TIDMAVG
RNS Number : 5346O
Avingtrans PLC
10 February 2021
10 February 2021
Avingtrans plc
("Avingtrans" or the "Group")
Interim results for the six months ended 30 November 2020
Avingtrans PLC (AIM: AVG), the international engineering group
which designs, manufactures and supplies original equipment,
systems and associated aftermarket services to the energy and
medical sectors, today announces its interim results for the six
months ended 30 November 2020.
Financial Highlights
-- Revenue was stable at GBP54.1m (2020 H1: GBP54.3m)
-- Gross Margin improved to 30.9% (2020 H1: 25.6%)
-- Adjusted* EBITDA increased by 36.6% to GBP6.3m (2020 H1: GBP4.6m)
-- Profit before Tax was GBP1.4m (2020 H1 GBP0.4m)
o Adjusted* Profit Before Tax increased to GBP3.5m (2020 H1:
GBP1.8m)
-- Adjusted* Diluted earnings per share doubled to 10.0p (2020 H1: 5.1p)
-- Cash inflow from operating activities was GBP1.1m (2020 H1: GBP2.1m outflow)
-- Net Debt (pre IFRS16) increased slightly to GBP7.8m (31 May 2020: GBP7.4m)
-- Dividend to be reinstated at Full Year (2020 H1: suspended)
* Adjusted to add back amortisation of intangibles from business
combinations, acquisition costs and exceptional items
Operational Highlights
Energy
-- Energy revenues decreased by 1.3%, driven by Covid-19 delays
-- Profits in the Energy divisions increased by 34.6%, driven by a recovery in EPM
-- Aftermarket margin performance continuing to improve across all business units
-- Sellafield 3M3 (three-metre-cubed box) steady - meeting customer expectations
-- Expanding orders in nuclear sector in the UK, USA and Asia
-- Ormandy Group performance steadily improving despite Covid-19 induced delays
-- Hydrocarbons - sales impacted by Covid-19 and targeted restructuring implemented
-- Booth and Energy Steel results are improved year on year and recovering as anticipated
-- In the period, Booth secured a contract for safety doors for
HS2, worth GBP36m and, post period end, secured an extension to
another government contract, worth GBP2.9m
-- The process to sell the HT Luton site is underway
Medical
-- Divisional revenues and margins were flat, as the planned transition to new markets continues
-- Post period end, we completed the merger of SciMag and Tecmag with Magnetica of Australia
-- Work on compact MRI systems is now expanding, with new investment planned
-- In parallel, we are now planning to exit third-party MRI component manufacture at Metalcraft
-- Composite Products performance improved in the period, with customers expanding
C ommenting on the results, Roger McDowell, Chairman, said:
"Avingtrans continues to make good progress during the pandemic
and has proven to be resilient. Following our PIE strategy, both
Booth Industries and Energy Steel are continuing to improve since
acquisition and the potentially transformational deal with
Magnetica (post period end) is an exciting prospect for the medical
division. The period result shows improving profits against flat
revenues, once more demonstrating our agility, even in
adversity."
"Although we face new challenges, we will also keep converting
opportunities and we remain confident about our outlook in both the
Energy and Medical sectors."
Enquiries:
Avingtrans plc
Roger McDowell, Chairman
Steve McQuillan, Chief Executive
Officer
Stephen King, Chief Financial Officer 0135 469 2391
N+1 Singer (Nominated Adviser)
Shaun Dobson/ Alex Bond (Corporate
Finance)
Rachel Hayes (Corporate Broking) 020 7496 3000
SEC Newgate (Financial PR)
Adam Lloyd/ Tom Carnegie 020 7653 9850
About Avingtrans plc: Avingtrans designs, manufactures and
supplies original equipment, systems and associated aftermarket
services to the energy, medical and industrial markets
worldwide.
Business units
Hayward Tyler - Luton & East Kilbride, UK and USA, China and
India
Specialises in the design, manufacture and servicing of performance-critical
motors and pumps for challenging environments.
Energy Steel, Inc - Lapeer, Michigan, USA
Provider of custom fabrications for the nuclear industry, specialising
in: OEM parts obsolescence; custom fabrications; engineering
design solutions; product refurbishment; on-site technical support.
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.
Booth Industries - Bolton, UK
Designs, manufactures, installs and services doors and walls
which can be tailored to be: blast &explosion proof; fireproof;
acoustically shielded; high security/safety; or combinations
of the above.
Ormandy Group, Bradford, UK
Design, manufacturers and servicing of off-site plant, heat
exchangers and other HVAC (heating, ventilation and air conditioning)
products
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 cryogenics for a variety of markets including MRI
and provides services for Nuclear Magnetic Resonance instruments.
Tecmag Inc, Houston, USA
Designs, manufactures and installs instrumentation, including
consoles, system upgrades, and probes, mainly for Magnetic Resonance
Imaging (MRI) and Nuclear Magnetic Resonance (NMR) systems.
Magnetica, Brisbane, Australia
Designs and manufactures compact, cryogen free MRI systems,
magnets and gradient and RF coils.
Chairman's Statement
They say that, if you are caught in an avalanche, you should
"swim" with the current, create room to breathe and stay calm. Many
of us will have felt the need to follow this advice over the last
year, as the Covid-19 avalanche has engulfed us. However, despite
the effects of Covid, Avingtrans has successfully created room to
breathe in the first half of FY21 and produced a solid result in
the circumstances. A creditable, stable revenue performance versus
H1 FY20 has been enhanced by a much improved EBITDA result, thanks
to steady recovery progress at Booth and Energy Steel (since
acquisition in June 2019) and an improved margin mix, stemming from
cost reductions and improving project margins. This is a pleasing
outcome. Even with some Covid delay effects, new orders have
continued to flow - and we were thrilled that Booth was chosen by
HS2 to produce their cross-tunnel safety doors in a multi-year
GBP36m contract win. A triumph for British manufacturing during the
Brexit process.
Our proven Pinpoint-Invest-Exit ("PIE") strategy continues to
deliver results, with Booth Industries in Bolton, and Energy Steel
in Michigan both responding well to our "get fit" regime and
driving improving results. Post period end, we were delighted to
conclude the merger of our Scientific Magnetics and Tecmag
businesses with Magnetica of Australia, giving Avingtrans
shareholders an initial 58.1% interest in this new business. This
accelerates our plans to become a leader in compact MRI niche
products, in sectors like orthopaedics and veterinary MRI. The
prospects for this new entity are exciting, so we plan to invest
over GBP3m in the new venture over the next 12-18 months, to reach
market launch. To focus on this new activity, a corollary is that
we have commenced a phased exit from third-party MRI component
manufacture. This process completes during 2022.
The divisional management teams have been further strengthened
in the period and they have been resourceful in tackling the Covid
effects. The crisis brought forward certain targeted changes, with
the Crown site now fully exited and limited restructuring, mainly
in Hayward Tyler and Peter Brotherhood (caused by the downturn in
oil and gas capital expenditure).
Our game plan for aftermarket growth in EPM and PSRE remains
intact as we seek to out-perform our competitors for a larger share
of the installed base support business, both for our products and
theirs. The improved end-user access model provides a predictable
and repeatable pipeline, drives improved profitability and enhances
products and services. We remain keen to maximise the revenue
opportunities arising from the aftermarket access afforded by our
own businesses and though partnership deals (eg with Shinhoo Pumps,
China and Parker Hannefin, USA).
The Engineered Pumps and Motors (EPM) division delivered an
improved half year result, despite Covid disruptions. The impacts
included delayed orders, some residual supply chain delays and
customer delivery issues, which resulted in some targeted
restructuring, so this was a very good outcome. Energy Steel's
improved performance, versus the corresponding period last year,
has supported the profit enhancement. The award of outline planning
permission for the HT Luton site was welcome news, providing us
with the opportunity to optimise HT's UK operations, whilst
potentially producing a net surplus for the Group when the site is
exited in due course.
The Process Solutions and Rotating Equipment (PSRE) division saw
a H1 revenue decline due to Covid delay effects, but profits were
enhanced by an improved margin mix, stemming partly from a pleasing
return to form for Booth, with a bulging order book being
complemented by increasing revenues and consistent profits. Year on
year profits were also up at Ormandy and Fluid Handling. The
division has refined its offering to the UK nuclear market -
especially to Sellafield for nuclear decommissioning - where
divisional businesses working as a team (eg Fluid Handling and
Metalcraft) have created new business wins. Conversely, Peter
Brotherhood has seen OE order delays - especially in oil and gas -
and has restructured as a consequence. We were concerned that
Ormandy would suffer from on-going Covid friction, but a
strengthened sales team has kept the order book afloat, with good
prospects.
The post period end merger with Magnetica is a potentially
transformational deal for the medical division. The combination of
Sci Mag, Tecmag and Magnetica creates a new entity, capable of
designing and manufacturing entire MRI systems in-house, giving us
the capability to enter and disrupt the MRI medical imaging market.
With first products for clinical testing expected to be ready
within 18 months, we will be able to target those applications
which currently lack effective MRI solutions, such as orthopaedics,
neonatal, neurology and veterinary. With this merger, the
multi-year strategic pivot in this division is nearing completion.
In parallel, Metalcraft has begun a phased exit from the
third-party component manufacturing niche, leaving Magnetica free
from undue external influence. Metalcraft will henceforth
concentrate on its energy market portfolio, with an emphasis on
nuclear life extension and decommissioning. Composite Products also
had a good first half year and will transition into the PSRE
division from FY22, to widen its scope of supply and potential
target customers.
With the improving results and our demonstrable resilience, the
Board intends to propose to reinstate a full year dividend, subject
to final results. We expect that this dividend should incorporate a
component for the half year, to restore our annual dividend
position to "normal". Whilst the results for the Group were solid
in the period, the context of the pandemic remains current, so we
believe that it is still prudent to hold back any immediate
dividend. All being well, we intend to return to our commitment to
long term shareholder returns later this year. Our confident view
of the prospects for the Group, underpinned by our prudent approach
to debt and financial headroom, further support this decision.
We welcome the staff of Magnetica to Avingtrans and congratulate
all Avingtrans employees for their dedication over recent,
challenging months. We continue to look forward with tempered
confidence and enthusiasm to the period ahead.
Roger McDowell
Chairman
9 February 2021
Strategy and business review
Group Performance
Avingtrans has a Pinpoint-Invest-Exit (PIE) business model,
which drives improvements in design, original equipment manufacture
(OEM) and associated aftermarket services, affording the Group an
improving margin mix, both in the near and longer term. The Group
has progressively shifted to an OEM based strategy over time, away
from build to print. Our Energy divisions, comprising Engineered
Pumps and Motors and Process Solutions and Rotating Equipment, form
the bulk of Avingtrans' operations. Effective longer-term
development of the Group's smaller Medical Imaging division is also
a core focus for management, in creating shareholder value.
Strategy
Avingtrans is an international precision engineering group,
operating in differentiated, specialist markets, within the supply
chains of many of the world's best known engineering original
equipment manufacturers (OEMs), as well as positioning itself as an
OEM to end users. Our core strategy is to build market-leading
niche positions in our chosen market sectors - currently focused on
the Energy and Medical sectors. Over the longer term, our
acquisition strategy has enabled our businesses to develop the
critical mass necessary to achieve leadership in our chosen markets
.
Our strategy remains consistent with previous statements. The
Group's unrelenting objective is to continue the proven strategy of
"buy and build" in regulated engineering markets, where we see
consolidation opportunities, potentially leading 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 - e.g. the disposal of Sigma
Components - 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 Board continues to focus on improvements in HTG's
operations, along with driving the performance of Booth and Energy
Steel. This programme is progressing to plan. We now have the
opportunity to transform the medical imaging division's
performance, thanks to the merger with Magnetica. The objective for
the Group is to become a leading supplier in targeted energy and
medical markets, of operation critical products, with a reputation
for high quality and delivery - on-time and on-budget. The Group
has production facilities in its three key geographical markets
(the Americas, Asia and Europe) with higher volume/lower cost
facilities in Asia, and product development and realisation in the
UK and the USA. The Group intends to invest in breakthrough and
disruptive technologies in the energy and medical markets.
Avingtrans' primary focus in Energy is the nuclear sector -
harvesting opportunities in decommissioning, life extension and
next generation nuclear markets. We are also engaged with a variety
of other niches in the renewable energy sector. In addition, the
Directors will continue to build on our 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, hydrocarbon, marine,
water and industrial sectors.
After the HTG acquisition in 2017, to maximise long term
shareholder value via our PIE strategy, we reorganised the Energy
assets of the Group into two distinct divisions:
-- Engineered Pumps and Motors (EPM) consisting of Hayward
Tyler's units in the UK, USA, China and India and Energy Steel,
acquired in June 2019.
-- Process Solutions and Rotating Equipment (PSRE) consisting of
Metalcraft's energy assets, Peter Brotherhood, Ormandy, the Fluid
Handling business in Scotland and also Booth Industries, acquired
in June 2019.
In parallel, the focus of the Group's Medical Imaging division
(MII) - has now evolved to focus on becoming a market leader in the
production of compact, superconducting, cryogen-free MRI systems,
targeted at specific applications - including orthopaedic imaging
and veterinary imaging. Whilst production of certain existing
products will continue, to support the division overall, Metalcraft
is now following a phased exit of third-party MRI component
manufacture. This division consists of Metalcraft's medical assets
in the UK and China, plus Scientific Magnetics and Tecmag in the
USA, which have now both merged with Magnetica of Australia. From
FY22, the medical division will consist only of the Magnetica
business units, with Metalcraft now focusing on nuclear energy and
Composite Products also moving into PSRE.
Our businesses have the capability to engineer products in
developed markets and to produce those products partly, or wholly,
in Asia, where appropriate. 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, Indian and other Asian
markets for our products. We are very well established in China,
providing integrated supply chain options for our blue-chip
customers.
An overarching strategic theme for Avingtrans, is to proactively
nurture and grow the proportion of our business stemming from
aftersales. We are targeting both our own installed base and the
wider competitive installed base of such equipment, in areas where
we can offer an advantage to our end-user customers. This focus now
applies mainly to our Energy businesses, with the Medical division
now strategically pivoting to new products and services.
Energy - Engineered Pumps and Motors ("EPM")
For Hayward Tyler ("HT"), the main priorities remain to
strengthen the aftermarket capabilities and to maximise
opportunities in the nuclear life extension market. The division
delivered a much improved first half performance, thanks to
previously delayed orders coming through and curtailing the
previous losses in Energy Steel.
At HT Luton, aftermarket activities continue to build, including
the servicing of 3(rd) party equipment. The GBP10m contract in
Sweden with Vattenfall for the Forsmark plant (for nuclear life
extension) has progressed well, whilst further defence orders have
been received and are being executed on target. However,
hydrocarbon related orders were disrupted by Covid-19 and, thus, a
targeted restructuring programme was completed in the period. We
are progressing with the marketing of the Luton site and plans for
a new site are now well developed.
HT Inc in Vermont (USA) suffered from some Covid-19 order
delays, but it continues to see solid order intake in the nuclear
life extension market in the USA - and again with KHNP, South
Korea, where we booked new orders in the period. HT Inc's new
R&D opportunities in next generation nuclear power have made
good progress, [with the TerraPower prototype product shipped post
period end].
HT Kunshan (China) has been less affected by Covid-19 recently.
The contract in China (worth GBP2.2m) for specialist pumps to be
installed in a major new concentrated solar power plant in Dubai
has completed successfully in the period. This was an important
seeding of the renewables market and we expect more to follow in
the coming years.
Meanwhile, in India, Covid-19 caused chaos in the period, with
service operations severely interrupted. Fortunately, the overall
financial impact was not material and operations have now
resumed.
Energy Steel ('ES') in Michigan (USA), continues to recover
steadily, with the ES and HT sales team now working as one unit,
focused on expanding the sales footprint in nuclear aftermarket
opportunities in north America and beyond. Post period end, we
received notice from the landlord that the ES building is to be
sold, so we plan to move to a new, smaller facility in mid-2021
Energy - Process Solutions and Rotating Equipment ("PSRE")
PSRE is equally focused on aftermarket where feasible, which is
gradually improving the margin mix, although the division has seen
order delays caused by Covid-19, which meant a reduced revenue in
the first half, caused by specific project timings. However, the
underlying margin mix improved, so that the profit held up
well.
Metalcraft's progress with the Sellafield 3M3 boxes continues to
be steady and we are producing boxes consistently. The next 3M3 box
contract tender, expected to be worth over GBP900m, will not be in
2021 now, having been delayed by Sellafield, as previously
noted.
Peter Brotherhood suffered from a reduction in hydrocarbon
related orders and OE order delays, due to Covid-19. This resulted
in targeted restructuring, which was completed in the first half.
Aftermarket orders were also disrupted by Covid-19, but have now
recovered close to pre-Covid levels. Prospects remain strong, but
we anticipate further order delays during the second half.
Ormandy's performance was temporarily blown off course by
Covid-19 also, but order intake there has now largely recovered and
the business performance is steadily improving. The pandemic may
provide opportunities for us to capitalise on Ormandy's position in
the HVAC sector.
Booth Industries continues on a rapid recovery curve and has
responded very well to the Avingtrans PIE treatment. A bumper crop
of orders has materialised, including the GBP36m order for HS2
cross-tunnel doors. The business now has a record order book,
extending over several years. Covid-19 caused us to temporarily
suspend the new building extension in Bolton. This work has now
resumed and we still expect to complete the extension this year,
allowing us to eliminate a separate, leased site.
The Fluid Handling business in Scotland has been a consistently
good performer since acquisition and has fitted well into our
ambitions to build a wider nuclear capability. The business has
continued to build a record order book and further nuclear life
extension and decommissioning opportunities are being pursued.
Sadly, the decline in its legacy business and Covid-19 delays
caused management to take the decision to exit Crown. We vacated
the Portishead site fully in the period. Metalcraft is continuing
with some Crown product sales from the Chatteris site.
Medical and Industrial Imaging ("MII")
The multi-year transition of the MII division is now nearing
completion. The post period end merger of Scientific Magnetics
(SciMag) and Tecmag with Magnetica effectively completes the
puzzle, enabling us to produce compact, superconducting,
helium-free MRI systems entirely in-house. The merger added co
mplementary capabilities in system architecture, asymmetric magnet
design and gradient and RF coil manufacture to our existing
knowhow.
Our initial estimate of the addressable orthopaedic imaging
market is circa GBP400m p.a. (Approximately 10% of the total MRI
hardware and service market). However, our intended "pay per scan"
business model could mean that the opportunity is significantly
larger. It is more difficult to quantify other market segments (eg
veterinary and neonatal imaging) at this stage, because there are
no available equivalent, dedicated products. We plan to invest over
GBP3m in the new business in the next 12-18 months, which we
anticipate will result in Magnetica having orthopaedic and
veterinary MRI products ready for clinical testing. We believe that
by materially reducing the size and total costs of these dedicated
MRI systems, coupled with them being much easier to set-up in a
wider variety of locations, produces a compelling sales
proposition. In addition, these dedicated systems will free-up
capacity on the existing MRI system installed base, which should be
a major benefit to healthcare organisations.
SciMag and Tecmag will rebrand to Magnetica in due course, to
present a seamless image of the new entity. However, there is merit
in continuing with various existing products and services at SciMag
and Tecmag, so long as they do not distract from our core vision
for MRI, which holds out the prospect of materially increasing the
value of Magnetica over the coming years. From FY22, the Medical
division will consist only of the new Magnetica business.
Metalcraft's UK and China business, with MRI component customers
like Siemens and Alltech, performed well in the period. However,
with the pivot towards sales of our own dedicated MRI products, we
will now gradually exit from this component manufacturing niche -
expected to be completed in 2022.
Finally, Composite Products had an improved first half, with
deliveries to Rapiscan increasing and new customers, like Arrival
(electric vehicles) coming onstream. Other smaller accounts
supported revenues, with good prospects. Following the completion
of the Magnetica merger, we plan to move Composites into the PSRE
division from FY22.
Markets
Global demand for energy has been interrupted by the Covid
pandemic, but this is expected to be temporary. However, it will
likely accelerate the main global themes that continue to dominate
the outlook for energy consumption:
-- Energy transition - the continued shift in demand from the US
and Europe to fast growing Asian markets.
-- Fuel mix - the on-going shift in supply to lower carbon fuels and renewables.
Nuclear
The Group has positioned itself as a leading supplier across the
nuclear life cycle. The UK continues to dominate global spend in
decommissioning and reprocessing and the on-going progress made by
Metalcraft on the strategic partnership for waste containers for
Sellafield is a highlight, positioning the Group as a leader in the
field. Given this solid platform, the Group is engaged with key
stakeholders to expand its offering. We see on-going success in
conducting engineering design and qualification studies for
obsolete equipment on critical systems.
Governments are seeking to extend the life of nuclear assets
through refurbishment programmes and the Group is ideally placed to
benefit from this trend, as evidenced by recent contract wins in
South Korea and the USA.
The development of Small Modular Reactor (SMR) technology
remains a promising opportunity for the Group, albeit longer term.
The Group has successfully positioned itself as a key player in
this developing market and the recent contract wins for the likes
of TerraPower and the ITER fusion project by HT Inc underlines this
success.
Power Generation
The share of energy used for power generation remains a key
Group focus.
-- Coal - The Group maintains a stable position in the ongoing coal fired power market and has value-engineered its product line and localised it in China. Opportunities exist for new power plants across Asia in addition to retrofitting systems to existing plants to improve efficiency and reduce harmful emissions.
-- Gas - The gas-fired power station market offers the Group
opportunities across our pump, compressor and steam turbine product
lines. The gas market is not yet dominated by Asian demand and
Asian EPCs.
-- Renewables - Most of the products for hydrocarbons have
direct benefits to the Group product lines that can be deployed for
concentrated solar power (CSP), biomass and waste to energy. Our
development programmes for molten salt applications benefit both
nuclear and CSP applications. The Chinese EPCs look set to dominate
the CSP market, for example in Dubai, where we have now completed
out first orders.
Hydrocarbons
At the start of FY20, we had begun to see relatively more orders
in this sector, although our forecasts were cautious, given the
recent years of weak prices, low capital expenditure, etc. Covid-19
has had a dramatic effect on oil and gas supply and demand.
Although oil prices have seen some recovery recently, the result is
that new capital expenditure in this sector has been materially
reduced. Therefore, our forecasts must continue to be conservative,
with some restructuring activity in EPM and at Peter Brotherhood
being necessary, due to the time lag expected before any sector
recovery.
Aftermarket - Energy
The drive for safety, efficiency and reliability is a consistent
theme for end users. In Asia, pressure on operational expenditure
is challenging preventative maintenance decisions and drives a
purchase cost decision-making process. However, in Europe, Middle
East and the Americas, operators focus on through-life cost. End
users want fast, reliable responses and local solutions to keep
plants operating and the Group continues to build upon its local
presence through agents and strategic partnerships, albeit that the
pandemic has disrupted service scheduling worldwide.
Companies across the energy market continue to invest in digital
technologies to improve productivity, efficiency and predictability
in the field. At the equipment level this translates to a series of
devices, sensors and algorithms which can predict breakdowns before
they occur and ensuring equipment is running at its optimum
performance. The Group launched its first monitoring product,
DataHawkTM, for Boiler Circulating Pumps over two years ago and is
building on this success by adding this capability to both a wider
set of original equipment and its aftermarket service offering.
Markets - Medical
The Diagnostic (medical) and molecular imaging markets are large
global sectors, dominated by a few large systems manufacturers. The
total Diagnostic Imaging Market is worth over $20bn, according to
Grand View Research and is expected to continue to grow at over 4%
per annum over the period 2020-2027. The largest market is the USA,
followed by Europe and Japan. The fastest growing markets are China
and India.
Following the merger with Magnetica, the Medical division is
primarily targeting the Magnetic Resonance Imaging (MRI) sector.
Market drivers for MRI include an ageing global population, a
demand for earlier detection and prevention of medical conditions
and the global pharmaceutical industry's research needs. MRI itself
is approximately 18% by value of the total diagnostic Imaging
market and is projected to grow at 6% p.a. (Grand View
Research).
Aftermarket - Medical
The MRI market segment is dominated by a handful of
manufacturers, including GE, Siemens and Philips, who account for
circa 80% of revenue globally. These players also dominate the
aftermarket, although there are a few independent MRI service
businesses in existence. Avingtrans is not present in the MRI
aftermarket at this time.
The NMR market is similar, currently dominated by Bruker and
Jeol. Avingtrans is aligned with MR Resources Inc, a
well-established US business, which services the NMR aftermarket.
The Medical division is well positioned in this end-user market
space and is winning service contracts with European NMR users,
following our partnership agreement with MR Resources.
Security
High security and integrity doors were a new market for the
Group, following the acquisition of Booth. Global safety and
security concerns, as well as risk mitigation on large
infrastructure projects, are key drivers for growth at Booth and we
are cultivating these opportunities prudently. Thus far, most of
Booth's sales are in the UK, but recent market research shows that
there are untapped international opportunities, in certain
compatible markets. We also believe that there is an aftermarket
potential, which has yet to be fully developed.
Threat detection standards for baggage handling at airports and
package scanning have been tightened everywhere around the world -
especially in Europe and the USA. With many millions of bags and
packages flowing across border crossings every day, screening
devices have to comply with threat detection standards without
impacting throughput. Rapiscan, the biggest customer for Composite
Products, is a market leader in this sector, whose presence is
increasing as new standards are rolled out.
Financial Performance
Key Performance Indicators
The Group uses a number of financial key performance indicators
to monitor the business, as set out below. The Company publishes
more detailed and operational KPIs in its annual report.
Revenue: flat, but a good outcome in the teeth of the
pandemic
Overall Group revenue decreased by 0.4% to GBP54.1m (2020 H1:
GBP54.3m). FY20 H1 was unaffected by Covid-19, but the pandemic has
resulted in various order timing delays, which have flattened the
revenue performance in the period.
Gross margin ('GM') leapt forward, as PIE initiatives drive
performance
GM improved to 30.9% (2020 H1: 25.6%) driven by previous
restructuring and completing historic, low margin orders from
acquisitions.
Profit margin: a 36% increase, as Booth and ES improve and
efficiencies are realised in other businesses
Adjusted EBITDA (note 4) increased to GBP6.3m (2020 H1:
GBP4.6m). This was mainly due to the improved margin mix in both
EPM and PSRE divisions, which, in turn, was caused by efficiency
gains. In addition, Energy Steel and Booth produced a drag of
GBP0.8m, last year which was not repeated in the reporting
period.
Adjusted operating profit before tax (note 4) was GBP4.0m (2020
H1: GBP2.4m), as above, boosted by better aftermarket and OE
project margins and improvements at Booth and Energy Steel.
Tax: future profits and cash protected by available losses
The effective rate of taxation at Group level was a 11.6% tax
charge. A reduction from H1 FY20, primarily due to reduced US taxes
following a change in tax treatment relating to FY20 which
increased carry forward losses that can be utilised in current and
future years, offset by a tax charge due to the utilisation of
losses previously recognised as a deferred tax asset. A deferred
tax credit from the amortisation of business intangibles has also
further reduced the tax charge in the period. The Group tax
position will continue to be aided in the coming years by the
utilisation of losses available in the UK, US and China.
Adjusted Earnings per Share (EPS): significant further
improvement - to almost double the previous result
Adjusted diluted earnings per share for continuing operations
improved once again, to 10.0p (2020 H1:5.1p) as higher margin
projects and acquisition improvements worked through to the bottom
line.
Funding and Liquidity: net debt stays well under control
Net debt was GBP15.9m, but this includes GBP8.0m of IFRS16 debt.
On a like for like basis, net debt has risen slightly to GBP7.8m
(31 May 2020: GBP7.4m) following some on-going investment in both
Booth and Energy Steel [as well as preparatory investment in the
medical division]. Cash inflow from operating activities in the
period was GBP1.1m (2020 H1: GBP2.1m outflow). During the period,
GBP0.5m net was invested in capital expenditure and project
development costs.
Dividend: full year dividend to be reinstated.
The Board proposes to reinstate our progressive dividend policy
for the full year, following the suspension last year due to
Covid-19. However, the pandemic remains a clear and present danger,
although an escape route is now emerging. Therefore, we plan to
reinstate the full year dividend, which will include an amount for
the interim dividend this year. We intend to fully reinstate our
progressive path in FY22, with a more normal interim and full year
dividend split, subject to the outcome of acquisition activities in
the coming years.
People
There was one change at divisional management level, post period
end, being the appointment of Duncan Stovell as CEO of the enlarged
Magnetica business, following the merger with SciMag and Tecmag. In
addition, Steve McQuillan, Stephen King and Clint Gouveia (MD of
SciMag), will join a reformatted Magnetica Board, alongside
previous Magnetica directors, Duncan Stovell and Professor Stuart
Crozier. There were no other Board changes.
At business unit level, Duncan Morgan joined PSRE, as MD of
Peter Brotherhood and Drew Baker joined EPM as President of Energy
Steel. Post period end, Ian Bannister was promoted to MD of
Metalcraft and Will Goss was promoted to GM of Composite
Products.
We continue to strengthen the management teams in the divisions,
with further appointments being made in the period and with an
emphasis on aftermarket opportunities. Skills availability is
always challenging, but we do not expect to be hampered by any
skills shortages. We continue to invest significant effort in
developing skills and talent, both through structured
apprenticeship programmes and graduate development plans across a
number of business units. The Group continues to be recognised
nationally for the strength of its apprenticeship training
schemes.
Finally, we note with some sadness the death of our former
Chairman, Ken Baker OBE, who passed away on 25(th) January 2021.
Ken was responsible for the creation and the initial phase of
development at Avingtrans until 2008.
Health, Safety and Environment (HSE)
The Group takes HSE matters and its related responsibilities
very seriously.
As regular acquirers of businesses, we nd different levels of
capability and knowledge in different businesses. Often, a key
investment need in smaller acquisitions is to spread HSE best
practice from other Group businesses and bring local processes up
to required standards. Larger acquisitions (eg HTG) generally have
well developed HSE practices and we seek to learn from these in
other business units. Health and Safety incident reporting has
improved across the Group and incident trends have generally been
improving over recent years. Near miss reporting and knowledge
exchange is also positively encouraged, to facilitate learning and
improvement. At Board level, Les Thomas has HSE oversight and he
conducts inspections with local management as appropriate.
The Group's environmental policy 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 signi cant
nes or penalties, nor been investigated for any signi cant breach
of HSE regulations.
Covid-19 has become the biggest health and safety issue for the
Group, along with everyone else. Fortunately, the nature of our
products and the topography of our factories have given us a good
base to work from, to make our workplaces Covid-19 safe. We have an
overall set of guidelines to work to, derived from government
policies around the world and local teams in each business adapt
these to the specifics of their individual site. These measures
include:
-- Shielding of vulnerable employees
-- Working from home where feasible
-- Factory and office re-layouts to facilitate social distancing
-- Enhanced cleaning and site hygiene
-- Additional use of PPE equipment where necessary
-- Minimisation and careful management of third party visitors to our sites
Where our employees have to visit other third party sites, they
have protocols from their business unit to follow and must also
adhere to the policies and procedures of the site which they are
visiting. Each business has a team responsible for ensuring that
the Covid-19 plan is kept up to date and adapted, if required, as
the circumstances of the pandemic evolve. Taken as a whole, these
measures have allowed us to operate at a high level of
effectiveness throughout the pandemic and ensured that we have
minimised any loss of output, whilst keeping employees safe.
Social Responsibility
The Group maintains the highest ethical and professional
standards across all of its activities and social responsibility is
embedded in operations and decision making. We understand the
importance of managing the impact that the business can have on
employees, customers, suppliers and other stakeholders. The impact
is regularly reviewed to sustain improvements, which in turn
support the long-term performance of the business. Our focus is to
embed the management of these areas into our business operations,
both managing risk and delivering opportunities that can have a
positive in uence on our business.
The Group places considerable value on the involvement of its
employees and has continued to keep them informed on matters
affecting them directly and on nancial and broader economic factors
affecting the Group. The Group regularly reviews its employment
policies. The Group is committed to a global policy of equality,
providing a working environment that maintains a culture of respect
and re ects the diversity of our employees. We are committed to
offering equal opportunities to all people regardless of their sex,
nationality, ethnicity, language, age, status, sexual orientation,
religion or disability.
We believe that employees should be able to work safely in a
healthy workplace, without fear of any form of discrimination,
bullying or harassment. We believe that the Group should
demonstrate a fair gender mix across all levels of our business,
whilst recognising that the demographics of precision engineering
and manufacturing remain predominantly male, which is, to an
extent, beyond our control.
Ethical policy
The Group complies with the Bribery Act 2010. We do not tolerate
bribery, corruption or other unethical behaviour on the part of any
of our businesses, or business partners in any part of the world.
Employee training has been completed in all areas of the business
to ensure that the Act is complied with.
Outlook
Avingtrans is a niche engineering market leader in selected
Energy and Medical sectors, with a successful profitable growth
record, underpinned by our successful 'PIE' strategy. Our
acquisitions provide further opportunities for the Group to build
enduring value for investors in resilient engineering market
niches. We will remain frugal and seek to crystallise value and
return capital when the timing is right, as part of the PIE
strategy implementation. We believe that our PIE strategy has
served us well in the Covid crisis and could result in further
opportunities to grow shareholder value.
The Group continues to invest across its three divisions, with a
focus on the global energy and medical markets, to position them
for maximum shareholder value via eventual exits in the years to
come. The integrations of Booth and Energy Steel are proceeding to
plan, as demonstrated by the first half results. The medical
division merger with Magnetica is expected to drive further value
enhancement in the coming years. Our value creation targets
continue to be accomplished as planned and are underpinned by a
conservative approach to debt, which is important during the
crisis.
The energy divisions have a strong emphasis on the thermal
power, nuclear and hydrocarbon markets and aftermarkets. The
medical division will now pivot to focus primarily on novel compact
MRI systems for niche applications. To drive profitability and
market engagement, each division has a clear strategy to support
end-user aftermarket operations, servicing their own equipment and
that of pertinent third parties, where appropriate, to capitalise
on the continued customer demand for efficient, reliable and safe
facilities.
The on-going disruption caused by the pandemic is still our
biggest uncertainty. However, we have completed rapid and effective
cost mitigation actions in the first half, in order to limit any
disadvantage and we will continue to be on our guard. Brexit has
not resulted in any material downside for the Group to date, but we
will continue to be vigilant.
Our markets continue to develop, despite Covid-19 and strategic
M&A opportunities remain a priority for us. Businesses like
ours can command high valuations at the point of exit. The Board
remains watchful, but confident about the current direction and
potential future opportunities across our markets. We will continue
to refine our strategy by pinpointing specific additional
acquisitions as the opportunities arise, to build businesses which
can create superior shareholder value, whilst maintaining a prudent
level of financial headroom, to buffer us against any unforeseen
headwinds, whether deriving from Covid-19, or elsewhere.
Roger McDowell Steve McQuillan
Stephen King
Chairman Chief Executive Officer Chief Financial Officer
9 February 2021 9 February 2021 9 February 2021
Consolidated Income Statement (Unaudited)
for the six months ended 30 November 2020
6 months 6 months Year to
to to
30 Nov 30 Nov 31 May
2020 2019 2020
GBP'000 GBP'000 GBP'000
Revenue 54,094 54,349 113,913
Cost of sales (37,387) (40,439) (82,284)
Gross profit 16,707 13,910 31,629
Distribution costs (2,164) (2,556) (4,931)
Other administrative expenses (12,538) (10,385) (22,557)
------------------------------------------------ --------- --------- ----------
Operating profit before amortisation
of acquired intangibles, other non-underlying
items and exceptional items
4,020 2,358 7,051
Amortisation of intangibles from
business combinations (629) (931) (2,223)
Other non-underlying items (54) (60) (112)
Acquisition costs - (282) (294)
Restructuring costs (1,332) (116) (281)
------------------------------------------------ --------- --------- ----------
Operating profit 2,005 969 4,141
Finance income (Note 5) 8 76 38
Finance costs (Note 5) (590) (601) (1,141)
Profit before taxation 1,423 444 3,038
Taxation (Note 3) (165) (67) (634)
Profit after taxation from continuing
operations 1,258 377 2,404
Loss after taxation from discontinuing
operations - (91) (1,018)
Profit for the financial period
attributable to shareholders 1,258 286 1,386
Profit per share :
From continuing operations
- Basic (Note 6) 4.0p 1.2p 7.6p
- Diluted (Note 6) 3.9p 1.2p 7.5p
From continuing and discontinuing
operations
- Basic (Note 6) 4.0p 0.9p 4.4p
- Diluted (Note 6) 3.9p 0.9p 4.3p
Consolidated statement of comprehensive income (Unaudited)
for the six months ended 30 November 2020
6 months 6 months Year to
to to
30 Nov 30 Nov 31 May
2020 2019 2020
GBP'000 GBP'000 GBP'000
Profit for the period 1,258 286 1,386
Items that will not be subsequently
be reclassified to profit or loss
Remeasurement of net defined benefit
liability - - 58
Income tax relating to items not
reclassified - - (43)
Items that may/will subsequently
be reclassified to profit or loss
Exchange differences on translation
of foreign operations (602) 5 120
Total comprehensive profit for the
period 656 291 1,521
Summarised consolidated balance sheet (Unaudited)
at 30 November 2020
30 Nov 30 Nov 31 May
2020 2019 2020
GBP'000 GBP'000 GBP'000
Non current assets
Goodwill 23,459 23,604 23,459
Other intangible assets 13,239 15,455 13,834
Property, plant and equipment 32,330 35,624 34,445
Deferred tax asset 1,262 1,109 1,241
Pension and other employee obligations 1,782 1,427 1,646
72,072 77,219 74,625
Current assets
Inventories 15,326 13,817 13,390
Trade and other receivables 41,220 35,150 36,910
Current tax asset 522 796 1,221
Derivatives - 29 -
Cash and cash equivalents 7,277 4,579 5,088
64,345 54,371 56,609
Total assets 136,417 131,590 131,234
Current liabilities
Trade and other payables (33,376) (30,242) (30,308)
Lease liabilities (1,775) (1,977) (2,125)
Borrowings (9,271) (5,259) (6,005)
Current tax liabilities (48) (644) (70)
Provisions (5,254) (5,965) (5,514)
Derivatives (105) - (36)
Total current liabilities (49,829) (44,087) (44,058)
Non-current liabilities
Borrowings (3,707) (4,294) (3,965)
Lease liabilities (8,386) (10,731) (9,340)
Deferred tax (2,224) (1,729) (2,460)
Contingent consideration (256) (256) (256)
Other creditors (1,245) (1,259) (1,247)
Total non-current liabilities (15,818) (18,269) (17,268)
Total liabilities (65,647) (62,356) (61,326)
Net assets 70,770 69,234 69,908
Equity
Share capital 1,593 1,576 1,588
Share premium account 15,117 14,038 14,970
Capital redemption reserve 1,299 1,299 1,299
Translation reserve (172) 315 430
Merger reserve 28,949 28,949 28,949
Other reserves 180 180 180
Investment in own shares (4,235) (3,435) (4,235)
Retained earnings 28,039 26,312 26,727
Total equity attributable to equity
owners of the parent 70,770 69,234 69,908
Consolidated statement of changes in equity (Unaudited)
at 30 November 2020
Capital Investment
Share Share redemp- Trans- in own
capital premium tion Merger lation Other shares Retained
account account reserve reserve reserve Reserves Earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 June 2019 1,568 14,018 1,299 28,949 310 180 (3,435) 26,405 69,294
Shares issued 8 20 - - - - - - 28
Dividend paid - - - - - - - (439) (439)
Share-based payments - - - - - - - 60 60
-------- -------- -------- -------- -------- --------- ---------- --------- --------
Transactions
with owners 8 20 - - - - - (379) (351)
Profit for the
period - - - - - - - 286 286
Other comprehensive
income
Exchange rate
gain - - - - 5 - - - 5
-------- -------- -------- -------- -------- --------- ---------- --------- --------
Total comprehensive
income for the
period - - - - 5 - - 286 291
At 30 Nov 2019 1,576 14,038 1,299 28,949 315 180 (3,435) 26,312 69,234
======== ======== ======== ======== ======== ========= ========== ========= ========
At 1 Dec 2019 1,576 14,038 1,299 28,949 315 180 (3,435) 26,312 69,234
Shares issued 12 932 - - - - - - 944
Dividend paid - - - - - - - (752) (752)
Investment in
own shares - - - - - - (800) - (800)
Share-based payments - - - - - - - 52 52
-------- -------- -------- -------- -------- --------- ---------- --------- --------
Transactions
with owners 12 932 - - - - (800) (700) (556)
Profit for the
period - - - - - - - 1,100 1,100
Other comprehensive
income:
Actuarial gains
on pension scheme - - - - - - - 58 58
Deferred tax
on actuarial
gains from pension
scheme - - - - - - - (43) (43)
Exchange rate
gain - - - - 115 - - - 115
-------- -------- -------- -------- -------- --------- ---------- --------- --------
Total comprehensive
income for the
period - - - - 115 - - 1,115 1,230
At 31 May 2020 1,588 14,970 1,299 28,949 430 180 (4,235) 26,727 69,908
======== ======== ======== ======== ======== ========= ========== ========= ========
At 1 June 2020 1,588 14,970 1,299 28,949 430 180 (4,235) 26,727 69,908
Shares issued 5 148 - - - - - - 153
Share-based payments - - - - - - - 54 54
-------- -------- -------- -------- -------- --------- ---------- --------- --------
Transactions
with owners 5 148 - - - - - 54 207
Profit for the
period - - - - - - - 1,258 1,258
Other comprehensive
income
Exchange rate
loss - - - - (602) - - - (602)
-------- -------- -------- -------- -------- --------- ---------- --------- --------
Total comprehensive
income for the
period - - - - (602) - - 1,328 656
At 30 Nov 2020 1,593 15,118 1,299 28,949 (172) 180 (4,235) 28,039 70,770
======== ======== ======== ======== ======== ========= ========== ========= ========
Consolidated cash flow statement (Unaudited)
for the six months ended 30 November 2020
6 months 6 months Year to
to to
30 Nov 30 Nov 31 May
2020 2019 2020
GBP'000 GBP'000 GBP'000
Operating activities
Cash flows from operating activities 1,195 (1,259) 2,919
Finance costs paid (543) (639) (1,189)
Income tax repaid/(paid) 573 (76) (1,527)
Contributions to defined benefit
plan (136) (127) (254)
Net cash inflow/(outflow) from operating
activities 1,089 (2,101) (51)
Investing activities
Acquisition of subsidiary undertakings - 720 720
Finance income 15 76 38
Purchase of intangible assets (335) (847) (760)
Purchase of property, plant and
equipment (224) (3,121) (3,984)
Net cash used by investing activities (544) (3,172) (3,986)
Financing activities
Equity dividends paid - (439) (1,191)
Repayments of bank loans (280) (312) (675)
Repayments of leases (1,596) (854) (2,200)
Proceeds from issue of ordinary
shares 154 27 972
Borrowings raised 3,448 2,900 3,807
Net cash inflow from financing activities 1,726 1,322 713
Net increase/(decrease) in cash
and cash equivalents 2,271 (3,951) (3,324)
Cash and cash equivalents at beginning
of period 4,693 8,053 8,053
Effect of foreign exchange rate
changes (61) (24) (36)
Cash and cash equivalents at end
of period 6,903 4,078 4,693
Cashflows from operating activities (Unaudited)
for the six months ended 30 November 2020
6 months 6 months Year to
to to
30 Nov 30 Nov 31 May
2020 2019 2020
GBP'000 GBP'000 GBP'000
Profit before income tax from continuing
operations 1,423 444 3,038
Loss before income tax from discontinuing
operations - (104) (1,218)
Adjustments for :
Depreciation of property, plant
and equipment 2,067 2,101 4,343
Amortisation of intangible assets 260 221 466
Amortisation of intangibles from
business combinations 629 931 2,222
Loss on disposal of property, plant
and equipment 8 - 119
Finance income (8) (76) (38)
Finance expense 590 601 1,141
Share based payment charge 54 60 112
Changes in working capital
(Increase)/Decrease in inventories (2,262) 1,791 2,157
Increase in trade and other receivables (5,311) (2,911) (5,010)
Increase /(decrease) in trade and
other payables 3,778 (3,802) (3,565)
Decrease in provisions (1) (450) (824)
Other non cash changes (32) (65) (24)
Cash inflow/(outflow) from operating
activities 1,195 (1,259) 2,919
6 months 6 months Year to
to to
30 Nov 30 Nov 31 May
2020 2019 2020
GBP'000 GBP'000 GBP'000
Cash and cash equivalents
Cash 7,277 4,579 5,088
Overdrafts (374) (501) (395)
6,903 4,078 4,693
Notes to the half year statement
30 November 2020
1. Basis of preparation
The Group's interim results for the six month period ended 30
November 2020 are prepared in accordance with the Group's
accounting policies which are based on the recognition and
measurement principles of International Financial Reporting
Standards ('IFRS') as adopted by the EU and effective, or expected
to be adopted and effective, at 31 May 2021. As permitted, this
interim report has been 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 the meaning of section 434 of the Companies Act 2006 and are
unaudited. The unaudited interim financial statements were approved
by the Board of Directors on 9 February 2021 and will shortly be
available on the Group's website at www.avingtrans.plc.uk.
The consolidated financial statements are prepared under the
historical cost convention as modified to include the revaluation
of financial instruments. The accounting policies used in the
interim financial statements are consistent with IFRS and those
which will be adopted in the preparation of the Group's annual
report and financial statements for the year ended 31 May 2021.
The statutory accounts for the year ended 31 May 2020, which
were prepared under IFRS, have been filed with the Registrar of
Companies. These statutory accounts carried an unqualified
Auditor's Report and did not contain a statement under either
Section 498(2) or (3) of the Companies Act 2006.
2. Segmental analysis
Energy Energy Medical Unallocated Total
EPM PSRE MII central
items
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
6 months to 30 November
2020
Original equipment 7,528 15,778 5,982 - 29,288
Aftermarket 18,469 6,311 25 - 24,805
-------- -------- -------- ------------ --------
Revenue 25,997 22,089 6,007 - 54,093
======== ======== ======== ============ ========
Operating profit/(loss) 1,307 1,130 84 (516) 2,005
Net finance costs (582)
Taxation (165)
--------
Profit after tax from continuing
operations 1,258
========
Notes to the half year statement
30 November 2020
Energy Energy Medical Unallocated Total
EPM PSRE MII central
items
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Year ended 31 May
2020
Original equipment 12,780 38,366 11,879 - 63,025
Aftermarket 36,530 14,358 - - 50,888
-------- -------- -------- ------------ --------
Revenue 49,310 52,724 11,879 - 113,913
======== ======== ======== ============ ========
Operating profit/(loss) 1,261 3,903 (326) (697) 4,141
Net finance costs (1,103
Taxation (634)
--------
Profit after tax from continuing
operations 2,404
========
Energy Energy Medical Unallocated Total
EPM PSRE MII central
items
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
6 months to 30
November 2019
Original equipment 4,624 18,892 5,613 - 29,129
Aftermarket 17,651 7,569 - - 25,220
Revenue 22,275 26,461 5,613 - 54,349
======== ======== ======== ============ ========
Operating profit/(loss) (301) 1,844 (6) (568) 969
Net finance costs (525)
Taxation (67)
--------
Profit after tax from
continuing operations 377
========
3. Taxation
The taxation charge is based upon the expected effective rate
for the year ended 31 May 2021.
Notes to the half year statement
30 November 2020
4. Adjusted Earnings before interest, tax, depreciation and amortisation
6 months 6 months Year to
to to
30 Nov 30 Nov 31 May
2020 2019 2020
GBP'000 GBP'000 GBP'000
Profit before tax from continuing
operations 1,423 444 3,038
Share based payment expense 54 60 112
Acquisition costs - 282 294
Restructuring costs 1,332 116 281
Loss/(gain) on derivatives 70 (74) 8
Unwinding of discounting on dilapidation
provision 35 44 88
Amortisation of intangibles from
business combinations 629 931 2,223
Adjusted profit before tax 3,543 1,803 6,044
Finance income (8) (76) (38)
Finance cost 590 601 1,141
(Loss)/gain on derivatives/unwinding
of discounting on dilapidation provision (105) 30 (96)
Adjusted profit before interest,
tax and amortisation from business
combinations ('EBITA') 4,020 2,358 7,051
Depreciation 2,065 2,090 4,321
Amortisation of other intangible
assets 260 198 403
Adjusted Earnings before interest,
tax, depreciation and amortisation
('EBITDA') 6,345 4,646 11,775
5. Finance income and costs
6 months 6 months Year to
to to 31 May
30 Nov 30 Nov 2020
2020 2019
GBP'000 GBP'000 GBP'000
Finance income
Bank balances and deposits - 2 5
Interest from other 8 74 33
8 76 38
Finance costs
Interest on banking facilities and
finance lease agreements 485 557 1,045
Finance charges relating to the
unwinding of provisions 35 44 88
Losses/(gain) on the fair value
of derivative contracts 70 - 8
590 601 1,141
Notes to the half year statement
30 November 2020
6. Earnings per share
Basic earnings per share is based on the earnings attributable
to ordinary shareholders and the weighted average number of
ordinary shares in issue during the year.
For diluted earnings per share the weighted average number of
ordinary shares is adjusted to assume conversion of all dilutive
potential ordinary shares, being the CSOP and ExSOP share
options.
6 months 6 months Year to
to to 31 May 2020
30 Nov 2020 30 Nov 2019 No
No No
Weighted average number of
shares - basic 31,775,612 31,364,098 31,531,278
Share Option adjustment 471,896 598,382 569,687
Weighted average number of
shares - diluted 32,247,508 31,962,480 32,100,965
GBP'000 GBP'000 GBP'000
Earnings from continuing operations 1,258 377 2,404
Share based payments 54 60 112
Acquisition costs - 282 294
Restructuring costs 1,332 116 281
(Gain)/loss on derivatives 70 (74) 8
Unwinding of discounting on
dilapidation provision 35 44 88
Amortisation of intangibles
from business combinations 629 931 2,223
Adjusted earnings from continuing
operations 3,378 1,736 5,410
From continuing operations:
Basic earnings per share 4.0p 1.2p 7.6p
Adjusted basic earnings per
share 10.1p 5.5p 17.2p
Diluted earnings per share 3.9p 1.2p 7.5p
Adjusted diluted earnings per
share 10.0p 5.4p 16.9p
Loss from discontinuing operations - (91) (1,018)
Adjusted loss from discontinuing
operations - (91) (211)
From discontinuing operations:
Basic (loss)/earnings per share - (0.3)p (3.2)p
Adjusted basic (loss)/earnings
per share - (0.3)p (0.7)p
Diluted (loss)/earnings per
share - (0.3)p (3.2)p
Adjusted (loss)/diluted earnings
per share - (0.3)p (0.7)p
Earnings attributable to shareholders 1,258 1,645 1,385
Adjusted earnings attributable
to shareholders 3,378 1,645 5,199
From continuing operations:
Basic earnings per share 4.0p 0.9p 4.4p
Adjusted basic earnings per
share 10.1p 5.2p 16.5p
Diluted earnings per share 3.9p 0.9p 4.3p
Adjusted diluted earnings per
share 10.0p 5.1p 16.2p
The Directors believe that the above adjusted earnings per share
calculation from continuing operations is the most appropriate
reflection of the Group performance.
Notes to the half year statement
30 November 2020
7. Net debt and gearing
The gearing ratio at the year-end is as follows: 30 Nov 2020 30 Nov 2019 31 May 2020
GBP'000 GBP'000 GBP'000
Cash 7,277 4,579 5,088
Loans (12,604) (9,052) (9,575)
Lease liability - finance leases under IAS17 (2,104) (3,295) (2,503)
Lease liability - under IFRS 16 (8,057) (9,414) (8,962)
Overdrafts (374) (501) (395)
------------- ------------- -------------
Net debt (15,862) (17,683) (16,347)
Equity 70,770 69,234 69,908
------------- ------------- -------------
Net debt to equity ratio 22.4% 25.5% 23.4%
============= ============= =============
Net debt to equity ratio excluding IFRS16 debt 11.0% 11.9% 10.6%
============= ============= =============
8. Events after the balance sheet date
Business combination - Magnetica Limited
On 29 January 2021 the Group acquired 58.1 percent of the issued
share capital of Magnetica Limited ('Magnetica') in exchange for
its interest of 98.5 percent holding in Sci-Mag (and its 100%
subsidiary Tecmag Inc.). Prior to Completion Avingtrans increased
its holding in Sci-Mag from 97.7% to 98.5% in exchange for 40,713
Avingtrans 5p Ordinary Shares.
Additionally Avingtrans agreed to invest up to a further GBP3.2m
for new shares in Magnetica, at 15 cents per share, to fund new MRI
product development and commercialisation activities. This could
increase Avingtrans' future interest to 61.2% in Magnetica.
In its previous financial year Magnetica Limited had turnover of
AUD 751,000 and a trading loss before tax of AUD 881,000.
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END
IR EAPANEDKFEFA
(END) Dow Jones Newswires
February 10, 2021 02:00 ET (07:00 GMT)
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