TIDMAVON
RNS Number : 2697A
Avon Protection PLC
23 May 2023
AVON PROTECTION PLC
("Avon Protection", "Avon" or the "Group")
INTERIM RESULTS FOR THE 26-WEEK PERIODED 1 APRIL 2023
IMPROVED H1 PROFITABILITY AND STRATEGIC PLAN TO REALISE OUR
POTENTIAL
Jos Sclater, Chief Executive Officer, said:
"Avon Protection is a business with strong foundations and
extraordinary potential. We have moved fast to develop our new STAR
strategy and have already taken meaningful steps forward, focusing
initially on strengthening the fundamentals with a view to building
short term momentum. In addition, we have developed strategic
initiatives to further improve the business over the medium term to
accelerate growth, improve margins and returns on capital, and
protect more lives through the sale of our innovative products.
Revenue during the first half was below our expectations, but a
better second half is supported by the strong order book, the steps
we have already taken to strengthen the factories focused on
shipping the first lots of NG IHPS helmet to the U.S. DOD and the
discontinuation of our armour business.
During the last four months we have increased the pace of
change, so I would like to thank everybody across the business for
their help and determination to realise our full potential. I am
confident that, together, we are setting Avon Protection up for a
successful future."
1 April 2023 2 April 2022 Change (constant currency)(4)
------------------------------------------------- ------------- ------------- ------------------------------
Group (2)
------------------------------------------------- ------------- ------------- ------------------------------
Orders received $125.6m $113.9m 11.9%
------------------------------------------------- ------------- ------------- ------------------------------
Closing order book $160.7m $135.1m 20.1%
------------------------------------------------- ------------- ------------- ------------------------------
Revenue $116.2m $121.9m (3.9%)
------------------------------------------------- ------------- ------------- ------------------------------
Adjusted(1) EBITDA $11.2m $6.2m 30.2%
------------------------------------------------- ------------- ------------- ------------------------------
Adjusted(1) operating profit $4.2m $(1.2)m 180.0%
------------------------------------------------- ------------- ------------- ------------------------------
Adjusted(1) profit/(loss) before tax $0.9m $(2.8)m
------------------------------------------------- ------------- ------------- ------------------------------
Adjusted(1) basic earnings per share 2.4c (7.2c) 15.3%
------------------------------------------------- ------------- ------------- ------------------------------
Interim dividend per share 14.3c 14.3c
------------------------------------------------- ------------- ------------- ------------------------------
Net debt excluding lease liabilities $71.8m $56.6m 26.9%
------------------------------------------------- ------------- ------------- ------------------------------
Statutory results
------------------------------------------------- ------------- ------------- ------------------------------
Operating loss(3) from continuing operations $(1.6)m $(10.7)m
------------------------------------------------- ------------- ------------- ------------------------------
Loss before tax from continuing operations $(5.3)m $(13.6)m
------------------------------------------------- ------------- ------------- ------------------------------
Basic loss per share from continuing operations (14.0)c (34.9)c
------------------------------------------------- ------------- ------------- ------------------------------
Net debt $94.9m $83.3m
------------------------------------------------- ------------- ------------- ------------------------------
Excluding Armour (2)
------------------------------------------------- ------------- ------------- ------------------------------
Revenue $101.6m $119.4m (14.2%)
------------------------------------------------- ------------- ------------- ------------------------------
Adjusted(1) EBITDA $15.9m $12.5m 6.7%
------------------------------------------------- ------------- ------------- ------------------------------
Adjusted(1) operating profit $8.9m $5.1m 14.1%
------------------------------------------------- ------------- ------------- ------------------------------
Improving margins provide a strong foundation to build upon
-- Strong order intake of $125.6 million, with a record-high order book of $160.7 million.
-- Revenue decline of 4.7%, with DOD helmet programmes slower than expected and a decrease in respiratory following
a strong prior year driven by NSPA volume, partially offset by increased armour revenue.
-- Adjusted EBITDA margin of 9.6% (HY22: 5.1%), reflecting cost reduction, early stages of operational efficiencies
and improved product mix. Adjusted EBITDA margin excluding armour of 15.6% (HY22: 10.5%).
-- Net debt excluding lease liabilities of $71.8 million and leverage of 2.6 times bank adjusted EBITDA. Increased
net debt reflects inventory build in NG IHPS and respiratory products ahead of expected H2 shipments.
-- Progress made against new head protection contracts; production of the first lot of NG IHPS helmets approved for
shipment and good progress towards achieving ACH GEN II FAT approval.
Strategy development underway to realise our potential
We have engaged our team to develop the STAR strategy to drive
value creation, focused on four key areas:
-- Strengthen - Strengthen fundamentals to quickly improve execution
-- Transform - Improve efficiency and working capital turns
-- Advance - Organically grow the core and scale up emerging opportunities
-- Revolutionise - Leverage innovation to drive further growth
Outlook and FY23 guidance
-- Good year-on-year revenue growth in Head Protection expected in FY23 and beyond, supported by the strong order
intake in H1.
-- Softer demand for mask systems seen in H1 has led to a more cautious view on H2 Respiratory revenue, which is now
anticipated to be lower than initially expected for FY23.
-- Full year Group revenue excluding armour now expected to be c9% lower than the prior year, reflecting the
Respiratory demand backdrop and some ongoing risk to shipment timings in H2.
-- Notwithstanding the lower revenue, following decisive action to right size Respiratory, full year Group EBITDA
margins excluding armour expected to be broadly consistent with the 14.7% reported in the prior year.
-- On track to complete armour obligations by end of financial year.
-- Year-end net debt position expected to be broadly in line with previous year, with strong cash generation in H2
from inventory unwind.
Notes:
(1) The Directors believe that adjusted measures provide a
useful comparison of business trends and performance. Adjusted
results exclude exceptional items and discontinued operations. The
term adjusted is not defined under IFRS and may not be comparable
with similarly titled measures used by other companies.
(2) For more information regarding segmental reporting and
detailed Armour performance refer to note 2.1.
(3) Reported operating loss includes $3.1 million amortisation
of acquired intangibles, restructuring costs of $2.3 million and
transaction costs of $0.4 million. See adjusted performance section
for full breakdown of adjustments and comparatives.
(4) Constant currency measures are provided in the adjusted
performance section.
For further enquiries, please contact:
Avon Protection plc
Jos Sclater, Chief Executive Officer +44 1225 896 848
Rich Cashin, Chief Financial Officer
Rory Wiltshire, Investor Relations Manager
MHP
Tim Rowntree
+44 7710 032 657
Pete Lambie avonprotection@mhpgroup.com
Analyst and investor webcast
Jos Sclater, Chief Executive Officer, and Rich Cashin, Chief
Financial Officer, will host a presentation for analysts and
investors at 9.00am this morning, at Peel Hunt, 100 Liverpool
Street, EC2M 2AT. The presentation will also be broad cast live at:
https://brrmedia.news/AvonProtection_hy_results
A copy of the presentation for the webcast will be uploaded to
www.avon-protection-plc.com at 8:30am this morning.
Legal Entity Identifier: 213800JM1AN62REBWA71
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation ("MAR") EU no.596/2014. Upon the
publication of this announcement via Regulatory Information Service
("RIS"), this inside information is now considered to be in the
public domain.
About Avon Protection:
Avon Protection make products that are trusted to protect the
world's militaries and first responders.
Our dedicated teams achieve this by developing mission-critical
solutions that enhance our customers' performance, efficiency and
capability, whilst providing ever-increasing levels of
protection.
With a portfolio that includes respiratory and head protection
systems, we are renowned for our innovative thinking and our
steadfast approach to manufacturing unrivalled products.
For further information, please visit our website
www.avon-protection-plc.com
CEO REVIEW
STRONG FOUNDATIONS
Avon Protection is fundamentally a good business with excellent
potential: the order book is improving, the customer base is
diverse and our long-term contracts provide good visibility around
future growth opportunities in Head Protection. Following the exit
from our Armour business, we are left with a high-quality business
capable of generating attractive margins and returns on capital,
with those margins being well protected by strong technology, high
value brands and significant barriers to entry.
Our Respiratory Protection business has an extremely strong
market position with a globally respected brand. It is a
sole-source supplier to the U.S. DOD, U.S. SOCOM, U.K. MOD and
NATO, which supports a reliable aftermarket in filters, spares and
repairs which represented over 40% of Respiratory Protection sales
in H1. Our underwater systems product line has world-leading
rebreather technology with a strong pipeline of opportunities.
In Head Protection, we are well positioned for growth with the
DOD through the long-term NG IHPS and ACH GEN II programmes. These
programmes will supplement the Team Wendy business, which continues
to perform well. There is a large untapped addressable market
beyond the DOD, which we believe we can expand into in the medium
term by commercialising our Ceradyne ballistic capability and Team
Wendy pad system technologies.
STRATEGY TO REALISE OUR POTENTIAL
With the strong market positions and reputation of our
Respiratory Protection business, and high potential for growth
following large contract wins in Head Protection, there is
significant opportunity for our business to deliver revenue growth
and improved margins.
We have developed a new strategy to capture this potential,
involving around 40 of our people in the development process to
ensure we capture the best ideas, improve buy in and reduce
execution risk. The new strategy is called STAR, and focuses on
four areas:
Strengthen
We are quickly strengthening the fundamentals to ensure rapid
improvement in delivery to our customers. This includes
implementing a new operating model which will have two Strategic
Business Units (SBUs) called Respiratory Protection and Head
Protection, with the responsibility and empowerment to deliver
their own specific strategic objectives. We are also strengthening
our factories by improving both leadership capabilities and
processes. Quarterly improvement kaizens have been implemented at
each site using a common methodology, underpinned by consistent
KPIs to cultivate a high-performance operational culture across the
business.
Transform
Within Transform, we are looking to significantly improve
efficiency and working capital turns, focusing on standard
transformational levers including:
-- Operational excellence
-- Footprint optimisation
-- Programme management excellence
-- Supply chain optimisation
-- Innovation process improvement
-- Sales and marketing focus
-- Finance Excellence
Advance
Advance is about growing our current core business organically
and scaling up emerging business models, with the strategic
initiatives tailored for each SBU. Within Respiratory Protection we
are looking to launch a certified self-contained breathing
apparatus (SCBA) to open up non-military markets and intend to
launch new masks to expand our serviceable markets. There is
significant opportunity to leverage our installed mask base to
increase sales of filters and accessories, and we see the potential
to capture a leading share of the growing market in deep water
military rebreathers.
In Head Protection, we need to ensure we capitalise on the known
demand for new helmets and pads from the DOD, whilst combining the
best of the Ceradyne ballistic capability with the pad system
technologies of Team Wendy to exploit the large unserved market
outside the DOD and North America.
Revolutionise
Revolutionise focuses on a number of exciting longer-term
opportunities, leveraging our core capabilities to drive further
growth through innovation and penetration into new markets. In
Respiratory Protection we are developing a game changing Modular
Integrated Tactical Respirator (MiTR) and several higher capability
filters. We also see potential opportunities to expand our
rebreathers business into adjacent markets such as mid to shallow
water.
We also have a roadmap within Head Protection, looking towards
expanding the capability and technology of our helmets including
the enabling of power and data solutions and further research into
traumatic brain injury prevention. In the longer term we see an
opportunity to supply integrated helmet and respirator solutions,
combined with other head mounted technologies.
SIGNIFICANT PROGRESS
Whilst we are in the early stages of what will be a five-year
journey, a number of key actions have already taken place in H1 and
we are moving fast to drive the change required:
In Strengthen, we have a clear and granular strategy, which is a
key building block for stronger performance management, and we are
in the process of communicating this throughout the organisation to
ensure alignment and focus. We have built a more capable team, with
the creation of new SBU organisations, a new leadership team at our
Irvine facility and significantly strengthening our Respiratory
team responsible for liaising with the DOD. Unfortunately, we have
also had to react to the lower than anticipated respiratory sales
within the DOD and have reduced headcount at our Cadillac facility
by around a quarter.
As part of the Transform pillar, we have insourced production of
our EXFIL SL helmet significantly improving gross margins and have
created a plan to optimise our manufacturing footprint further in
support of growth and margin improvement. We have also implemented
a new programme management process for DOD helmets projects.
Advance has also seen a great deal of progress. Within Head
Protection, the first lot of NG IHPS has been approved for shipping
and we have made good progress towards achieving FAT approval on
ACH GEN II. We have had new Team Wendy pad system technology
approved on the NG IHPS helmet programme and have launched our new
EPIC range of ballistic helmets for sale outside of the DOD.
Lastly, although Revolutionise focuses on a longer-term horizon,
several crucial first steps have already been taken. Funded
development is well underway within Respiratory Protection for our
next generation of higher capability filters, and we are already
market testing prototypes made for our new modular tactical
respirator. Feedback at a recent user trial was very positive. In
Head Protection, we have funded work looking at the next generation
of technology to protect against traumatic brain injury.
STAR is designed to realise our full potential and deliver
growth, improved margins and cash return on capital, whilst
delivering more innovative products to protect those who protect
us. We will provide medium term guidance as our plans develop. We
will also carry out a balance sheet review in H2 in light of the
new organisational structure, with a focus on some IT assets as our
plans for footprint optimisation develop.
CAPITAL ALLOCATION PRIORITIES
Reflecting the development of the Group over the last five years
and the need to invest for sustainable growth as part of our new
strategy, we have implemented a new capital allocation framework,
prioritising organic growth and investment in the medium term. We
do not envisage further share buybacks and expect to maintain net
debt/EBITDA leverage on a bank covenant basis between 1 and 2 times
. We will review our dividend policy in H2.
FINANCIAL REVIEW
Despite a decline in revenue of 4.7% to $116.2 million (HY22:
$121.9 million), a more favourable product mix, effects of cost
saving programmes and operational efficiency initiatives alongside
favourable FX movements have resulted in increased profitability of
the business, with an adjusted operating profit of $4.2 million
(HY22: loss of $1.2 million). This includes $4.7 million of losses
relating to the Armour business. The statutory operating loss of
$1.6 million compares to a HY22 loss of $10.7 million for the
equivalent period last year.
1 April 2023 2 April 2022 Change (constant currency)(2)
------------------------------------------------- --------------- ------------- ------------------------------
Orders received $125.6m $113.9m 11.9%
------------------------------------------------- --------------- ------------- ------------------------------
Closing order book $160.7m $135.1m 20.1%
------------------------------------------------- --------------- ------------- ------------------------------
Revenue $116.2m $121.9m (3.9%)
------------------------------------------------- --------------- ------------- ------------------------------
Adjusted(1) EBITDA $11.2m $6.2m 30.2%
------------------------------------------------- --------------- ------------- ------------------------------
Adjusted(1) EBITDA margin 9.6% 5.1% 250bps
------------------------------------------------- --------------- ------------- ------------------------------
Adjusted(1) operating profit/(loss) $4.2m $(1.2)m 180.0%
------------------------------------------------- --------------- ------------- ------------------------------
Adjusted(1) operating profit/(loss) margin 3.6% (1.0)% 240bps
------------------------------------------------- --------------- ------------- ------------------------------
Adjusted(1) net finance costs $(3.3)m $(1.6)m 120.0%
------------------------------------------------- --------------- ------------- ------------------------------
Adjusted(1) profit/(loss) before tax $0.9m $(2.8)m
------------------------------------------------- --------------- ------------- ------------------------------
Adjusted(1) taxation $(0.2)m $0.6m
------------------------------------------------- --------------- ------------- ------------------------------
Adjusted(1) profit/(loss) after tax $0.7m $(2.2)m
------------------------------------------------- --------------- ------------- ------------------------------
Adjusted(1) basic earnings/(loss) per share 2.4c (7.2c)
------------------------------------------------- --------------- ------------- ------------------------------
Dividend per share 14.3c 14.3c
------------------------------------------------- --------------- ------------- ------------------------------
Net debt excluding lease liabilities(1) $71.8m $44.2m
------------------------------------------------- --------------- ------------- ------------------------------
Return on invested capital(1) 5.6% 2.8%
------------------------------------------------- --------------- ------------- ------------------------------
Statutory results
------------------------------------------------- --------------- ------------- ------------------------------
Operating loss $(1.6)m $(10.7)m
------------------------------------------------- --------------- ------------- ------------------------------
Net finance costs $(3.7)m $(2.9)m
------------------------------------------------- --------------- ------------- ------------------------------
Loss before tax $(5.3)m $(13.6)m
------------------------------------------------- --------------- ------------- ------------------------------
Taxation $1.1m $2.9m
------------------------------------------------- --------------- ------------- ------------------------------
Loss after tax from continuing operations $(4.2)m $(10.7)m
------------------------------------------------- --------------- ------------- ------------------------------
Profit/(loss) from discontinued operations(3) $0.8m $(1.2)m
------------------------------------------------- --------------- ------------- ------------------------------
Loss for the period $(3.4)m $(11.9)m
------------------------------------------------- --------------- ------------- ------------------------------
Basic loss per share from continuing operations (14.0)c (34.9)c
------------------------------------------------- --------------- ------------- ------------------------------
Net debt $94.9m $83.3m
------------------------------------------------- --------------- ------------- ------------------------------
1 The Directors believe that adjusted measures provide a useful
comparison of business trends and performance. Adjusted results
exclude exceptional items and discontinued operations. The term
adjusted is not defined under IFRS and may not be comparable with
similarly titled measures used by other companies.
2 Constant currency measures are provided in the adjusted
performance measures section below.
3 Discontinued operations relate to activities under the
Manufacturing Service Agreement for the milkrite | InterPuls
business divested in September 2020, see note 2.3.
Order intake of $125.6 million (HY22: $113.9 million) was up
10.3% (11.9% on a constant currency basis). Respiratory orders were
largely flat year on year, but with slightly higher order intake
within U.K. & International offset by a small decline in
Commercial Americas orders , whilst Head Protection orders saw
strong growth in both U.S. DOD and U.K. & International. Order
intake excluding armour totalled $125.4 million (HY22: $113.6
million), up 10.4% (12.1% on a constant currency basis) .
The closing order book of $160.7 million (HY22: $135.1 million)
reflects an increase of 18.9% (20.1% on a constant currency basis)
on the prior period. Closing order book excluding armour of $144.7
million (HY22: $110.7 million) reflects an increase of 30.8% (32.4%
on a constant currency basis).
Revenue totalled $116.2 million (HY22: $121.9 million), down
4.7% (down 3.9% on a constant currency basis) . This reflects a
decline in Respiratory sales with softer demand in Commercial
Americas and U.K. & International markets in the half comparing
to strong NSPA volumes in the previous year. Head Protection sales
also dipped modestly, with a decrease in U.S. DOD deliveries ahead
of first shipments of NG IHPS, partially offset by an increase in
U.K. & International. Armour revenue grew to $14.6 million
(HY22: $2.5m) as shipments of DLA ESAPI product ramped up. Revenue
excluding armour totalled $101.6 million (HY22: $119.4 million),
down 14.9% (down 14.2% on a constant currency basis) .
Adjusted EBITDA of $11.2 million (HY22: $6.2 million) is up
80.6% (30.2% on a constant currency basis) compared to the prior
period, with the decrease in revenue offset by improved mix, cost
reductions and the initial impacts of operational efficiency
improvements implemented. Adjusted EBITDA margin of 9.6% represents
an increase of 450bps (250bps on a constant currency basis).
Adjusted EBITDA losses for armour totalled $4.7 million (HY22: loss
of $6.3 million), resulting in adjusted EBITDA excluding armour of
$15.9 million, up 27.2% (6.7% on a constant currency basis)
compared to the prior year (HY22: $12.5 million), and EBITDA margin
excluding armour of 15.6%, up 510bps.
Adjusted operating profit of $4.2 million (HY22: loss of $1.2
million) is after adjusted depreciation and amortisation of $7.0
million (HY22: $7.4 million), an increase of 450% (180.0% on a
constant currency basis) compared to the prior period.
Statutory operating loss was $1.6 million (HY22: loss of $10.7
million) after $5.8 million adjustments (HY22: $9.5 million
adjustments) with the decreased loss reflecting increased adjusted
operating profit, and $3.8 million of non-current asset impairments
in the prior year. The adjusted performance section contains
further explanation for adjusting items which are summarised
below.
HY23 HY22
$m $m
Statutory operating loss (1.6) (10.7)
-------------------------------------- -------- --------
Amortisation of acquired intangibles 3.1 3.5
-------------------------------------- -------- --------
Impairment of non-current assets - 3.8
-------------------------------------- -------- --------
Restructuring costs 2.3 1.4
-------------------------------------- -------- --------
Transaction costs 0.4 0.8
-------------------------------------- -------- --------
Adjusted operating profit 4.2 (1.2)
-------------------------------------- -------- --------
Adjusted net finance costs increased to $3.3 million (HY22: $1.6
million) due to higher net debt and variable interest charges.
After an adjusted tax charge of $0.2 million (HY22: credit of
$0.6 million), the Group recorded an adjusted profit for the period
after tax of $0.7 million (HY22: loss of $2.2 million).
Adjusted basic earnings per share increased to 2.4 cents (HY22:
negative 7.2 cents).
Return on invested capital, calculated on a rolling 12-month
basis, improved to 5.6% (HY22: 2.8%), reflecting higher adjusted
operating profit.
Statutory net finance costs of $3.7 million (HY22: $2.9million)
include $0.4 million (HY22: $0.8 million) net interest expense on
the U.K. defined benefit pension scheme liability.
Statutory loss before tax from continuing operations was $5.3
million (HY22: loss of $13.6 million) and, after a tax credit of
$1.1 million (HY22: credit of $2.9 million), the loss for the
period from continuing operations was $4.2 million (HY22: loss of
$10.7 million). Basic losses per share from continuing operations
were 14.0 cents (HY22: losses of 34.9 cents).
HY23 HY22
------------------------------------------------- --------------------------------------------------
Respiratory Head Respiratory Head
Revenue $m Protection Protection Armour Total Protection Protection Armour Total
--------------- -------------- -------------- --------- ------ -------------- --------------- ------- --------
U.S. DOD 34.1 8.3 - 42.4 24.0 19.5 - 43.5
--------------- -------------- -------------- --------- ------ -------------- --------------- ------- --------
Commercial
Americas 14.6 12.1 - 26.7 17.7 13.0 - 30.7
--------------- -------------- -------------- --------- ------ -------------- --------------- ------- --------
U.K. &
International 19.8 12.7 - 32.5 41.1 4.1 - 45.2
--------------- -------------- -------------- --------- ------ -------------- --------------- ------- --------
Total
excluding
Armour 68.5 33.1 - 101.6 82.8 36.6 - 119.4
--------------- -------------- -------------- --------- ------ -------------- --------------- ------- --------
Armour - - 14.6 14.6 - - 2.5 2.5
--------------- -------------- -------------- --------- ------ -------------- --------------- ------- --------
Total 68.5 33.1 14.6 116.2 82.8 36.6 2.5 121.9
--------------- -------------- -------------- --------- ------ -------------- --------------- ------- --------
U.S. DOD
U.S. DOD revenue declined by 2.5% to $42.4 million (HY22: $43.5
million). U.S. DOD Respiratory revenue grew by 42.1% to $34.1
million (HY22: $24.0 million) with strong sales of M50 masks and
M61 filters, partially offset by non-recurrence of M69 mask revenue
following contract completion last year. Head Protection revenue
declined by 57.4% to $8.3 million (HY22: $19.5 million). HY22
benefited from first generation IHPS revenue which has not repeated
this year due to the manufacture of NG IHPS for delivery in H2 2023
and beyond.
U.S. DOD closing order book for HY23 of $91.8 million (HY22:
$52.5 million) is comprised of $28.6 million respiratory orders and
$63.2 million Head Protection orders, which includes $42 million of
NG IHPS and $13 million of ACH GEN II orders.
Commercial Americas
Commercial Americas revenue declined by 13.0% to $26.7 million
(HY22: $30.7 million). Commercial Americas Respiratory revenue
declined by 18.1% to $14.5 million (HY22: $17.7 million) with
decreases in Respiratory revenue following deliveries in support of
Ukraine in the prior year. Head Protection revenue declined by 6.9%
to $12.1 million (HY22: $13.0 million) with a decline in EXFIL SL
helmets partially offset by increased sales of F90 helmets.
Commercial Americas closing order book for HY23 of $7.5 million
(HY22: $6.1 million), comprises $3.9 million of Respiratory orders
and $3.6 million of Head Protection orders.
U.K. & International
U.K. & International revenue declined by 28.1% (26.6% on a
constant currency basis) to $32.5 million (HY22: $45.2 million).
U.K. & International Respiratory revenue declined by 51.7%
(50.6% on a constant currency basis) to $19.8 million (HY22: $41.0
million) following a very strong prior year comparator with the
NSPA contract. U.K. & International Head Protection revenue
grew by 209.8% (208.2% on a constant currency basis) to $12.7
million (HY22: $4.1 million) with a large delivery of EXFIL
Ballistic helmets to the Australian Defence Force.
U.K. & International closing order book for HY23 of $45.4
million (HY22: $52.1 million) is comprised of $41.4 million (HY22:
$49.0 million) of Respiratory orders, including a $14 million order
for the middle east expected to ship in H2, and $4.0 million (HY22:
$3.1 million) of Head Protection orders.
Armour
Armour revenue increased to $14.6 million (HY22: $2.5 million),
leaving us on track to have fulfilled all obligations by the end of
the financial year.
Armour closing order book of $16.0 million (HY22: $24.4 million)
comprises $8.0 million of DLA ESAPI and $8.0 million of flat
armour.
Research and development expenditure
Total investment in research and development (capitalised and
expensed) was $5.1m (HY22: $5.3m), in line with the prior
period.
HY23 HY22
$m $m
-------------------------------------------------------- ------ ------
Total expenditure 5.1 5.3
Less customer funded (0.6) (0.7)
-------------------------------------------------------- ------ ------
Group expenditure 4.5 4.6
Capitalised (2.2) (2.7)
-------------------------------------------------------- ------ ------
Income statement impact 2.3 1.9
Amortisation and impairment of development expenditure 2.5 3.7
-------------------------------------------------------- ------ ------
Total income statement impact 4.8 5.6
-------------------------------------------------------- ------ ------
Revenue 116.2 121.9
-------------------------------------------------------- ------ ------
R&D spend as a % of revenue 4.1% 4.3%
-------------------------------------------------------- ------ ------
Respiratory expenditure has primarily focused on completing the
development of the EXOSKIN line of boots and gloves, whilst Head
Protection expenditure continued to centre around NG IHPS and ACH
GEN II helmet development.
In HY23 research and development costs have been reclassified as
a separate line item below gross profit in the Consolidated
Statement of Comprehensive Income, with comparatives restated
accordingly.
Net debt and cash flow
HY23 HY22
$m $m
---------------------------------------------------------------- ------- -------
Adjusted continuing EBITDA 11.2 6.2
---------------------------------------------------------------- ------- -------
Share-based payments and defined benefit pension scheme costs 1.2 1.2
---------------------------------------------------------------- ------- -------
Working capital (23.4) (2.2)
---------------------------------------------------------------- ------- -------
Cash flows from continuing operations before exceptional items (11.0) 5.2
---------------------------------------------------------------- ------- -------
Restructuring and transaction costs paid (1.6) (0.8)
---------------------------------------------------------------- ------- -------
Cash flows from continuing operations (12.6) 4.4
---------------------------------------------------------------- ------- -------
Cash flows from discontinued operations (0.4) (0.6)
---------------------------------------------------------------- ------- -------
Cash flow from operations (13.0) 3.8
---------------------------------------------------------------- ------- -------
Payments to pension plan - (2.6)
---------------------------------------------------------------- ------- -------
Net finance costs (3.0) (1.3)
---------------------------------------------------------------- ------- -------
Repayment of lease liability (1.5) (2.1)
---------------------------------------------------------------- ------- -------
Tax received 3.9 0.6
---------------------------------------------------------------- ------- -------
Capital Expenditure (4.9) (5.8)
---------------------------------------------------------------- ------- -------
Acquisitions - (3.2)
---------------------------------------------------------------- ------- -------
Purchase of own shares - share buyback - (10.1)
---------------------------------------------------------------- ------- -------
Dividends to shareholders (9.1) (9.1)
---------------------------------------------------------------- ------- -------
Change in net debt (27.6) (29.8)
---------------------------------------------------------------- ------- -------
Opening net debt, excluding lease liabilities (44.2) (26.8)
---------------------------------------------------------------- ------- -------
Closing net debt, excluding lease liabilities (71.8) (56.6)
---------------------------------------------------------------- ------- -------
Cash flows from continuing operations before exceptional items
were an outflow $11.0 million (HY22: inflow of $5.2 million)
principally due to increased inventory holdings for anticipated H2
deliveries.
Dividends and purchase of own shares were $9.1 million (HY22:
$19.2 million), with the reduction reflecting the cessation of the
buyback programme in April 2022. The buyback programme has now been
formally cancelled.
Tax was an inflow of $3.9m (HY22: inflow of $0.6m), due to
historical amounts owed being settled in the period.
Net debt was $94.9 million (FY22: net debt $68.0 million), which
includes lease liabilities of $23.1 million (FY22: $23.8 million).
Excluding lease liabilities, net debt was $71.8 million (FY22: net
debt $44.2 million). The change in net debt is principally due to
increased inventory holding in support of NG IHPS and increased
respiratory deliveries scheduled for H2.
Armour update
The following tables summarise the contribution of the Armour
business to the Group's financial statements for HY23.
Armour HY23 HY22
-------------------- ------- -------
Orders received $0.2m $0.3m
-------------------- ------- -------
Closing order book $16.0m $24.4m
-------------------- ------- -------
Revenue $14.6m $2.5m
-------------------- ------- -------
Armour Respiratory & Head Total
HY23 adjusted $m $m $m
---------------------------------- -------- ------------------- ------
Orders received 0.2 125.4 125.6
---------------------------------- -------- ------------------- ------
Closing order book 16.0 144.7 160.7
---------------------------------- -------- ------------------- ------
Revenue 14.6 101.6 116.2
---------------------------------- -------- ------------------- ------
Adjusted EBITDA (4.7) 15.9 11.2
---------------------------------- -------- ------------------- ------
Adjusted EBITDA margin (32.2%) 15.6% 9.6%
---------------------------------- -------- ------------------- ------
Adjusted operating profit/(loss) (4.7) 8.9 4.2
---------------------------------- -------- ------------------- ------
Respiratory
Armour & Head Total
HY23 adjustments $m $m $m
---------------------------- ------- ------------ ------
Revenue - - -
---------------------------- ------- ------------ ------
EBITDA(1) (0.8) (1.2) (2.0)
---------------------------- ------- ------------ ------
Operating profit/(loss)(1) (0.8) (5.0) (5.8)
---------------------------- ------- ------------ ------
Respiratory
Armour & Head Total
HY23 total $m $m $m
---------------------------- ------- ------------ ------
Revenue 14.6 101.6 116.2
---------------------------- ------- ------------ ------
EBITDA (5.5) 14.7 9.2
---------------------------- ------- ------------ ------
Operating profit/(loss) (5.5) 3.9 (1.6)
---------------------------- ------- ------------ ------
1 Armour operating loss adjustments totalling a charge of $0.8
million comprise $0.4 million transaction costs and $0.4 million of
armour specific restructuring costs.
Defined benefit pension scheme
The Group operated a contributory defined benefits plan to
provide pension and death benefits for the employees of Avon
Protection plc and its Group undertakings in the U.K. employed
prior to 31 January 2003. The plan was closed to future accrual of
benefit on 1 October 2009 and has a weighted average maturity of
approximately 12 years. The net pension liability for the scheme
amounted to $16.5 million as at 1 April 2023 (FY22: $6.3 million).
The increase is due to a lower discount rate being applied to
pension liabilities.
There were no contributions in respect of scheme expenses and
deficit recovery plan payments in the period as these were fully
prepaid for FY23 in the previous year. In accordance with the
deficit recovery plan agreed following the 31 March 2019 actuarial
valuation, the Group will make payments in FY24 of $4.3 million in
respect of deficit recovery and scheme expenses. These payments are
subject to review following the March 2022 actuarial valuation
which will be finalised during H2 2023.
Foreign exchange and interest rate risk management
The Group is exposed to translational foreign exchange risk
arising when the results of sterling denominated companies are
consolidated into the Group presentational currency, U.S. dollars.
Group policy is not to hedge translational foreign exchange risk.
Due to the translational effect, a one-cent increase in the value
of the U.S. dollar against sterling would have decreased revenue by
approximately $0.1 million and increased operating profit by
approximately $0.1 million for HY23.
RCF borrowings are floating rate priced using the U.S. Secured
Overnight Financing Rate (SOFR). In 2022 the Group implemented a
hedging policy using interest rate swaps to fix a portion of SOFR
floating rate interest. The notional value of interest rate swaps
at 1 April 2023 was $30.0 million (FY22: $30.0 million), expiring
on 8 September 2025 in line with the RCF. The financial value of
interest rate swaps at 1 April 2023 was a $0.4m (FY22: $0.5m), an
asset position as hedged fixed rates are lower than current market
forecasts for SOFR.
Dividends
The Board has proposed an interim dividend of 14.3 cents per
share (HY22: 14.3 cents) in line with the interim dividend last
year. The interim dividend will be paid in pounds sterling on 8
September 2023 to shareholders on the register at 11 August 2023.
The final dividend will be converted into pounds sterling for
payment at the prevailing exchange rate which will be announced
prior to payment.
As mentioned previously, we will be reviewing our dividend
policy in the second half of the year to ensure it aligns with our
new strategy.
Jos Sclater Rich Cashin
Chief Executive Officer Chief Financial Officer
23 May 2023 23 May 2023
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors confirm that this condensed consolidated interim
financial information has been prepared in accordance with
International Accounting Standard 34, "Interim Financial Reporting"
as adopted by the United Kingdom, and that the interim management
report herein includes a true and fair review of the information
required by DTR 4.2.7 and DTR 4.2.8, namely:
á an indication of important events that have occurred during
the first six months and their impact on the condensed consolidated
interim financial information, and a description of the principal
risks and uncertainties for the remaining six months of the
financial year; and
á material related party transactions in the first six months
and any material changes in the related party transactions
described in the last annual report.
á A true and fair view of the assets, liabilities, financial
position and profit or loss of the undertakings included in the
consolidation.
Miles Ingrey-Counter
Company Secretary
23 May 2023
FORWARD-LOOKING STATEMENTS
Certain statements in this half year report are forward --
looking. Although the Group believes that the expectations
reflected in these forward -- looking statements are reasonable, we
can give no assurance that these expectations will prove to have
been correct. Because these statements involve risks and
uncertainties, actual results may differ materially from those
expressed or implied by these forward -- looking statements.
We undertake no obligation to update any forward -- looking
statements whether as a result of new information, future events or
otherwise.
COMPANY WEBSITE
The half year report is available on the Company's website at
https://www.avon-protection-plc.com/ . The maintenance and
integrity of the website is the responsibility of the Directors.
Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
INDEPENT REVIEW REPORT TO AVON PROTECTION PLC
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
26-week period ended 01 April 2023 which comprises the Consolidated
Statement of Comprehensive Income, Consolidated Balance Sheet,
Consolidated Cash Flow Statement, Consolidated Statement of Changes
in Equity and the related explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the 26-week period ended 01
April 2023 is not prepared, in all material respects, in accordance
with IAS 34 Interim Financial Reporting as adopted for use in the
UK and the Disclosure Guidance and Transparency Rules ("the DTR")
of the UK's Financial Conduct Authority ("the UK FCA").
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410 Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity ("ISRE (UK) 2410") issued for use in the UK. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. We
read the other information contained in the half-yearly financial
report and consider whether it contains any apparent misstatements
or material inconsistencies with the information in the condensed
set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention that causes us to believe that the directors have
inappropriately adopted the going concern basis of accounting, or
that the directors have identified material uncertainties relating
to going concern that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410. However, future events or
conditions may cause the group to cease to continue as a going
concern, and the above conclusions are not a guarantee that the
group will continue in operation.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with UK-adopted international
accounting standards.
The directors are responsible for preparing the condensed set of
financial statements included in the half-yearly financial report
in accordance with IAS 34 as adopted for use in the UK.
In preparing the condensed set of financial statements, the
directors are responsible for assessing the group's ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
group or to cease operations, or have no realistic alternative but
to do so.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review. Our conclusion, including our
conclusions relating to going concern, are based on procedures that
are less extensive than audit procedures, as described in the Basis
for conclusion section of this report.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the company in accordance with the
terms of our engagement to assist the company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the company for our
review work, for this report, or for the conclusions we have
reached.
Andrew Campbell-Orde
for and on behalf of KPMG LLP
Chartered Accountants
66 Queen Square
Bristol
BS1 4BE
23 May 2023
Consolidated Statement of Comprehensive Income for the 26 weeks
ended 01 April 2023
26 weeks to 01 April 26 weeks to 02 April
2023 2022
(restated) (1)
Adjusted Adjustments Total Adjusted Adjustments Total
$m $m $m $m $m $m
Note (Note 2.1) (Note 2.1)
------------------------------------------------- -------- ----------- ------ -------- ----------- ------
Continuing operations
Revenue 2.2 116.2 - 116.2 121.9 - 121.9
Cost of sales (77.4) (0.4) (77.8) (83.6) - (83.6)
---------------------------------- -------------- -------- ----------- ------ -------- ----------- ------
Gross profit 38.8 (0.4) 38.4 38.3 - 38.3
Selling and distribution
costs (10.9) - (10.9) (12.8) - (12.8)
Research and development
costs (4.8) - (4.8) (4.0) (1.6) (5.6)
General and administrative
expenses (18.9) (5.4) (24.3) (22.7) (7.9) (30.6)
---------------------------------- -------------- -------- ----------- ------ -------- ----------- ------
Operating (loss)/profit 4.2 (5.8) (1.6) (1.2) (9.5) (10.7)
Net finance costs 4.3 (3.3) (0.4) (3.7) (1.6) (1.3) (2.9)
-------------- -------- ----------- ------
(Loss)/profit before taxation 0.9 (6.2) (5.3) (2.8) (10.8) (13.6)
---------------------------------- -------------- -------- ----------- ------ -------- ----------- ------
Taxation 2.5 (0.2) 1.3 1.1 0.6 2.3 2.9
---------------------------------- -------------- -------- ----------- ------ -------- ----------- ------
(Loss)/profit for the period
from continuing operations 0.7 (4.9) (4.2) (2.2) (8.5) (10.7)
Discontinued operations
Profit/(loss) from discontinued
operations 2.3 - 0.8 0.8 - (1.2) (1.2)
---------------------------------- -------------- -------- ----------- ------ -------- ----------- ------
(Loss)/profit for the
period 0.7 (4.1) (3.4) (2.2) (9.7) (11.9)
---------------------------------- -------------- -------- ----------- ------ -------- ----------- ------
(1) The comparatives for the 26 weeks to 02 April 2022 have been
restated to reflect reclassification of research and development
costs as disclosed in note 5.5.
Consolidated Statement of Comprehensive Income for the 26 weeks
ended 01 April 2023 (Continued)
Note 26 weeks to 26 weeks to
01 April 2023$m 02 April
2022
$m
Loss for the period (3.4) (11.9)
Other comprehensive income/(expense)
Items that are not subsequently reclassified to the income statement
Remeasurement (loss)/gain recognised on retirement benefit scheme 5.2 (8.3) 36.4
Deferred tax relating to retirement benefit scheme 2.1 (9.3)
Items that may be subsequently reclassified to the income statement
Cash flow hedges (0.1) -
Net exchange differences offset in reserves 0.3 0.4
--------------------------------------------------------------------- ----- ------------------ ------------
Other comprehensive (expense)/ income for the period (6.0) 15.6
Total comprehensive (expense)/income for the period (9.4) 3.7
--------------------------------------------------------------------- ----- ------------------ ------------
Earnings per share (cents)
Basic (11.4c) (38.8c)
Diluted (11.4c) (38.8c)
Earnings per share from continuing operations (cents)
Basic (14.0c) (34.9c)
Diluted (14.0c) (34.9c)
--------------------------------------------------------------------- ----- ------------------ ------------
Consolidated Balance Sheet
Note As at As at
01 April 01 Oct
2023 2022
$m $m
Assets
Non-current assets
Intangible assets 3.1 168.1 171.0
Property, plant and equipment 3.2 37.1 39.9
Finance leases 3.3 2.5 -
Deferred tax assets 29.9 26.7
Derivative financial instruments 0.2 0.3
--------------------------------------------- ----- ----------- --------
237.8 237.9
Current assets
Inventories 82.3 65.6
Trade and other receivables 34.8 30.6
Derivative financial instruments 0.2 0.2
Current tax receivables 1.3 4.2
Cash and cash equivalents 14.9 9.5
--------------------------------------------- ----- ----------- --------
133.5 110.1
Liabilities
Current liabilities
Borrowings 4.1 4.3 4.1
Trade and other payables 40.3 42.3
Provisions for liabilities and charges 5.1 0.8 0.7
45.4 47.1
Net current assets 88.1 63.0
--------------------------------------------- ----- ----------- --------
Non-current liabilities
Borrowings 4.1 105.6 73.4
Deferred tax liabilities 5.8 5.8
Retirement benefit obligations 5.2 16.5 6.3
Provisions for liabilities and charges 5.1 5.2 4.9
--------------------------------------------- ----- ----------- --------
133.1 90.4
Net assets 192.8 210.5
--------------------------------------------- ----- ----------- --------
Shareholders' equity
Ordinary shares 4.4 50.3 50.3
Share premium account 4.4 54.3 54.3
Other reserves (13.9) (14.2)
Cash flow hedging reserve 0.3 0.4
Retained earnings 10 1.8 119.7
--------------------------------------------- ----- ----------- --------
Total equity 192.8 210.5
--------------------------------------------- ----- ----------- --------
Consolidated Cash Flow Statement
26 weeks to 26 weeks to
01 April 02 April
2023 2022
Note $m $m
------------------------------------------------------------ ----- -------------- --------------
Cash flow from operating activities
Cash flow from continuing operations 5.3 (12.6) 4.4
Cash flow used in discontinued operations 5.3 (0.4) (0.6)
------------------------------------------------------------ ----- -------------- --------------
Cash flow from operations (13.0) 3.8
Retirement benefit deficit recovery contributions 5.2 - (2.6)
Tax receipts 3.9 0.6
------------------------------------------------------------ -----
Net cash flow (used in)/from operating activities (9.1) 1.8
------------------------------------------------------------ ----- -------------- --------------
Cash flow used in investing activities
Purchase of property, plant and equipment 3.2 (2.1) (2.9)
Capitalised development costs and computer software 3.1 (2.8) (2.9)
Interest income 4.3 0.2 -
Acquisition of business - (3.2)
Net cash used in investing activities (4.7) (9.0)
------------------------------------------------------------ ----- -------------- --------------
Cash flow used in financing activities
Proceeds from loan drawdowns 4.2 42.0 33.9
Loan repayments 4.2 (9.0) (5.6)
Finance costs paid in respect of bank loans and overdrafts 4.3 (2.7) (0.8)
Finance costs paid in respect of leases 4.3 (0.5) (0.5)
Repayment of lease liability (1.5) (2.1)
Dividends paid to shareholders 4.5 (9.1) (9.1)
Purchase of own shares - Share buyback programme 4.4 - (10.1)
Net cash from financing activities 19.2 5.7
------------------------------------------------------------ ----- -------------- --------------
Net increase/(decrease) in cash and cash equivalents 5.4 (1.5)
Cash and cash equivalents at beginning of the period 9.5 14.1
Cash and cash equivalents at end of the period 14.9 12.6
------------------------------------------------------------ ----- -------------- --------------
Consolidated Statement of Changes in Equity
Note Share Share premium Hedging reserve Other reserves Retained Total equity
capital earnings
$m $m $m $m $m $m
---------------- ----- --------- -------------- ---------------- --------------- ---------------- -------------
At 02 October
2021 50.3 54.3 - (15.0) 115.8 205.4
---------------- ----- --------- -------------- ---------------- --------------- ---------------- -------------
Loss for the
period - - - - (11.9) (11.9)
Net exchange
differences
offset in
reserves - - - 0.4 - 0.4
Actuarial loss
on retirement
benefit scheme - - - - 36.4 36.4
Deferred tax
relating to
retirement
benefit scheme - - - - (9.3) (9.3)
---------------- ----- --------- -------------- ---------------- --------------- ---------------- -------------
Total
comprehensive
income for the
period - - - 0.4 15.2 15.6
---------------- ----- --------- -------------- ---------------- --------------- ---------------- -------------
Dividends paid 4.5 - - - - (9.1) (9.1)
Own shares
acquired 4.4 - - - - (10.7) (10.7)
Fair value of
share-based
payments - - - - 0.5 0.5
---------------- ----- --------- -------------- ---------------- --------------- ---------------- -------------
At 02 April
2022 50.3 54.3 - (14.6) 111.7 201.7
---------------- ----- --------- -------------- ---------------- --------------- ---------------- -------------
Profit for the
period - - - - 4.3 4.3
Net exchange
differences
offset in
reserves - - - 0.4 - 0.4
Current tax
relating to
other
temporary
differences - - - - (0.1) (0.1)
Actuarial gain
on retirement
benefit scheme - - - - 13.7 13.7
Deferred tax
relating to
retirement
benefit scheme - - - - (0.3) (0.3)
Deferred tax
relating to
change in tax
rates - - - - (3.4) (3.4)
Interest rate
swaps - cash
flow hedge - - 0.5 - - 0.5
Current tax on
interest rate
swaps - - (0.1) - - (0.1)
---------------- ----- --------- -------------- ---------------- --------------- ---------------- -------------
Total
comprehensive
income for the
period - - 0.4 0.4 14.2 15.0
---------------- ----- --------- -------------- ---------------- --------------- ---------------- -------------
Dividends paid 4.5 - - - - (4.3) (4.3)
Own shares
acquired - - - - (1.7) (1.7)
Fair value of
share-based
payments - - - - 0.5 0.5
Deferred tax
relating to
employee share
schemes - - - - (0.7) (0.7)
At 01 October
2022 50.3 54.3 0.4 (14.2) 119.7 210.5
Loss for the
period - - - - (3.4) (3.4)
Net exchange
differences
offset in
reserves - - - 0.3 - 0.3
Actuarial loss
on retirement
benefit scheme - - - - (8.3) (8.3)
Deferred tax
relating to
retirement
benefit scheme - - - - 2.1 2.1
Interest rate
swaps - cash
flow hedge - - (0.1) - - (0.1)
---------------- ----- --------- -------------- ---------------- --------------- ---------------- -------------
Total
comprehensive
income for the
period - - (0.1) 0.3 (9.6) (9.4)
---------------- ----- --------- -------------- ---------------- --------------- ---------------- -------------
Dividends paid 4.5 - - - - (9.1) (9.1)
Fair value of
share-based
payments - - - - 0.8 0.8
---------------- ----- --------- -------------- ---------------- --------------- ---------------- -------------
At 01 April
2023 50.3 54.3 0.3 (13.9) 101.8 192.8
---------------- ----- --------- -------------- ---------------- --------------- ---------------- -------------
Other reserves consist of the capital redemption reserve of
$0.6m (02 April 2022: $0.6m, 01 October 2022: $0.6m) and the
translation reserve of ($14.5m) (02 April 2022: ($15.2m), 01
October 2022: ($14.8m)).
NOTES TO THE FINANCIAL STATEMENTS
Section 1: General Information and Basis of Preparation
The Company is a public limited Company incorporated in England
and Wales and domiciled in England with its ordinary shares being
traded on the London Stock Exchange. The address of its registered
office is Hampton Park West, Semington Road, Melksham, Wiltshire,
SN12 6NB.
This unaudited condensed consolidated interim financial
information was approved for issue on 23 May 2023.
The financial period presents the 26 weeks ended 1 April 2023
(prior financial period 26 weeks ended 2 April 2022, prior
financial year 52 weeks ended 1 October 2022).
The financial information set out in this document does not
constitute the Group's statutory accounts for the period or the
full year. Statutory accounts for the previous financial year were
approved by the Board of Directors on 21 November 2022 and
delivered to the Registrar of Companies.
The report of the auditors on those accounts was unqualified,
did not contain an emphasis of matter paragraph and did not contain
any statement under Section 498 of the Companies Act 2006.
This condensed consolidated interim financial information for
the 26 weeks ended 1 April 2023 has been prepared in accordance
with the Disclosure and Transparency Rules of the Financial Conduct
Authority and with IAS 34, 'Interim financial reporting' as adopted
by the United Kingdom. These interim financial results should be
read in conjunction with the annual financial statements for the
year ended 1 October 2022, which have been prepared in accordance
with UK-adopted International accounting standards.
The financial information presented in this Interim Report has
been prepared in accordance with the accounting policies expected
to be used in preparing the 2023 Annual Report and Accounts which
do not differ significantly from those used in the preparation of
the 2022 Annual Report and Accounts.
The Directors have prepared a going concern assessment covering
the 52 week period from the date of approval of these interim
financial statements. The assessment indicates that the Group will
have sufficient funds to meet its liabilities as they fall due for
that period.
As part of their assessment, the Directors considered a base
case and a severe downside scenario involving a 32% decline in
bank-determined adjusted EBITDA against the base case. Even in this
severe downside scenario, the assessment indicates that the Group
will have sufficient funds to meet its liabilities as they fall
due, and will continue to comply with its loan covenants,
throughout the forecast period. The Group has committed RCF
facilities of $200 million and related loan covenants include a
limit of 3.0 times for the ratio of net debt, excluding lease
liabilities, to bank-determined adjusted EBITDA (leverage). $142
million of the facility matures on 8 September 2025. The remaining
$58 million matures on 8 September 2024, subject to a one-year
extension option to 8 September 2025.
On this basis, the Directors are confident that the Group will
have sufficient funds to continue to meet its liabilities as they
fall due for at least 12 months from the approval of these interim
financial statements. Accordingly, the Group continues to adopt the
going concern basis in preparing its interim financial
statements.
Section 2: Results for the Period
2.1 Adjusted performance measures
The Directors assess the operating performance of the Group
based on adjusted measures of EBITDA, operating profit, finance
costs, taxation and earnings per share (note 2.4), as well as other
measures not defined under IFRS including orders received, closing
order book, EBITDA margin, ROIC and net debt excluding lease
liabilities (note 4.2). These measures are collectively described
as Adjusted Performance Measures (APMs).
The Directors believe that the APMs provide a useful comparison
of business trends and allow investors to understand the underlying
performance of the Group. The APMs exclude exceptional items
considered unrelated to the underlying trading performance of the
Group and discontinued operations. APMs also include constant
currency equivalent metrics. The term adjusted is not defined under
IFRS and may not be comparable with similarly titled measures used
by other companies.
Adjustments to operating profit
26 weeks to 26 weeks to
01 April 02 April
2023 2022
$m $m
-------------------------------------- ------------ ------------
Operating loss (1.6) (10.7)
-------------------------------------- ------------ ------------
Amortisation of acquired intangibles 3.1 3.5
Restructuring costs 2.3 1.4
Transaction costs 0.4 0.8
Impairment of non-current assets - 3.8
Adjusted operating profit/(loss) 4.2 (1.2)
-------------------------------------- ------------ ------------
Depreciation 3.9 4.7
Other amortisation charges 3.1 2.7
-------------------------------------- ------------ ------------
Adjusted EBITDA 11.2 6.2
-------------------------------------- ------------ ------------
Amortisation charges for acquired intangible assets of $3.1
million (HY22: $3.5 million) are excluded from adjusted measures as
they do not change each period based on underlying business trading
and performance.
Restructuring costs relating to the closure of Armour and the
overhead reduction programme were $2.3 million (HY22: $1.4
million). These costs include a $0.5m right of use asset impairment
relating to the closure of one of our U.S. offices (HY22: $0.4
million). These costs are considered exceptional as they relate to
a specific programme which does not form part of the underlying
business trading and performance.
Transaction costs of $0.4 million (HY22: $0.8 million) relate to
the planned sale of the armour related assets later in FY23. These
costs are considered exceptional as they are specific to the wind
down of the Armour business and do not form part of the underlying
business trading and performance.
In the prior year, impairment reviews for the Group's
non-current assets resulted in $3.8 million exceptional impairment
losses as the carrying value of certain cash-generating units
exceeded estimated recoverable amounts. These impairment losses
were significant items resulting from changes in assumptions for
future recoverable amounts. As such they were considered unrelated
to 2022 trading performance. No indications for further impairments
were identified in the current period.
26 weeks to 26 weeks to
Adjustments to finance costs 01 April 2023 02 April 2022
$m $m
---------------------------------------------------------- --------------- ---------------
Net finance costs (3.7) (2.9)
---------------------------------------------------------- --------------- ---------------
U.K. defined benefit pension scheme net interest expense 0.4 0.8
Contingent consideration unwind discount - 0.5
---------------------------------------------------------- --------------- ---------------
Adjusted net finance costs (3.3) (1.6)
---------------------------------------------------------- --------------- ---------------
$0.4 million (HY22: $0.8 million) net interest expense on the
U.K. defined benefit pension scheme liability is treated as
exceptional given the scheme relates to employees employed prior to
31 January 2003 and was closed to future accrual of benefits on 1
October 2009 (note 5.2).
In the prior year, $0.5 million related to unwind of discounting
on contingent consideration from the 3M ballistic acquisition.
Adjustments to taxation
Adjustments to taxation represent the tax effects of the
adjustments to operating profit and finance
costs. Adjusting items do not have significantly different tax
rates, with the overall effective rate of 21%
(HY22: 21%) approximating statutory rates applicable in the U.S.
and U.K.
Constant currency reporting
Constant currency measures remove the impact of changes in
exchange rates. Constant currency measures are calculated by
translating the prior period at HY23 exchange rates.
The Armour business transacts entirely in USD meaning there is
no currency impact for this operating segment.
26 weeks 26 weeks Change
Group to to (constant
01 April 02 April currency)
2023 2022
----------------------------------- ---------- ---------- ------------
Orders received $125.6m $112.2m 11.9%
Closing order book $160.7m $133.8m 20.1%
Revenue $116.2m $120.9m (3.9%)
Adjusted EBITDA $11.2m $8.6m 30.2%
Adjusted operating profit $4.2m $1.5m 180.0%
Adjusted profit before tax $0.9m $0.0m
Adjusted basic earnings per
share 2.4c 2.0c 15.3%
----------------------------------- ---------- ---------- ------------
Respiratory and Head Protection
----------------------------------- ---------- ---------- ------------
Orders received $125.4m $111.9m 12.1%
Closing order book $144.7m $109.4m 32.4%
Revenue $101.6m $118.4m (14.2%)
Adjusted EBITDA $15.9m $14.9m 6.7%
Adjusted operating profit $8.9m $7.8m 14.1%
Adjusted profit before tax $5.7m $6.4m (10.9%)
Adjusted basic earnings per
share 15.3c 18.3c (16.9%)
----------------------------------- ---------- ---------- ------------
Return on invested capital (ROIC)
26 weeks to 26 weeks to
01 April 2023 02 April 2022
$m $m
----------------------------------------- ---------------- ---------------
Net assets 192.8 201.7
Net debt 71.8 56.6
Lease liabilities 23.1 26.7
Retirement benefit obligations 16.5 28.7
Derivatives (0.4) -
Net tax (25.4) (34.7)
----------------------------------------- ---------------- ---------------
Total invested capital 278.4 279.0
----------------------------------------- ---------------- ---------------
Average invested capital 278.7 300.5
Adjusted operating profit (preceding 12
months) 15.6 8.3
ROIC 5.6% 2.8%
2.2 Operating segments
The Group Executive team is responsible for allocating resources
and assessing performance of its operating segments. Operating
segments are therefore reported in a manner consistent with the
internal reporting provided to the Group Executive team.
The Group has two different operating and reportable segments,
these being the core Respiratory and Head Protection business and
the Armour business which is in the process of being wound-down.
The Group plans to split Respiratory and Head Protection into
separate segments in the second half of the financial year in order
to enable more granular analysis.
26 weeks to 01 April 2023
Armour Respiratory Adjustments Total
& Head & discontinued
Protection
--------------------------------------
( note 2.1
& 2.3)
--------------------------------------
$m $m $m $m
-------------------------------------- ---------------- ------
Revenue 14.6 101.6 - 116.2
-------------------------------------- ------- ------------ ---------------- ------
Adjusted EBITDA (4.7) 15.9 (2.0) 9.2
-------------------------------------- ------- ------------ ---------------- ------
Depreciation - (3.9) - (3.9)
Other amortisation charges - (3.1) - (3.1)
Amortisation of acquired intangibles - - (3.1) (3.1)
Other adjusting items (note 2.1) - - (0.7) (0.7)
-------------------------------------- ------- ------------ ---------------- ------
Operating profit/(loss) (4.7) 8.9 (5.8) (1.6)
-------------------------------------- ------- ------------ ---------------- ------
Net finance costs (0.1) (3.2) (0.4) (3.7)
-------------------------------------- ------- ------------
Profit/(loss) before taxation (4.8) 5.7 (6.2) (5.3)
-------------------------------------- ------- ------------ ---------------- ------
Taxation 0.9 (1.1) 1.3 1.1
-------------------------------------- ------- ------------ ---------------- ------
Profit/(loss) for the period from
continuing operations (3.9) 4.6 (4.9) (4.2)
---------------- ------
Profit from discontinued operations - - 0.8 0.8
Profit/(loss) for the period (3.9) 4.6 (4.1) (3.4)
-------------------------------------- ------- ------------ ---------------- ------
Total assets 15.1 177.7 - 192.8
-------------------------------------- ------- ------------ ---------------- ------
Basic earnings per share (cents) (12.9c) 15.3c (13.8c) (11.4c)
Diluted earnings per share (cents) (12.9c) 15.3c (13.8c) (11.4c)
------------------------------------ -------- ------ -------- --------
26 weeks to 02 April 2022
Armour Respiratory Adjustments Total
& Head & discontinued
Protection
--------------------------------------
(Note 2.1
& 2.3)
--------------------------------------
$m $m $m $m
-------------------------------------- ---------------- --------
Revenue 2.5 119.4 - 121.9
-------------------------------------- -------- ------------ ---------------- --------
Adjusted EBITDA (6.3) 12.5 - 6.2
-------------------------------------- -------- ------------ ---------------- --------
Depreciation - (4.7) - (4.7)
Other amortisation charges - (2.7) - (2.7)
Amortisation of acquired intangibles - - (3.5) (3.5)
Other adjusting items (note 2.1) - - (6.0) (6.0)
-------------------------------------- -------- ------------ ---------------- --------
Operating profit/(loss) (6.3) 5.1 (9.5) (10.7)
-------------------------------------- -------- ------------ ---------------- --------
Finance costs (0.1) (1.5) (1.3) (2.9)
-------------------------------------- -------- ------------ ---------------- --------
Profit/(loss) before taxation (6.4) 3.6 (10.8) (13.6)
-------------------------------------- -------- ------------ ---------------- --------
Taxation 1.4 (0.8) 2.3 2.9
---------------- --------
Profit/(loss) for the period from
continuing operations (5.0) 2.8 (8.5) (10.7)
Loss from discontinued operations - - (1.2) (1.2)
-------------------------------------- -------- ------------ ---------------- --------
Profit/(loss) for the period (5.0) 2.8 (9.7) (11.9)
-------------------------------------- -------- ------------ ---------------- --------
Total assets 18.2 361.7 - 379.9
-------------------------------------- -------- ------------ ---------------- --------
Basic earnings per share (cents) (16.3c) 9.1c (31.6c) (38.8c)
Diluted earnings per share (cents) (16.3c) 9.1c (31.6c) (38.8c)
-------------------------------------- -------- ------------ ---------------- --------
Revenue analysed by line of business
01 April 2023 02 April 2022
Head Head
Respiratory Protection Armour Total Respiratory $m Protection Armour Total
$m $m $m $m $m $m $m
U.S. DOD 34.1 8.3 14.6 57.0 24.0 19.5 2.5 46.0
Commercial
Americas 14.6 12.1 - 26.7 17.7 13.0 - 30.7
U.K. &
International 19.8 12.7 - 32.5 41.1 4.1 - 45.2
Total 68.5 33.1 14.6 116.2 82.8 36.6 2.5 121.9
--------------- -------------- ------------- --------- ------ ---------------- -------------- --------- ------
Revenue analysed by geographic region by origin
26 weeks to 26 weeks to
01 April 02 April
2023 2022
$m $m
------- ------------ ------------
U.K. 16.5 37.4
U.S. 99.7 84.5
------- ------------ ------------
Total 116.2 121.9
------- ------------ ------------
2.3 Discontinued Operations
In September 2020 the Group divested the entire milkrite |
InterPuls business. As part of the sale and purchase agreement, the
Group entered into a Manufacturing Service Agreement whilst
arrangements were made to relocate manufacturing equipment from a
previously shared U.K. facility. As the activities under this
agreement is not part of the continuing operations of the Group,
the revenue and costs associated with this agreement have been
classified as discontinued operations.
26 weeks to 26 weeks to
01 April 02 April
2023 2022
$m $m
-----------
Revenue 2.6 1.7
Cost of Sales (1.6) (3.2)
------------------------------------------- ----------- -----------
Gross Profit/(loss) 1.0 (1.5)
General and administrative expenses - -
------------------------------------------- ----------- -----------
Operating profit/(loss) 1.0 (1.5)
Finance costs - -
------------------------------------------- ----------- -----------
Profit/(loss) before taxation 1.0 (1.5)
Taxation (0.2) 0.3
----------- -----------
Profit/(loss) from discontinued operations 0.8 (1.2)
------------------------------------------- ----------- -----------
Basic earnings per share (cents) 2.7c (3.9c)
Diluted earnings per share (cents) 2.7c (3.9c)
------------------------------------------- ----------- -----------
2.4 Earnings Per Share
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares in issue during the period, excluding
those held as treasury shares (note 4.4). The company has dilutive
potential ordinary shares in respect of the Performance Share Plan.
Reconciliations of the earnings and weighted average number of
shares used in calculations of earnings per share are set out
below:
Weighted average number of shares
26 weeks to 26 weeks to
01 April 02 April
2023 2022
------------------------------------------------------------------------------------------ ------------ ------------
Weighted average number of ordinary shares in issue used in basic calculations
(thousands) 29,996 30,644
Potentially dilutive shares (weighted average) (thousands) 331 284
------------------------------------------------------------------------------------------ ------------ ------------
Fully diluted number of ordinary shares (weighted average) (thousands) 30,327 30,928
------------------------------------------------------------------------------------------ ------------ ------------
2.5 Taxation
26 weeks to 26 weeks to
01 April 02 April
2023 2022
$m $m
----------------------------------------------------------------------------- ----------- -----------
Loss before taxation from continuing operations (5.3) (13.6)
----------------------------------------------------------------------------- ----------- -----------
Tax charge/(credit) at the average standard U.K. rate of 22.0% (HY22: 19.0%) (1.2) (2.6)
Differences in overseas tax rates (0.1) (0.2)
Permanent differences 0.2 (0.1)
----------------------------------------------------------------------------- ----------- -----------
Tax credit (1.1) (2.9)
----------------------------------------------------------------------------- ----------- -----------
The effective tax rate for the period is 21% (HY22: 21%).
Section 3: Non-current assets
3 .1 Intangible assets
Acquired Development Computer
Goodwill intangibles expenditure software Total
Net book amounts $m $m $m $m $m
---------------------- ---------------- ------------------- ------------------- --------------- --------
At 01 October
2022 88.7 52.1 21.1 9.1 171.0
Additions - - 2. 2 0.6 2. 8
---------------------- ---------------- ------------------- ------------------- --------------- --------
Amortisation - (3.1) (2.5) (0.6) (6.2)
---------------------- ---------------- ------------------- ------------------- --------------- --------
Exchange differences - - 0.5 - 0.5
---------------------- ---------------- ------------------- ------------------- --------------- --------
At 01 April 2023 88.7 49.0 21.3 9.1 168.1
---------------------- ---------------- ------------------- ------------------- --------------- --------
The carrying amounts of non-financial assets have been reviewed
at the interim reporting date to determine whether there is any
indication of impairment. No indications of impairment were
identified in the period.
3.2 Property, plant and equipment
Net book amounts Freeholds Right of Plant and Leasehold Total
$m use assets machinery improvements $m
$m $m $m
---------------------- ---------- ------------ ----------- -------------- ------
At 01 October
2022 1.7 12.6 22.6 3.0 39.9
---------------------- ---------- ------------ ----------- -------------- ------
Additions - - 2.1 - 2.1
---------------------- ---------- ------------ ----------- -------------- ------
Transfer to finance
leases - (1.5) - - (1.5)
---------------------- ---------- ------------ ----------- -------------- ------
Impairments - (0.5) (0.2) - (0.7)
Depreciation (0.1) (1.3) (2.3) (0.2) (3.9)
---------------------- ---------- ------------ ----------- -------------- ------
Exchange differences - 0.5 0.8 (0.1) 1.2
---------------------- ---------- ------------ ----------- -------------- ------
At 01 April 2023 1.6 9.8 23.0 2.7 37.1
---------------------- ---------- ------------ ----------- -------------- ------
The Group sub-leases legacy commercial premises where they are
longer required for operations, resulting in lease assets being
held on the balance sheet.
Following the sub-let of an additional property in the period,
these assets have been transferred from right of use assets to a
specific finance lease balance sheet classification as they are now
considered collectively material.
3.3 Finance leases
Finance
leases
$m
--------------------------------------------- --------
At 01 October -
2022
--------------------------------------------- --------
Transfer from property, plant and equipment 1.5
Additions 1. 1
Payments received (0.1)
At 01 April
2023 2.5
------------------------------------------------- --------
Section 4: Funding
4.1 Borrowings
As at As at
01 April 01 Oct
2023 2022
$m $m
Current
Lease liabilities 4.3 4.1
Non-Current
Bank Loans 86.7 53.7
Lease liabilities 18.9 19.7
----------------------- ---------- -------
105.6 73.4
----------------------- ---------- -------
Total Group borrowings 109.9 77.5
----------------------- ---------- -------
The Group has the following committed facilities:
As at As at
01 April 01 Oct
2023 2022
$m $m
--------------------------------------------- ---------- -------
Total undrawn committed borrowing facilities 118.3 151.3
Bank loans and overdrafts utilised 86.7 53.7
Total Group committed facilities 205.0 205.0
--------------------------------------------- ---------- -------
The Group has a revolving credit facility (RCF) with a total
commitment of $200 million across six lenders with an accordion
option of an additional $50 million. $142 million of the facility
matures on 8 September 2025. The remaining $58 million matures on 8
September 2024, subject to a one-year extension option to 8
September 2025. In addition to the RCF, the Group's U.S. operations
have access to a $5.0 million overdraft facility.
The RCF is subject to financial covenants measured on a
bi-annual basis. These include a limit of 3.0 times for the ratio
of net debt, excluding lease liabilities, to bank-defined adjusted
EBITDA (leverage). The Group was in compliance with all financial
covenants during the current and prior period.
The RCF is floating rate priced on the U.S. dollar secured
overnight financing rate (SOFR) plus a margin of 1.45-2.35%
depending on leverage. In 2022 the Group implemented a hedging
policy using interest rate swaps to fix a portion of SOFR floating
rate interest. The notional value of interest rate swaps at 1 April
2023 was $30.0 million (01 October 2022: $30.0 million), expiring
on 8 September 2025 in line with the RCF.
The Group has provided the lenders with a negative pledge in
respect of certain shares in Group companies.
4.2 Analysis of net debt
As at
01 Oct 2022 As at
$m Cash flow $m Non-cash movements $m Exchange movements $m 01 April 2023 $m
------------------- ------------- ------------- ---------------------- ---------------------- -------------------
Cash at bank and
in hand 9.5 5.4 - - 14.9
Bank loans (53.7) (33.0) - - (86.7)
------------------- ------------- ------------- ---------------------- ---------------------- -------------------
Net debt excluding
lease liabilities (44.2) (27.6) - - (71.8)
------------------- ------------- ------------- ---------------------- ---------------------- -------------------
Lease liabilities (23.8) 2.1 (1.0) (0.4) (23.1)
------------------- ------------- ------------- ---------------------- ---------------------- -------------------
Net debt (68.0) (25.5) (1.0) (0.4) (94.9)
------------------- ------------- ------------- ---------------------- ---------------------- -------------------
Cash flow relating to bank loans consisted of $42.0 million
proceeds from drawdowns, less $9.0 million repayments.
4.3 Net finance costs
26 weeks 26 weeks
to 01 April to 02 April
2023 2022
$m $m
------------------------------------------------- ------------ ------------
Interest payable on bank loans and overdrafts (2.7) (0.8)
Interest payable in respect of leases (0.5) (0.5)
Amortisation of finance fees (0.3) (0.3)
U.K. defined benefit pension scheme net interest
expense (0.4) (0.8)
Contingent Consideration unwind discount - (0.5)
Other finance income 0.2 -
Net finance costs (3.7) (2.9)
------------------------------------------------- ------------ ------------
4.4 Equity
Share Capital
No. of Ordinary Share No. of Ordinary Share
shares shares premium shares shares premium
as at as at as at as at as at as at
01 April 01 April 01 April 01 Oct 01 Oct 01 Oct
2023 2023 2023 2022 2022 2022
$m $m $m $m
--------------------- ----------- ---------- ---------- ----------- --------- ---------
Called up, allotted
and fully paid
ordinary shares
of GBP1 each
--------------------- ----------- ---------- ---------- ----------- --------- ---------
At the beginning
of the period 31,023,292 50.3 54.3 31,023,292 50.3 54.3
At the end of the
period 31,023,292 50.3 54.3 31,023,292 50.3 54.3
--------------------- ----------- ---------- ---------- ----------- --------- ---------
Ordinary shareholders are entitled to receive dividends and to
vote at meetings of the Company.
Own shares held - Share Buyback Programme
26 weeks to Period ended
01 April 01 Oct
2023 2022
No. of shares No. of shares
----------------------- -------------- --------------
Opening balance 765,098 -
Acquired in the period - 765,098
Closing balance 765,098 765,098
----------------------- -------------- --------------
In the 52 weeks ended 1 October 2022, the Group completed a
GBP9.25 million ($12.4 million) Share Buyback Programme, purchasing
765,098 ordinary shares. Dividends on these shares have been
waived. Purchased shares under the programme are held at cost as
treasury shares and deducted from shareholders' equity.
Own shares held - Long-Term Incentive Plan
26 weeks to Period ended
01 April 01 Oct
2023 2022
No. of shares No. of shares
-------------------------------- -------------- --------------
Opening balance 261,714 334,933
Acquired in the period - -
Disposed on exercise of options - (73,219)
-------------------------------- -------------- --------------
Closing balance 261,714 261,714
-------------------------------- -------------- --------------
These shares are held in trust in respect of awards made under
the Avon Protection Long-Term Incentive Plan. Dividends on the
shares have been waived. The market value of shares held in trust
at 02 April 2023 was $3.0 million (02 April 2022: $4.5 million).
The shares are held at cost as treasury shares and deducted from
shareholdersÕ equity.
In December 2021 73,219 shares vested under the Avon Protection
Long-Term Incentive Plan and were distributed to employees.
4.5 Dividends
On 27 January 2023, the shareholders approved a final dividend
of 30.6c per qualifying ordinary share in respect of the year ended
01 October 2022. This was paid on 10 March 2023 utilising $9.1
million of shareholders' funds.
The Board of Directors has declared an interim dividend of 14.3c
(2022: 14.3c) per qualifying ordinary share in respect of the year
ending 30 September 2023. This interim dividend will be paid in
sterling at the prevailing exchange rate prior to payment on 08
September 2023 to shareholders on the register at the close of
business on 11 August 2023. In accordance with accounting
standards, this dividend has not been provided for. It will be
recognised in shareholders' funds in the 52 weeks to 30 September
2023 and is expected to utilise $4.3 million (2022: $4.4 million)
of shareholders' funds.
Section 5: Other
5.1 Provisions for liabilities and charges
Warranty Property Obligations Total
provisions
$m $m $m
------------ --------------------- ------
Balance at 01 October 2022 2.3 3.3 5.6
--------------------------------- ------------ --------------------- ------
Provision created in the period 0.2 - 0.2
Payments in the period (0.1) - (0.1)
Foreign exchange movements - 0.3 0.3
Balance at 01 April 2023 2.4 3.6 6.0
--------------------------------- ------------ --------------------- ------
As at As at
01 April 01 Oct
2023 2022
Analysis of total provisions $m $m
Current 0.8 0.7
Non-current 5.2 4.9
------------------------------ ---------- --------
Total provisions 6.0 5.6
------------------------------ ---------- --------
Property obligations relate to leased premises of the Group
which are subject to dilapidation risks and are expected to be
utilised within the next ten years. Property provisions are subject
to uncertainty in respect of any final negotiated settlement of any
dilapidation claims with landlords.
5.2 Defined benefit pension scheme
As at As at
01 April 01 Oct
2023 2022
$m $m
---------------------- ---------- -------
Net pension liability 16.5 6.3
---------------------- ---------- -------
Defined benefit pension scheme
The Group operated a contributory defined benefit plan to
provide pension and death benefits for the employees of Avon
Protection plc and its Group undertakings in the U.K. employed
prior to 31 January 2003. The plan was closed to future accrual of
benefit on 1 October 2009 and has a weighted average maturity of
approximately 12 years. The assets of the plan are held in separate
trustee administered funds and are invested by professional
investment managers. The Trustee is Avon Rubber Pension Trust
Limited, the Directors of which are members of the plan. Three of
the Directors are appointed by the Company and two are elected by
the members. The defined benefit plan exposes the Group to
actuarial risks such as longevity risk, inflation risk and
investment risk.
The funding of the plan is based on regular actuarial
valuations. The most recent finalised actuarial valuation of the
plan was carried out at 31 March 2019 when the market value of the
plan's assets was GBP335.8 million. The fair value of those assets
represented 83% of the value of the benefits which had accrued to
members, after allowing for future increase in pensions.
During the period the Group made payments to the fund of $nil
(HY22: $2.6 million) in respect of scheme expenses and deficit
recovery plan payments. In the financial period ending 01 October
2022, the Group made a prepayment of $4.0m covering all
contributions due in FY23. In accordance with the deficit recovery
plan agreed following the 31 March 2019 actuarial valuation, the
Group will make payments of $4.3m in FY24 in respect of deficit
recovery plan payments and scheme expenses. These payments are
subject to review following the March 2022 actuarial valuation
which will be finalised in 2023.
The Directors have confirmed no additional liability is required
to be recognised as a consequence of minimum funding requirements.
The trustees have no rights to wind up the scheme or improve
benefits without Company consent.
An updated actuarial valuation for IAS 19 purposes was carried
out by an independent actuary at 01 April 2023 using the projected
unit method.
Movement in net defined benefit liability
Defined benefit Defined benefit Net defined
obligation asset benefit
liability
=================================== ------------------- ------------------- -------------------
01 April 01 Oct 01 April 01 Oct 01 April 01 Oct
2023 2022 2023 2022 2023 2022
$m $m $m $m $m $m
=================================== ========== ======= ========== ======= ========== =======
At 02 October/01 October (284.9) (534.7) 278.6 466.4 (6.3) (68.3)
----------------------------------- ---------- ------- ---------- ------- ---------- -------
Included in profit or
loss
----------------------------------- ---------- ------- ---------- ------- ---------- -------
Administrative expenses (0.5) (0.8) - - (0.5) (0.8)
----------------------------------- ---------- ------- ---------- ------- ---------- -------
Net interest cost (8.1) (10.3) 7.8 9.0 (0.3) (1.3)
----------------------------------- ---------- ------- ---------- ------- ---------- -------
(8.6) (11.1) 7.8 9.0 (0.8) (2.1)
----------------------------------- ---------- ------- ---------- ------- ---------- -------
Included in other comprehensive
income
----------------------------------- ---------- ------- ---------- ------- ---------- -------
Remeasurement gain:
----------------------------------- ---------- ------- ---------- ------- ---------- -------
Ð Actuarial gain/(loss)
arising from:
----------------------------------- ---------- ------- ---------- ------- ---------- -------
Ð Demographic assumptions 2.3 (0.2) - - 2.3 (0.2)
----------------------------------- ---------- ------- ---------- ------- ---------- -------
Ð Financial assumptions (8.1) 175.4 - - (8.1) 175.4
----------------------------------- ---------- ------- ---------- ------- ---------- -------
Ð Experience adjustment (5.2) (11.3) - - (5.2) (11.3)
----------------------------------- ---------- ------- ---------- ------- ---------- -------
Ð Return on plan assets
excluding interest income - - 2.7 (113.8) 2.7 (113.8)
----------------------------------- ---------- ------- ---------- ------- ---------- -------
(11.0) 163.9 2.7 (113.8) (8.3) 50.1
----------------------------------- ---------- ------- ---------- ------- ---------- -------
Other
----------------------------------- ---------- ------- ---------- ------- ---------- -------
Contributions by the employer - - - 8.5 - 8.5
----------------------------------- ---------- ------- ---------- ------- ---------- -------
Net benefits paid out 11.3 21.5 (11.3) (21.5) - -
----------------------------------- ---------- ------- ---------- ------- ---------- -------
FX gain/(loss) (34.6) 75.5 33.5 (70.0) (1.1) 5.5
----------------------------------- ---------- ------- ---------- ------- ---------- -------
At 01 April/01 October (327.8) (284.9) 311.3 278.6 (16.5) (6.3)
----------------------------------- ---------- ------- ---------- ------- ---------- -------
Actuarial assumptions
The main financial assumptions used by the independent qualified
actuaries to calculate the liabilities under IAS 19 are set out
below:
01 April 01 Oct
2023 2022
% p.a. % p.a.
====================================== ========= =======
Inflation (RPI) 3.25 3.60
-------------------------------------- --------- -------
Inflation (CPI) 2.55 2.80
-------------------------------------- --------- -------
Pension increases post August 2005 2.05 2.30
-------------------------------------- --------- -------
Pension increases pre August 2005 3.05 3.45
-------------------------------------- --------- -------
Discount rate for scheme liabilities 4.80 5.30
-------------------------------------- --------- -------
Plan assets
01 April 01 Oct
2023 2022
$m $m
=============================== ========= ======
Equities and other securities 83.9 105.6
------------------------------- --------- ------
Liability Driven Investment 94.6 54.4
------------------------------- --------- ------
Secured income fund 41.5 53.1
------------------------------- --------- ------
Infrastructure fund 64.7 55.2
------------------------------- --------- ------
Cash 26.6 10.3
------------------------------- --------- ------
Fair value of assets 311.3 278.6
------------------------------- --------- ------
Equity securities are valued using quoted prices in active
markets where available.
Liability Driven Investments (LDI) comprises an investment in a
level 2 pooled investment vehicle which combines a series of
variable interest -earning cash deposits combined with contracts to
hedge interest rate and inflation risk. The LDI is valued using a
Net Asset Value published on the Irish Stock Exchange.
Holdings in unquoted securities and infrastructure funds are
classified as level 3 within the fair value hierarchy. Holdings
unquoted securities are valued at fair value which is typically the
Net Asset Value provided by the fund administrator at the most
recent quarter end. Holdings in the infrastructure fund are valued
by an independent valuer using a model-based valuation such as a
discounted cash flow approach.
The significant assumptions used in the valuation are the
discount rate and the expected cash flow, both of which are subject
to estimation uncertainty. Changes in assumptions relating to these
variables could positively or negatively impact the reported fair
value of these instruments.
5.3 Cash flow from operations
26 weeks 26 weeks
to to
01 April 02 April
2023 2022
$m $m
------------------------------------------------------ ---------- ----------
Continuing operations
(Loss)/profit for the period (4.2) (10.7)
Adjustments for:
Taxation (1.1) (2.9)
Depreciation 3.9 4.7
Amortisation of intangible assets 6.2 6.2
Impairments 0.7 4.2
Defined benefit pension scheme cost 0.4 0.7
Finance costs 3.7 2.9
Fair value of share-based payments 0.8 0.5
Restructuring costs expensed (excluding impairments) 1.6 1.0
Transaction costs expensed 0.4 0.8
Increase in inventories (16.5) (10.9)
(Increase)/decrease in receivables (3.9) 10.6
Decrease in payables and provisions (3.0) (1.9)
------------------------------------------------------ ---------- ----------
Cash flow from continuing operations before
exceptional items (11.0) 5.2
------------------------------------------------------ ---------- ----------
Restructuring and transaction costs paid (1.6) (0.8)
Cash flow from continuing operations (12.6) 4.4
------------------------------------------------------ ---------- ----------
Discontinued operations
Profit/(loss) for the period 0.8 (1.2)
Adjustments for:
Taxation 0.2 (0.3)
(Increase)/decrease in inventories (0.2) 0.2
Increase in receivables (0.3) -
(Decrease)/increase in payables and provisions (0.9) 0.7
------------------------------------------------------ ---------- ----------
Cash flow from discontinued operations (0.4) (0.6)
------------------------------------------------------ ---------- ----------
Cash flow from operations (13.0) 3.8
------------------------------------------------------ ---------- ----------
5.4 Exchange rates
The following significant exchange rates applied during the
period.
Average Closing Average Closing Closing
rate rate rate rate rate
01 April 01 April 02 April 02 April 01 Oct
2023 2023 2022 2022 2022
----- --------- --------- --------- --------- --------
GBP 0.8380 0.8085 0.7438 0.7614 0.9058
----- --------- --------- --------- --------- --------
5.5 Restatements
The comparatives for the period to 02 April 2022 have been
restated to reflect the reclassification of research and
development costs as a separate line item below gross profit. This
change in accounting policy provides visibility of research and
development costs on the face of the consolidated statement of
comprehensive income when it was previously only reported in the
financial review. This presentation is consistent and comparable
with common market practice and therefore provides reliable and
more relevant information to the reader of the accounts.
Overall operating loss figures as reported in the previous
period remain unchanged as this is only a presentational
change.
A rec onciliation of previously reported figures for the period
to 02 April 2022 to restated figures is presented below:
Consolidated Statement of Comprehensive Income - for the 26 weeks ended
02 April 2022
Adjusted Adjustments Totals
Previously Reclass Restated Previously Reclass Restated Previously Reclass Restated
reported adjustment reported adjustment reported adjustment
Continuing $m $m $m $m $m $m $m $m $m
operations
---------------- ----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Revenue 121.9 - 121.9 - - - 121.9 - 121.9
Cost of sales (87.6) 4.0 (83.6) - - - (87.6) 4.0 (83.6)
---------------- ----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Gross profit 34.3 4.0 38.3 - - - 34.3 4.0 38.3
Selling and
distribution
costs (12.8) - (12.8) - - - (12.8) - (12.8)
Research and
development
costs - (4.0) (4.0) - (1.6) (1.6) - (5.6) (5.6)
General and
administrative
expenses (22.7) - (22.7) (9.5) 1.6 (7.9) (32.2) 1.6 (30.6)
---------------- ----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Operating loss (1.2) - (1.2) (9.5) - (9.5) (10.7) - (10.7)
5.6 Principal risks and uncertainties
The nature of the principal risks and uncertainties impacting
the Group are described on pages 62-69 of our 2022 Annual Report
and remain unchanged.
The principal risks include the delivery of strategic projects
and new product introduction, market threat to core business,
talent management, cybersecurity and information technology,
customer dependency, financial management, manufacturing risk,
compliance and legal matters and political and economic
instability.
5.7 Related party transactions
There were no related party transactions during the period or
outstanding at the end of the period (2022: nil) other than
internal transactions between Group companies, and compensation of
key management personnel which will be disclosed as required in the
Group's Annual Report for the 52 weeks ending 30 September
2023.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR FFFELEEIFFIV
(END) Dow Jones Newswires
May 23, 2023 02:00 ET (06:00 GMT)
Avon Protection (AQSE:AVON.GB)
過去 株価チャート
から 4 2024 まで 5 2024
Avon Protection (AQSE:AVON.GB)
過去 株価チャート
から 5 2023 まで 5 2024
