Avingtrans Regulatory News (AVG)

7 Sep 2005 06:00

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 theGroup and has resulted in a step-change in revenues, profitability, earningsper 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 statementI am, on behalf of the Board of Directors, pleased to present the results forAvingtrans plc for the year ended 31 May 2005.The year under review has been a period of positive transformation for theGroup and has resulted in a step-change in revenues, profitability, earningsper share, profile and future prospects.Trading conditions in all our major markets improved and despite the continuedweakness of the U.S Dollar against the Pound Sterling and Euro, we have beenable to maintain attractive margins across all the Group's products whilstenjoying the benefits of adding to each of the subsidiary's client base.The Jena Group (Jena) benefited from a growth in demand for its ballscrewproducts, spindles and services as the machinery sector recovered in Germany,and new customers came on stream in the USA and China with demand for servicedaerospace turbine blades continuing at a high level.Crown UK Limited (Crown) completed its first full year with the Group withsupply of its highway products and rail-side products continuing to meetexpectations.The acquisition of Stainless Metalcraft Limited (Metalcraft) on 13 October 2004for ‚£8.1million was the major event for the Group during the year. Metalcrafthas made a significant contribution to sales and revenue in the subsequentseven and a half months of the financial year. Metalcraft is based inChatteris, Cambridgeshire, and makes machined and fabricated components for theworldwide medical, scientific and research communities. It specialises in themanufacturing of vacuum and cryogenic components for the MRI scanner industry.The demand for the latter continued strongly during the period due to themedical benefits that accompany this technology and its non-invasive nature.Metalcraft continues to benefit from this thriving market. This increase indemand is forecast to continue and Avingtrans has consequently continued toinvest funds into production enhancing machinery, equipment and the upgradingof the premises during the period.Financial performanceEarnings 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 beforetax 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) resultingin gearing of 41%.An exchange rate gain of ‚£37,000 (2004: loss of ‚£163,000) was recorded throughthe reserves during the year on currency translation of foreign subsidiaries.DividendIn light of the financial performance highlighted above and with the agreementof Group's bankers the Board is recommending to the shareholders at the AGM afinal dividend of 0.5p per share for the year under review.Acquisitions and investmentThe Group worked on a number of acquisition opportunities during the periodunder review. The acquisition of Metalcraft for ‚£8.1 million was completed on13 October 2004. The funding for the acquisition included the raising of ‚£4million through a placing of new shares and bank lending of ‚£4.3 million fromHSBC. At the same time, the Group raised funds for working capital of ‚£327,000through a one for ten limited open offer to existing shareholders.The Group increased its investment at Metalcraft and other subsidiaries throughplacing orders for ‚£1.8 million of new robots, computer controlled productionmachinery and other equipment to support increasing order books and improvementof productivity.Review of the yearAside from the increase in trading resulting from the acquisition of Metalcraftdescribed previously, progress in the other areas of the Group has also beenvery positive. This improved overall Group progress resulted in Avingtransindicating better than expected profits in a trading statement post year-end.At Jena Group both Jena Tec and C&H Precision Finishers enjoyed a significantrecovery in orders. This led to a record sales year at C&H due to the increaseddemand for finishing processes on turbine and compressor blades from both theaerospace and power generation industries. One of the more high-profile eventsin this division's year was its involvement in the finishing of the compressorblades and vanes for the new Rolls Royce Trent engine used on the Airbus A380which recently made its successful maiden flight in France.In line with our policy, stated in the last annual report, to seek new marketsfor our products, it is encouraging to report new demand for Jena's miniatureball screw products in the Far-East and many new customers in existing marketsfor 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 nowfully integrated within the Group. The much publicised increase in demand forroadside speed cameras all over Europe continues to have a most positive impacton this division which manufactures, repairs and services the complex standsand housings for these devices. Crown is the only UK government accreditedsupplier of the poles for the roadside speed cameras, and is the market leaderin this field. Plans for the migration from existing analogue-based devices todigital-based camera equipment and the use of the pole technology for rail-sidesignalling, both requiring new pole and housing components, developed stronglyduring the period.Negotiations with our primary collaborator in Europe led to Crown being able tomarket its speed cameras posts and housings to other speed camera makers. Thisled to a significant increase in the level of enquiries from both European andNorth American companies and some immediate growth in sales of our componentsoverseas.Crown has attracted new customers and is penetrating new territories for bothspeed and red light enforcement products. In November, Crown was awardedaccreditation from network rail for railside signal posts, alongside its gantryproduct that it continues to supply to the railway industry.Directors and senior managementWhilst the composition of the main board of directors remained unchanged duringthe year, Avingtrans continued to strengthen its senior management team. Wewelcomed a new commercial and financial controller to the Group as well aswelcoming new Managing Directors to a number of the subsidiaries of Avingtrans.In accordance with the Articles of Association, Kenneth Baker and Stephen Kingretire from the Board in rotation and offer themselves for re-election at theAGM scheduled for 5 October 2005.OutlookThe positive momentum in the year under review has continued into the currentyear with enquiry levels and order intake remaining strong. The Board is keento continue to nurture this organic growth but also recognises the benefits offurther acquisitions. The Board is seeking complementary and earnings enhancingcompanies, within the precision engineering area that operate in a niche marketor produce a niche product and demonstrate differentiation. This is a strategythat is serving us well within each of our existing subsidiaries as it reducesthe exposure to the wider economic forces that influence the more generalengineering sectors.The acquisition of Crown, followed by Metalcraft, combined with an upturn ineconomic conditions and a significantly more efficient operation has led to aGroup that, today, enjoys a portfolio of subsidiaries which are each performingprofitably and have real potential to achieve further growth. This is in nosmall 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 beyondwith confidence.K M BakerChairman7 September 2005Consolidated profit and loss accountfor 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 5,533operations 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 187operations Interest receivable 5 2 Interest payable (300) (49) _______ _______ Profit on ordinary activities 1 1,969 140before taxation Taxation on profit on 2 (668) 1ordinary activities _______ _______ Profit for the financial year 1,301 141 Dividend 3 (71) - _______ _______ Retained profit transferred 1,230 141to reserves Earnings per share - basic 4 11.2p 2.0p Earnings per share (before 4 13.6p 3.1pgoodwill amortisation) - basic Earnings per share - diluted 4 10.6p 3.1p Consolidated statement of total recognised gains and lossesfor 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 statementfor 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 operatingactivities 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 sheetat 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 statement31 May 20051. Segmental analysisClass 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 3,140Engineering Medical and 14,875 - 1,510 - 4,042 -Scientific Unallocated central - - (65) (63) 2,813 1,618items 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. DividendThe Board is proposing a final dividend of 0.5p per share (2004: ‚£Nil).4. Earnings per shareEarnings 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 theweighted average number of ordinary shares in issue during the year. Anadjustment of 653,485 shares (2004: Nil) has been made for the assumedconversion of all dilutive potential ordinary shares, being the warrants andEMI 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 909hand 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 statementThis preliminary statement, which has been agreed with the auditors, wasapproved by the Board on 1 September 2005. It is not the company's statutoryaccounts. Statutory accounts will be sent to shareholders shortly.The statutory accounts for the two years ended 31 May 2004 and 2005 receivedaudit 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 ended31 May 2004 have been delivered to the Registrar of Companies but the 31 May2005 accounts have not yet been filed.ENDAVINGTRANS PLC