on translation of foreign subsidiaries (163) 111
Total recognised gains and losses relating to the year (22) 339
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
2004 2003
£ '000 £ '000
Profit for the financial year 141 228
Issue of shares - 400
Exchange (losses)/ gains on translation of foreign subsidiaries (163) 111
Net change to shareholders' funds (22) 739
Shareholders' funds at 1 June 4,780 4,041
Shareholders' funds at 31 May 4,758 4,780
SUMMARISED CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 May 2004
2004 2003
£ '000 £ '000
Net cash inflow from operating activities (see below) 196 281
Returns on investment and servicing of finance (47) (2)
Taxation 31 (135)
180 144
Capital expenditure and financial investment (194) (140)
Acquisitions (1,862) (3,371)
Equity dividends paid to shareholders - -
Management of liquid resources - -
Financing 1,544 207
Decrease in net cash (see note 4) (332) (3,160)
NOTE: RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING
ACTIVITIES
2004 2003
£ '000 £ '000
Operating profit 187 293
Depreciation charges (net of loss on sale of assets) 263 199
Goodwill amortisation 81 67
Increase in stocks (237) (101)
Increase in debtors (246) (98)
Increase /(decrease) in creditors 148 (79)
Net cash inflow from operating activities 196 281
SUMMARISED CONSOLIDATED BALANCE SHEET
at 31 May 2004
2004 2003
£ '000 £ '000
Fixed assets
Intangible assets 2,625 1,400
Tangible assets 1,791 1,522
Investments 59 59
4,475 2,981
Current assets
Stocks 1,908 1,430
Debtors 1,593 913
Cash at bank and in hand 687 1,083
4,188 3,426
Creditors: amounts falling due within one year (2,544) (1,227)
Net current assets 1,644 2,199
Total assets less current liabilities 6,119 5,180
Creditors: amounts falling due after more than one year (1,358) (400)
Provisions for liabilities and charges (3) -
Net assets 4,758 4,780
Capital and reserves
Called up share capital 352 352
Share premium account - 3,611
Capital redemption account 813 813
Other reserves 180 180
Profit and loss account 3,413 (176)
Equity shareholders' funds 4,758 4,780
NOTES TO THE PRELIMINARY STATEMENT
31 May 2004
1. SEGMENTAL ANALYSIS
Class of business
Turnover Profit before Tax Net Assets
2004 2003 2004 2003 2004 2003
£'000 £'000 £'000 £'000 £'000 £'000
By class of business
Precision Engineering 701 717 29 (19) 565 (6)
Actuators and Spindles 4,832 3,930 221 334 2,575 2,675
Unallocated central items - - (63) (22) 1,618 2,111
Net Interest - - (47) (2) - -
Total 5,533 4,647 140 291 4,758 4,780
Turnover by geographical market
Precision Actuators and
Spindles
Engineering Total Total
2004 2004 2004 2003
£ '000 £ '000 £ '000 £ '000
Turnover by geographical origin
United Kingdom 701 738 1,439 1,079
Europe - 4,018 4,018 3,509
North America - 76 76 59
Rest of World - - - -
701 4,832 5,533 4,647
Turnover by geographical destination
United Kingdom 678 1,403 2,081 1,489
Europe 23 2,890 2,913 2,708
North America - 469 469 407
Rest of World - 70 70 43
701 4,832 5,533 4,647
2. TAXATION
2004 2003
£ '000 £ '000
UK corporation tax (2) (13)
Irrecoverable ACT - 49
Foreign tax 1 37
Current taxation (1) 73
Deferred taxation - (10)
Group tax on profit on ordinary activities (1) 63
3. EARNINGS PER SHARE
Earnings per share and diluted earnings per share have been calculated on the
profit for the year of £141,000 (2003: £228,000) and on 7,049,804 (2003:
6,990,028) ordinary shares, being the weighted average number of ordinary shares
in issue during the year.
4. ANALYSIS OF NET FUNDS
Other Exchange
non-cash Move-ments
1 June Cashflow 31 May
2003 Acquisition Changes 2004
£ '000 £'000 £ '000 £ '000 £ '000 £ '000
Cash at bank and in hand 1,083 (630) 256 - (22) 687
Bank overdrafts and loans (227) 42 - - 15 (170)
856 (588) 256 - (7) 517
Debt - (1,749) - - - (1,749)
Hire Purchase leases (577) 205 - (172) 36 (508)
(577) (1,544) - (172) 36 (2,257)
Net (debt)/funds 279 (2,132) 256 (172) 29 (1,740)
5. PRELIMINARY STATEMENT
This preliminary statement, which has been agreed with the auditors, was
approved by the Board on 14 September 2004. 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 2003 and 2004 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 2003 have been delivered to the Registrar of Companies but the 31 May
2004 accounts have not yet been filed.
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