TIDMAVG
RNS Number : 0730T
Avingtrans PLC
01 October 2014
Avingtrans plc
("Avingtrans" or the "Group")
Preliminary Results for the year ended 31 May 2014
Avingtrans plc, which designs, manufactures and supplies
critical components, modules and associated services to the
aerospace, energy and medical sectors, today announces its final
results for the year ended 31 May 2014.
Financial Highlights
-- Revenue increased by 33% to a record GBP60.3m (2013: GBP45.3m)
-- Adjusted EBITDA increased to GBP5.6m, including GBP2.6m
Bargain purchase from the acquisition of Maloney Metalcraft, which
offset the expected losses in that Company (2013: GBP3.6m)
-- Adjusted Profit Before Tax was GBP3.5m (2013: GBP1.9m)
-- Adjusted Diluted earnings per share from continuing
operations increased to 13.7 pence per share (2013: 7.0 pence per
share)
-- Cash generated from operating activities was GBP1.6m (2013: GBP0.5m outflow)
-- Continued investment in capability and capacity: GBP4.3m (2013: GBP2.8m)
-- Net debt was GBP3.6m (31 May 2013: GBP2.9m). Gearing 11% (2013: 10%)
-- Increased final dividend of 1.8 pence per share, Full year
total 2.7 pence (2013: Final 1.5 pence per share, Total 2.2 pence),
an increase of 23%
Operational Highlights
Aerospace growth boosted by acquisitions, with an increase in
revenues of 32% versus 2013
-- Full effect of Farnborough and Derby acquisitions in 2013 coming through
-- Hinckley new product introduction site is fully operational
-- C&H strong year, with new "barrelling" capability bedding-in well
-- Composites loss was reduced and the EU "Clean Skies" project progresses to plan
-- Pipe production in China commenced, although growth slower than anticipated
-- Quality & Delivery performance becoming best-in-class for key customers
-- Post year end certain assets of RMDG acquired from Tricorn plc
Energy and Medical division revenues increased by 35%, driven by
the Maloney acquisition
-- New Divisional MD and other senior management changes completed
-- The acquisition of Maloney Metalcraft affords us critical mass in the Oil & Gas sector
-- The Maloney potential prospects list is growing, in strong market conditions
-- Metalcraft China GBP1.0m phase 1 investment completed.
Production ramp up is being paced by demand from Siemens in China,
this is taking longer than they had anticipated
-- Crown's markets are gradually improving and the business was profitable in 2014
Commenting on the results, Roger McDowell, Chairman, said:
"Once again, I am pleased to report significant Group revenue
and EBITDA growth to shareholders. Driven by recent acquisitions,
revenue grew by 33% and EBITDA by 55%. Adjusted diluted earnings
per share almost doubled to 13.7 pence, assisted by a favourable
tax charge. Despite continuing investment of GBP4.3m, Group net
debt only increased modestly to GBP3.6m - lower than market
expectations - with gearing stable at 11%. As before, there is no
room for complacency. The Group saw significant currency headwinds
last year and short term forecast variation means we need to remain
agile. Aerospace remains in good health, with the recent
acquisition of RMDG Aerospace consolidating our niche market
leadership. Energy and Medical is also making headway in its
restructuring plans. The Maloney Metalcraft acquisition has proven
challenging, but the reinforced management team are getting to
grips with the recovery. Importantly, we have also strengthened our
Board this year, welcoming Les Thomas to the Group. We remain
positive about the future and a 1.8 pence per share final dividend
is proposed, making 2.7 pence for the year, an increase of
23%."
Enquiries:
Avingtrans plc tel. 01159 499 020
Roger McDowell, Chairman
Steve McQuillan, Chief Executive Officer
Stephen King, Chief Financial Officer
Numis
David Poutney (Corporate Broking) 0207 260 1000
Richard Thomas (Corporate Finance and Nominated Adviser)
Newgate Threadneedle 020 7653 9850
(Financial PR)
Josh Royston / Heather Armstrong
About Avingtrans plc:
Avingtrans has become a significant organisation in the design,
manufacture and supply of critical components, systems and
associated services to global industrial markets from two
divisions: Aerospace and Energy and Medical.
Aerospace
Sigma Components Ltd - UK and China
Sigma is a market leader in rigid and flexible pipe assemblies
and components for prestigious aerospace customers such as Rolls
Royce, Safran and Meggitt. Sigma also manufactures precision prismatic
components and composite components for the aerospace industry
from its purpose-built facilities in the UK and Chengdu, China.
Sigma Components operates from a number of sites, as follows:
Hinckley, UK: centre for rigid pipe assemblies and components
and new product introduction.
Swadlincote and Derby, UK: satellite facilities to Hinckley, producing
pipe assemblies
Farnborough, UK: centre for fabrications, ducts and other complex
assemblies
Chengdu, China: centre for precision prismatic components, now
also producing pipe assemblies
Buckingham, UK: centre for composite parts and machining services
to customers in Aerospace, F1/Motorsport and industrial markets.
Sandiacre, UK (C&H): centre for precision polishing and specialist
finishing of aero-engine turbine blades, compressor blades and
vanes for the power generation industries.
Energy and Medical
Stainless Metalcraft Ltd - Chatteris, UK and Chengdu, China
Provider of safety-critical equipment for the energy, medical,
science and research communities, worldwide, specialising in
precision pressure and vacuum vessels and associated fabrications,
sub-assemblies and systems.
Maloney Metalcraft Ltd - Aldridge, UK (formerly Exterran UK)
Designs, manufactures and services oil and gas extraction and
processing equipment, including process plant for dehydration,
sweetening, drying and compression.
Crown International Ltd - Portishead, UK
Designs and manufactures market-leading pole and support systems
for roadside signage and safety cameras, rail track signalling
and gantries.
Chairman's Statement
Prudent strategic construction of the group continued in the
period, with the acquisition of Maloney Metalcraft (formerly
Exterran UK) followed, post year-end, by the acquisition of certain
assets of RMDG Aerospace from Tricorn plc. Coupled with on-going
investment in the group of some GBP4.3m this year and new senior
management appointments, this represents a significant investment
plan and change management task for our divisions. We have also
recently strengthened the Board, by appointing a new non-executive
director, Les Thomas, CEO of Ithaca Energy Inc, to bolster our Oil
and Gas sector credentials. Our passion for the Civil Aerospace,
Energy and Medical Imaging markets continues and these markets
provide strong medium-term prospects for growth, although some
short-term adjustments to forecasts have been required in the
current financial year, due to volume and mix effects with key
customers.
During the period, we invested in skills at all levels, notably
a new Managing Director for the Energy and Medical division, Austen
Adams and (post year end) a new NED for Energy and Medical, Gareth
Job. These recruitments demonstrate our focus on the Oil and Gas
market in particular. In Aerospace, a fortified senior team is in
place under Mark Johnson. We are delighted to welcome all of our
new recruits to Avingtrans. These stronger divisional management
teams are working hard to optimise their respective strategies and
structures for the future.
In our Aerospace division, the acquisitions made over the last
two years are generally integrating well and cementing our
leadership position with key customers. Further reshaping to
optimise the divisional performance is underway. As noted at the
interims, the overall EBIT for the division is returning to
respectable levels, though we are not complacent about this.
Customers see Sigma as a key partner, with excellent product
quality and delivery performance and a progressively capable
technology development capability.
At Energy and Medical, the volume of change in the period means
we are yet to see the financial results come through (excluding any
one-off accounting profits associated with the acquisition of
Maloney). A new leadership team, integration of Maloney and
Metalcraft to tackle the Oil and Gas and Nuclear decommissioning
markets, development of Energy prospect pipelines and further
investment in China (for Siemens) are all elements of a deep change
programme and we believe that investors will only begin to see the
fruits of this activity in the current financial year.
During the year, we embraced the government sponsored
world-class supply chain initiative, "Sharing in Growth" (SiG) at
both Sigma and Metalcraft and we have been further assisted in this
regard by Rolls Royce. This programme sets both divisions on a path
to excellence, which we believe will enhance long-term returns for
investors. We have dovetailed SiG with the implementation of the
new Epicor manufacturing system across several sites, to good
effect so far.
Although, it is pleasing once more to report results for the
year in line with expectations, investors will note some headwinds
that we must navigate successfully. For example, adverse exchange
rates reduced group profits by GBP0.35m (approximately 10%) in the
period and we continue to be impacted by exchange rates in the
current financial year. Orders remain at high levels, with
Aerospace signing further new long term contracts in the year.
Acquisitions boosted revenue growth to 33% and adjusted EBITDA grew
by 55%, to GBP5.6m (including the GBP2.6m Bargain purchase from the
acquisition from Exterran, which offset the expected losses in
Maloney Metalcraft) (note 2 reconciles EBITDA to adjusted EBITDA).
Operating profit on continuing operations has increased year on
year by GBP1.2m. Adjusted diluted earnings per share almost doubled
to 13.7 pence. Unadjusted diluted earnings per share increased to
10.8 pence from 4.8 pence. Gearing rose marginally to 11% on Net
debt nudging up to GBP3.6m. Therefore, the balance sheet remains in
good shape, despite the previously mentioned on-going investment in
the year, of GBP4.3m.
Nonetheless, our performance must still improve. For Aerospace,
although Composites losses were reduced and Farnborough turned in a
steady profit, both are capable of improvement. At Energy and
Medical, bottom line losses in the year were partly justified by
Maloney Metalcraft acquisition costs and subsequent restructuring.
As expected, Metalcraft China made larger start-up losses than
originally intended, due to the slower roll-out of the new Siemens
product, which is an on-going issue. The new divisional leadership
team have been busy clearing the decks, but a sizeable task
remains, to integrate Metalcraft and Maloney, fully utilise our
engineering capability and restore divisional profitability to
respectable levels.
Finally, an increased final dividend, of 1.8 pence per share,
rendering a full year total of 2.7 pence, underlines our commitment
to consistently improve returns to our shareholders. On behalf of
all of our customers and investors, I would again like to take this
opportunity to thank our employees for their hard work and
dedication to deliver excellent quality engineering products and
services.
Roger McDowell
Chairman
30 September 2014
Business Review
Group Performance
Strategy
We are a precision engineering group, operating in
differentiated, specialist niches in the supply chains of many of
the world's best known engineering OEMs, for example: Rolls Royce,
Siemens and Safran. Our core strategy is to build market-leading
niche positions in our chosen sectors. We continue to focus on our
Aerospace, Energy and Medical market niches. Recent acquisitions
enable Sigma and Metalcraft to develop the critical mass to achieve
leadership in their respective sectors.
Our core businesses have the capability to engineer products in
Europe and produce those products partly or wholly in Asia,
allowing us and our customers to access low cost sourcing at
minimum risk, as well as positioning us neatly in the development
of the Chinese and Asian markets for our products. Sigma and
Metalcraft are both well established in China, providing integrated
supply chain options for our customers.
Niche Market Positioning
Aerospace: Our strength lies in civil aerospace, where we
produce pipes for the majority of aero-engine suppliers into the
large civil airliner market; and where we enjoy market leadership
in Europe, as well as a leading position as an independent supplier
globally. In addition, we are building a position in assemblies and
fabrications beyond pipes - eg in ducts, nacelles, etc - that will
allow us to access an even larger market niche. We also have UK
market leadership in the domain of blade polishing and finishing
through Sigma's C&H subsidiary.
Energy and medical: Following the Maloney Metalcraft
acquisition, we can cement our position as a leading European
supplier of oil and gas processing modules, vertically integrating
this capability with the vessel manufacturing capability at
Metalcraft. This same vertical integration capability lends itself
to the "new nuclear" and nuclear decommissioning markets, as well
as a variety of other niches in the renewable energy sector and
emerging markets like shale gas.
Metalcraft's cryogenic vessel manufacturing pedigree, spanning
over 40 years, makes us a supplier of choice to OEMs in markets
where this capability is critical; notably in MRI, or related
sectors. We enjoy a global market leading position in this
particular supply niche.
We have strengthened our capability to manage sophisticated
outsourced manufacturing programmes for OEMs, thus accessing
business of enduring value, with the prospect of further sales
growth. We remain focused on markets where we can sustain a
significant, competitive, long term advantage and where the
regulatory and technical requirements provide competitive barriers
to entry.
Operations
Aerospace Division (Sigma)
Operational Key Performance Indicators (KPIs)
2014 2013
-- Customer Quality - defects in parts per million (ppm)
3,732
3,082
-- Customer on time in-full deliveries (%) 80 78
-- Annualised staff turnover (%) 11.9 14.2
-- Health, Safety and Environment incidents per head per annum 0.1 0.1
Sigma's progress this year was very positive overall. The 2013
acquisitions in Derby and Farnborough integrated well into the
Group and produced consistent profits. Post year end, the
acquisition of the RMDG assets from Tricorn plc further strengthens
our leadership status in the aerospace pipes niche. During the
year, losses at the Composites business reduced and we were able to
begin to capitalise on the composites capability that we are
developing. We continue to work to develop new capabilities and
products, to broaden our appeal. Customers recognize Sigma as an
important supplier in their increasingly global supply chains.
Operations (continued)
Aerospace Division (Sigma) (continued)
The civil aerospace market remains robust, with Airbus and
Boeing continuing to report very strong 20-year projections in
their latest outlooks. At the recent Farnborough air show, Boeing
predicted a 5% compound growth in passenger traffic for the next 20
years, leading to demand for over 36,000 new large passenger
aircraft in that time period. This trend is very positive for
Sigma, although, in contrast, we have seen some short-term
plateauing of demand in recent months. This is a function of the
main aircraft and engine programmes that we participate in. Some
older engine types have seen demand falling, whilst newer types are
yet to compensate fully for the reductions in our mix. Stronger
growth is expected to resume in the second half of the current
financial year. In response, we are working hard to broaden our
offering and our customer base, to take full advantage of the macro
market dynamics.
Measured capital expenditure at Sigma continued, as has
organisational development, through management and capability
strengthening, as required. Sigma's world-class supplier journey
continues and our OEM partners appreciate the improvements in
delivery and quality that our focus is bringing. Plans to establish
Sigma in the USA are progressing.
Aerospace division sales were up by 32% (to GBP38.5m) when
compared to the prior year. Organic sales growth (excluding the two
recent acquisitions) was 8%. Our order book remains at record
levels, with over GBP200m of long term agreements having been
signed in the last 18 months - some underpinning current business
and some providing future growth.
Overall Aerospace EBIT margins were 12%, a pleasing improvement,
driven mainly by improving profitability at Farnborough and reduced
losses at Composites, though both of these sites remain below our
desired run rate for profitability. Profits at Derby, Hinckley,
Chengdu and Sandiacre (C&H) were reassuringly consistent. We
plan for margins at Composites and Farnborough to improve in the
current financial year, though this will partly be dependent on
planned restructuring, following the recent RMDG acquisition.
Briefly summarising the main developments at the Aerospace
sites:
-- Hinckley's progress was slowed somewhat by changes in volumes
of older and newer product mix and transfers to other sites.
However, the site performance was good and the "Sharing in Growth"
programme, driven by Rolls Royce and others, progressed well. The
new Epicor IT system is up and running at Hinckley now too.
-- Derby also saw some product mix effects in the year, but has
integrated into Sigma well, achieving consistent profitability and
having significantly improved delivery performance to key
customers.
-- Farnborough's performance improved markedly in the period and
the site is now profitable. Delivery and quality improvements are
encouraging, though with further room for improvement. The new
Epicor system has helped to drive operational improvements on site
in the year and is running smoothly.
-- Chengdu's sales growth was slower in the last 12 months than
previously, largely because of the mix changes noted above.
However, the capacity of the site will be increased again during
the current period, in anticipation of further customer demands and
the need to expand pipe production in China.
-- Buckingham (Composites) saw reduced losses in the year, as
sales grew once more. We are making good headway with investment in
composite aerospace components, in line with the EU "Clean Sky"
contract.
-- Sandiacre (C&H) had another strong and consistent year,
with the "barreling" investment now being used in volume
production.
-- Post year end, Sigma acquired certain assets of RMDG
(Swadlincote) from Tricorn plc. This is a site that dovetails well
into the division, being a rigid pipe manufacturing centre. It also
strengthens Sigma's relationships with key customers including
Aircelle (Safran) and Bombardier, as well as bringing some new
customers to the business.
Energy and Medical Division (Metalcraft, Maloney Metalcraft and
Crown)
Operational Key Performance Indicators (KPIs)
2014 2013
-- Customer Quality - defect free deliveries (%) 99.3 98.8
-- Customer on time in-full deliveries (%) 92.5 87.1
-- Annualised staff turnover (%) 8.6 9.3
-- Health, Safety and Environment incidents per head per annum 0.2 0.4
Operations (continued)
Energy and Medical Division (Metalcraft, Maloney Metalcraft and
Crown) (continued)
Headline revenue growth of 35% was driven by the acquisition of
Maloney Metalcraft in July 2013. Adjusting for this, divisional
revenue actually reduced by 7% in the period. This was entirely
attributable to reduced sales to Siemens in the MRI market, where
issues with the new product roll-out, entirely beyond our control,
affected output. Discussions with Siemens are on-going, to seek
ways to redress the balance. This resulted in on-going start-up
losses in China, as anticipated, as well as losses in the UK
Metalcraft business. The overall EBIT loss for the division, of
-6%, was therefore worse than anticipated, though it should be
noted that this figure also includes certain restructuring and
acquisition costs associated with Maloney. A bright point for the
division was Crown's return to modest profitability in the
year.
Investors will recall that the acquisition price of GBP1 for
Maloney indicated a business in some distress and, thus, we did
expect losses at Maloney in the first year, both operationally and
as a result of restructuring of the division. As anticipated, the
"bargain profit" on acquisition balanced the initial losses and the
benefits to investors of this reshaped business will only be
realised in the current year and beyond. However, we can now see
substantial longer term benefits still to be gained from the
further integration of Maloney and Metalcraft.
Favourable market drivers remain intact. A recent GE report
anticipates compound annual growth of world energy consumption of
just over 2% over the next decade, with gas, nuclear and wind
energy being the expected winners in a shifting energy supply mix.
The global medical imaging market is expected to grow by over 5%
per annum through to 2019, according to industry analysts, driven
by conditions associated with an ageing global population. These
trends remain positive for the division and underpin our
strategy.
Summarising the situation at the Energy and Medical sites:
-- Metalcraft, Chatteris: The roll-out of the new Siemens
product did not proceed as anticipated, for reasons beyond our
control and the Siemens business with Metalcraft declined in the
year. Cummins volumes also remained weak and are not now
significant in our forward planning. Other customers in the UK
showed signs of growth - eg Heatric (Meggitt) where volumes are
increasing from a low base. Nuclear decommissioning in the UK looks
positive, though the sales to this market in the year were
modest.
-- Metalcraft, Chengdu: The fit-out of the factory continued,
albeit moderated by the slower roll out of the Siemens products.
Other Far East Medical customers continue to develop their
activities with us and we anticipate some further capex investment
to meet their needs. Start-up losses were therefore higher than in
our original plans for the facility.
-- Maloney Metalcraft, Aldridge: This business was acquired from
Exterran in July 2013 for GBP1 and we continue to work on restoring
its profitability. Operational losses were largely in line with
expectations in the year, as well as restructuring costs to
integrate the business into the division. Whilst we were encouraged
by early contracts with Porvair, we are yet to convert other
significant prospects in the pipeline. However, the prospect bank
continues to grow strongly, though we would expect to win only a
proportion of this business.
-- Crown grew again in the year, with sales increasing from a
low base. The result was a welcome, if modest, profit for the
period and market conditions continue to steadily improve.
Financial Performance
Revenue: record sales
Full year Group revenue was up by more than 33%, to a record
GBP60.3m (2013: GBP45.3m). Aerospace saw over 32% growth, lifted by
the acquisitions made in 2013. Energy and Medical saw 35% growth
overall, due to the acquisition of Maloney in the year. However,
excluding Maloney, there was a 7% reduction in Energy and Medical,
predominately due to on-going issues with new Siemens product
roll-out.
Profit: underlying margins improving
Adjusted EBITDA, including the GBP2.6m Bargain purchase from the
acquisition of Maloney Metalcraft which offset the expected losses
in that Company (note 2), was up by 55%, to GBP5.6m (2013:
GBP3.6m). Aerospace profits continued to be suppressed both by
on-going losses at Composites (as anticipated) and by lower running
rate profits at Farnborough albeit that both were trending
positively. Issues with the with new Siemens product roll-out led
to losses in Energy and Medical.
Gross margins were 24% (2013: 26%), adversely impacted by the
Maloney acquisition early in the year. The underlying business
improved to 27%. Adjusted PBT (note 2) also increased markedly, up
by 78% to GBP3.5m (2013: GBP1.9m), despite adverse currency
effects, amounting to GBP0.3m in the period.
Financial Performance (continued)
Tax: utilising benefits
The effective rate of taxation was a 15.3% credit, resulting
from Research and Development tax credits in the UK, losses
utilised in China and the reduction in the rate of corporation tax
reducing deferred tax provisions. The tax position is expected to
"normalise" in the coming years, though we anticipate some on-going
benefits - eg R&D tax credits.
Earnings per Share (EPS): substantial progress
Adjusted diluted earnings per share almost doubled to 13.7p
pence per share (2013: 7.0 pence per share), based on 28.1 million
shares (diluted weighted average).
Funding and Liquidity: Balance sheet remains robust
The net cash inflow from operating activities was GBP1.6m (2013:
GBP0.5m outflow), after a cash outflow from operations at Maloney
Metalcraft of GBP2.2m, which was slightly higher than expected.
Net indebtedness (note 7) at year end stood at GBP3.6m (2013 Net
Debt: GBP2.9m). Balance sheet gearing was 11% (2013: 10%).
Dividend: progression confirmed
The Board again voted to underline our progressive dividend
policy and we are pleased to be able to recommend at the AGM an
improved final dividend of 1.8 pence per share (2013: 1.5 pence per
share). This will be paid on 12 December 2014 to shareholders on
the register at 7 November 2014.
The Group continues to focus on exciting trading opportunities
in the Aerospace and Energy sectors and we see further prospects to
develop our offering, which should deliver long term growth and
shareholder value. The continued backing of our investors, coupled
with a positive relationship with the Group's principal bankers,
means we expect to have more than adequate financial resources to
continue to invest in the business. We also continue to develop
relationships with an array of new and potential stakeholders,
assisted by our consistent dividend track record.
People
During the period, we continued to strengthen our management
teams in both divisions, including integration of the senior
managers in the recently acquired businesses. In Aerospace, a
senior management reorganisation was completed, recognising the
significant changes necessary after several recent acquisitions. A
similar strengthening exercise is underway in Energy and Medical,
following the Maloney acquisition and the appointment of Austen
Adams as Divisional Managing Director, after the retirement of
Peter Kenny.
Each of the businesses augmented its base of skilled engineering
and technical personnel, with intellectual property development
becoming more prevalent in the reshaped group. Skills availability
remains challenging, but we do not expect to be constrained by any
shortages and we continue to invest in skills - eg apprenticeships
- at several locations. Both divisions increased headcount in the
last year, but the output per employee also continued to
improve.
Post year end, we acted to strengthen our non-executive
leadership team, with the appointment of Les Thomas, the CEO of
Ithaca Energy Inc, to the plc Board and the appointment of Dr
Gareth Job, of Technip, to the Energy and Medical Divisional Board.
Both appointments underline our commitment to the Energy market -
especially Oil & Gas.
Outlook
The group is now a niche engineering market leader in the
Aerospace, Energy and Medical sectors. With attractive structural
growth markets and durable customer relationships, we remain
cautiously confident about the future of Avingtrans,
notwithstanding any short term issues with product mix and currency
exchange rates. The world economic outlook is also broadly
positive, despite current geopolitical stresses. Prospects for
Civil Aerospace and Oil & Gas, in particular, are exciting.
Our strategy has already produced significant new business wins
that support our results and provide good visibility of longer term
earnings. We have an excellent customer base to build on and
differentiated product niches to develop that offer a degree of
protection to market cycles. We are clearly well placed to benefit
from further market consolidation.
Our recent acquisitions emphasise our intention to build
shareholder value through targeted M&A activity. Although we
cannot state that this will result in any further transactions
during the current financial period, we will pursue any opportunity
to enhance long-term value.
Sigma and Metalcraft are clear leaders in their chosen niche
markets, providing customers with consistent quality as part of a
world class supplier journey, with our growing Chinese presence
providing a crucial competitive advantage. Investors are once more
invited to endorse our strategy and join us in developing a great
British engineering story. Thank you for your support.
Roger McDowell Steve McQuillan Stephen King
Chairman Chief Executive Officer Chief Financial Officer
30 September 2014 30 September 2014 30 September 2014
Consolidated Income Statement
for the year ended 31 May 2014 Note 2014 2013
GBP'000 GBP'000
Revenue 1 60,265 45,280
Cost of sales (45,808) (33,624)
--------- ---------
Gross profit 14,457 11,656
Distribution costs (1,266) (712)
Share based payment expense (46) (40)
Acquisition costs (171) (288)
Restructuring costs (269) -
Start up costs - China (318) -
Amortisation of intangibles from business combinations (137) (283)
Other administrative expenses (12,181) (8,777)
--------- ---------
Total administrative expenses (13,122) (9,388)
Bargain purchase on acquisition (note 5) 2,615 -
--------- ---------
Operating profit 1 2,684 1,556
Finance income 8 6
Finance costs (166) (225)
--------- ---------
Profit before taxation 2,526 1,337
Taxation 3 388 (37)
--------- ---------
Profit after taxation from continuing operations 2,914 1,300
Profit after taxation from discontinued operations - 6,197
Profit for the financial year attributable to equity shareholders 2,914 7,497
========= =========
Earnings per share:
From continuing operations
- Basic 4 10.6p 4.9p
- Diluted 4 10.4p 4.8p
From continuing and discontinued operations
- Basic 4 10.6p 28.3p
- Diluted 4 10.4p 27.6p
========= =========
Consolidated statement of Comprehensive income
2014 2013
GBP'000 GBP'000
Profit for the year 2,914 7,497
Other comprehensive income for the year, net of tax:
Items that may/will subsequently be reclassified to profit or loss
Exchange differences on translation of foreign operations (357) (308)
Exchange differences reclassified on disposal of subsidiary undertakings - (399)
Total comprehensive income for the year attributable to equity shareholders 2,557 6,790
======== ========
Exchange differences recycled on disposal of subsidiary
undertakings relates to discontinued operations.
Consolidated statement of changes in equity
at 31 May 2014
Capital
Share redemp- Trans-
Share premium tion Merger lation Other Invest-ment in Retained
capital account reserve reserve reserve reserves own shares earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 June 2012 1,302 9,787 814 402 467 180 (281) 11,021 23,692
Ordinary shares
issued 51 518 - - - - - - 569
Dividends paid - - - - - - - (260) (260)
Investment in own
shares - - - - - - (316) - (316)
Share-based
payments - - - - - - - 40 40
--------- -------- -------- -------- -------- --------- ---------------- ---------- -------
Transactions with
owners 51 518 - - - - (316) (220) 33
Profit for the
year - - - - - - - 7,497 7,497
Other
comprehensive
income
Recycled on
disposal of
subsidiary
undertakings - - - - (399) - - - (399)
Exchange rate
loss - - - - (308) - - - (308)
--------- -------- -------- -------- -------- --------- ---------------- ---------- -------
Total
comprehensive
income for the
year - - - - (707) - - 7,497 6,790
--------- -------- -------- -------- -------- --------- ---------------- ---------- -------
Balance at 31 May
2013 1,353 10,305 814 402 (240) 180 (597) 18,298 30,515
========= ======== ======== ======== ======== ========= ================ ========== =======
At 1 June 2013 1,353 10,305 814 402 (240) 180 (597) 18,298 30,515
Ordinary shares
issued 26 513 - - - - - - 539
Dividends paid - - - - - - - (599) (599)
Investment in own
shares - - - - - - (403) - (403)
Share-based
payments - - - - - - - 46 46
--------- -------- -------- -------- -------- --------- ---------------- ---------- -------
Transactions with
owners 26 513 - - - - (403) (553) (417)
Profit for the
year - - - - - - - 2,914 2,914
Other
comprehensive
income
Exchange loss - - - - (357) - - - (357)
--------- -------- -------- -------- -------- --------- ---------------- ---------- -------
Total
comprehensive
income for the
year - - - - (357) - - 2,914 2,557
--------- -------- -------- -------- -------- --------- ---------------- ---------- -------
Balance at 31 May
2014 1,379 10,818 814 402 (597) 180 (1,000) 20,659 32,655
========= ======== ======== ======== ======== ========= ================ ========== =======
Consolidated Balance Sheet
at 31 May 2014 2014 2013
GBP'000 GBP'000
Non current assets
Goodwill 9,557 9,557
Other intangible assets 2,691 2,307
Property, plant and equipment 12,607 10,338
Deferred tax 83 70
Available for sale financial assets - -
---------- ----------
24,938 22,272
Current assets
Inventories 11,071 10,048
Trade and other receivables 17,740 16,478
Current tax asset 104 40
Cash and cash equivalents 7,204 8,881
---------- ----------
36,119 35,447
Total assets 61,057 57,719
========== ==========
Current liabilities
Trade and other payables (15,811) (14,219)
Obligations under finance leases (773) (593)
Borrowings (6,436) (6,943)
Current tax liabilities (129) (539)
Provisions (689) -
Total current liabilities (23,838) (22,294)
========== ==========
Non current liabilities
Borrowings (2,267) (2,859)
Obligations under finance leases (1,314) (1,091)
Deferred tax (983) (960)
---------- ----------
Total non-current liabilities (4,564) (4,910)
---------- ----------
Total liabilities (28,402) (27,204)
========== ==========
Net assets 32,655 30,515
========== ==========
Equity
Share capital 1,379 1,353
Share premium account 10,818 10,305
Capital redemption reserve 814 814
Merger reserve 402 402
Translation reserve (597) (240)
Other reserves 180 180
Investment in own shares (1,000) (597)
Retained earnings 20,659 18,298
Total equity attributable to equity holders of the parent 32,655 30,515
========== ==========
Consolidated Cash Flow Statement
for the year ended 31 May 2014 2014 2013
GBP'000 GBP'000
Operating activities
Cash flows from operating activities 1,787 405
Finance costs paid (166) (262)
Income tax paid (71) (637)
--------- ---------
Net cash inflow/(outflow) from operating activities 1,550 (494)
--------- ---------
Investing activities
Acquisition of subsidiary undertakings (note 5) 2,039 (3,746)
Disposal of subsidiary undertakings (net of cash) - 12,398
Finance income 8 6
Purchase of intangible assets (1,275) (765)
Purchase of property, plant and equipment (2,992) (2,072)
Proceeds from sale of property, plant and equipment 320 7
--------- ---------
Net cash (used)/generated by in investing activities (1,900) 5,828
Financing activities
Equity dividends paid (599) (260)
Repayments of bank loans (680) (536)
Repayments of obligations under finance leases (786) (994)
Proceeds from issue of ordinary shares 137 253
Borrowings raised 1,188 1,584
--------- ---------
Net cash (outflow)/inflow from financing activities (740) 47
Net (decrease)/increase in cash and cash equivalents (1,090) 5,381
Cash and cash equivalents at beginning of year 2,681 (2,353)
Effect of foreign exchange rate changes on cash (163) (347)
--------- ---------
Cash and cash equivalents at end of year 1,428 2,681
--------- ---------
Cash flows from operating activities:
for the year ended 31 May 2014
2014 2013
GBP'000 GBP'000
Continuing operations
Profit before income tax from continuing operations 2,526 1,337
Profit before income tax from discontinued operations - 274
Adjustments for:
Depreciation 1,229 1,126
Amortisation and impairment of intangible assets 891 830
Profit on disposal of property, plant and equipment (261) -
Finance income (8) (6)
Finance expenses 166 262
Share based payment charge 46 40
Bargain purchase on acquisition (note 5) (2,615) -
Changes in working capital
Increase in inventories (146) (2,259)
Decrease/(increase) in trade and other receivables 1,564 (2,798)
(Decrease)/increase in trade and other payables (1,611) 1,593
Other non cash changes 6 6
Cashflows from operating activities 1,787 405
======= =======
Notes to the Preliminary Statement
31 May 2014
1 Segmental analysis
Energy Unallocated
and Central
Year ended 31 May 2014 Aerospace Medical items Total
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 38,528 21,737 - 60,265
========= ======== =========== ========
Operating profit/(loss) 4,350 (1,243) (423) 2,684
Net finance costs (158)
Taxation 388
--------
Profit after tax 2,914
========
Segment non-current assets 14,419 10,519 - 24,938
Segment assets 35,400 21,947 3,710 61,057
--------- -------- ----------- --------
Segment liabilities (14,211) (10,871) (3,320) (28,402)
--------- -------- ----------- --------
Net assets 21,189 11,076 390 32,655
========= ======== =========== ========
Energy and Medical results includes the acquisition of the
Exterran UK limited (renamed Maloney Metalcraft) which contributed
GBP6,686,000 and GBP2,195,000 to Group revenue and loss after tax
respectively, which was offset above by the GBP2,615,000 bargain
purchase on acquisition (note 5).
Energy Unallocated
and Central
Year ended 31 May 2013 Aerospace Medical items Total
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 29,141 16,139 - 45,280
========= ======== =========== ========
Operating profit/(loss) 1,949 258 (651) 1,556
Net finance costs (219)
Taxation (37)
--------
Profit after tax 1,300
========
Segment non-current assets 13,714 8,558 - 22,272
Segment assets 34,592 16,951 6,176 57,719
--------- -------- ----------- --------
Segment liabilities (17,724) (6,114) (3,366) (27,204)
--------- -------- ----------- --------
Net assets 16,868 10,837 2,810 30,515
========= ======== =========== ========
Notes to the Preliminary Statement (continued)
31 May 2014
Geographical
2014 2013 2014 2013
Non-current Non-current
Revenue Revenue assets Assets
GBP'000 GBP'000 GBP'000 GBP'000
United Kingdom 54,416 39,461 21,737 19,804
Europe 5,488 6,059 - -
North America 896 700 - -
Rest of World 3,614 1,725 3,201 2,468
Eliminations (4,149) (2,665) - -
60,265 45,280 24,938 22,272
========= ======= =========== ===========
The Group has Aerospace revenue of GBP13,314,000 (2013:
GBP10,612,000) and Energy & Medical revenue of GBP7,597,000
(2013: GBP9,661,000) with single external customers under common
control, which each represent more than 10% of the Group's
revenue.
2 Adjusted Earnings before interest, tax, depreciation and amortisation
2014 2013
GBP'000 GBP'000
Profit before tax 2,526 1,337
Share based payment expense 46 40
Acquisition costs 171 288
Restructuring costs 269 -
Start up costs - China 318 -
Amortisation of intangible assets from business combinations 137 283
------- -------
Adjusted profit before tax 3,467 1,948
Finance income (8) (6)
Finance cost 166 225
------- -------
Adjusted Earnings before interest, tax and amortisation ('EBITA') 3,625 2,167
Depreciation 1,229 924
Amortisation of other intangible assets 754 534
Adjusted Earnings before interest, tax, depreciation and amortisation ('EBITDA') 5,608 3,625
======= =======
The Directors believe that the above adjusted earnings are a
more appropriate reflection of the Group performance and should not
adjust for the GBP2,615,000 bargain purchase on acquisition which
offset the expected losses at Maloney Metalcraft in the period
since acquisition.
3 Taxation
2014 2013
GBP'000 GBP'000
Current tax (214) 145
Deferred tax (174) (108)
(388) 37
======== ========
Notes to the Preliminary Statement (continued)
31 May 2014
4 Earnings per ordinary share
2014 2013
Number Number
Weighted average number of shares - basic 27,363,979 26,463,694
Share option adjustment 716,303 737,649
Weighted average number of shares - diluted 28,080,282 27,201,343
=========== ==========
2014 2013
GBP'000 GBP'000
Earnings from continuing operations 2,914 1,300
Share-based payments 46 40
Restructuring costs 269 -
Start up costs - China 318 -
Acquisition costs 171 288
Amortisation of acquisition related intangibles 137 283
Adjusted earnings from continuing operations 3,855 1,911
=========== ==========
From continuing operations:
Basic earnings per share 10.6p 4.9p
Adjusted basic earnings per share 14.1p 7.2p
Diluted earnings per share 10.4p 4.8p
Adjusted diluted earnings per share 13.7p 7.0p
Earnings from discontinued operations -6,197
=====
From discontinued operations:
Basic earnings per share -23.4p
Diluted earnings per share -22.8p
Earnings attributable to shareholders 2,914 7,497
Share-based payments 46 40
Restructuring costs 269 -
Start up losses - China 318 -
Acquisition costs 171 288
Amortisation of acquisition related of intangibles 137 283
Adjusted earnings attributable to shareholders 3,855 8,108
======= =====
Basic earnings per share 10.6p 28.3p
Adjusted basic earnings per share 14.1p 30.6p
Diluted earnings per share 10.4p 27.6p
Adjusted diluted earnings per share 13.7p 29.8p
Notes to the Preliminary Statement (continued)
31 May 2014
5 Acquisitions
Business combinations - Maloney Metalcraft Limited
On 3 July 2013 the Group acquired 100 percent of the issued
share capital of Maloney Metalcraft Limited (formerly Exterran (UK)
Limited). The provisional net assets at the date of acquisition
were as follows:
Fair value of assets and liabilities acquired GBP'000
Property, plant and equipment 664
Inventories 888
Trade and other receivables 2,924
Current tax asset 189
Cash and cash equivalents 2,398
Trade and other payables (including provisions) (3,905)
Deferred tax (184)
-------
Net assets 2,974
Intangibles assets identified -
Goodwill -
2,974
=======
Fair value of consideration transferred:
Cash -
Retention bonuses accounted for as consideration 359
-------
Consideration 359
Cash acquired (2,398)
Acquisition costs charged to expenses 171
-------
Net cash paid relating to the acquisition 1,868
=======
Cash of GBP1 was paid for the share capital of Exterran (UK)
Limited. Consideration also includes GBP359k relating to
contractual retention bonuses as set out in the SPA that under IFRS
3 have been accounted for as consideration for the assets
acquired.
The acquisition of this business resulted in a gain on purchase
as a consequence of buying the business in a distressed state. The
gain on bargain purchase is separately presented in the income
statement before operating profit. Also as a result of the
distressed state in which the business was in at the date of
purchase and following a review of the assets acquired, the
Directors consider that no intangible assets of any value have been
acquired.
The acquired entity incurred a loss after tax of GBP2,195,000
for the 11 months from 3 July 2013 to the reporting date. If it had
been acquired on 1 June 2013, revenue for the Group would have been
GBP7,070,000 and loss after tax for the year would have increased
by GBP205,000.
Acquisition costs arising from this transaction of GBP171,000
have been included in administration expenses before operating
profit.
Since acquisition Maloney Metalcraft contributed the following to the Group's cashflows: 2014
GBP'000
Operating cashflows (2,237)
Investing activities (247)
Notes to the Preliminary Statement (continued)
31 May 2014
6 Events after the balance sheet date
On 11 August 2014 Sigma Precision Components UK limited
completed the acquisition of certain of the assets of RMDG limited
for GBP1,100,000 plus professional costs. In its previous financial
year RMDG had turnover of GBP3,327,000 and a loss before tax of
GBP398,000 after exceptional restructuring costs of GBP275,000.
7 Net Debt and gearing
The gearing ratio at the year-end is as follows: 2014 2013
GBP'000 GBP'000
Debt (10,790) (11,486)
Cash and cash equivalents 7,204 8,881
Ring fenced cash - (286)
---------- ----------
Net debt (3,586) (2,891)
Equity 32,655 30,515
---------- ----------
Net debt to equity ratio 11.0% 9.5%
========== ==========
8 Preliminary statement
This preliminary statement, which has been agreed with the
auditors, was approved by the Board on 30 September 2014. It is not
the Group's statutory accounts within the meaning of Section 434 of
the Companies Act 2006.
The statutory accounts for the two years ended 31 May 2014 and
2013 received audit reports which were unqualified and did not
contain statements under s498(2) or (3) of the Companies Act 2006.
The statutory accounts for the year ended 31 May 2013 have been
delivered to the Registrar of Companies but the 31 May 2014
accounts have not yet been filed.
9 Annual report and Accounts
The Report and Accounts for the year ended 31 May 2014 will be
available on the Group's website www.avingtrans.plc.uk on or around
8 October 2014. Further copies will be available from the
Avingtrans' registered office:
Precision House, Derby Road, Sandiacre, Nottingham, NG10
5HU.
10 Annual General Meeting
The Annual General Meeting of the Group will be held at The
Holiday Inn, Bostocks Lane, Sandiacre, Nottingham NG10 5NL at 11.00
a.m. on 12 November 2014
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR GMGFLVGRGDZM
Avingtrans (LSE:AVG)
Historical Stock Chart
From Aug 2024 to Sep 2024
Avingtrans (LSE:AVG)
Historical Stock Chart
From Sep 2023 to Sep 2024