Avingtrans Plc Acquires RMDG
Avingtrans plc ("Avingtrans" or "the Company"), which designs, manufactures and supplies critical components and associated services to the global aerospace, energy, and medical sectors, announces that it intends to acquire the trade and certain business assets and liabilities relating to the manufacture of aerospace components from Tricorn Group plc's ("Tricorn") subsidiary, RMDG Aerospace ("RMDG" and the "Acquisition") for a cash consideration of £1.1 million, excluding costs. The Acquisition is due to be entered into and completed on or before 12 August 2014, following employee consultation.
Highlights of the Acquisition:
- Strengthens the Group's Aerospace division, Sigma Components ("Sigma")
- Cash consideration of £1.1million
- Reinforces Avingtrans' position with certain existing customers, as well as introducing new customers to the Group
The principal activity of RMDG, located in Swadlincote, Derbyshire, is the manufacture of a range of rigid pipe assemblies and precision components for the aerospace sector. The Directors of Avingtrans (the "Board") believe that the Acquisition enhances the Group's aerospace components and sub-assemblies offering and the Board is pleased to take this further step in implementing the Group's strategy for aerospace. RMDG has a number of customers in common with Avingtrans, as well as several customers with whom the Company has no existing commercial relationship. The Board therefore believes that the Acquisition will both strengthen its current portfolio and also add valuable new sales channels.
RMDG generated revenues of £3.2 million and an adjusted operating loss of £0.14 million during the year ended 31 March 2014. However, the Board believes that its potential is materially higher, when combined with the Group's other aerospace assets. The net book value of the assets and liabilities being acquired has been valued at £1.1m million, as at 31 March 2014.
In the current financial year, the business is expected to make a small operating loss, but to move back to break even and beyond from the next financial year. The Acquisition will be funded from existing debt facilities and the transaction will not materially affect the overall Group debt position.
RMDG employs 29 people in the UK, all of whom are expected to transfer to Avingtrans, following an appropriate consultation process.
Trading Update and Notice of Results
Results for the financial year ended May 2014, to be announced on 1 October, were broadly in line with market expectations, with the Company benefiting from a slightly lower tax rate than expected. In recent months, the Group has seen some rescheduling of orders by key customers which reflect changes in end-user market conditions. The strength of sterling is also having a short term impact. However, recent contract wins, which will ramp up in due course, have strengthened the Group's prospects, particularly in Aerospace, which will be further enhanced by the acquisition of RMDG.
Steve McQuillan, Chief Executive of Avingtrans commented:
"The purchase of RMDG further strengthens our position in the aerospace market, reinforcing us as a leading supplier to a number of major manufacturers. We intend to integrate RMDG with our other local aerospace assets, to improve its financial performance by reducing overall business costs and leveraging the greater buying power of the aerospace division. We believe that RMDG will prove a valuable addition to the division alongside the other recent acquisitions in Derby and Farnborough."