Last checked at 27 Feb 2013 07:00
AVINGTRANS PLC - Interim ResultsAVINGTRANS PLC - Interim Results
PR Newswire
London, February 26
Avingtrans plc, which designs, manufactures and supplies critical componentsand associated services to the aerospace, energy and medical sectors, todayannounces its interim results for the six months ended 30 November 2012.
Corporate Highlights
* Sale of Jena Tec to Kuroda of Japan for £12.4m cash net of debt to create
focused business in Aerospace and Energy & Medical sectors * Acquisition of Aerotech Tubes for £1.9m, net of cash* Acquisition of PFW Farnborough assets completed post period end for £1.85m
cashFinancial Highlights* Revenue from continuing operations increased by 19% to £16.9m (H1 2012: £
14.2m) * Order book of continuing businesses remains at record levels, driven by Aerospace * EBITDA of continuing operations was £1.1m (H1 2012: £1.0m)* Profit after tax was £6.5m (H1 2012: £0.7m), including £6.1m profit on
disposal of Jena Tec * Fully diluted EPS (from continuing and discontinued operations) of 24.3 pence per share (H1 2012: 2.6 pence per share) * Cash generated from operations was £0.3m (H1 2012: £0.4m)* Following the disposal of Jena Tec, the Group ended the half year with net
cash of £0.3m (May 2012: net debt of £8.4m)
* Commitment to an enhanced dividend on achieving final results this year
Highlights of Continuing Operations
Aerospace grew robustly, with an increase in revenues of 25%
* Long term agreements signed with existing and acquired customers, providing
visibility of revenues, including: + £80m of revenue over 10 years with Rolls Royce + £20m of revenue over 10 years with key Aerotech Tubes customer + £25m of revenue over 10 years with Safran Aircelle, customer of PFW Farnborough* Another solid first half for C&H, with new capabilities in development for
the second half * Composites made a loss, but also made good progress with the EU "Clean Skies" project* Commencement of "special processing" and pipe assembly production in China
Energy and Medical division achieved breakeven overall in the first half
* Metalcraft continued its steady recovery, with revenue up by 8% in the
first half
* Crown's markets remained tough, but losses were much reduced and prospects
are improving
Commenting on the results, Roger McDowell, Chairman, said:
"Whilst the word transformation is overused in business terms it undoubtedlysummarises the events at Avingtrans over the last few months. The sale of theJena Tec business (for £12.4m, net of debt) and subsequent acquisitions ofAerotech Tubes and PFW Farnborough (at a combined cost of £3.75m), has createda Group clearly focused on two businesses (Sigma Components and Metalcraft),serving OEMs in clearly defined markets (Aerospace, Energy and Medical) withhighly engineered components and services."As a result we have a market leading position in the aerospace pipes niche andhave recently secured three key long term agreements with major clients worth £125m of revenue over the next 10 years. With this strength of visibility wehave once again concluded that we can commit to the payment of an enhanceddividend with the final results this year, rewarding our loyal investors fortheir continued support."Enquiries:Avingtrans plc tel. 01159 499 020Roger McDowell, ChairmanSteve McQuillan, Chief Executive OfficerStephen King, Chief Financial OfficerNumis
David Poutney (Corporate Broking) 0207 260 1000Richard Thomas (Corporate Finance and Nominated Adviser)
Newgate Threadneedle (Financial PR) 020 7653 9850Josh Royston / Heather Armstrong
About Avingtrans plc:
Avingtrans has become a significant organisation in the design, manufacture andsupply of critical components and associated services to global industrialmarkets from two divisions: aerospace and energy and medical.
Aerospace
Sigma Components- UK and China
Sigma Components is a market leader in rigid and flexible pipeassemblies and components for prestigious aerospace customers such asRolls Royce, Bombardier, Safran and Meggitt. Sigma also manufacturesprecision prismatic components and composite components for theaerospace industry from its purpose-built facilities in the UK andChengdu, China. Sigma Components operates from a number of sites, asfollows:
Hinckley, UK: centre for rigid and flexible pipe assemblies andcomponents
Derby, UK: (formerly Aerotech Tubes): satellite facility to Hinckley,producing pipe assemblies
Farnborough, UK (formerly PFW): centre for fabrications, ducts andother complex assemblies
Chengdu, China: centre for precision prismatic components, now alsoproducing pipe assemblies
Buckingham, UK: centre for composite parts and machining services tocustomers in Aerospace, F1/Motorsport and industrial markets.
Sandiacre, UK (C&H): centre for precision polishing and specialistfinishing on aeroengine turbine blades, compressor blades and vanes forthe power generation industries.
Energy and MedicalMetalcraft - UK and ChinaProvider of safety-critical equipment for the energy, medical, scienceand research communities, worldwide, specialising in precision pressureand vacuum vessels and associated fabrications, sub-assemblies andsystems.
Crown International - UKDesigns and manufactures market-leading pole and support systems forroadside signage and safety cameras, rail track signalling andgantries.
Chairman's Statement
In years to come, we will look back on 2012 as a pivotal year for Avingtrans.With the sale of Jena Tec and the subsequent acquisitions of Aerotech Tubes,Derby and PFW, Farnborough, the metamorphosis of the group into a nicheengineering market leader is largely complete. These transactions enableAvingtrans to focus fully on the two remaining core businesses - Sigma andMetalcraft. Without the sale of Jena Tec we could not realistically hope toachieve true critical mass in the other divisions, or sustain the proactiveinvestment requirements to maximise shareholder returns over the longer term.This decision has already been vindicated with two highly significant new longterm agreements for the newly acquired businesses in Derby and Farnboroughbeing testament to our niche market leadership in aerospace pipes and ourintent to aggressively pursue new opportunities. These two deals followed hoton the heels of the largest ever deal for the Group - the £80m, 10-yearcontract for supply of pipes and prismatic aerospace components to Rolls Royce,our biggest customer.We believe that we are very well placed to take advantage in each of our chosenmarkets. Civil aerospace remains particularly strong and, whilst the broaderEnergy market is less consistent in outlook, we are nimble enough to skipbetween the various sub-sectors as opportunities present themselves. With thenew MRI product for Siemens ramping up at last, our Medical market prospectsare also encouraging. Our market leadership in our core niches is a rock solidfoundation to build on and we fully intend to cement our advantage. Commoditycosts are under control and we have agreements in place to isolate us fromvolatility.Results in the first half, excluding the proceeds of the Jena Tec sale, werebroadly in line with expectations, with revenue from continuing operations upby 19% versus the first half of last year (or 6% including Jena Tec results)and we expect the usual stronger second half performances in revenues andmargins; both in Aerospace - lifted by the acquisitions and expectedimprovements at the Sigma Composites business - and in Energy and Medical,where Metalcraft continues to improve and Crown is less problematic than in theprevious two years.At the recent group management conference, we exhorted our teams to join us in"designing the future". Our employees, both existing and new, continue todemonstrate determination to succeed in demanding markets that need everyone tooperate consistently to impeccable quality standards, with integrity andagility. These qualities will drive the business forward as we navigate theroad ahead. As ever, I would like to thank all of our people for theirstrenuous efforts to design a better future for Avingtrans.Roger McDowellChairman27 February 2013Business ReviewGroup PerformanceRevenue: Growth continues
Civil aerospace continued to buoy our first half revenues and other marketsgenerally trended positively also, albeit more sedately. Energy is a broadsector and there were a few "downs" as well as "ups", but progress in theMedical arena with Siemens compensated for lower sales to Cummins, for example.Crown also had a better first half, though the transport infrastructure marketremains depressed. Both continuing divisions are able to report growth, withfirst half revenues of continuing operations increasing by 19% to £16.9m (H12012: £14.2m). If we include Jena Tec, revenues increased by 6% to £21.4m(H12012: £20.2m).Profit: Margins StableProfit figures are distorted by the sale of Jena Tec and the process leading upto this, making comparisons difficult. Aerospace profits were temporarilydepressed in the first half by a loss at Composites, but we expect improvementin the second half. The Energy and Medical division again advanced, withincreased investment in China, with reduced losses at Crown also contributingto improvements. Overall gross margins of continuing businesses were downslightly to 23.3% (H1 2012: 24.1%). Despite the loss at Sigma Composites in thefirst half, EBITDA of continuing operations was £1.1m (H1 2012: £1.0m). Theoverall Profit for the first half was £6.5m (H1 2012: £0.7m), including £6.1mfrom the sale of Jena Tec (Note 7).Earnings per Share (EPS): Boosted by disposal
Adjusted diluted earnings per share from continuing operations for the periodending 30 November 2012 was 1.5 pence per share (H1 2012: 1.3 pence per share)based on weighted average number of shares of 26,940,368 (H1 2012: 25,969,275).Diluted earnings per share attributable to shareholders was 24.3 pence pershare (H1 2012: 2.6 pence per share).Funding and Liquidity: Debt position materially improved
The net cash flow from operations was £0.3m (H1 2012: £0.4m).
Net cash at 30 November 2012 stood at £0.3m, driven by the Jena Tec disposaland the Aerotech Tubes acquisition (31 May 2012: Net Debt of £8.4m). Note thatthese figures exclude the PFW Farnborough acquisition, which took place justafter half-year end, for a consideration of £1.85m.Dividend: Maturing policy
The reinstated Interim dividend of 0.7 pence per share (H1 2012: 0.0 pence pershare) will be paid on 14 June 2013 to shareholders on the register at 26 April2013. The transformation of the balance sheet combined with a strong order bookhas enabled the board to reinstate the interim dividend and, in the absence ofunforeseen circumstances, expects to increase this year's final payment as partof a progressive dividend policy.Operations
Aerospace Division (Sigma Components)
With the acquisitions of Aerotech Tubes, Derby and (after half-year end) PFW,Farnborough, Sigma Components has entered a new and exciting phase of itsjourney towards world class aerospace components supply. These two acquisitionshave propelled us to a market leading position in aerospace pipes, as well asadding new capabilities and products (eg Ducts) that we can build upon in thefuture. We are now in the midst of a rebranding exercise that will unify all ofthe businesses in the division under the Sigma Components banner and providestability and clarity for both customers and investors alike.The civil aerospace market remained healthy in the first half and our morepotent market position drove revenues upwards. OEM customers are in growth modein most world regions and in its latest outlook presentation, Rolls Royce, ourbiggest customer, recently underlined a strong 20-year forecast, with Asian airtraffic expected to grow to double the size of Europe, or North America overthat period. Rolls Royce also recently reported record results and a growingorder book.Aerospace division sales were up by 25% in comparison with the prior year. Wealso have a record order book, most notably boosted by the £80m, 10-yearcontract to supply pipes and components to Rolls Royce. In the first half, wealso signed a new 10-year agreement worth £20m of revenue to our Derby site(formerly Aerotech Tubes) as part of the acquisition process. Recently, weannounced another significant contract with Safran Aircelle for Farnborough,worth £25m in revenues over 10-years. Discussions are on-going with bothexisting and new customers regarding further contract extensions and long termagreements.Although Aerospace margins were temporarily suppressed by losses at theComposites business in Buckingham in the period, we believe that underlyingdivisional margins are still strong and are expected to improve in the secondhalf.
Briefly summarising activities at the Aerospace sites:
* Hinckley grew solidly in the first half, with the £80m Rolls Royce contract
underpinning the work there for the foreseeable future and work with other
customers is stable.
* Derby (Aerotech Tubes) is already well integrated with our Hinckley site
and developing in line with initial expectations, having signed the £20m
contract with its key customer in 2012.
* Farnborough (PFW) is performing ahead of initial expectations, with
recovery in results now expected earlier in the next financial year than
originally thought. The recent £25m contract win with Safran Aircelle is a
good sign of a rapidly improving outlook for the site. This business also
gives us new product areas to develop with customers beyond pipes.* Chengdu grew rapidly in the first half, up by 28%, as Chinese operations
continue to mature. The majority of sales are to sister companies in the
division, with regional market sales also developing, albeit more long
term. We successfully completed the first phase of our investment in pipe
assembly for this site and anticipate new business coming from this source
in the near term. * Buckingham (Composites) developed more slowly than we expected, with F1 business more difficult to re-establish than we previously presumed,resulting in a first half loss. However, other customers are developing and
we are making headway with investment in composite aerospace components, in
line with the EU "Clean Skies" contract won earlier in 2012. * Sandiacre (C&H, Polishing) had a solid first half. Although growth was slower, margins have held up well and new investment will again widen capability in the second half, reinvigorating growth prospects for this part of the business.Energy & Medical Division (Metalcraft and Crown)
Sales in the division were up by 12% versus the first half of last year and thedivisional result was breakeven at EBIT level, a modest improvement on theprevious first half last year.
Summarising the position at the Energy & Medical sites:
* Metalcraft, Chatteris: Market conditions at Metalcraft are positive
overall, though business with Cummins significantly reduced in the first
half, due to changes in their market conditions. However, this was
counterbalanced by the ramp-up of the new Siemens product finally coming on
stream - and this is set to strengthen in the second half. Other customers
in the UK began to show promising signs - eg Heatric (Meggitt) where volumes are increasing from a low initial base. We are also encouraged by prospects in the civil nuclear market - namely in the reprocessing andwaste storage sectors, where Sellafield, Magnox and their Tier 1 suppliers,
who are our customers, are intensifying their activities.
* Metalcraft, Chengdu: We have taken on a new lease contract for a facility
which will house our MRI activities with Siemens from next financial year
(all of the new products supplied thus far to Siemens being produced in the
UK). In addition, other Far East Medical customers continue to develop
their activities with us and we anticipate further capex investment in our
next financial year. Despite the increased investment, we expect a result
close to breakeven in China for the full year. As previously noted, we are
able to scale Metalcraft's China operations more easily than we did with
Sigma in the initial stages and we also learned some valuable lessons from
our previous start up.
* Crown in Bristol saw a welcome return to growth in the first half, with
sales up significantly from a very low base. Since we previously reduced
costs in this business, we were able to record a much improved result, although still a loss in the first half. Whilst trading is not yet "normalised", prospects are now improving slowly and we expect modest growth to continue in the second half and beyond. Therefore, overall results this year are not expected to have a material adverse impact onGroup performance and the slow recovery looks likely to persist into the
next financial year.
Industrial Products Division (Jena Tec)
The sale of Jena Tec in November to Kuroda of Japan swamps many of the figuresin this report and makes meaningful comparison with the previous divisionalperformance difficult. The business was sold for a cash consideration of £12.4m, net of debt, with the resulting exceptional profit being £6.1m from thistransaction. Although the division contributed five months of sales to ourfirst half, the revenue cannot be compared to previous periods faithfully atthe divisional level, due to various termination effects in the figures and dueto the fact Jena Tec was sold before the end of the half. However, actual salesin the first five months were £4.4m.The sale allows Avingtrans to focus fully on its two remaining core businesses- Sigma and Metalcraft. Without this, we could not hope to achieve truecritical mass in the other divisions, or sustain the proactive investmentrequirements to maximise shareholder returns over the longer term.
Outlook
With the transformation of the group progressing to plan in attractivestructural growth markets and durable customer relationships, we are confidentabout the long term future of Avingtrans. Therefore, we look forward withconfidence to the second half and beyond.
Our focused strategy is now bearing fruit, producing significant new businesswins that support our short term results and provide visibility of longer termearnings. Our exceptional customer base and resulting concentration ondifferentiated product niches offers a degree of protection to cyclicalmarkets. We are well placed to benefit from any further consolidation in ourmarkets.Sigma Components and Metalcraft are developing into clear market leaders intheir chosen niches, providing customers with consistent quality as part of aworld class journey and investors with the opportunity to participate in agreat British engineering story.
Roger McDowell Steve McQuillan Stephen KingChairman Chief Executive Officer Chief Financial Officer27 February 2013 27 February 2013 27 February 2013Consolidated Income Statement (Unaudited)
for the six months ended 30 November 2012
6 months to 6 months to Year to 30 Nov 30 Nov 31 May 2012 2011 2012 £'000 £'000 £'000Revenue 16,948 14,247 32,153Cost of sales (12,999) (10,812) (24,532)Gross profit 3,949 3,435 7,621Distribution costs (341) (285) (484)Administrative expenses (3,131) (2,682) (5,880)Share based payment expense (15) (15) (35)Impairment of goodwill - - (850)Acquisition costs (50) - - Amortisation of intangibles from business (69) (69) (137) combinationsOperating profit 343 384 235Finance income - 2 2Finance costs (143) (101) (229)Profit before taxation 200 285 8Taxation (Note 3) 57 (32) (22) Profit/(loss) after tax from continuing 257 253 (14) operations Profit after tax from discontinued 6,279 430 949 operations Profit for the financial period 6,536 683 935 Earnings/(loss) per share :From continuing operations- Basic 1.0p 1.0p 0.0p- Diluted 1.0p 1.0p 0.0p From continuing and discontinued operations - Basic 25.1p 2.7p 3.6p- Diluted 24.3p 2.6p 3.5pConsolidated statement of comprehensive income (Unaudited)
for the six months ended 30 November 2012
6 months to 6 months to Year to 30 Nov 30 Nov 31 May 2012 2011 2012 £'000 £'000 £'000Profit for the period 6,536 683 935 Exchange differences on translation of (284) 92 (44) foreign operations Exchange differences realised on disposal (585) - - (Note 7) Total comprehensive income for the period 5,667 775 891Consolidated cash flow statement (Unaudited)
for the six months ended 30 November 2012
6 months to 6 months to Year to 30 Nov 30 Nov 31 May 2012 2011 2012 £'000 £'000 £'000Operating activities Cash flows from operating activities 302 414 2,161Finance costs paid (180) (150) (329)Income tax paid (366) (171) (258) Net cash (outflow)/inflow from (244) 93 1,574operating activitiesInvesting activities Acquisition of subsidiaries (net of (1,889) - -cash) Disposal of subsidiaries (net of 12,429 - -cash)Finance income - 2 2 Purchase of intangible assets (263) (466)(759)
Purchase of property, plant and (1,370) (1,175) (2,759)equipment Proceeds from sale of property, - 1 43plant and equipmentNet cash generated by/(used in) 8,907 (1,638) (3,473)investing activitiesFinancing activitiesEquity dividends paid - - (104)Repayments of borrowings (268) (477) (481) Repayments of obligations under (703) (339) (996)finance leasesBorrowings raised 1,584 588 1,577 Net cash inflow/(outflow) from 612 (228) (4)financing activitiesNet increase/(decrease) in cash and 9,275 (1,773) (1,903)cash equivalentsCash and cash equivalents at (2,353) (564) (564)beginning of period Effect of foreign exchange rate (842) 110 (114)changesCash and cash equivalents at end of 6,080 (2,227) (2,353)periodCashflows from operating activities (Unaudited)
for the six months ended 30 November 2012
6 months to 6 months to Year to 30 Nov 30 Nov 31 May 2012 2011 2012 £'000 £'000 £'000Profitbefore income taxfrom 200 285 8continuing activitiesProfit before income tax from 274 561 1,227discontinued activitiesAdjustments for: Depreciation of property, plant and 617 594 1,248equipment Amortisation of intangible assets 341 247 497Profit on disposal of property, plant - (1) (3) and equipmentFinance income - (2) (2)Finance expense 180 150 328Share based payment charge 20 21 47 Impairment of available for sale - - 219 investmentImpairment of goodwill - - 850Changes in working capital(Increase)/decrease in inventories (1,018) (943) (1,285)
(Increase)/decrease in trade and (306) (1,063) (2,109)other receivables (Decrease)/increase in trade and (8) 561 1,129other payablesOther non cash changes 3 4 7 Cashflows from operating activities 302 414 2,161Summarised consolidated balance sheet (Unaudited)
at 30 November 2012 30 Nov 30 Nov 31 May 2012 2011 2012 £'000 £'000 £'000Non current assetsGoodwill 9,487 10,242 10,242Other intangible assets 2,357 2,201 2,574Property, plant and equipment 9,171 10,529 10,954Investment property 600 600 600Deferred tax 76 39 76Investments - 219 - 21,691 23,830 23,596Current assetsInventories 7,006 8,756 9,003Trade and other receivables 10,894 9,932 10,940Current tax asset - 37 22Cash and cash equivalents 10,509 2,168 1,849 28,409 20,893 21,814Total assets 50,100 44,723 45,410Current liabilitiesTrade and other payables (8,947) (8,886) (9,389) Obligations under finance leases (595) (912) (994)Borrowings (5,149) (4,671) (4,726)Current tax liabilities (504) (709) (906)Total current liabilities (15,195) (15,178) (16,015)Non-current liabilitiesBorrowings (3,147) (3,001) (3,200)Obligations under finance leases (1,336) (1,619) (1,376)Deferred tax (1,043) (1,271) (1,127)Total non-current liabilities (5,526) (5,891) (5,703)Total liabilities (20,721) (21,069) (21,718)Net assets 29,379 23,654 23,692EquityShare capital 1,302 1,302 1,302Share premium account 9,787 9,787 9,787Capital redemption reserve 814 814 814Merger reserve 402 402 402Translation reserve (402) 603 467Other reserves 180 180 180Investment in own shares (281) (281) (281)Retained earnings 17,577 10,847 11,021Equity attributable to owners of 29,379 23,654 23,692the CompanyConsolidated statement of changes in equity (Unaudited)
at 30 November 2012
Share Share Capital Merger Trans- OtherInvestment Retained Total
capital premium redemp- reserve lation reserves in own earnings account account tion reserve shares reserve £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000At 1 June 2011 1,274 9,534 814 402 511 180 - 10,143 22,858Shares issued 28 253 - - - - - - 281Investment in - - - - - - (281) - (281)own sharesShare-based - - - - - - 21 21paymentsTransactions 28 253 - - - - (281) 21 21with ownersProfit for the - - - - - - - 683 683periodOthercomprehensiveincomeExchange rate - - - - 92 - - - 92gainTotal - - - - 92 - - 683 775comprehensiveincome for theyearAt 30 Nov 2011 1,302 9,787 814 402 603 180 (281) 10,847 23,654At 1 Dec 2011 1,302 9,787 814 402 603 180 (281) 10,847 23,654Dividend paid - - - - - - - (104) (104)Share-based - - - - - - - 26 26paymentsTransactions - - - - - - (78) (78)with ownersProfit for the - - - - - - 252 252periodOthercomprehensiveincomeExchange rate - - - - (136) - - (136)lossTotal - - - - (136) - 252 116comprehensiveincome for theyearAt 31 May 2012 1,302 9,787 814 402 467 180 (281) 11,021 23,692At 1 June 2012 1,302 9,787 814 402 467 180 (281) 11,021 23,692Share-based - - - - - - - 20 20paymentsTransactions - - - - - - - 20 20with ownersProfit for the - - - - - - - 6,536 6,536periodOthercomprehensiveincomeRealised on - - - - (585) - - - (585)disposal ofsubsidiariesExchange rate - - - - (284) - - - (284)lossTotal - - - - (869) - - 6,536 5,667comprehensiveincome for theyearAt 30 Nov 2012 1,302 9,787 814 402 (402) 180 (281) 17,577 29,379Notes to the half year statement
30 November 20121. Basis of preparationThe Group's interim results for the six month period ended 30 November 2012 areprepared in accordance with the Group's accounting policies which are based onthe recognition and measurement principles of International Financial ReportingStandards (`IFRS') as adopted by the EU and effective, or expected to beadopted and effective, at 31 May 2013. As permitted, this interim report hasbeen prepared in accordance with the AIM rules and not in accordance with IAS34`Interim financial reporting'.These interim results do not constitute full statutory accounts within themeaning of section 434 of the Companies Act 2006 and are unaudited. Theunaudited interim financial statements were approved by the Board of Directorson 27 February 2013 and will shortly be available on the Group's website athttp://www.avingtrans.plc.uk/pages/reports.html.
The consolidated financial statements are prepared under the historical costconvention as modified to include the revaluation of financial instruments. Theaccounting policies used in the interim financial statements are consistentwith IFRS and those which will be adopted in the preparation of the Group'sannual report and financial statements for the year ended 31 May 2013. Thestatutory accounts for the year ended 31 May 2012, which were prepared underIFRS, have been filed with the Registrar of Companies. These statutory accountscarried an unqualified Auditors' Report and did not contain a statement undereither Section 498(2) or (3) of the Companies Act 2006.2. Segmental analysis Aerospace Energy and Unallocated Total Medical Central items £'000 £'000 £'000 £'0006 months ended 30 Nov 2012Revenue 9,771 7,177 - 16,948Operating profit/ 698 (25) (330) 343(loss)Year ended 31 May 2012Revenue 17,071 15,082 - 32,153Operating profit/ 1,684 (767) (682) 235(loss)6 months ended 30 Nov 2011Revenue 7,820 6,427 - 14,247Operating profit/ 804 (85) (335) 384(loss)3. TaxationThe taxation credit/(charge) is based upon the expected effective rate for theyear ended 31 May 2013.
4. Earnings per shareBasic earnings per share is based on the earnings attributable to ordinaryshareholders and the weighted average number of ordinary shares in issue duringthe year.
For diluted earnings per share the weighted average number of ordinary sharesis adjusted to assume conversion of all dilutive potential ordinary shares,being the CSOP and EMI share options.
6 months to 6 months to Year to 30 Nov 2012 30 Nov 2011 31 May 2012 No No NoWeighted average number of 26,030,577 25,580,029 25,925,592shares - basicShare Option adjustment 909,791 389,246 453,282Weighted average number of 26,940,368 25,969,275 26,378,874shares - diluted £'000 £'000 £'000 Earnings/(loss) from continuing 257 253 (14) operationsShare based payments 15 15 35Impairment of goodwill - - 850Acquisition costs 50 - -Amortisation of intangibles 69 69 137Adjusted earnings from 391 337 1,008continuing operationsFrom continuing operations:Basic earnings per share 1.0p 1.0p 0.0pDiluted earnings per share 1.0p 1.0p 0.0pAdjusted basic earnings per 1.5p 1.3p 3.9pshareAdjusted diluted earnings per 1.5p 1.3p 3.9pshareEarnings from discontinued 6,279 430 949operationsShare based payments 5 6 12Adjusted earnings from 6,284 436 961discontinued operations From discontinued operations: Basic earnings per share 24.1p 1.7p 3.6pDiluted earnings per share 23.3p 1.7p 3.5pAdjusted basic earnings per 24.1p 1.7p 3.6pshareAdjusted diluted earnings per 23.3p 1.7p 3.6pshareEarnings attributable to 6,536 683 935shareholders Adjusted earnings attributable 6,675 773 1,969 to shareholdersBasic earnings per share 25.1p 2.7p 3.6pDiluted earnings per share 24.3p 2.6p 3.5pAdjusted basic earnings per 25.6p 3.0p 7.6pshareAdjusted diluted earnings per 24.8p 3.0p 7.5pshareThe Directors believe that the above adjusted earnings per share calculationfrom continuing operations is the most appropriate reflection of the Groupperformance.
5. Discontinued operationsOn 8 November 2012 the Company disposed of its Industrial Products Division, 6 months to 6 months to Year to 30 Nov 30 Nov 31 May 2012 2011 2012 £'000 £'000 £'000Revenue 4,424 5,997 11,839Expenses (4,150) (5,436) (10,612)Profit before taxation 274 561 1,227Taxation (79) (131) (278) Profit after tax from discontinued 195 430 949 operationsThe Industrial Products Division contributed the following to the Groupscashflows: 6 months to 6 months to Year to 30 Nov 30 Nov 31 May 2012 2011 2012 £'000 £'000 £'000Operating cashflows 606 (58) 438Investing activities (280) (398) (813)Financing activities 68 54 (35)6. Acquisition of subsidiary
On 23 November 2012 the group acquired 100 percent of the issued share capitalof AeroTech Tubes Limited, the provisional net assets at the date ofacquisition were as follows:
£'000Property, plant and equipment 52 Inventories 240Trade and other receivables 822Deferred tax asset 1Cash and cash equivalents 632Trade and other payables (574)Current tax liabilities (115)Net Assets 1,058Intangible assets acquired 145Goodwill 1,318Total consideration paid 2,521Aerotech Tubes contributed £56,000 to group revenues and £4,000 to profit aftertax for the period between the date of acquisition and the balance sheet date.
Acquisition costs arising from this transaction of £50,000 have been includedin overheads before operating profit.
7. Disposal of subsidiary
On 8 November 2012 the Company disposed of its Industrial Products Division,the net assets at the date of disposal were as follows:
£'000Goodwill 1,224Other intangible assets 284 Property, plant and equipment 2,584 Inventories 3,236Trade and other receivables 1,160Cash and cash equivalents 596Trade and other payables (1,093) Obligations under finance leases (912) Borrowings (335)Current tax liabilities (65)Deferred tax (73)Net Assets 6,606Gain on disposal 6,084 Total consideration (net of costs of £ 12,690 695,000)Less cash disposed of (261)Net consideration received 12,429Included in the above result is £585,000 of foreign exchange translationreserves realised on disposal of the Industrial Products division.