Avingtrans profit in line but hit by US Covid loan repayment demand
Avingtrans PLC on Wednesday said full-year profit will be in line with market expectations but said it will need to unexpectedly repay some Covid-19 loans in the US.
In response, shares in the Cambridgeshire, England-based engineering firm fell 6.0% to 568.78 pence each in London on Wednesday.
In a trading update for the financial year ended May 31, Avingtrans said it has continued to secure ‘strategically significant’ contract awards across its core nuclear and infrastructure markets, while also making ‘encouraging progress in expanding its presence in adjacent growth sectors’.
The Advanced Engineering Systems division enters the new financial year with a strong order book in expanding markets and continues to win orders post year end, including securing a further $4 million contract in South Korea.
The Medical & Industrial Imaging division made ‘encouraging progress’ over the period, although revenue was lower than intended, driven primarily by timing in the receipt of regulatory clearances.
In addition, the firm noted a ruling that it does not qualify for ’Second Draw’ loans under the US Government’s Paycheck Protection Program launched during the Covid pandemic.
As a result, the US government has required repayment of loans. The principal amount is around $3.1 million, with interest and penalties expected to bring the total to $5.0 million.
Repayment terms remain under discussion, but are currently expected to be spread over approximately 24 months.
‘The board has decided not to contest the matter, since this could be counter-productive, given the strong pipeline of prospects in the next generation nuclear and defence sectors and is working to conclude a settlement with the US Government,’ it added.
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