Avingtrans Share Discussion Threads

[cerrito] 09/4/2020 07:57

As with PRES this morning, could have been worse.
Interested in their comments about China back to normal though I need to check where they are in China : good to see Board taking a financial hit and no surprise about the dividend and that they have financial flexibility.
Interested in their comment that their service people cannot travel to the plants they service and let's pray there are no health and safety incidents around the world that need their attention.
On balance given the current share price, I think the market will be reassured.

[gwr7] 07/4/2020 12:42

This is on my watchlist but bad luck going into this with so much debt so it'll stay on my watchlist.

[cisk] 05/3/2020 18:09

We don’t hear much about Crown nowadays - I see that Hill & Smith had good results recently - any possible read through to Crown?

[wilmdav] 05/3/2020 17:36

The above post has been edited twice. Hope I have now got it right.

[wilmdav] 03/3/2020 15:58

Whilst the IFRS 16 debt adjustment is not a major issue for AVG, it will crop up elsewhere, so I have had a closer look at it.

Prior to IFRS 16, a finance lease was defined as one where ownership of the asset is, or can be, transferred to the lessee at the end of the term, sometimes after a ‘balloon’; payment.

Likewise an operating lease was defined as one where ownership of the item remains with the lessor during and after the term. The two types of leases were accounted for differently.

Finance leases were treated more or less in accordance with what IFRS 16 now prescribes for all leases. The current value of an asset was added to Property Plant & Equipment (P.P. & E.) in the balance sheet and a liability for outstanding repayments added to Liabilities. The asset was depreciated yearly and the liability also reduced as repayments were made. The interest portion of the yearly rental was included in Finance costs in the P & L account, which also recorded depreciation, presumably at a rate which covers repayments of the principal portion of the rental.

For operating leases, the full rental was treated as an expense in the P & L but the financial commitment was entirely off balance sheet.

For AVG the introduction of IFRS 16 has resulted in an increase of £8.0m to P.P.& E. and an additional lease liability of £9.7m. (They give a technical reason why these two amounts are not the same.)

Now imagine AVG had borrowed £8m to buy the assets instead of leasing them. The amount would initially have gone into P.P. & E. as an asset on the balance sheet, and a roughly equivalent amount would have gone into Liabilities. The interest on the loan would be recorded in Finance costs in the P & L account, which would also record depreciation. This is the same treatment as is now required for all leases.

Hence I think it is meaningful to say that AVG has £17m of debt rather than £8.3m. They are of course justified in quoting the £8.3m figure in order to provide a comparison with the prior end of year period of £2.0m. If the prior year had been restated (which it was not) the increase in net debt would still have been £6.3m or thereabouts.

So a lease for an asset valued at £10m with 10 years outstanding would account for approximately ten times more debt than a lease for the same original value with only one year remaining.

True, in many cases, such a lease would be renewed at the end of its term, incurring another £10m or so of debt in the following year. But if the asset had been originally purchased by means of a loan, the asset would need to be replaced or renovated at some point, which would have to be financed.

Edited on 05/03/20.

[steve3sandal] 27/2/2020 19:29

Something of a nonsense. I have to confess I sold out the day before results as mine always bomb on solid progress which is what's occurring here. I will be back.

[cockerhoop] 27/2/2020 17:37

Neither am I but basically the cost of the leases are added to the liabilities and a corresponding right of use asset is added to the asset side of the balance sheet generally roughly canceling each other out.

So I don't think it should just be added to debt otherwise a company with a 10 year lease would have 10x more associated debt than a company with a year remaining (and plans to renew)

[cockerhoop] 27/2/2020 14:47

Hi Wilmdav,Understood, my point was that adjusted debt (excluding IFRS 16 rent - which isn't actually debt is it but an obligation) is revised by Finncap to be less than previously forecast.

[cockerhoop] 26/2/2020 18:57

I thought the results decent, whilst LFL (excluding Booths & Energy Steels) revenue flat, margins were improved and underlying profit up 63%. Booths looks as though it'll be contributing before too much longer, Energy Steels larger losses.

As you've stated Finncap leave the 16.5p eps unchanged but reduce the YE debt from £9.2m to £7.8m.

[cerrito] 26/2/2020 18:43

FWIW, I see that Finncap reiterates its rating with a tp of 315p

[cerrito] 26/2/2020 12:08

DGWinterbottom
A tardy response of thanks to your good guidance.
I have been a bit baffled by the share price increase of the last weeks but did not organize myself to sell.
I need to go through today's figures.

[dgwinterbottom] 25/1/2020 20:09

Cerrito - I have had a holding here for about 10 years and attended a few AGM's and would say that on one occasion when questioned about such things as market expectations the reply was that they are bound by the brokers guidelines , and their broker is "very picky" unquote. I can understand your reluctance to attend the AGM but there have been few other shareholders on my visits. That said it is more than worth the visit just to get to know the Board as compared to many, they are very keen to chat to shareholders.

[cerrito] 23/1/2020 10:07

I find it frustrating when companies do not spell out what their understanding of market expectations are.
I am about to ask them to spell this out in future but it is an uphill fight.
As you say fillipe the price did get frothy and for me no reason for it to fall today.
I find this an odd share. I pay my holding here very little attention and am content to watch the share price go up.
The shareholding base seems very stable but the plus 3%ers have 44% of the shares so I would expect more activity.
Did anyone make the AGM?
I am reluctant to go from London to Birmingham for it as I am concerned I would be the only one there.

[fillipe] 17/1/2020 10:14

The cream being taken off the top following today's holding RNS.

f

[cfro] 13/1/2020 07:32

Hayward Tyler wins £2m solar contract.

[fillipe] 10/1/2020 14:43

Another sunny day, another +3%.

f

[puffintickler] 09/1/2020 13:30

Me neither, there may be a tip out there or perhaps the market has finally woken to the potential here. I imagine the price will pull back a bit so I've dabbled in a bit of top slicing.

[fillipe] 09/1/2020 09:34

Another strong day going on today, although I don't know what's driving it.

f

[fredfishcake] 09/1/2020 08:55

We've had a good run - anyone thinking of selling or is there more to come?

[fillipe] 07/1/2020 16:30

AVG being liked a lot, if the trades today are anything to go by.

f

[fillipe] 03/1/2020 09:43

This one must be 100% off the radars!

AVG have been regularly ticking up to a doubling throughout almost the whole of the past twelve months.

169p >>>> 287p.... so what's not to like and run along with?

f

[cerrito] 10/11/2019 20:46

anyone going to the AGM?
Not practical for me to make it and welcome feedback from anyone who can.