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Hayward Tyler – does trading update support recently stated “good progress”?

By Steve Moore | Thursday 20 April 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Last week I questioned stated “continued good progress” by Hayward Tyler (HAYT), with it having produced a profit warning as recently as 20th February. The following updates with the shares currently on the rise, at around 55p, on the back of a trading update the company “is pleased to provide” for its year ended 31st March 2017…

The update notes expected revenue of c.£63 million and that “the group's previously communicated profit guidance remains valid”. The latter means a swing to loss – and “net debt at £22.1m (at 30 September 2016: £18.3m, at 31 March 2016: £8.6m)”.

The company notes this is with “increased working capital as a result of a significant increase in activity during the final quarter and capital expenditure” and “is delighted to report that order intake increased significantly in 2H2017 when compared to 1H2017”.

With an increased order book of £49.8 million, “continued strong pipeline, combined with our recent investments in our front-end win order processes and renewed focus on taking cost out of the business”, the company claims “good stead to get back on track and deliver significant and cash generative revenue growth to our shareholders”.

Hmmm, currently though it is relying on continuing “constructive discussions with its bank, Royal Bank of Scotland” and the share price likely somewhat on “early stages of discussions with Avingtrans PLC, regarding a possible offer by Avingtrans PLC” - the shares up from 37p prior to this.

Currently Avingtrans (AVG) remains required to announce either a firm intention to make an offer or not by 5pm on 28th April – and the risks here if it doesn’t see me currently continue to avoid.

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