8 September 2010 – final results

Following the positive trading update in June, when we rated the shares a buy at 35p, shares in Avingtrans, the specialist engineering group, have continued to rise.  The final results for the year to 31 May have revealed a drop in revenue to £28.6m (2009: £37.6m) with pre-tax profits before exceptional items declining to £0.77m (2009: £1.95m.  Earnings per share on the same basis fell to 3.0p from 6.2p.  The year was very difficult for the group as component manufacturers such as Avingtrans bore the brunt of the squeeze in engineering, although the second half of the financial year was better than the first.  The order book is recovering with contracts being signed or renewed with blue-chip companies such as Cummins and Siemens, although markets have not fully recovered.  Better net cash flow from operations led to a fall in gearing to 36% (2009: 48%).  Times remain hard at the group and the recovery will be slow – after the recent rise in price we rate the shares as a HOLD.