REG - Avingtrans PLC - Final Results <Origin Href="QuoteRef">AVG.L</Origin> - Part 1

AvingtransAnnouncement

27/09/2017 07:06

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 22.7m (2016: 21.2m)
 Improved Gross Margins 17.9% (2016: 14.9%)
 Adjusted EBITDA from continuing operations increased by 104%, to 0.7m (2016: 0.4m)
 Adjusted Profit Before Tax improved to 0.3m (2016: 0.1m) 
 Adjusted Diluted earnings per share from continuing operations 1.1p (2016: 1.0p)
 Cash outflow from operating activities 3.3m (2016: generated 7.8m)
 Continued investment in capability and capacity in continuing operations 1.1m (2016: 0.5m) 
 Net Cash 26.4m (31 May 2016: Net cash 51.0m)
 Increased final dividend of 2.2p per share, Full year total 3.4p (2016: Final 2.1p, Total 3.2p)
 Tender offer returned 19.4m 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 29.4m, excl. debt & costs
 First Sellafield 3M3 (three-metre-cubed) prototype box delivered and fully approved
 11m Sellafield 3-year contract extension; facilities redevelopment on time and on budget
 Maloney agreed a framework contract with EDF, worth 3.5m over 3 years
 Post year end, Metalcraft gained contract extension with Cummins, worth 3.6m 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 0.33m
 China facility gearing-up for new contracts with Wuhan (9m 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 19.4m 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 29.4m, 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, 11m 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 9m, 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 0.33m. 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 19.4m 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 47m, 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 11m, 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 3bn, 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 1.7m 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 0.1m, 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 22.7m (2016: 21.2m). 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 0.7m (2016: 0.4m). 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 3.3m (2016: 7.8m inflow), following payment of costs from the Sigma disposal. 
Net Cash (note 7) at year end stood at 26.4m (2016: Net cash: 51.0m) following the tender buyback 19.4m (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 Officer
Chief Financial Officer
26 September 2017
26 September 2017
26 September 2017
Consolidated Income Statement
for the year ended 31 May 2017
Note
2017
2016
'000
'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
'000
'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
Share
capital 
Share
premium
account 
Capital
redemp-
tion
reserve
Merger
reserve
Trans-
lation
reserve
Other
reserves
Invest-ment in own shares
Retained
earnings
Total
'000
'000
'000
'000
'000
'000
'000
'000
'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
'000
'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
'000
'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
'000
'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
Year ended 31 May 2017
Energy
Medical
Unallocated
central items
Total
'000
'000
'000
'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 227,000 and 115,000 to Group revenue and loss after tax respectively.
Year ended 31 May 2016 (restated)
Energy
Medical
Unallocated
central items
Total
'000
'000
'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
Revenue
Revenue
Non-current
assets
Non-current
Assets
'000
'000
'000
'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 7,229,000 (2016: 6,997,000) and Energy nil (2016: 2,284,000) 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
'000
'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
'000
'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
'000
'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
'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 89,000 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 256,000, 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
'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 29.4m through a share placing. On the same date 11.5m of its facilities were repaid, a further 10.0m of debt assumed and 5m of associated transaction costs incurred. In its previous financial year Hayward Tyler Group plc had turnover of 62,719,000 and a trading loss before tax of 3,705,000 before an exceptional gain of 376,000.
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
'000
'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 Registrarof 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
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