Allen-Vanguard Corporation announces Med-Eng integration plan and provides general update



    
    - Integrated organizational structure with three reporting segments:
      Electronic Systems, Personal Protection Systems, and Services
    - Record revenue expected for Q4 ended September 30, 2007
    - Fiscal 2008 indicated revenue in excess of $500 million confirmed,
      reflecting strong order flows
    

    OTTAWA, Oct. 25 /CNW Telbec/ - Allen-Vanguard Corporation
("Allen-Vanguard" or the "Company") (TSX:VRS) today provides a general update,
including its integration plan, new senior management appointments, revenue
for the fourth quarter of fiscal 2007, as well as an update to the outlook for
the combined Med-Eng Systems Inc. ("Med-Eng") and Allen-Vanguard enterprise
for fiscal 2008, which commenced October 1, 2007. All amounts are in Canadian
dollars unless otherwise noted.

    Integration plan

    The Company announced an integrated organizational structure with three
reporting business segments: Electronic Systems, Personal Protection Systems
and Services, each of which has operations in North America servicing the
U.S., Canada and Latin America, and in the U.K. servicing overseas
international markets.

    
       - Electronic Systems is comprised mainly of the Company's electronic
         counter measures (ECM) technology, commonly called "jammers", which
         prevent the detonation of remotely controlled improvised explosive
         devices ("RCIED"s).

       - Personal Protection Systems includes bomb disposal suit and chem-bio
         suit ensembles, body armour to protect against improvised explosive
         devices ("IED"s), bomb search and disposal tools and equipment, and
         blast mitigation and decontamination equipment.

       - Services entails counter-IED intelligence, training and advisory
         services, including the "Triton" intelligence report, and operates
         under the name Hazard Management Solutions ("HMS").

    "Together, these products and services provide a unique platform for
comprehensive mission support to military and homeland security forces for
sustainable capability against the continuously evolving threat of IEDs,
whether explosive, bio-chemical or radiological, including RCIEDs," said
David E. Luxton, President and CEO.
    The Company plans to report revenue and gross margin for these segments
commencing the fourth quarter of fiscal 2007 which ended September 30, 2007.
    In conjunction with its integration plan the Company announced the
following new senior management appointments, all of which are effective
November 1, 2007:

       - Mr. Paul Timmis, formerly Vice President, Electronic Systems, at
         Med-Eng, becomes Corporate Vice President, Electronic Systems.

       - Mr. Jon Earey, formerly Vice President of Personal Protection
         Systems at Med-Eng, becomes Corporate Vice President, Personal
         Protection Systems.

       - Mr. Roger Davies, Managing Director of Hazard Management Solutions
         Inc., takes on the additional role of Corporate Vice President,
         Services.

       - Mr. Guido Curridor, formerly Vice President, Operations, at Med-Eng,
         becomes Corporate Vice President, North American Operations

       - Mr. Bob Adams, incoming Managing Director of Allen-Vanguard U.K.
         Ltd., takes on the additional role of Corporate Vice President,
         International Operations.

       - Mr. Aris Makris, formerly Chief Technology Officer and Vice
         President at Med-Eng, becomes Corporate Vice President and Chief
         Technology Officer.
    

    Financial update and outlook for fiscal 2008

    On September 27, 2007, the Company announced the completion of a
$300 million equity offering by way of prospectus, with use of net proceeds to
eliminate $150 million in subordinated debt financing and to reduce long-term
debt. The Company confirms that the subordinated debt has been eliminated, and
that long-term debt has been reduced to approximately $263 million. "The
reduction in debt substantially improves our operating flexibility and
positions our balance sheet for both the scale and the strong growth outlook
we foresee for the combined businesses," said Mr. Luxton.
    This growth was evident in the fourth quarter ended September 30, 2007,
when the Company achieved very strong revenue from the Allen-Vanguard and HMS
businesses. In addition, Med-Eng contributed approximately $14 million to
consolidated revenue, representing its revenue from the closing date of
September 17 to September 30, 2007. Therefore, revenue for fiscal 2007 is
expected to exceed $93 million. The Company noted that, in accordance with
Canadian generally accepted accounting principals, the fourth quarter and
fiscal year results will include substantial charges and amortization related
to the acquisition and financing of Med-Eng and Hazard Management Solutions,
which will be partially offset by a foreign exchange gain on the translation
of U.S. dollar denominated debt. Allen-Vanguard expects to release audited
financial results for fiscal 2007 in the week of December 10, 2007.
    The Company reported that sales order flow and order size have increased
with the acquisition of Med-Eng, with combined order intake of more than
$60 million since the start of fiscal 2008, including approximately
$40 million in ECM orders for U.S. customers, $12 million for Personal
Protection Systems products, and approximately $8 million in Services
contracts.
    "The pipeline of sales opportunities remains very strong and we believe
we are very well positioned to capture additional business globally,
especially from existing and new ECM programs in the U.S., including the
emerging Homeland Security market where we have a first mover advantage," said
Mr. Luxton.
    In the initial Med-Eng acquisition announcement, Allen-Vanguard noted the
scale of the combined business and gave an indication that on a pro forma
basis fiscal 2008 combined revenue would be in the range of $500 million, with
EBITDA of approximately $160 million. "Based on backlog and expected orders,
largely from existing programs, we remain confident that the business is
tracking to this level for fiscal 2008," said Mr. Luxton. "And, as noted in
our September 28, 2007 order announcement for $12.2 million in ECM spares, we
are now beginning to see more recurring revenue in the sales mix as our
installed base of ECM equipment expands." The Company stated that its
installed base of ECM units currently numbers several thousand and is expected
to more than double in fiscal 2008, including vehicle-mounted ECM systems for
existing and new vehicles such as the Mine Resistant Ambush Protected (MRAP)
vehicle. For clarity, the Company added that its ECM systems for MRAP vehicles
are procured as Government Furnished (GFE) equipment, and these ECM sales are
therefore not dependent on which vehicle manufacturer produces the MRAP.
    The Company added that it expects the Electronic Systems division will be
the largest contributor to revenue and EBITDA, driven by a combination of
continued government commitment to ECM spiral programs for sustained force
protection capability, the Company's ability to exploit its strong
partnerships in the U.S. with Lockheed Martin and General Dynamics, the
mission-proven reputation of its technology, and the advanced new versions and
enhancements it is bringing to market. This division will also likely report
the highest margins. Given that most of the manufacturing for the ECM
components is taking place in the U.S., the Company has a natural hedge
against most of the recent strong rise in the Canadian dollar vis a vis the
U.S. dollar. Personal Protection Systems is expected to be the next largest
division, contributing about 20% of revenue. The Services division is expected
to contribute just under 10% of revenue, and to sustain its high growth
momentum with consistent and predictable financial results.

    Potential partnerships and teaming arrangements

    The Company stated that as part of its long-term business development
plan it foresees partnerships with prime defence contractors and systems
integrators on major programs in North America and overseas. "Major military
and Homeland Security programs have been outsourced to these firms, and in
many cases Allen-Vanguard has products and services that fill important
capability gaps," commented David Luxton. "As part of our overall corporate
business development strategy we have been engaged in discussions with prime
contractors on a number of opportunities and we are optimistic that this will
result in new partnership or teaming announcements."

    U.S. public listing under consideration

    The Company stated that, while it has made no formal decision yet
regarding a U.S. stock exchange listing, it is actively evaluating
requirements and strategies. "We recognize the potential to increase the
following and liquidity in our stock through a U.S. listing of our shares,"
said David Luxton. "At the same time, the logistics and costs of such a
decision need to be carefully assessed. We will be updating investors as we
conclude on this."

    About Allen-Vanguard

    Allen-Vanguard Corporation supports the mission of military and homeland
security forces around the world with leading proprietary solutions for
protection and counter-measures against hazardous devices of all kinds,
whether chemical, biological, radiological or explosive ("CBRNE"), including
improvised explosive devices ("IED"s) and remotely controlled IEDs ("RCIED"s).
Allen-Vanguard equipment is in service in more than 120 countries. Products
include Electronic Counter-Measures ("ECM") equipment for jamming remote
detonation of terrorist devices, specialty security equipment for Explosive
Ordnance Disposal ("EOD"), remote intervention robots for hazardous
applications, and personal protective wear for use in dealing with explosive
and bio-chemical agents. Allen-Vanguard is the developer and/or sole,
worldwide licensee of proprietary technologies such as the Med-Eng EOD9(TM)
bomb suit, the Defender(TM) and Vanguard (TM) Mk2 bomb disposal robots, and
the Universal Containment System and CASCAD Foam system for blast mitigation
and decontamination of bio-chemical warfare agents. Professional services
encompass counter-IED intelligence, training and advisory services, including
the Triton(TM) Report on terrorist incidents around the world. The Company
operates globally through its wholly owned subsidiaries under the names
"Allen-Vanguard", "Med-Eng" and "Hazard Management Solutions". Head office
operations are located in Ottawa, Ontario, Canada, with manufacturing
operations in Stoney Creek and Pembroke, Ontario; Ogdensburg, New York;
Tewkesbury, U.K.; and Cork, Ireland; The Company has professional services
operations in Shrivenham, U.K., aand in the U.S. in Arlington, Virginia. Sales
offices are located in Canada, the U.S., the U.K. and Asia. Allen-Vanguard's
shares are listed on The Toronto Stock Exchange (TSX) under the symbol "VRS".

    This press release may contain forward-looking statements, which reflect
Allen-Vanguard's current expectations regarding future events, its strategy,
expected performance and condition. Forward-looking statements include
statements that are predictive in nature, that depend upon or refer to future
events or conditions, or that include words such as "expects," "anticipates,"
"plans," "believes," "estimates" or negative versions thereof and similar
expressions. In addition, any statement that may be made concerning future
performance, strategies or prospects, and possible future acquisitions or
dispositions, is also a forward-looking statement. Forward-looking statements
are based on current expectations and projections about future events and are
inherently subject to, among other things, risks, uncertainties and
assumptions about the Company and economic factors. Forward-looking statements
are not promises or guarantees of future performance, and actual events and
results could differ materially from those expressed or implied in any
forward-looking statements made about the Company. Any number of important
factors could contribute to these digressions, including, but not limited to,
general economic, political and market factors in North America and
internationally, interest and foreign exchange rates, global equity and
capital markets, business competition, technological change, changes in
government regulations, unexpected judicial or regulatory proceedings, and
catastrophic events. We stress that the above-mentioned list of important
factors is not exhaustive. We encourage you to consider these and other
factors carefully before making any investment decision and we urge you to
avoid placing undue reliance on forward-looking statements. Further, you
should be aware that the Company disclaims any obligation to publicly update
or revise any such forward-looking statements whether as a result of new
information, future events or otherwise, prior to the release of the next
Management Discussion and Analysis to be released by the Company or except as
required by law.

    To find out more about Allen-Vanguard Corporation (TSX: VRS), visit our
website at www.allen-vanguard.com.
    %SEDAR: 00018026E




For further information:

For further information: David Luxton, (613) 288-5555

Organization Profile

ALLEN-VANGUARD CORPORATION

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