Avingtrans Regulatory News (AVG)

21 Feb 2007 07:00

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 PlcKen Baker, ChairmanStephen King, Finance DirectorTel. 01159 499 020Hansard GroupBen SimonsTel. 020 7245 1100KBC Peel Hunt LtdJulian BluntDavid AndersonTel 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.BakerChairman21 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 2,770before interest Net interest payable and similar (222) (190) (345)charges Profit on ordinary activities 1,283 1,159 2,425before taxation Tax on profit on ordinary 3 (382) (355) (489)activities Profit on ordinary activities 901 804 1,936after 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 1,936financial period Other recognised gains and losses Currency translation (37) 52 8(losses)/gain Total recognised 870 856 1,944gains/(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 16,230liabilities 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 2,710activities 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 393goodwill 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 2,710activities 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 580bank 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 1,936period 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 2,406funds Closing shareholders' funds 15,795 11,034 12,646