Avingtrans' revenue falls after selling aerospace division

For the year ended 31 May, revenue from continuing operations decreased by 6% to £21.2m, compared to the previous year, as the company swung to a pre-tax profit of £100,000 from a £700,000 loss.

In May, the company sold its aerospace division for £65m, which after adjustments for debt and working capital and transactions costs, the company received about £52m, and the company said it intends to return £28m of the disposal proceeds to shareholders through a tender offer in November.

Chairman Roger McDowell said plans were advancing positively to utilise the remaining funds received from the sale.

Earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 18% to £400,000.

Diluted earnings per share rose to 1p from 0.4p.

Cash generated from operating activities rose to £7.8m from £1.6m and net cash at the end of May increased to £51m from net debt £5.9m last year.

The company lowered investment in capability and capacity by about 38% to £500,000.

Revenue for the energy and medical division remained flat due to the low price of oil and low earnings before interest and taxation recovered in the second half the year. Due to the low oil price, the company sold the Aldridge manufacturing site for £1.1m.

During the year just ended, the company won contracts with Rapiscan and Bruker, each worth £3m over 3 years and made progress before production in the Sellafield 3M3 box contract.

Since the end of May the company has also won a contract with French utility firm EDF, worth £3.5m over 3 years.

McDowell added: “The Energy and Medical division performed in line with management expectations in the period and we look forward to the year ahead, as we prepare to capitalise on the major contract wins with Sellafield, Rapiscan, Bruker and EDF.

“With attractive structural growth markets and durable customer relationships, we remain cautiously confident about the future of Avingtrans."

The company increased the final dividend to 2.1p per share from 2p and full-year total to 3.2p from 3p.

FinnCap analyst David Buxton termed the prospects for the company "encouraging", adding that the oil and gas market remained in the doldrums but was likely to provide a recovery story in due course.

Buxton reiterated his 'buy' recommendation on the shares with a 215.0p.

Shares in Avingtrans were up 1.12% to 190.11p at 1032 BST.