TIDMAVG
RNS Number : 8976R
Avingtrans PLC
27 September 2017
27 September 2017
Avingtrans plc
("Avingtrans" or the "Group")
Preliminary Results for the year ended 31 May 2017
Avingtrans plc, which designs, manufactures and supplies
critical components, modules and associated services to the energy
and medical sectors, today announces its preliminary results for
the twelve months ended 31 May 2017.
Financial Highlights
-- Revenue from continuing operations increased by 7% to GBP22.7m (2016: GBP21.2m)
-- Improved Gross Margins 17.9% (2016: 14.9%)
-- Adjusted EBITDA from continuing operations increased by 104%, to GBP0.7m (2016: GBP0.4m)
-- Adjusted Profit Before Tax improved to GBP0.3m (2016: GBP0.1m)
-- Adjusted Diluted earnings per share from continuing operations 1.1p (2016: 1.0p)
-- Cash outflow from operating activities GBP3.3m (2016: generated GBP7.8m)
-- Continued investment in capability and capacity in continuing
operations GBP1.1m (2016: GBP0.5m)
-- Net Cash GBP26.4m (31 May 2016: Net cash GBP51.0m)
-- Increased final dividend of 2.2p per share, Full year total
3.4p (2016: Final 2.1p, Total 3.2p)
-- Tender offer returned GBP19.4m to Shareholders
Operational Highlights
Energy
-- Energy revenues increased by 15%, with a modest improvement in profitability
-- Post period end, acquisition of Hayward Tyler Group plc for GBP29.4m, excl. debt & costs
-- First Sellafield 3M3 (three-metre-cubed) prototype box delivered and fully approved
-- GBP11m Sellafield 3-year contract extension; facilities redevelopment on time and on budget
-- Maloney agreed a framework contract with EDF, worth GBP3.5m over 3 years
-- Post year end, Metalcraft gained contract extension with Cummins, worth GBP3.6m over 3 years
Medical
-- Medical revenues were marginally lower, but with a welcome return to modest levels of profit
-- Technology enabling acquisition of Scientific Magnetics Ltd for GBP0.33m
-- China facility gearing-up for new contracts with Wuhan (GBP9m gained in year) and Bruker
Commenting on the results, Roger McDowell, Chairman, said:
"Avingtrans continues to demonstrate its capacity for
reinvention. After the successful sale of the Aerospace division,
we returned GBP19.4m of cash to shareholders via a tender offer. In
the second half of the period, we cemented the cornerstone of our
Medical strategy through the enabling acquisition of Scientific
Magnetics Ltd. Post year end, this was followed by the substantial
acquisition of Hayward Tyler Group (HTG) for GBP29.4m, excluding
debt and costs. This deal will accelerate our plans to split the
Energy and Medical divisions, to fully capitalise on the HTG
potential. Operationally, we have made pleasing progress with key
accounts - especially at Sellafield, where we secured a 3-year,
GBP11m extension to our existing multi-year contract.
"We are under no illusion that the next phase of our development
will be easy. Some heavy lifting will be necessary to restore
momentum at HTG. However, we are excited by the potential to
develop our offerings in both the Energy and Medical sectors, with
blue chip customers and prospects underpinning our sensibly
optimistic outlook."
Enquiries:
Avingtrans plc 01354 692391
Roger McDowell, Chairman
Steve McQuillan, Chief Executive Officer
Stephen King, Chief Financial Officer
N+1 Singer (Nominated Advisor) 020 7496 3000
Shaun Dobson
Lauren Kettle
Newgate (Financial PR) 020 7653 9850
Adam Lloyd
Ed Treadwell
James Browne
About Avingtrans plc:
Avingtrans is engaged in the provision of highly engineered
components, systems and services to the energy, medical and traffic
management industries worldwide.
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
Designs, manufactures and services oil and gas
extraction and processing equipment, including
process plant for dehydration, sweetening, drying
and compression.
Hayward Tyler - Luton & East Kilbride, UK and USA,
China and India
Specialises in the design, manufacture and servicing
of performance-critical motors and pumps in challenging
environments
Peter Brotherhood - Peterborough, UK
Specialises in the design, manufacture and servicing
of performance-critical steam turbines, turbo gen-sets,
compressors, gear boxes and combined heat and power
systems
Composite Products Ltd - Buckingham, UK
Centre for composite technology, parts and assemblies,
serving customers in industrial markets.
Scientific Magnetics - Abingdon, UK
Designs and manufactures superconducting magnet
systems and associated cryogenic systems for a
variety of markets
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
In the last year, Avingtrans has been busy reinventing itself
once more, as we have striven for early exploitation of the
fruitful sale of our Aerospace division in 2016. A successful
tender offer in the first half was followed by the modest
acquisitions of Scientific Magnetics and the assets of Whiteley
Read Engineering during the financial year.
In a major step forward, the Group, post year end, has completed
the acquisition of Hayward Tyler Group plc ("HTG"). HTG's
subsidiaries, Hayward Tyler and Peter Brotherhood, are venerable
brand names in the UK engineering world, between them having a
pedigree of over 350 years in the sector. This bold step required a
reverse takeover - a rare event on AIM. In itself, that is of
little merit, merely serving to underpin the extent of our diligent
ambitions for the Group.
An unfortunate combination of ambitious investment programmes,
acquisition and market down-cycle led HTG to an overstretched
balance sheet position, wherefrom it was finding difficulty in
restoring equilibrium and achieving the growth which the Directors
believe it is capable of.
Thus, Avingtrans, with its clear objective to continue the now
proven strategy of "buy and build" in regulated engineering niche
markets, together with its strong balance sheet, was the ideal
solution to the problem.
As investors will recall, we have named this strategy PIE -
"Pinpoint-Invest-Exit". Previous deals - notably the disposal of
Sigma - have clearly demonstrated the success of this approach,
producing substantial increases in shareholder value. We have built
strong brands and value from smaller constituent parts, we have
demonstrated well-developed deal-making skills and we have shown
that we do not overpay for assets. The strategy to "buy and build"
around smaller deals and consolidate relevant niches has
significant potential to generate growth and shareholder value, as
demonstrated with Sigma and JenaTec. At the appropriate time in the
future, we will again seek to crystallise gains with periodic sales
of businesses at advantageous valuations and return the proceeds to
shareholders.
Meanwhile, our existing Energy and Medical divisions have made
steady progress. The on-going pre-production phase of Sellafield
3M3 Box operations at Metalcraft continues to proceed positively,
with Sellafield approving the first 3M3 prototype unit and opening
the 3M3 box production facility at Chatteris. This progress was
underpinned by the award of a significant contract extension by
Sellafield. The Sellafield project is the precursor to a
significant expansion of long term business in the nuclear
decommissioning sector. We believe that Metalcraft is well-placed
to be a key partner for Sellafield in this programme over the next
30 years and to participate in further contracts in the sector, as
and when these are tendered.
The Medical division was awarded a GBP9m, 10-year contract for
NMR (Nuclear Magnetic Resonance) - cryostats during the year. The
customer, based in Wuhan, China, is now known as CAS Oxford, an
intriguing new entrant to the NMR market. We are excited also by
the acquisition of Scientific Magnetics Ltd, a manufacturer of
superconducting magnet systems and cryogenics for MRI NMR and other
markets, for initial consideration of GBP0.33m. We believe that
this small, but strategic acquisition could become the cornerstone
of our vertical integration strategy in the medical market.
In addition to the GBP19.4m of cash returned to shareholders,
via the tender offer, the Board has declared an increased final
dividend, of 2.2 pence per share, rendering a full year total of
3.4 pence, once again underlining our commitment to consistently
improve returns to our shareholders.
Finally, I would like to take this opportunity to thank all our
employees, including those newly arrived with recent acquisitions,
for all their hard work and dedication to deliver excellent quality
engineering products and services to our customers. UK engineering
is the richer for their valuable contributions.
Roger McDowell
Chairman
26 September 2017
Strategy and 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 original equipment
manufacturers. Our core strategy is to build market-leading niche
positions in our chosen market sectors - currently Energy and
Medical. Over the longer term, our acquisition strategy has enabled
our businesses to develop the critical mass necessary to achieve
market leadership.
Our core businesses have the capability to engineer products in
the UK and produce those products partly, or wholly in Asia and
now, with the addition of HTG, in the USA. This allows 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. Hayward Tyler and Metalcraft, for
example, are well established in China, providing integrated supply
chain options for our customers.
The Group's clear objective is to continue the proven strategy
of "buy and build" in regulated engineering niche markets, where we
see consolidation opportunities, which can lead to significantly
increased shareholder returns over the medium to long term. At the
appropriate time we will seek to crystallise these gains with
periodic sales of businesses at advantageous valuations and return
the proceeds to shareholders. We call this strategy PIE -
"Pinpoint-Invest-Exit". Previous deals - eg the disposal of Sigma -
have clearly demonstrated the success of this approach, producing
substantial increases in shareholder value. We have built strong
brands and value from smaller constituent parts; we have
demonstrated well-developed deal-making skills and prudence in the
acquisition of new assets. The strategy to "buy and build" around
smaller deals and consolidate relevant niches has significant
potential to generate growth and shareholder value, as demonstrated
with Sigma and JenaTec.
Following the acquisition, the Board's focus in the short term
will be the full integration of HTG's operations, a process which
has already started and is expected to continue throughout our
first half. The objective for the Enlarged Group is to become a
leading supplier in the energy and medical markets of low volume,
operation critical products, with a reputation for high quality and
delivery on-time and on-budget. The Enlarged Group has production
facilities in its three key geographical markets (the Americas,
Asia and Europe) with high volume/lower cost facilities in Asia,
and product development and realisation in the UK and the USA. The
Enlarged Group intends to invest in breakthrough and disruptive
technologies in the energy and medical markets.
Avingtrans' primary focus for its Energy division is the nuclear
market; decommissioning, life extension and "new nuclear" markets -
in particular, nuclear waste storage containers - as well as a
variety of other niches in the renewable energy sector. In
addition, the Directors will continue to build on HTG's footprint
in the wider power and energy sectors; in particular, the provision
of traditional power generation, motor solutions, steam turbines,
combined heat and power units and gas to power units, in various
sectors, with a principal focus on the power, oil and gas, marine,
water and industrial sectors.
The key focus of the Enlarged Group's Medical division is to
become a market leader in the production of high integrity
components and systems for medical and scientific equipment
manufacturers in specific niche markets, including for MRI
(Magnetic Resonance Imaging) derivatives, proton therapy and NMR
(Nuclear Magnetic Resonance).
Operations
Existing Group
Operational Key Performance Indicators (KPIs)
2017 2016
* Customer Quality - defect free deliveries (%) 99.2 99.3
* Customer on time in-full deliveries (%) 99.7 97.0
* Annualised staff turnover (%) 10.2 8.9
* Health, Safety and Environmental incidents per head
per annum 0.13 0.05
Our excellent divisional quality performance was sustained in
the year and our delivery performance improved slightly. For
certain customers, we were again very pleased to be able to record
near perfect quality and delivery records across the full year.
Staff turnover was up marginally year on year, reflecting ongoing
oil and gas market turmoil. Therefore, we believe that this remains
at an acceptable level for this type of business. Whilst Health and
safety incidents appear to have increased significantly in the
year, this simply reflects a change in reporting policy, which now
includes even minor incidents and near misses in the statistics, as
we seek to build on our positive improvement record of the last few
years.
Operations (continued)
Energy Division (Hayward Tyler, Peter Brotherhood, Metalcraft
(part), Maloney Metalcraft and Crown)
Following the acquisition of HTG, the Energy division now forms
the bulk of group operations.
The ongoing low oil price continued throughout the year, meaning
that this sector was a lower priority for the existing businesses.
The residual phase of restructuring at Maloney is now complete. We
continued to mitigate the negative effects of the oil price by
focusing on the growth areas in the energy market, for example:
energy storage; carbon capture; and nuclear power life extension
and decommissioning. HTG had already been following a risk
mitigation path for oil and gas in its business plans and we will
continue to follow through with the restructuring of the business
which had already begun. In addition, at Peter Brotherhood, we will
seek to expand the range of products being manufactured by this
business, to further de-risk this operation.
The existing businesses produced healthy revenue growth of
almost 16% in the period, with pre-exceptional EBITDA increasing by
113%, as the positive effects of restructuring at Maloney and the
improving margin mix of new contracts began to be felt at
Metalcraft and Crown.
Despite the recent oil price issues, the US Energy Information
Administration forecasts a 48% increase in global energy
consumption (between 2012 and 2040) mainly driven by population
growth. This is positive for the Energy Division, since we have
interests in various parts of the energy cycle, from primary
extraction, to generation, alternative energy storage and
decommissioning. Decommissioning activities are steadily gathering
pace, as this very long term legacy clean-up project is grasped by
the UK government and others around the world.
Summarising developments over the year at the Energy sites:
-- Metalcraft, (Energy) Chatteris: business with existing key
accounts - eg Cummins - was steady. The GBP47m, 10-year contract
with Sellafield Ltd, to produce 3M3 boxes, for the storage of
intermediate level nuclear waste, is progressing to plan. We also
were favoured with an GBP11m, 3-year contract extension by
Sellafield, extending the scope of the 3M3 box programme. We made
excellent progress with facilities refurbishment and pre-production
tests. The production set-up and prototyping phase will continue in
the current financial year, with series production expected to
commence in calendar 2018. Metalcraft is well-placed to be a key
partner for Sellafield in this programme. The total number of 3M3
boxes required is now expected to be in excess of 70,000 over the
entire programme life, worth an estimated GBP3bn, according to
Sellafield's own estimates.
-- Whiteley Read Engineering Ltd, Rotherham: This small
acquisition of assets (now a branch of Metalcraft) has already
proven its worth, by successfully completing overspill activities
from Maloney and Metalcraft, as well as providing an opportunity to
widen our customer base in the Energy sector.
-- Maloney Metalcraft, Aldridge: as noted elsewhere, the oil
price effects continued to affect the business in the period. We
completed a limited restructuring process, to stabilise our
position in the new $50 a barrel oil reality. The gas project
contract with Samsung was successfully completed in the period and
the JGC Gulf International Co. Ltd project is nearing completion,
following a number of customer induced design changes. Work also
commenced on the EDF life extension contract and is proceeding to
plan.
-- Crown, Portishead: Crown had a stronger second half, driven
by the win of an important new GBP1.7m contract for flame detection
masts, whose end customer is Fluor Corporation. Work on this
contract continues into the current financial year. The "FET"
carbon abatement trial in Wales concluded successfully and we are
working to turn this application into a product of the future with
FET. This technology promises to make small to medium fossil fuel
generators "clean", which is important in a future where the energy
grid is more fragmented and localised.
The addition of the HTG Group brings with it several additional
sites to the Energy division: the Centre of Excellence at HTG's
headquarters in Luton, the associated HTI business in Vermont and
Peter Brotherhood's production facility in Peterborough, as well as
sales, support and repair facilities in India and China. The
multi-million pound investment in the Luton Centre of Excellence
has resulted in the world's most advanced facility for specialist
motor manufacture and also provides significant additional support
for R&D and the training and development of the Group's
workforce.
Medical Division (Scientific Magnetics Metalcraft (part) and
Composite Products
During the year, we made the small, but important
technology-enabling acquisition of Space Cryomagnetics Limited;
trading as Scientific Magnetics. This acquisition enables us to
vertically build our capability into superconducting magnets and
cryogenics, including "cryogen free" technology - ie avoiding using
helium. This is crucial for the future of sectors like MRI and NMR,
due to the unstable nature of helium supplies. For example, the
recent trade sanctions against Qatar by the gulf states has a
significant destabilising impact on helium supply, since helium is
a by-product captured from only a few oil and gas fields around the
world and Qatar is a significant producer.
Scientific Magnetics only added a small amount to Q4 revenue and
made an initial loss of GBP0.1m, as anticipated. Overall, the
Medical division saw modest revenue decline of 2% in the period,
mainly driven by ramp up delays at Composite Products.
Nevertheless, the division did see a welcome return to modest
pre-exceptional profit in the year, following losses last year. We
anticipate growth coming through in the current financial year from
recently won contracts - eg Rapiscan and Wuhan (now CAS Oxford), as
well as a full year of revenue from Scientific Magnetics.
The demographics of a growing and ageing world population are
encouraging for the medical imaging and diagnostics markets, so the
business is well placed to benefit from external market drivers.
There have been notable changes of ownership in some of the key
players in the MRI sector recently - eg with Canon acquiring
Toshiba's Medical business unit for $6bn. We continue to see new
entrants penetrating the Chinese medical imaging market, which, in
general, we view positively, in terms of business opportunity.
These developments indicate that the sector will continue to spend
money on developing new products and imaging techniques.
Summarising developments over the year at the Medical sites:
-- Scientific Magnetics Ltd, Abingdon: acquired in February
2017, this niche supplier of high power superconducting magnets and
cryogenics brings considerable engineering capability, at a time
when we expect to see new breakthrough technologies impacting the
magnet designs of the future and when the need for helium free
technology is increasingly important. The business strategy is
being realigned around a number of new potential products and
customers.
-- Metalcraft (Medical) Chatteris and Chengdu: Business with
Siemens was steady in the UK in the period and we continued to
develop our relationships with other customers - eg for Proton
Therapy. In China, results for the unit continued to improve year
on year and we made good progress with the existing customers (eg
Siemens and Alltech), as well as preparing for the new contracts
with Bruker and Wuhan (CAS Oxford) for NMR vessels.
Composite Products, Buckingham: performance in the second half
suffered from ramp-up delays with key customer, Rapiscan. We
believe that the issues causing the delays are now resolved and
expect to continue the ramp-up in the current financial year.
Financial Performance
Key Performance Indicators
The Group uses a number of financial key performance indicators
to monitor the business, as set out below.
Revenue: continuing operations saw modest sales improvement
Full year Group revenue of continuing operations increased by
7%, to GBP22.7m (2016: GBP21.2m). Energy again saw year-on-year
effects of the oil price holding back revenues, though the base
position now seems stable.
Profit: margin improvement continues as new contracts build
Adjusted EBITDA increased by 104% (note 4), to GBP0.7m (2016:
GBP0.4m). Action to optimise the cost base at Maloney, on-going
improvements at Metalcraft and further progress in China improved
the overall EBITDA.
Gross margins were 17.9% (2016: 14.9%), improving as the margin
mix of new contracts rises.
Tax:
The effective rate of taxation was a 3.9% tax charge, whereas
2016 was a 71.4% tax credit. We have continued to benefit from
Research and Development tax credits in the UK. In 2016 the
non-taxable sale of the property and ongoing release of deferred
tax liabilities distorted the overall tax charge. The tax position
will "normalise" in the coming years, though we anticipate some
on-going benefits - e.g. R&D tax credits and utilisation of
China losses.
Financial Performance (continued)
Earnings per Share (EPS): Improved for continuing
operations.
Adjusted diluted earnings per share for continuing operations
increased to 1.1p from 1.0p in 2016. Diluted loss per share,
attributable to shareholders was 1.3p (adjusted diluted earnings
per share 2016: 111.4p reflecting the substantial shareholder
benefit from the disposal of Aerospace).
Funding and Liquidity: Balance sheet strong with Net Cash
The net cash outflow from operating activities was GBP3.3m
(2016: GBP7.8m inflow), following payment of costs from the Sigma
disposal.
Net Cash (note 7) at year end stood at GBP26.4m (2016: Net cash:
GBP51.0m) following the tender buyback GBP19.4m (before costs) and
payment of the costs associated with the Sigma disposal.
Dividend: steady progress
The Board once more proposes to underpin our progressive
dividend policy. We are pleased to be able to recommend an improved
final dividend of 2.2 pence per share (2016: 2.1 pence per share).
We intend to continue on this progressive path, subject to the
outcome of acquisition activities in the coming years. The dividend
will be paid on 8 December 2017, to shareholders on the register at
26 October 2017.
People
The post year end acquisition of HTG brings a capability
treasure chest to Avingtrans and we look forward to working with
their talented people over the coming years, to develop a great
business together.
We are delighted to retain the services of the HTG CEO, Ewan
Lloyd Baker and we expect to formally confirm his appointment to
the Board at the AGM. No other Board changes are proposed at this
time.
There were no other Board or top team management changes in the
period, but the management team in the Energy and Medical divisions
continues to strengthen. Skills availability remains challenging,
but we do not expect to be unduly constrained by any shortages.
Like Avingtrans, HTG has invested significant effort in developing
skills, both through structured apprenticeship programmes and also
graduate development plans, notably at the HTL site in Luton.
The group undertakes to ensure social, community and human
rights issues are considered in its employment of people.
Environment
The Group's policy with regard to the environment is to ensure
that we understand and effectively manage the actual and potential
environmental impact of our activities. Our operations are
conducted such that we comply with all legal requirements relating
to the environment in all areas where we carry out our business.
During the period covered by this report the Group has not incurred
any significant fines or penalties or been investigated for any
significant breach of environmental regulations.
Outlook
The group is a niche engineering market leader in the Energy and
Medical sectors. The past year has demonstrated our skill for
invention and reinvention, both technologically and corporately. We
expect that the recent acquisitions (particularly that of HTG) will
afford investors another opportunity to build enduring value with
us in a new set of engineering market niches. We will continue to
be frugal and seek to crystallise value and return capital, if the
timing is right.
Our strategy continues to produce significant new business wins
that support our results and provide good visibility of longer term
earnings, such as the contract extension with Sellafield. We have
an excellent customer base which we can leverage and differentiated
product niches where the group can be world-leading. We are well
placed to benefit from further market consolidation, particularly
in the Energy sector. Clearly, the short-term focus for Avingtrans
will be the successful integration of HTG, where we see a
significant body of work being necessary, to steady the ship and
re-establish a profitable growth path.
Metalcraft, Hayward Tyler and Peter Brotherhood are clear
leaders in their chosen niche markets, providing customers with
consistent quality as part of a world class journey. We believe
that Scientific Magnetics can be the key to growing a Medical
division which develops tangible value for shareholders in the
longer term.
Our attractive structural growth markets and durable customer
relationships mean that we remain cautiously confident about the
future of Avingtrans. As ever in our acquisition activities, we
will seek to conduct our efforts rigorously and efficiently, with
an underpinning ethos that recent deals should be for the benefit
of all stakeholders and should build sustainable long-term
value.
Roger McDowell Steve McQuillan Stephen King
Chairman Chief Executive Chief Financial
Officer Officer
26 September 2017 26 September 2017 26 September 2017
Consolidated Income Statement
for the year ended 31 May 2017 Note 2017 2016
GBP'000 GBP'000
Revenue 1 22,714 21,177
Cost of sales (18,659) (18,028)
--------- ---------
Gross profit 4,055 3,149
Distribution costs (713) (699)
Share based payment expense (34) (21)
Acquisition costs (101) -
Restructuring costs (182) (272)
Tender share buyback costs (226) -
Net proceeds from property disposal - 446
Other administrative expenses (3,265) (2,830)
--------- ---------
Total administrative expenses (3,808) (2,677)
Operating loss 1 (466) (227)
Finance income 219 554
Finance costs (38) (82)
--------- ---------
(Loss)/ profit before taxation (285) 245
Taxation 3 (11) 175
(Loss)/ profit after taxation from continuing operations (296) 420
========= =========
Profit after taxation from discontinued operations - 30,716
========= =========
(Loss)/ profit for the financial year attributable to equity shareholders (296) 31,136
========= =========
(Loss)/ earnings per share:
From continuing operations
- Basic 4 (1.3)p 1.5p
- Diluted 4 (1.3)p 1.5p
From continuing and discontinued operations
- Basic 4 (1.3)p 112.3p
- Diluted 4 (1.3)p 111.4p
========= =========
Consolidated statement of Comprehensive income
2017 2016
GBP'000 GBP'000
(Loss)/ profit for the year (296) 31,136
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 10 (283)
Merger reserve recycled on disposal of subsidiary undertakings - 402
Exchange differences recycled on disposal of subsidiary undertakings - 477
Total comprehensive income for the year attributable to equity shareholders (286) 31,732
======== ========
Consolidated statement of changes in equity
at 31 May 2017
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 2015 1,385 10,873 814 402 (202) 180 (1,000) 21,733 34,185
Ordinary shares
issued 2 30 - - - - - - 32
Dividends paid - - - - - - - (830) (830)
Transfer on
disposal - - - (402) - - - 402 -
Share-based
payments - - - - - - - 36 36
--------- -------- -------- -------- -------- --------- ---------------- ---------- --------
Transactions
with owners 2 30 - (402) - - - (392) (762)
Profit for the
year - - - - - - - 31,136 31,136
Other
comprehensive
income
Exchange gain - - - - (283) - - - (283)
Recycled on
disposal of
subsidiary
undertakings - - - - 477 - - - 477
--------- -------- -------- -------- -------- --------- ---------------- ---------- --------
Total
comprehensive
income for the
year - - - - 194 - - 31,136 31,130
--------- -------- -------- -------- -------- --------- ---------------- ---------- --------
Balance at 31
May 2016 1,387 10,903 814 - (8) 180 (1,000) 52,477 64,753
========= ======== ======== ======== ======== ========= ================ ========== ========
At 1 June 2016 1,387 10,903 814 - (8) 180 (1,000) 52,477 64,753
Ordinary shares
issued 56 1,868 - - - - - - 1,924
Dividends paid - - - - - - - (886) (886)
Investment in
own shares - - - - - - (1,250) - (1,250)
Tender share
buyback (485) - 485 - - - - (19,383) (19,383)
Share-based
payments - - - - - - - 34 34
--------- -------- -------- -------- -------- --------- ---------------- ---------- --------
Transactions
with owners (429) 1,868 485 - - - (1,250) (20,235) (19,561)
Loss for the
year - - - - - - - (296) (296)
Other
comprehensive
income
Exchange gain - - - - 10 - - - 10
--------- -------- -------- -------- -------- --------- ---------------- ---------- --------
Total
comprehensive
income for the
year - - - - 10 - - (296) (286)
--------- -------- -------- -------- -------- --------- ---------------- ---------- --------
Balance at 31
May 2017 958 12,771 1,299 - 2 180 (2,250) 31,946 44,906
========= ======== ======== ======== ======== ========= ================ ========== ========
Consolidated Balance Sheet
at 31 May 2017 2017 2016
GBP'000 GBP'000
Non current assets
Goodwill 5,198 4,550
Other intangible assets 1,442 930
Property, plant and equipment 4,850 4,668
Deferred tax - 6
--------- ----------
11,490 10,154
Current assets
Inventories 5,618 3,046
Trade and other receivables : amounts falling due within one year 9,038 6,141
Trade and other receivables : amounts falling due after one year 580 1,450
Current tax asset 52 85
Cash and cash equivalents 27,703 56,503
--------- ----------
42,991 67,225
Total assets 54,481 77,379
========= ==========
Current liabilities
Trade and other payables (7,870) (6,908)
Obligations under finance leases (142) (295)
Borrowings (179) (3,911)
Current tax liabilities - (129)
Total current liabilities (8,191) (11,243)
========= ==========
Non current liabilities
Borrowings (896) (1,075)
Obligations under finance leases (37) (176)
Deferred tax (195) (132)
Contingent consideration (256) -
--------- ----------
Total non-current liabilities (1,384) (1,383)
--------- ----------
Total liabilities (9,575) (12,626)
========= ==========
Net assets 44,906 64,753
========= ==========
Equity
Share capital 958 1,387
Share premium account 12,771 10,903
Capital redemption reserve 1,299 814
Translation reserve 2 (8)
Other reserves 180 180
Investment in own shares (2,250) (1,000)
Retained earnings 31,946 52,477
Total equity attributable to equity holders of the parent 44,906 64,753
========= ==========
Consolidated Cash Flow Statement
for the year ended 31 May 2017 Note 2017 2016
GBP'000 GBP'000
Operating activities
Cash flows from operating activities (3,221) 7,885
Finance costs paid (38) (146)
Income tax (paid)/repaid (1) 52
---------- ---------
Net cash (outflow)/ inflow from operating activities (3,260) 7,791
---------- ---------
Investing activities
Acquisition of subsidiary undertakings , net of cash acquired (585) (3,500)
Disposal of subsidiary undertakings, net of cash - 53,677
Finance income 219 554
Purchase of intangible assets (626) (766)
Purchase of property, plant and equipment (484) (1,062)
Proceeds from sale of intangible assets - 9
Proceeds from sale of property, plant and equipment 13 1,319
---------- ---------
Net cash (used)/ generated by in investing activities (1,463) 50,231
Financing activities
Equity dividends paid (886) (830)
Repayments of bank loans (334) (4,156)
Repayments of obligations under finance leases (292) (1,176)
Proceeds from issue of ordinary shares 612 32
Purchase of shares - tender buyback (19,383) -
Proceeds from borrowings - 1,651
---------- ---------
Net cash outflows from financing activities (20,283) (4,479)
Net (decrease)/ increase in cash and cash equivalents (25,006) 53,543
Cash and cash equivalents at beginning of year 52,923 (361)
Effect of foreign exchange rate changes on cash (214) (259)
---------- ---------
Cash and cash equivalents at end of year 27,703 52,923
---------- ---------
Cash flows from operating activities:
for the year ended 31 May 2017
2017 2016
GBP'000 GBP'000
Continuing operations
(Loss)/ profit before income tax from continuing operations (285) 245
Profit before income tax from discontinued operations - 3,878
Adjustments for:
Depreciation 525 1,520
Amortisation of intangible assets 120 983
Gain on disposal of property, plant and equipment (13) (489)
Finance income (219) (554)
Finance expenses 38 146
Research and Development Expenditure Credit - (168)
Share based payment charge 34 36
Bargain purchase on acquisition - (172)
Changes in working capital
Increase in inventories (2,482) (2,327)
Increase trade and other receivables (1,654) (556)
Increase in trade and other payables 711 5,339
Other non cash changes 4 4
Cashflows from operating activities (3,221) 7,885
======= =======
Notes to the Preliminary Statement
31 May 2017
1 Segmental analysis
Unallocated
Year ended 31 May 2017 Energy Medical central items Total
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 12,610 10,104 - 22,714
========= =========== =============== ===============
Operating profit/(loss) 456 428 (1,350) (466)
Net finance costs 181
Taxation (11)
---------------
Loss after tax from continuing operations (296)
===============
Segment non-current assets 7,482 4,008 - 11,490
Segment assets 17,796 10,110 26,575 54,481
--------- ----------- --------------- ---------------
Segment liabilities (4,158) (2,241) (3,176) (9,575)
--------- ----------- --------------- ---------------
Net assets 13,638 7,869 23,399 44,906
========= =========== =============== ===============
Non-current asset additions
Intangible assets 587 39 - 626
Tangible assets 316 168 - 484
--------- ----------- --------------- ---------------
903 207 - 1,110
========= =========== =============== ===============
Medical results includes the acquisition of the Space Cryomagnetics Limited which contributed
GBP227,000 and GBP115,000 to Group revenue and loss after tax respectively.
Unallocated
Year ended 31 May 2016 (restated) Energy Medical central items Total
GBP'000 GBP'000 GBP'000
Revenue 10,912 10,265 - 21,177
============== =========== =============== ===============
Operating profit/(loss) 247 (188) (286) (227)
Net finance costs 472
Taxation 175
---------------
Profit after tax from continuing operations 420
===============
Segment non-current assets 6,862 3,292 - 10,154
Segment assets 13,638 6,789 56,952 77,379
-------------- ----------- --------------- ---------------
Segment liabilities (4,151) (3,801) (4,674) (12,626)
-------------- ----------- --------------- ---------------
Net assets 9,487 2,988 52,278 64,753
============== =========== =============== ===============
Non-current asset additions
Intangible assets 294 36 - 330
Tangible assets 333 97 - 430
-------------- ----------- --------------- ---------------
627 133 - 760
============== =========== =============== ===============
Notes to the Preliminary Statement (continued)
31 May 2017
Geographical
2017 2016 2017 2016
Non-current Non-current
Revenue Revenue assets Assets
GBP'000 GBP'000 GBP'000 GBP'000
United Kingdom 18,635 16,027 10,111 8,628
Europe 785 511 - -
North America 5 1 - -
Rest of World 3,863 5,387 1,379 1,528
Eliminations (574) (749) - -
22,714 21,177 11,490 10,154
========= ======= =========== ===========
The Group had Medical revenue of GBP7,229,000 (2016:
GBP6,997,000) and Energy GBPnil (2016: GBP2,284,000) 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
2017 2016
GBP'000 GBP'000
(Loss)/ profit before tax from continuing operations (285) 245
Share based payment expense 34 21
Acquisition costs 101 -
Restructuring costs 182 272
Profit on disposal of property 226 -
Tender share buyback costs - (446)
------- -------
Adjusted profit before tax 258 92
Finance income (219) (554)
Finance cost 38 82
------- -------
Adjusted profit/ (loss) before interest, tax and amortisation from business combinations ('EBITA') 77 (380)
Depreciation 525 505
Amortisation of other intangible assets 120 229
Adjusted Earnings before interest, tax, depreciation and amortisation ('EBITDA') 722 354
======= =======
The Directors believe that the above adjusted earnings are a
more appropriate reflection of the Group performance.
3 Taxation
2017 2016
GBP'000 GBP'000
Current tax (57) (63)
Deferred tax 69 (112)
11 (175)
======== ========
Notes to the Preliminary Statement (continued)
31 May 2017
4 Earnings per ordinary share
2017 2016
Number Number
Weighted average number of shares - basic 22,295,083 27,725,452
Share option adjustment 288,451 230,934
Weighted average number of shares - diluted 22,583,534 27,956,384
========== ==========
2017 2016
GBP'000 GBP'000
(Loss)/earnings from continuing operations (296) 420
Share-based payments 34 21
Acquisition costs 101 -
Restructuring costs 182 272
Tender share buyback costs 226 -
Profit on disposal of property - (446)
Adjusted earnings attributable to shareholders 247 267
========== ==========
Basic (loss)/earnings per share (1.3)p 1.5p
Adjusted basic earnings per share 1.1p 1.0p
Diluted (loss)/earnings per share (1.3)p 1.5p
Adjusted diluted earnings per share 1.1p 1.0p
Earnings from discontinued operations - 30,716
=== ======
Basic earnings per share - 110.8p
Diluted earnings per share - 109.9p
Earnings attributable to shareholders 247 31,136
======== ======
Basic (loss)/earnings per share (1.3)p 112.3p
Diluted (loss)/earnings per share (1.3)p 111.4p
Notes to the Preliminary Statement (continued)
31 May 2017
5 Acquisitions
Business combination - Space Cryomagnetics Limited (trading as
Scientific Magnetics Limited)
On 27 February 2017 the Group acquired 82% of the issued share
capital of Space Cryomagnetics Limited. The acquisition was made to
enhance the Group's position in the energy and medical division.
The provisional net assets at the date of acquisition were as
follows:
Fair value of assets and liabilities acquired GBP'000
Other intangible assets 4
Property, plant and equipment 104
Inventories 57
Trade and other receivables 335
Cash and cash equivalents 153
Trade and other payables (245)
Loan (468)
-------
Net liabilities (60)
Intangibles assets identified -
Goodwill 648
588
=======
Fair value of consideration transferred:
Cash 270
Shares issued 62
Contingent consideration 256
-------
Consideration 588
Cash acquired 153
Loan 468
Acquisition costs charged to expenses 89
-------
Net cash paid relating to the acquisition 674
=======
Management did not identify any intangible assets on acquisition
of this business.
Acquisition costs arising from this transaction of GBP89,000
have been included in administration expenses included in overheads
before operating profit.
There are call and put options enabling or requiring the Company
to purchase the remaining 18% of the issued share capital of Space
Cryomagnetics Limited ("Sci Mag"). The options have an exercise
date of October 2019 and October 2022. The Company expects to
acquire the remaining 18% of Sci Mag through the future exercise of
one of these options and consequently, for the purposes of the
Group's consolidation, Sci Mag has been accounted for as if it were
100% owned. The exercise price of the option is contingent upon the
future trading performance of Sci Mag during the period to October
2019 and October 2022. At 31 May 2017, the Group has recognised
contingent consideration of GBP256,000, being the best estimate of
the Directors at that point in time.
Since acquisition Sci Mag contributed the following to the Group's cashflows: 2017
GBP'000
Operating cashflows (43)
Investing activities (41)
Notes to the Preliminary Statement (continued)
31 May 2017
6 Events after the balance sheet date
On 31 August 2017 the Group acquired 100 percent of the issued
share capital of the Hayward Tyler Group plc for GBP29.4m through a
share placing. On the same date GBP11.5m of its facilities were
repaid, a further GBP10.0m of debt assumed and GBP5m of associated
transaction costs incurred. In its previous financial year Hayward
Tyler Group plc had turnover of GBP62,719,000 and a trading loss
before tax of GBP3,705,000 before an exceptional gain of
GBP376,000.
Management are assessing assets and liabilities purchased and
are unable to confirm the value, given that they are currently in
the process of reviewing the records of the business.
7 Net cash/(debt) and gearing
The gearing ratio at the year-end is as follows: 2017 2016
GBP'000 GBP'000
Debt (1,254) (5,457)
Cash and cash equivalents 27,703 56,503
--------- ---------
Net cash 26,449 51,046
Equity 44,906 64,753
--------- ---------
Net cash to equity ratio 58.9% 78.8%
========= =========
8 Preliminary statement and basis of preparation
This preliminary statement, which has been agreed with the
auditors, was approved by the Board on 26 September 2017. 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 2017 and
2016 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 2016 have been
delivered to the Registrar of Companies but the 31 May 2017
accounts have not yet been filed.
The Company's financial statements have been prepared and
approved by the directors in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European
Union and those parts of the Companies Act 2006 that apply to
companies reporting under IFRS. The principal accounting policies
adopted by the company, which remain unchanged, are set out in the
statutory financial statements for the year ended 31 May 2017.
9 Annual report and Accounts
The Report and Accounts for the year ended 31 May 2017 will be
available on the Group's website www.avingtrans.plc.uk on or around
3 October 2017. Further copies will be available from the
Avingtrans' registered office:
Chatteris Business Park, Chatteris, Cambridgeshire PE16 6SA.
10 Annual General Meeting
The Annual General Meeting of the Group will be held at
Shakespeare Martineau LLP, No1 Colmore Square, Birmingham, B4 6AA
on 16 November 2017 at 11:00am
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR FMGZLNVDGNZM
(END) Dow Jones Newswires
September 27, 2017 02:00 ET (06:00 GMT)
Avingtrans (LSE:AVG)
Historical Stock Chart
From Mar 2024 to Apr 2024
Avingtrans (LSE:AVG)
Historical Stock Chart
From Apr 2023 to Apr 2024