Trading Update and Contract Wins

RNS Number : 1728S

Avingtrans PLC

07 July 2020

 

7 July 2020

Avingtrans plc

("Avingtrans" or the "Group")

T rading update and contract wins

Avingtrans PLC (AIM: AVG), the international engineering group which designs, manufactures and supplies original equipment, systems and associated aftermarket services to the energy, nuclear, defence and medical sectors, today announces a trading update in respect of the financial year ending 31 May 2020.

Avingtrans is an international, diversified engineering group, with a strong balance sheet. Our presence in multiple market sectors and the resilience and strength of covenant of many of our customers, including various national governments or their agents, means that most parts of the Group are able to continue to operate at close to normal levels, despite the on-going global COVID-19 pandemic.

As reported in its trading update on 9 April 2020, the Group's order book and prospect pipeline remains strong overall, albeit that we have seen some reduced prospects in specific sectors, notably in oil and gas, where we have a limited exposure. Therefore, the Group is prudently taking measures in response to the unprecedented conditions affecting its markets, clients and businesses, to reduce its costs and protect its longer-term position. These measures include conserving cash and improving liquidity in order to mitigate the effects of near-term disruption.

Robust Balance Sheet - strong headroom

Avingtrans has a modest level of debt and secured facilities with its banks. The Group's net debt position has improved, as anticipated, since our interim results were announced in February. As at 31 May 2020, the Group has headroom in its facilities in excess of £10m.  The Group has strong, long-term relationships with its banks, who have confirmed their on-going support. Nevertheless, due to the on-going economic uncertainty, the Board continues to believe it is prudent to conserve cash, including specific measures as follows:

·Targeted but limited use of government stimulus programmes where available, such as the UK furlough scheme, to support ongoing employment costs in the short term

· Deferring non-critical capital expenditure until the second half of the current financial year

· Continuing to seek on-time stage payments from key customers to support working capital

The board believes it has ample headroom for its future needs.

Year End Trading

Despite the widespread disruption caused by the pandemic, due to our prompt mitigation actions, the year ending 31 May 2020 ("FY20") produced expected results as follows:

· Revenue for the year of £114m (FY19 £105m)

· Adjusted EBITDA for the year is expected to be at least £11.5m (FY19 £9.4m)

·Net debt is expected to be in line with previous guidance, being £7.5m, excluding IFRS16 adjustments. At the half year, net debt was £8.3m.

Notwithstanding these encouraging results, the on-going uncertainly around the impact of COVID-19 means that it is still not possible to assess with any precision the impact this will have on the Group's financial performance for the current financial year.  As such, the Group is not yet ready to release guidance for the year ending 30 May 2021 (FY21). Nevertheless, due to its diversity and well-proven Pinpoint, Invest, Exit ("PIE") model, the Group is resilient  and in a better position than most to weather the current storm. It is likely that we will find ourselves in a strong position to capitalise on the emerging market situation as the crisis passes.

Contract wins

The Board is pleased to announce two new nuclear sector contract wins: a US $4.85 million contract in South Korea and a £2.5 million contract with a nuclear plant operator in the UK.

Hayward Tyler, Inc. has secured a new nuclear contract with our South Korea customer, for US $4.85m, to provide critical nuclear safety related spare parts to reactors in South Korea for Essential Service Water pumps, which is expected to be delivered in FY21. Hayward Tyler Inc., located in Vermont USA, continues to support global nuclear operations with parts, units, service and technical support through its team of nuclear professionals and the underlying nuclear quality program.

Hayward Tyler Fluid Handling has secured a contract, worth an initial £2.5m, to develop a prototype valve for a nuclear plant operator in the UK. The contract will see our East-Kilbride based business develop the valve to replace legacy components, with a potential to produce up to 150 further units in due course.

These contracts demonstrate the Group's ability to continue winning important new work both in the UK and globally. Further, both are recognition of the Group's international reputation for engineering excellence in the nuclear industry.

Planning permission

The Group is pleased to report that it has been granted outline planning permission for the conversion of its Hayward Tyler Luton (HTL) site into residential housing with consent for up to 1,000 dwellings. If the development goes ahead HTL will relocate to a new site in the Luton area.

Commenting on today's announcement, Steve McQuillan, Chief Executive Officer, said:

"We all continue to experience an unprecedented situation. Our top priority remains the health and well-being of our people, clients and suppliers, while ensuring that we take the decisive actions necessary to protect the Group for the long-term. Both myself and the Board again wish to express our thanks to all our employees for their flexibility and resilience during this crisis, which has allowed Avingtrans to continue operating effectively and provide essential support to our clients, including national governments.

"It is notable that our results are expected to be close to original expectations, despite the widespread disruption to our operations in all countries during our second half year. We are also very pleased that significant new orders continue to be won by Group businesses. Our balance sheet remains robust, meaning that we can continue to sustain our business units fully in most locations, while implementing pinpoint restructuring where this is unavoidable and where it is in the long-term interest of all stakeholders."

This announcement contains inside information.

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	020 7496 3000
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. 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.

 

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