TIDMAVON
RNS Number : 0565U
Avon Protection PLC
21 November 2023
AVON PROTECTION PLC
("Avon Protection", "Avon" or the "Group")
PRELIMINARY RESULTS FOR THE 52 WEEKSED 30 SEPTEMBER 2023
EXCELLENT STRATEGIC PROGRESS, SETTING AVON UP FOR THE FUTURE
Jos Sclater, Chief Executive Officer, said:
"We made excellent strategic progress during 2023 and enter 2024
with a stronger, more stable business. We are now entering the
transform stage of our strategy with a focus on delivering improved
margins, cash flow and returns on capital for our shareholders.
Avon has an exciting future and is well positioned to become the
largest supplier of ballistic helmets to the U.S. Department of
Defense, complementing our existing position as the leading
provider of respiratory products to the DOD and other NATO
countries.
I want to thank all our employees for the tenacity they have
shown in overcoming a number of major challenges during 2023,
including successfully exiting our loss-making armour business and
ramping up production of the next generation IHPS helmet for the
U.S. DOD. It is this dedication that will enable Avon Protection to
deliver its strategy in the medium term, protecting more lives
through our innovative products."
30 September 1 October Change Change (constant
52 weeks ended: 2023 2022 currency)(4)
------------------------------ ------------- ---------- -------- -----------------
Continuing operations (1)
------------------------------ ------------- ---------- -------- -----------------
Orders received $258.7m $267.9m (3.4%) (2.9%)
------------------------------ ------------- ---------- -------- -----------------
Closing order book $135.8m $120.9m 12.3% 10.9%
------------------------------ ------------- ---------- -------- -----------------
Revenue $243.8m $263.5m (7.5%) (7.5%)
------------------------------ ------------- ---------- -------- -----------------
Adjusted(2) EBITDA $35.7m $38.8m (8.0%) (13.6%)
------------------------------ ------------- ---------- -------- -----------------
Adjusted(2) operating profit $21.2m $23.4m (9.4%) (18.5%)
------------------------------ ------------- ---------- -------- -----------------
Adjusted(2) profit before
tax $14.0m $19.7m (28.9%) (37.5%)
------------------------------ ------------- ---------- -------- -----------------
Adjusted(2) basic earnings
per share 40.3c 54.7c (26.3%) (35.2%)
------------------------------ ------------- ---------- -------- -----------------
Total dividend per share 29.6c 44.9c (34.1%)
------------------------------ ------------- ---------- -------- -----------------
Net debt excluding lease
liabilities $64.5m $44.2m 45.9%
------------------------------ ------------- ---------- -------- -----------------
Statutory results
------------------------------ ------------- ---------- -------- -----------------
Operating (loss)/profit from
continuing operations (3) $(12.6)m $11.0m
------------------------------ ------------- ---------- -------- -----------------
(Loss)/profit before tax
from continuing operations $(20.2)m $6.0m
------------------------------ ------------- ---------- -------- -----------------
(Loss)/profit for the period $(14.4)m $(7.6)m
------------------------------ ------------- ---------- -------- -----------------
Basic loss per share(2) (48.0c) (25.1c)
------------------------------ ------------- ---------- -------- -----------------
Net debt $85.4m $68.0m
------------------------------ ------------- ---------- -------- -----------------
Results in-line with expectations and order book to support
growth in 2024
-- Robust order intake of $258.7 million and closing order book of $135.8 million.
-- Revenue in line with expectations, with strong growth in Head
Protection following the commencement of deliveries of NG IHPS
helmets, partially offsetting expected weaker demand in Respiratory
Protection, resulting in year-on-year revenue decline of 7.5% at
constant currency.
-- Adjusted operating profit margin of 8.7% (FY22: 8.9%), with
lower revenue in the higher margin Respiratory Protection business
and manufacturing ramp-up costs in Head Protection, offset by
favourable Respiratory Protection product mix, lower freight costs
and lower central overheads.
-- Cash conversion of 7.0%, with a high receivables balance
driven by a large number of orders shipped in the final month of
the period, and inventory build in support of 2024 Head Protection
deliveries.
-- Net debt excluding lease liabilities of $64.5 million and
leverage of 1.9 times bank adjusted EBITDA (versus 2.6 times at the
half-year), reflecting improved profitability and the movement of
the Armour business into discontinued operations.
-- Return on invested capital of 8.7% (FY22: 9.0%), with the
reduction in operating profit partially offset by a lower capital
base following an impairment to goodwill.
Good strategic and operational progress
We have made good progress in implementing initiatives as part
of our STAR strategy:
-- Strengthen - Exited the Armour business on-time and to plan.
SBU leadership teams embedded and strategy cascaded throughout the
business. Continued strengthening of teams in key areas. Launch of
new mission, vision and values.
-- Transform - Focus is now on our transformation programme
which is expected to deliver mid-teens operating margins, and
improved return on capital and cash flow, through 5 key elements;
footprint optimisation, operational efficiency, commercial
optimisation, functional excellence and programme management
excellence.
-- Advance - Respiratory Protection focused on rebuilding the
sales pipeline, winning the NSPA contract for boots and gloves and
building a strong pipeline for rebreathers. Head Protection focused
on ensuring we have the capacity and capability to fulfil
demand.
-- Revolutionise - Success in securing a number of funded
research and development programmes including new filter
technology, shallow water rebreather and traumatic brain injury
mitigation.
Outlook and FY24 guidance
-- High-single-digit revenue growth for the Group:
-- Strong growth in Head Protection revenue, with growing
commercial helmet sales, full year of NG IHPS and H2 ramp in ACH
GEN II deliveries, supported by strong orders
-- Continued soft demand for respiratory products, with
opportunities for growth in rebreather revenue.
-- Revenue expected to be H2 weighted.
-- Solid operating margin progression - expected outturn close to 10%:
-- Strong recovery in Head Protection margin from operational
leverage and efficiency improvements.
-- Margin improvement from transformation expected to start from H2.
-- Dividend rebased as part of revised capital allocation policy
focused on margin progression, organic growth and debt
reduction.
-- Net debt position expected to reduce, with strong operating
cash flows and rebased dividend partially offset by investment in
transformation and increased pension contributions.
Notes:
(1) At 30 September 2023 Armour operations have fully closed.
Armour has therefore been classified as a discontinued operation,
including restatement of prior period comparatives.
(2) 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.
(3) Reported operating loss includes $6.3 million amortisation
of acquired intangibles, restructuring costs of $1.4 million,
impairment of non-current assets and goodwill of $24.6 million and
transition costs of $1.5 million. See adjusted performance measures
section for full breakdown of adjustments and comparatives.
(4) Constant currency measures are provided in the adjusted
performance measures section.
For further enquiries, please contact:
Avon Protection plc
Jos Sclater, Chief Executive
Officer
Rich Cashin, Chief Financial
Officer +44 1225 896 848
MHP +44 7817 458 804
Tim Rowntree avonprotection@mhpgroup.com
Ollie Hoare
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_fy_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.
Capital markets day
The company will be hosting a capital markets day in London on
8(th) February 2024. Further details will be provided in due
course.
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
LOTS DONE. LOTS TO DO.
2023 has been a transformative year for the Group. We have
undertaken significant changes that have reshaped the very core of
our business. This journey has seen us realign our structure into
two Strategic Business Units, a move designed to improve delivery,
focus and accountability. We launched our new STAR strategy to
realise our potential and deliver revenue growth, mid-teens
operating margins and improved cash flow. Furthermore, we have
defined a combined purpose, mission, vision and values that unite
our entire business under a shared ethos with a view to
accelerating strategy execution.
We have maintained high levels of energy through the continued
execution of our STAR strategy and we have made significant
progress in each of the key areas, which is a testament to the
dedication and determination of our team.
STRENGTHEN
In the period, we have wound-down and subsequently exited the
Armour business on-time and to plan, with the successful delivery
of all outstanding obligations. As well as giving us an immediate
financial benefit, this also enables us to fully focus on the
objectives and priorities within the continuing business, whilst
freeing up space to optimise helmet manufacturing within our Irvine
facility.
The Group has diligently worked to implement the new operating
model announced at the half year results, with the creation of two
Strategic Business Units (SBUs) for Respiratory Protection and Head
Protection, each with focused leadership teams who are empowered
and accountable for delivering our STAR strategy. Development of
improved performance management processes is well underway, with
objectives, key results and full financial performance reports at
an SBU level.
We have continued to strengthen our teams in many key areas
including finance, sales, programme management, engineering, and
HR. Importantly, we have strengthened the operational leadership
teams at our Salem and Irvine facilities, which is essential in
ensuring the successful delivery of the U.S. DOD contracts which
underpin the growth of the Head Protection business in the coming
years.
Following the lower than expected demand for our respiratory
products in the year, we took decisive action to right-size the
capacity of the business. In Head Protection, we have improved
productivity following the exit from the Armour business.
Altogether, we have reduced headcount by around 100 people through
these initiatives.
During the second half, we have also developed a reinvigorated
purpose, mission, vision and values and are excited to start
sharing this across the Group. To create something that is
reflective of our collective aspirations, we initiated a
comprehensive process that invited employees to provide their
feedback through surveys and focus groups. These insights were
invaluable and provided the foundations upon which our shared
values were developed, aligning us as a company with a clear
direction and shared ethos. Our Group will be more aligned than
ever before, united in our goal to protect lives and provide
unparalleled support to those who protect us, all of which is
underpinned by our STAR strategy.
TRANSFORM
Whilst the majority of the year has been focused on
strengthening and stabilising the business, attention has now
turned to a number of transformational initiatives which are at the
core of ensuring we can deliver mid-teens operating margins, and
improved return on capital and cash flow.
The transformation programme has been split into five
workstreams with dedicated teams, and most importantly defined
costs and benefits. Furthermore, we have aligned the incentives of
the business to these initiatives with a greater focus on profit
and average working capital turns for our annual bonus scheme, and
an emphasis on 2026 earnings and ROIC for our longer-term incentive
plans.
The first and single biggest lever within transformation is
footprint optimisation. Within Head Protection initiatives include
insourcing the production of our EXFIL Ballistic SL helmets, the
movement of finishing for our new EPIC range of helmets to
Cleveland, and the consolidation of high-volume ACH GEN II
production into Cleveland and Salem. All of these initiatives
deliver good margin improvements and support the future growth of
the Head Protection business. We have further initiatives in our
pipeline which will help us accelerate further.
Secondly comes operational excellence. Laying the groundwork for
a culture of continuous improvement will be essential in driving
efficiency and growing margins as we move forward, and we took some
important first steps in the second half of the year. Regular
Kaizens have been implemented at all our sites, with a number of
significant improvements already realised, including reducing the
scrap rate for NG IHPS, as well as the creation of a funnel of
Kaizens for the new year. To further drive operational improvement,
we have developed a new set of operational metrics with consistency
across the SBUs; these will be rolled out to all sites at a value
stream level along with a reinvigorated operational tier system in
the new year.
Commercial optimisation focuses on streamlining our product
offerings and routes to market, whilst ensuring we are fully
leveraging our market leading positions. The introduction of the
good, better, best range of EPIC helmets has been very successful,
with the majority of customers choosing the top end EPIC specialist
variant. Within Respiratory Protection we have identified a number
of pricing optimisation opportunities on products where we do not
currently make acceptable levels of margin.
The final two workstreams of functional excellence and programme
management excellence are at the earlier stages of their execution,
but important first steps have taken place with a number of
opportunities identified to improve functional efficiency, reduce
waste, and improve productivity. We will also be expanding the
Kaizen methodology outside of operations to drive similar levels of
improvement in other areas of the business including HR, finance
and new product introduction.
We estimate that the total cash cost for these transformation
initiatives will total between $10-12 million in 2024, including
$1-2 million of capital expenditure. The transformation expenses
are expected to be recognised as exceptional cost. There will be
further transformation costs in 2025, with a sharp decrease
expected in 2026.
ADVANCE - RESPIRATORY PROTECTION
A lot of the effort within Respiratory Protection this year has
focused on rebuilding the sales pipeline, either by innovation of
new products or new channels to market.
Earlier in the year we announced that we had been awarded a
framework contract by the NATO Support and Procurement Agency
(NSPA), to supply our EXOSKIN range of CBRN protective boots and
gloves, and this was followed up later in the year by the first
order under the contract from a NATO customer. Importantly this
serves as the first country to have procured against both the boots
and gloves contract and the existing framework contract for FM50
masks, evidencing the robust platform the contracts provide for
showcasing our extensive CBRN portfolio to NATO nations and
partners.
We have made good progress strengthening our relationship with
the DOD programme office and are seeing significantly higher levels
of collaboration on future product developments. We do not expect
this to translate into increased DOD demand this year, which will
be impacted by a gap in filter production. Going forwards, we will
level load the filter line to avoid this happening again.
We are continuing to focus on capturing the underwater market
with our world-leading rebreather technology, and see a strong
pipeline which we expect to enable us to expand our customer base
beyond the NATO countries that we have already won contracts
with.
Looking forward, we will focus on the launch of our
revolutionary new Modular Integrated Tactical Respirator (MiTR)
mask and goggle system via our Quick Launch process, increasing
sales of our complete CBRN portfolio including our new protective
suit developed in partnership with OPEC CBRNe, and importantly
start to see returns from sales of rebreathers following many years
of continuous product development.
ADVANCE - HEAD PROTECTION
Within Head Protection, the focus has been on ensuring we have
the capacity and capability to fulfil the demand against our DOD
contracts.
The ramp-up of NG IHPS production has made significant progress,
and in total over 12,000 helmets were successfully produced,
approved and delivered within the year. We expect to deliver around
24,000 NG IHPS helmets in 2024. This, in combination with the award
of a five-year extension to the J&A contract, underpins growth
within the Head Protection business.
Formal FAT approval for ACH GEN II has been received, which
represents an important milestone in de-risking this programme. We
will now move into the ramp-up phase of this programme, but with
the lessons learned from the successful launches of both NG IHPS
and EPIC this year, I am confident that we will start production in
H1.
The new EPIC range of ballistic helmets that launched earlier in
the year demonstrates the collaboration across our Head Protection
sites, combining the ballistic helmet technology that was developed
for the ACH GEN II programme with the Team Wendy liner systems to
provide a lightweight, high-performance helmet with premium comfort
and a best-in-class performance to weight ratio. Initial interest
and orders have been very promising with around 10,000 ordered to
date.
The focus for 2024 remains on improving productivity and scrap
rates as we ramp-up production to drive margins up to an acceptable
level.
REVOLUTIONISE
Revolutionise focuses on a longer-term horizon and we have made
a number of important first steps in the year.
Our Head Protection team has started work on the next generation
of bump helmets, as well as leveraging the Ceradyne technology into
new high-performance helmets for the commercial market.
We have also had success in securing a number of funded research
and development programmes, which further demonstrates the strong
partnerships we hold with our customers in collaborating on the
next generation of protective technologies. Within Respiratory
Protection we received funding for the development of the next
generation of filters, as well as funding for the development of
new diving masks and shallow water rebreathers to complement our
underwater portfolio. In Head Protection we continue to be one of
the leading experts in traumatic brain injury mitigation and have
received funding to continue our research in this area.
SUSTAINABILITY
We protect lives; it's ingrained within our culture and is at
the heart of everything we do, which is why sustainability is so
important to us. We recognise we are at the start of our
sustainability journey so have been focused on developing a
high-level sustainability vision linked to our purpose and
strategy.
During the period, we evolved our sustainability agenda by
redefining and expanding the four distinct pillars which underpin
our sustainability agenda to better reflect our key stakeholders,
each of whom has an important role to play in our journey. These
are now known as our planet, our supply chain, our customers and
our colleagues and communities.
Within each pillar, we have identified priority objectives which
will be closely monitored by the Board. Targets have been agreed
against these ambitions and will help drive positive momentum. Each
pillar also has a number of other focus areas that support the
priority objectives and are necessary for us to manage as part of
our day-to-day stewardship.
CAPITAL ALLOCATION POLICY
We have completed a review of our capital allocation policy and
have introduced a new framework. First and foremost, we want to
focus our attention and resources on capitalising on the growth
opportunities ahead of us, whilst maximising the returns from these
growth opportunities through the targeted transformation activities
detailed above. Our second focus is to reduce debt to enable
flexibility and minimise our interest costs. Thirdly, while we
recognise the importance of dividends to some of our shareholders,
we want to ensure that these distributions are sized appropriately
and, importantly, set at a level from which they can grow as
business performance starts to improve on a sustainable basis. With
this in mind, we believe that an appropriate level of distribution
is for dividend payments to be between 2.5 and 3x covered by
adjusted basic EPS through the cycle.
Beyond these three core principles, in the medium term we will
consider inorganic bolt-on opportunities with the express
requirement that they accelerate the delivery of our strategy.
However, we do not anticipate considering inorganic investments
until we have meaningfully improved profitability in the Head
Protection business and reduced debt to a more comfortable
level.
FINANCIAL REVIEW
Revenue declined within Respiratory Protection this year
following a record prior year supported by the initial deployment
of masks into Europe under the NSPA framework contract, in addition
to support for Ukraine. This has been partially offset by revenue
growth within Head Protection with the commencement of shipments
against the NG IHPS contract, which resulted in total revenue for
the Group declining by 7.5% to $243.8 million (2022: $263.5
million). Margins in both businesses improved year on year, but a
shift in revenue from higher margin Respiratory Protection to lower
margin Head Protection led to margin erosion at a group level,
resulting in adjusted operating profit margin at 8.7% (2022: 8.9%).
Following the completion of our contractual obligations, the Armour
business has moved into discontinued operations, and we have
restated the 2022 financials to compare on a like-for-like
basis.
30 September 1 October Change Change (constant
52 weeks ended: 2023 2022 currency)(4)
-------------------------------------- ------------- ---------- -------- -----------------
Continuing operations (1)
-------------------------------------- ------------- ---------- -------- -----------------
Orders received $258.7m $267.9m (3.4%) (2.9%)
-------------------------------------- ------------- ---------- -------- -----------------
Closing order book $135.8m $120.9m 12.3% 10.9%
-------------------------------------- ------------- ---------- -------- -----------------
Revenue $243.8m $263.5m (7.5%) (7.5%)
-------------------------------------- ------------- ---------- -------- -----------------
Adjusted(2) EBITDA $35.7m $38.8m (8.0%) (13.6%)
-------------------------------------- ------------- ---------- -------- -----------------
Adjusted(1) EBITDA margin 14.6% 14.7% (10bps) (110bps)
-------------------------------------- ------------- ---------- -------- -----------------
Adjusted(2) operating profit $21.2m $23.4m (9.4%) (18.5%)
-------------------------------------- ------------- ---------- -------- -----------------
Adjusted(2) operating profit
margin 8.7% 8.9% (20bps) (120bps)
-------------------------------------- ------------- ---------- -------- -----------------
Adjusted(2) net finance costs $(7.2)m $(3.7)m 94.6% 100.0%
-------------------------------------- ------------- ---------- -------- -----------------
Adjusted(2) profit before tax $14.0m $19.7m (28.9%) (37.5%)
-------------------------------------- ------------- ---------- -------- -----------------
Adjusted(2) taxation $(1.9)m $(3.1)m
-------------------------------------- ------------- ---------- -------- -----------------
Adjusted(2) profit/(loss) after
tax $12.1m $16.6m
-------------------------------------- ------------- ---------- -------- -----------------
Adjusted(2) basic earnings
per share 40.3c 54.7c (26.3%) (35.2%)
-------------------------------------- ------------- ---------- -------- -----------------
Total dividend per share 29.6c 44.9c (34.1%)
-------------------------------------- ------------- ---------- -------- -----------------
Net debt excluding lease liabilities $64.5m $44.2m 45.9%
-------------------------------------- ------------- ---------- -------- -----------------
Cash conversion 7.0% 151.3%
-------------------------------------- ------------- ---------- -------- -----------------
Return on invested capital(2) 8.7% 9.0%
-------------------------------------- ------------- ---------- -------- -----------------
Statutory results
-------------------------------------- ------------- ---------- -------- -----------------
Operating (loss)/profit from
continuing operations (3) $(12.6)m $11.0m
-------------------------------------- ------------- ---------- -------- -----------------
Net finance costs $(7.6)m $(5.0)m
-------------------------------------- ------------- ---------- -------- -----------------
(Loss)/profit before tax from
continuing operations $(20.2)m $6.0m
-------------------------------------- ------------- ---------- -------- -----------------
Taxation $3.8m $(0.3)m
-------------------------------------- ------------- ---------- -------- -----------------
(Loss)/profit after tax from
continuing operations $(16.4)m $5.7m
-------------------------------------- ------------- ---------- -------- -----------------
Profit/(loss) from discontinued
operations $2.0m $(13.3)m
-------------------------------------- ------------- ---------- -------- -----------------
Loss for the period $(14.4)m $(7.6)m
-------------------------------------- ------------- ---------- -------- -----------------
Basic loss per share (48.0c) (25.1c)
-------------------------------------- ------------- ---------- -------- -----------------
Net debt $85.4m $68.0m
-------------------------------------- ------------- ---------- -------- -----------------
1 At 30 September 2023 Armour operations have fully closed.
Armour has therefore been classified as a discontinued operation,
including restatement of prior period comparatives.
2 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.
3 Reported operating loss includes $6.3 million amortisation of
acquired intangibles, restructuring costs of $1.4 million,
impairment of non-current assets and goodwill of $24.6 million and
transition costs of $1.5 million. See Adjusted Performance Measures
section for full breakdown of adjustments and comparatives.
4 Constant currency measures are provided in the Adjusted
Performance Measures section.
Order intake for the Group of $258.7 million (2022: $267.9
million) was down 3.4% (2.9% constant currency). Head Protection
orders grew strongly with $38 million of orders for NG IHPS and $14
million of orders against the ACH GEN II contract received in the
year. Respiratory orders were down in the year, with weak demand
from the U.S. DOD as expected.
The closing order book of $135.8 million reflects an increase of
12.3% (10.9% constant currency) over the prior year, with an
increase of 64.5% (64.5% constant currency) in the Head Protection
order book more than offsetting a decrease of 40.4% (42.0% constant
currency) within Respiratory Protection. Notably the Head
Protection order book consists of $59 million of orders for NG IHPS
and over $20 million for ACH GEN II, both fully covering expected
sales for these products in the next financial year.
Revenue for the Group totalled $243.8 million, a decline of 7.5%
(7.5% constant currency) compared to a prior year of $263.5
million.
Respiratory Protection revenue totalled $156.9 million, a
decline of 18.7% (18.7% constant currency) compared to $193.0
million in 2022, with the largest decrease within the U.K. &
International market as a result of the large sales into Europe
last year under the NSPA framework contract. Respiratory Protection
sales into the U.S. DOD grew modestly, albeit with a significant
mix shift away from mask systems to aftermarket products as sales
of M53A1 and M69 masks in the prior year were replaced with sales
of filters and other spares and accessories. Notably, we delivered
over $17 million of M61 filters into the U.S. DOD which represented
24 months' worth of demand, and although we expect to receive
similar orders in the future, there will be a significant decline
of U.S. DOD filters revenue in 2024 as a consequence. Commercial
Americas revenue dropped significantly; however, this was driven by
one-off deliveries in the prior year in support of Ukraine.
Head Protection revenue totalled $86.9 million, an increase of
23.3% (23.3% constant currency) over the prior year of $70.5
million. U.S. DOD revenue grew by 19.7% with strong sales of EXFIL
ballistic helmets and a successful ramp-up of the NG IHPS
programme. Commercial Americas revenue grew modestly at 7.1% with
encouraging initial sales of the new EPIC commercial helmet range
following a successful launch in the second half of the year.
Lastly, we had a strong year for Head Protection in the U.K. &
International market with revenue growth of 77.6%, driven by
deliveries of EXFIL helmets into the Australian Defence Force.
Group adjusted EBITDA of $35.7 million (2022: $38.8 million) is
down 8.0% (13.6% constancy currency) compared to the prior period.
Lower revenue in high margin Respiratory Protection, high levels of
scrap from production ramp-up of NG IHPS, and increased levels of
expensed R&D were headwinds in the year, partially offset by
favourable product mix within Respiratory Protection, reduced
freight costs, and savings in central overheads. Adjusted EBITDA
margin of 14.6% was down 10bps (down 110bps constant currency) on
the prior year.
Adjusted operating profit of $21.2 million (2022: $23.4 million)
is after adjusted depreciation, amortisation and impairment of
$14.5 million (FY22: $15.4 million), resulting in an adjusted
operating profit margin of 8.7% (2022: 8.9%) down 20bps (down
120bps constant currency) on the prior year.
Statutory operating loss from continuing operations of $12.6
million (2022: profit of $11.0 million) reflected exceptional items
in the period which are summarised below.
Impairments include a $23.4 million charge to goodwill (2022:
$nil), arising as the new Head Protection cash-generating unit
(CGU) was subject to impairment testing for the first time. Based
on the Group's Board approved five-year financial plan, adjusted to
exclude cash flows considered expansionary, the value in use of the
Head Protection CGU was less than the carrying amount.
The Head Protection CGU includes all goodwill associated with
the 2020 Ceradyne acquisition of $28.0 million and 2021 Team Wendy
acquisition of $58.3 million. In 2021, goodwill related to the
Ceradyne acquisition was allocated in full to the sole Respiratory
and Head protection operating segment, and as such was unaffected
by the 2021 armour-related impairments. In 2022, the decision to
present Armour as a separate operating segment was taken, with nil
goodwill value allocated to the Armour segment. This was based on a
relative value approach, which attributed no value to Armour given
trading losses forecast to closure. Further details of the
impairment are included in note 3.1.
The Adjusted Performance Measures section contains a full
breakdown and explanation of adjustments.
FY23 FY22
$m $m
Statutory operating (loss)/profit (12.6) 11.0
----------------------------------------------------- --------- ------
Amortisation of acquired intangibles 6.3 6.8
----------------------------------------------------- --------- ------
Impairment of goodwill and other non-current assets 24.6 4.0
----------------------------------------------------- --------- ------
Restructuring costs 1.4 1.6
----------------------------------------------------- --------- ------
Transaction costs 1.5 -
----------------------------------------------------- --------- ------
Adjusted operating profit 21.2 23.4
----------------------------------------------------- --------- ------
Adjusted net finance costs increased to $7.2 million (2022: $3.7
million) due to higher net debt and variable interest charges.
After an adjusted tax charge of $1.9 million (2022: $3.1
million), the Group recorded an adjusted profit for the period
after tax of $12.1 million (2022: $16.6 million).
Adjusted basic earnings per share fell to 40.3 cents (2022: 54.7
cents).
Return on invested capital, calculated on a rolling 12-month
basis, fell to 8.7% (2022: 9.0%), reflecting lower adjusted
operating profit.
Statutory net finance costs of $7.6 million (2022: $5.0 million)
include $0.4 million (2022: $1.3 million) net interest expense on
the U.K. defined benefit pension scheme liability.
Statutory loss before tax from continuing operations was $20.2
million (2022: profit of $6.0 million) and, after a tax credit of
$3.8 million (2022: charge of $0.3 million), the loss for the
period from continuing operations was $16.4 million (2022: profit
of $5.7 million).
Segmental performance
FY23 FY22
Respiratory Respiratory
$m Protection Head Protection Total Protection Head Protection Total
Revenue 156.9 86.9 243.8 193.0 70.5 263.5
Adjusted EBITDA 36.6 (0.9) 35.7 42.4 (3.6) 38.8
Adjusted EBITDA
margin 23.3% (1.0%) 14.6% 22.0% (5.1%) 14.7%
Adjusted operating
profit 29.3 (8.1) 21.2 33.5 (10.1) 23.4
Adjusted operating
profit margin 18.7% (9.3%) 8.7% 17.4% (14.3%) 8.9%
Adjusted operating profit margin within the Respiratory
Protection business improved despite the fall in revenue, growing
from 17.4% in FY22 to 18.7% in FY23. This was due to a product mix
shift away from lower margin sales on the NSPA framework in the
prior period, and repricing on a couple of key products. Beyond
these mix effects, rapid action to right-size the cost base was
taken in light of the weaker demand environment.
The Head Protection business has continued to make a loss as we
work through the production ramp-up for the NG IHPS and ACH GEN II
programmes, although we have seen reduced losses with the
operational gearing tailwinds from the increased revenue, resulting
in an adjusted operating profit margin of (9.3%), up from (14.3%)
in FY22. We continue to believe that the transformational
initiatives within the STAR strategy will bring this business to
acceptable levels of profitability.
Research and development expenditure
Total investment in research and development (capitalised and
expensed) was $10.2 million (2022: $10.9 million), in line with the
prior period as a percentage of revenue. Excluding amortisation and
impairment, we have seen an increase in costs expensed to the
P&L and lower levels of capitalisation.
FY23 FY22
Continuing operations $m $m
-------------------------------------------------------- ------ ------
Total expenditure 10.2 10.9
Less customer funded (1.2) (1.4)
-------------------------------------------------------- ------ ------
Group expenditure 9.0 9.5
Capitalised (3.1) (5.8)
-------------------------------------------------------- ------ ------
Income statement impact 5.9 3.7
Amortisation and impairment of development expenditure 4.3 6.5
-------------------------------------------------------- ------ ------
Total income statement impact 10.2 10.2
-------------------------------------------------------- ------ ------
Revenue 243.8 263.5
-------------------------------------------------------- ------ ------
R&D spend as a % of revenue 4.2% 4.1%
-------------------------------------------------------- ------ ------
Respiratory Protection 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 FY23 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
FY23 FY22
$m $m
-------------------------------------------------- ------- -------
Adjusted continuing EBITDA 35.7 38.8
-------------------------------------------------- ------- -------
Share-based payments and defined benefit pension
scheme costs 1.7 1.8
-------------------------------------------------- ------- -------
Working capital (34.9) 18.1
-------------------------------------------------- ------- -------
Cash flows from continuing operations before
exceptional items 2.5 58.7
-------------------------------------------------- ------- -------
Restructuring and transaction costs paid (2.3) (1.0)
-------------------------------------------------- ------- -------
Cash flows from continuing operations 0.2 57.7
-------------------------------------------------- ------- -------
Cash flows from discontinued operations 3.2 (24.2)
-------------------------------------------------- ------- -------
Cash flow from operations 3.4 33.5
-------------------------------------------------- ------- -------
Payments to pension plan - (8.5)
-------------------------------------------------- ------- -------
Net finance costs (6.6) (3.4)
-------------------------------------------------- ------- -------
Net repayment of leases (3.0) (3.2)
-------------------------------------------------- ------- -------
Tax received 3.7 3.7
-------------------------------------------------- ------- -------
Capital expenditure (11.0) (8.9)
-------------------------------------------------- ------- -------
Discontinued operation disposals, investing and
financing cash flows 6.6 (4.4)
-------------------------------------------------- ------- -------
Purchase of own shares - share buyback - (12.4)
-------------------------------------------------- ------- -------
Dividends to shareholders (13.4) (13.4)
-------------------------------------------------- ------- -------
Foreign exchange on cash - (0.4)
-------------------------------------------------- ------- -------
Change in net debt (20.3) (17.4)
-------------------------------------------------- ------- -------
Opening net debt, excluding lease liabilities (44.2) (26.8)
-------------------------------------------------- ------- -------
Closing net debt, excluding lease liabilities (64.5) (44.2)
-------------------------------------------------- ------- -------
Cash flows from continuing operations before exceptional items
were $2.5 million (2022: $58.7 million) with the movement
principally due to working capital outflows of $34.9 million,
compared to inflows of $18.1 million in the prior year. Working
capital outflows were driven by a $26.2 million increase in
receivables due to sales phasing (2022: $13.2 million reduction in
receivables).
Dividends and purchase of own shares were $13.4 million (2022:
$25.8 million), with the change reflecting the buyback programme in
the prior year, which has now been formally cancelled.
Tax was an inflow of $3.7m (2022: inflow of $3.7 million), due
to historical amounts owed being settled in the period.
Net debt was $85.4 million (2022: net debt $68.0 million), which
includes lease liabilities of $20.9 million (2022: $23.8 million).
Excluding lease liabilities, net debt was $64.5 million (2022: net
debt $44.2 million).
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 11 years. The net pension liability for the scheme
amounted to $40.2 million as at 30 September 2023 (2022: $6.3
million). The increase is mainly due to adverse actuarial
experience adjustments.
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 2022 actuarial
valuation, the Group will make payments in FY24 of GBP6.95 million,
FY25 of GBP4.30 million and FY26 of GBP4.70 million in respect of
deficit recovery and scheme expenses.
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 1 cent increase in the value of
the U.S. dollar against sterling would have decreased revenue by
approximately $0.2 million and increased operating profit by
approximately $0.2 million for FY23.
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 active interest rate
swaps at 30 September 2023 was $30.0 million (2022: $30.0 million),
expiring on 8 September 2025. The Group also has additional
interest rate swaps in place with a notional value of $20.0 million
starting on 8 September 2025 and expiring on 8 September 2026
(2022: $nil). The financial value of interest rate swaps at 30
September 2023 was $0.9 million (2022: $0.5 million), an asset
position as hedged fixed rates are lower than current market
forecasts for SOFR.
Dividends
In-line with the revised capital allocation policy, the Board
has proposed a final dividend of 15.3 cents per share (2022: 30.6
cents). The final dividend will be paid in pounds sterling on 8
March 2024 to shareholders on the register at 9 February 2023. The
final dividend will be converted into pounds sterling for payment
at the prevailing exchange rate which will be announced prior to
payment.
We expect the H1 2024 dividend to be similarly rebased,
resulting in the customary one-third to two-thirds distribution for
the full year next year.
Jos Sclater Rich Cashin
Chief Executive Officer Chief Financial Officer
21 November 2023 21 November 2023
Forward-looking statements
Certain statements in this 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 full annual report will be made available on 12 December
2023 on the Company's website 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.
Performance measurement
The Directors assess the operating performance of the Group
based on adjusted measures of EBITDA, operating profit, net finance
costs, taxation and earnings per share, as well as other measures
not defined under IFRS including orders received, closing order
book, EBITDA margin, operating profit margin, return on invested
capital, cash conversion, net debt excluding lease liabilities,
average working capital turns, and constant currency equivalents
for relevant metrics. These are collectively described as Adjusted
Performance Measures (APMs).
The Directors believe that the APMs provide a useful comparison
of business trends and performance. The APMs exclude exceptional
items considered unrelated to the underlying trading performance of
the Group. The term adjusted is not defined under IFRS and may not
be comparable with similarly titled measures used by other
companies. The Group uses these measures for planning, budgeting
and reporting purposes and for its internal assessment of the
operational performance.
Adjusted Performance Measures
The following table summarises the statutory and adjusted profit
and loss account measures for the period together with the
adjustments made to each line item.
52 weeks ended 30 September 52 weeks ended 1 October
2023 2022 (restated)(1)
------------------------------- ------------------------------
Adjusted Adjustments Total Adjusted Adjustments Total
Continuing operations $m $m $m $m $m $m
--------------------------- --------- ----------- ------- -------- ----------- -------
Revenue 243.8 - 243.8 263.5 - 263.5
--------------------------- --------- ----------- ------- -------- ----------- -------
Cost of sales (157.9) - (157.9) (174.6) - (174.6)
--------------------------- --------- ----------- ------- -------- ----------- -------
Gross profit 85.9 - 85.9 88.9 - 88.9
--------------------------- --------- ----------- ------- -------- ----------- -------
Sales and marketing
expenses (14.9) - (14.9) (15.0) - (15.0)
--------------------------- --------- ----------- ------- -------- ----------- -------
Research and development
costs (10.0) (0.2) (10.2) (8.8) (1.4) (10.2)
--------------------------- --------- ----------- ------- -------- ----------- -------
General and administrative
expenses (39.8) (33.6) (73.4) (41.7) (11.0) (52.7)
--------------------------- --------- ----------- ------- -------- ----------- -------
Operating profit/(loss) 21.2 (33.8) (12.6) 23.4 (12.4) 11.0
--------------------------- --------- ----------- ------- -------- ----------- -------
EBITDA 35.7 (2.9) 32.8 38.8 (1.6) 37.2
--------------------------- --------- ----------- ------- -------- ----------- -------
Depreciation, amortisation
and impairment (14.5) (30.9) (45.4) (15.4) (10.8) (26.2)
--------------------------- --------- ----------- ------- -------- ----------- -------
Operating profit/(loss)
(note 1) 21.2 (33.8) (12.6) 23.4 (12.4) 11.0
--------------------------- --------- ----------- ------- -------- ----------- -------
Net finance costs (note
2) (7.2) (0.4) (7.6) (3.7) (1.3) (5.0)
--------------------------- --------- ----------- ------- -------- ----------- -------
Profit/(loss) before
taxation 14.0 (34.2) (20.2) 19.7 (13.7) 6.0
--------------------------- --------- ----------- ------- -------- ----------- -------
Taxation (note 3) (1.9) 5.7 3.8 (3.1) 2.8 (0.3)
--------------------------- --------- ----------- ------- -------- ----------- -------
Profit/(loss) for the
period from continuing
operations 12.1 (28.5) (16.4) 16.6 (10.9) 5.7
--------------------------- --------- ----------- ------- -------- ----------- -------
Discontinued operations
- profit/(loss) from
discontinued operations
(note 4) - 2.0 2.0 - (13.3) (13.3)
--------------------------- --------- ----------- ------- -------- ----------- -------
Profit/(loss) for
the period (note 5) 12.1 (26.5) (14.4) 16.6 (24.2) (7.6)
--------------------------- --------- ----------- ------- -------- ----------- -------
Basic (loss)/earnings
per share 40.3c (88.3c) (48.0c) 54.7c (79.8c) (25.1c)
--------------------------- --------- ----------- ------- -------- ----------- -------
Diluted (loss)/earnings
per share 40.3c (88.3c) (48.0c) 54.4c (79.3c) (24.9c)
--------------------------- --------- ----------- ------- -------- ----------- -------
1 Comparatives for the 52 weeks ended 1 October 2022 have been
restated to reflect reclassification of research and development
costs, reclassification of selling and distribution costs, and the
discontinuation of the Armour business. These are disclosed in APMs
note 13.
1 Adjustments to operating loss
Adjusted operating profit excludes discontinued operations and
exceptional items considered unrelated to the underlying trading
performance of the Group. Transactions are classified as
exceptional where they relate to an event that falls outside of the
underlying trading activities of the business and where
individually, or in aggregate, they have a material impact on the
financial statements.
2023 2022
(restated)(1)
$m $m
------ ---------------
Operating (loss)/profit (12.6) 11.0
-------------------------------------------------- ------ ---------------
Amortisation of acquired intangibles 6.3 6.8
-------------------------------------------------- ------ ---------------
Restructuring costs 1.4 1.6
-------------------------------------------------- ------ ---------------
Restructuring-related impairment of non-current
assets 0.7 0.4
-------------------------------------------------- ------ ---------------
Impairment of other non-current assets (excluding
restructuring related impairments) 0.5 3.6
-------------------------------------------------- ------ ---------------
Impairment of goodwill 23.4 -
-------------------------------------------------- ------ ---------------
Transition costs 1.5 -
-------------------------------------------------- ------ ---------------
Adjusted operating profit 21.2 23.4
-------------------------------------------------- ------ ---------------
Depreciation 9.2 9.1
-------------------------------------------------- ------ ---------------
Other impairment charges - 0.4
-------------------------------------------------- ------ ---------------
Other amortisation charges 5.3 5.9
-------------------------------------------------- ------ ---------------
Adjusted EBITDA 35.7 38.8
-------------------------------------------------- ------ ---------------
1 Comparatives for the 52 weeks ended 1 October 2022 have been
restated to reflect the discontinuation of the Armour business.
Amortisation of acquired intangibles
Amortisation charges for acquired intangible assets of $6.3
million (2022: $6.8 million) are considered exceptional as they do
not change each period based on underlying business trading and
performance.
Restructuring costs
Restructuring costs related to the right-sizing of operations
were $1.4 million (2022: $1.6 million). These costs are considered
exceptional as they relate to specific programmes which do not form
part of the underlying business trading and performance.
Restructuring-related impairment of non-current assets
Restructuring-related impairment of non-current assets was $0.7
million. This related to the closure of one of our U.S. offices,
with a $0.5 million impairment to right of use assets (2022: $0.4
million impairment), and $0.2 million impairment to plant and
machinery (2022: $nil). These costs are considered exceptional as
they relate to a specific office closure which does not form part
of the underlying business trading and performance.
Impairment of other non-current assets
Reviews of the Group's non-current assets resulted in $0.5
million exceptional impairment losses (2022: $3.6 million) as the
carrying value of certain product group level cash-generating units
(CGUs) exceeded estimated recoverable amounts. Further details are
provided in note 3.1. The impairment losses are significant items
resulting from changes in assumptions for future recoverable
amounts. As such they are considered unrelated to current or prior
year trading performance.
In the prior period the Group also recognised $0.4 million other
non-current asset impairments that were not considered exceptional
(note 3.1).
Impairment of goodwill
Review of the Head Protection CGU resulted in impairment to
goodwill of $23.4 million (2022: $nil) as the carrying value of the
CGU exceeded its estimated recoverable amount. Further details are
provided in note 3.1. The impairment is a significant item based on
forecast assumptions for future cash flows. As such it is
considered unrelated to current year trading performance.
Transition costs
Transition costs of $1.5 million (2022: $nil) related to the
transfer of legacy Team Wendy operations in Head Protection onto a
Group controlled ERP system. These costs are considered
transition-related and exceptional as they relate to a specific
programme for Team Wendy operations that was only required as a
result of acquisition in November 2020.
2 Adjustments to net finance costs
Adjusted net finance costs exclude exceptional items considered
unrelated to the underlying trading performance of the Group.
2023 2022
(restated)(1)
$m $m
----- ---------------
Net finance costs 7.6 5.0
---------------------------------------- ----- ---------------
Defined benefit pension unwind discount (0.4) (1.3)
---------------------------------------- ----- ---------------
Adjusted net finance costs 7.2 3.7
---------------------------------------- ----- ---------------
1 Comparatives for the 52 weeks ended 1 October 2022 have been
restated to reflect the discontinuation of the Armour business.
$0.4 million (2022: $1.3 million) unwind of discounting 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.
3 Adjustments to taxation
Adjustments to taxation represent the tax effects of the
adjustments to operating profit and net finance costs. Except for
the impairment to goodwill, adjusting items do not have
significantly different effective tax rates compared to statutory
rates, with an overall effective rate of 17% (2022: 20%).
The $23.4 million impairment of goodwill resulted in a tax
credit of $3.4 million (effective tax rate 14.5%), which explains
the lower overall rate compared to statutory rates on the total
level of adjustments.
4 Profit from discontinued operations
The adjusted profit measures exclude the result from
discontinued operations relating to the divestment of milkrite |
InterPuls and closure of the Armour business (note 2.2).
During the period, total profit after tax from discontinued
operations was $2.0 million (2022: loss after tax of $13.3
million).
5 Adjustments to loss for the period
2023 2022
(restated)(1)
$m $m
------ ---------------
Loss for the period (14.4) (7.6)
-------------------------------------------------- ------ ---------------
Amortisation of acquired intangibles 6.3 6.8
-------------------------------------------------- ------ ---------------
Restructuring costs 1.4 1.6
-------------------------------------------------- ------ ---------------
Restructuring-related impairment of non-current
assets 0.7 0.4
-------------------------------------------------- ------ ---------------
Impairment of other non-current assets (excluding
restructuring-related impairments) 0.5 3.6
-------------------------------------------------- ------ ---------------
Impairment of goodwill 23.4 -
-------------------------------------------------- ------ ---------------
Transition costs 1.5 -
-------------------------------------------------- ------ ---------------
Defined benefit pension unwind discount 0.4 1.3
-------------------------------------------------- ------ ---------------
Tax on exceptional items (5.7) (2.8)
-------------------------------------------------- ------ ---------------
(Profit)/loss from discontinued operations (2.0) 13.3
-------------------------------------------------- ------ ---------------
Adjusted profit for the period 12.1 16.6
-------------------------------------------------- ------ ---------------
1 Comparatives for the 52 weeks ended 1 October 2022 have been
restated to reflect the discontinuation of the Armour business.
6 Adjusted earnings per share
Weighted average number of shares 2023 2022
------ ------
Weighted average number of ordinary shares in issue
used in basic calculation (thousands) 29,996 30,308
----------------------------------------------------- ------ ------
Potentially dilutive shares (weighted average)
(thousands) 263 221
----------------------------------------------------- ------ ------
Diluted number of ordinary shares (weighted average)
(thousands) 30,259 30,529
----------------------------------------------------- ------ ------
2023 2022
(restated)(1)
Adjusted continuing earnings per share $ cents $ cents
--------- ---------------
Basic 40.3c 54.7c
---------------------------------------- --------- ---------------
Diluted 40.3c 54.4c
---------------------------------------- --------- ---------------
7 Net debt
2023 2022
$m $m
------ ------
Cash and cash equivalents 13.2 9.5
------------------------------------- ------ ------
Bank loans (77.7) (53.7)
------------------------------------- ------ ------
Net debt excluding lease liabilities (64.5) (44.2)
------------------------------------- ------ ------
Lease liabilities (20.9) (23.8)
------------------------------------- ------ ------
Net debt including lease liabilities (85.4) (68.0)
------------------------------------- ------ ------
8 Adjusted dividend cover ratio
2023 2022
(restated)(1)
$ cents $ cents
--------- ---------------
Interim dividend 14.3c 14.3c
---------------------------------- --------- ---------------
Final dividend 15.3c 30.6c
---------------------------------- --------- ---------------
Total dividend 29.6c 44.9c
---------------------------------- --------- ---------------
Adjusted basic earnings per share 40.3c 54.7c
---------------------------------- --------- ---------------
Adjusted dividend cover ratio 1.4 times 1.2 times
---------------------------------- --------- ---------------
1 Comparatives for the 52 weeks ended 1 October 2022 have been
restated to reflect the discontinuation of the Armour business.
9 Return on invested capital
Return on invested capital (ROIC) is calculated as adjusted
operating profit over average invested capital relating to
continuing operations.
2023 2022
$m $m
------ ------
Net assets 159.4 210.5
---------------------------------------------------- ------ ------
Net assets associated with discontinued operations (5.6) (8.4)
---------------------------------------------------- ------ ------
Net assets associated with continuing operations 153.8 202.1
---------------------------------------------------- ------ ------
Net debt excluding lease liabilities 64.5 44.2
---------------------------------------------------- ------ ------
Lease liabilities (excluding liabilities associated
with discontinued operations) 20.9 14.5
---------------------------------------------------- ------ ------
Pension 40.2 6.3
---------------------------------------------------- ------ ------
Derivatives (0.9) (0.5)
---------------------------------------------------- ------ ------
Net tax (33.2) (25.1)
---------------------------------------------------- ------ ------
Total invested capital 245.3 241.5
---------------------------------------------------- ------ ------
Average invested capital 243.4 261.3
---------------------------------------------------- ------ ------
Adjusted operating profit 21.2 23.4
---------------------------------------------------- ------ ------
ROIC 8.7% 9.0%
---------------------------------------------------- ------ ------
2023 2022
Average invested capital $m $m
----- -----
Current period invested capital 245.3 241.5
-------------------------------- ----- -----
Prior period invested capital 241.5 281.0
-------------------------------- ----- -----
Average invested capital 243.4 261.3
-------------------------------- ----- -----
10 Average working capital turn (AWCT)
AWCT is the ratio of the 12 month average month end working
capital (defined as the total of inventory, receivables and
payables excluding lease liabilities) to revenue, based on
continuing operations.
2023 2022
Continuing operations $m $m
----- -----
12 month average month end working capital 65.7 48.2
------------------------------------------- ----- -----
Revenue 243.8 263.5
------------------------------------------- ----- -----
AWCT 3.7 5.5
------------------------------------------- ----- -----
11 Cash conversion
Cash conversion excludes the impact of exceptional items from
operating cash flows and EBITDA.
2023 2022
(restated)(1)
$m $m
----- ---------------
Cash flows from continuing operations before exceptional
items 2.5 58.7
--------------------------------------------------------- ----- ---------------
Adjusted EBITDA 35.7 38.8
--------------------------------------------------------- ----- ---------------
Cash conversion 7.0% 151.3%
--------------------------------------------------------- ----- ---------------
2023 2022
(restated)(1)
$m $m
----- ---------------
Cash flows from continuing operations 0.2 57.7
--------------------------------------------------------- ----- ---------------
Restructuring and transition costs paid 2.3 1.0
--------------------------------------------------------- ----- ---------------
Cash flows from continuing operations before exceptional
items 2.5 58.7
--------------------------------------------------------- ----- ---------------
1 Comparatives for the 52 weeks ended 1 October 2022 have been
restated to reflect the discontinuation of the Armour business.
12 Constant currency reporting
Constant currency measures are calculated by translating the
prior period at current period exchange rates.
2023 2022
(restated)(1)
Continuing operations $m $m
----- ---------------
Orders received 258.7 266.3
---------------------------------- ----- ---------------
Closing order book 135.8 122.5
---------------------------------- ----- ---------------
Revenue 243.8 263.5
---------------------------------- ----- ---------------
Adjusted EBITDA 35.7 41.3
---------------------------------- ----- ---------------
Adjusted operating profit 21.2 26.0
---------------------------------- ----- ---------------
Adjusted profit before tax 14.0 22.4
---------------------------------- ----- ---------------
Adjusted basic earnings per share 40.3c 62.2c
---------------------------------- ----- ---------------
1 Comparatives for the 52 weeks ended 1 October 2022 have been
restated to reflect the discontinuation of the Armour business.
13 Restatement of adjusted performance measures
As per statutory equivalents reconciled in note 5.1, prior
period comparatives for adjusted performance measures have been
restated to present the Armour business as a discontinued
operation, and to reclassify certain expenses in the Consolidated
Statement of Comprehensive Income.
Expense reclassifications include disclosure of research and
development costs as a separate line item below gross profit, and
recategorisation of selling and distribution costs. The 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. Selling and distribution costs have been disaggregated into
sales and marketing expenses, presented in a separate line below
gross profit, and freight and distribution costs which have been
reclassified into cost of sales.
This presentation reflects the way the business performance will
be monitored in future, with separate disclosure of research and
development appropriate as an integral part of operations. It is
also consistent and comparable with common market practice and
therefore provides reliable and more relevant information to the
reader. Overall operating loss figures for the previous period
remain unchanged as this is only a presentational restatement. A
reconciliation of reported prior period to restated figures is
presented below:
Consolidated Statement of Comprehensive Income for the 52 weeks
ended 1 October 2022
Research Selling
Previously Remove and and
reported Armour development distribution Restated
Continuing operations - Adjusted $m $m $m $m $m
---------- ------- ------------ ------------- ----------
Revenue 271.9 (8.4) - - 263.5
------------------------------------ ---------- ------- ------------ ------------- ----------
Cost of sales (192.1) 18.5 8.8 (9.8) (174.6)
------------------------------------ ---------- ------- ------------ ------------- ----------
Gross profit 79.8 10.1 8.8 (9.8) 88.9
------------------------------------ ---------- ------- ------------ ------------- ----------
Selling and distribution costs
/ Sales and marketing expenses (26.0) 1.2 - 9.8 (15.0)
------------------------------------ ---------- ------- ------------ ------------- ----------
Research and development costs - - (8.8) - (8.8)
------------------------------------ ---------- ------- ------------ ------------- --------
General and administrative expenses (43.7) 2.0 - - (41.7)
------------------------------------ ---------- ------- ------------ ------------- ----------
Operating profit 10.1 13.3 - - 23.4
------------------------------------ ---------- ------- ------------ ------------- ----------
Net finance costs (4.0) 0.3 - - (3.7)
------------------------------------ ---------- ------- ------------ ------------- ----------
Profit before tax 6.1 13.6 - - 19.7
------------------------------------ ---------- ------- ------------ ------------- ----------
Remove Research
Previously Armour and
reported adjustments development Restated
Continuing operations - Adjustments $m $m $m $m
---------- ------------- ------------ --------
Revenue - - - -
--------------------------------------- ---------- ------------- ------------ --------
Cost of sales (1.6) 1.6 - -
--------------------------------------- ---------- ------------- ------------ --------
Gross profit (1.6) 1.6 - -
--------------------------------------- ---------- ------------- ------------ --------
Selling and distribution costs / Sales
and marketing expenses - - - -
--------------------------------------- ---------- ------------- ------------ --------
Research and development costs - - (1.4) (1.4)
--------------------------------------- ---------- ------------- ------------ --------
General and administrative expenses (10.6) (1.8) 1.4 (11.0)
--------------------------------------- ---------- ------------- ------------ --------
Operating profit/(loss) (12.2) (0.2) - (12.4)
--------------------------------------- ---------- ------------- ------------ --------
Net finance costs (2.4) 1.1 - (1.3)
--------------------------------------- ---------- ------------- ------------ --------
Profit before tax (14.6) 0.9 - (13.7)
--------------------------------------- ---------- ------------- ------------ --------
Consolidated Statement of Comprehensive Income
For the 52 weeks ended 30 September 2023
52 weeks 52 weeks
ended ended
1 October
30 September 2022
2023 (restated)(1)
Continuing operations Note $m $m
----- -------------- ---------------
Revenue 2.1 243.8 263.5
---------------------------------------------- ----- -------------- ---------------
Cost of sales (157.9) (174.6)
---------------------------------------------- ----- -------------- ---------------
Gross profit 85.9 88.9
---------------------------------------------- ----- -------------- ---------------
Sales and marketing expenses (14.9) (15.0)
---------------------------------------------- ----- -------------- ---------------
Research and development costs (10.2) (10.2)
---------------------------------------------- ----- -------------- ---------------
General and administrative expenses (73.4) (52.7)
---------------------------------------------- ----- -------------- ---------------
Operating (loss)/profit (12.6) 11.0
---------------------------------------------- ----- -------------- ---------------
Net finance costs 4.3 (7.6) (5.0)
---------------------------------------------- ----- -------------- ---------------
(Loss)/profit before taxation (20.2) 6.0
---------------------------------------------- ----- -------------- ---------------
Taxation 3.8 (0.3)
---------------------------------------------- ----- -------------- ---------------
(Loss)/profit for the period from continuing
operations (16.4) 5.7
---------------------------------------------- ----- -------------- ---------------
Discontinued operations
---------------------------------------------- ----- -------------- ---------------
Profit/(loss) from discontinued operations 2.2 2.0 (13.3)
---------------------------------------------- ----- -------------- ---------------
(Loss)/profit for the period (14.4) (7.6)
---------------------------------------------- ----- -------------- ---------------
Other comprehensive income/(expense)
---------------------------------------------- ----- -------------- ---------------
Items that are not subsequently reclassified
to the income statement
---------------------------------------------- ----- -------------- ---------------
Remeasurement (loss)/gain recognised
on retirement benefit scheme (31.8) 50.1
---------------------------------------------- ----- -------------- ---------------
Deferred tax relating to retirement benefit
scheme 6.9 (9.6)
---------------------------------------------- ----- -------------- ---------------
Deferred tax relating to change in tax
rates 1.1 (3.4)
---------------------------------------------- ----- -------------- ---------------
Deferred tax relating to other temporary
differences (0.2) (0.1)
---------------------------------------------- ----- -------------- ---------------
Items that may be subsequent l y reclassified
to the income statement
---------------------------------------------- ----- -------------- ---------------
Deferred tax exchange differences offset
in reserves 0.8 (2.7)
---------------------------------------------- ----- -------------- ---------------
Other exchange differences offset in
reserves (0.5) 3.5
---------------------------------------------- ----- -------------- ---------------
Cash flow hedges 0.4 0.5
---------------------------------------------- ----- -------------- ---------------
Current tax relating to cash flow hedges - (0.1)
---------------------------------------------- ----- -------------- ---------------
Other comprehensive (expense)/income
for the period (23.3) 38.2
---------------------------------------------- ----- -------------- ---------------
Total comprehensive (expense)/income
for the period (37.7) 30.6
---------------------------------------------- ----- -------------- ---------------
Earnings per share
---------------------------------------------- ----- -------------- ---------------
Basic (48.0c) (25.1c)
---------------------------------------------- ----- -------------- ---------------
Diluted (48.0c) (24.9c)
---------------------------------------------- ----- -------------- ---------------
Earnings per share from continuing operations
---------------------------------------------- ----- -------------- ---------------
Basic (54.7c) 18.8c
---------------------------------------------- ----- -------------- ---------------
Diluted (54.7c) 18.7c
---------------------------------------------- ----- -------------- ---------------
1 Comparatives for the 52 weeks ended 1 October 2022 have been
restated to reflect reclassification of research and development
costs, reclassification of selling and distribution costs, and the
discontinuation of the Armour business. These are disclosed in note
5.1.
Consolidated Balance Sheet At 30 September 2023
At 30 September At 1 October
2023 2022
Note $m $m
----- ---------------- -------------
Non-current assets
--------------------------------------- ----- ---------------- -------------
Intangible assets 3.1 139.2 171.0
--------------------------------------- ----- ---------------- -------------
Property, plant and equipment 35.8 39.9
--------------------------------------- ----- ---------------- -------------
Finance leases 6.2 -
--------------------------------------- ----- ---------------- -------------
Deferred tax assets 40.1 26.7
======================================= ===== ================ =============
Derivative financial instruments 0.6 0.3
--------------------------------------- ----- ---------------- -------------
221.9 237.9
--------------------------------------- ----- ---------------- -------------
Current assets
--------------------------------------- ----- ---------------- -------------
Inventories 54.4 65.6
--------------------------------------- ----- ---------------- -------------
Trade and other receivables 58.3 30.6
--------------------------------------- ----- ---------------- -------------
Derivative financial instruments 0.3 0.2
--------------------------------------- ----- ---------------- -------------
Current tax receivables - 4.2
--------------------------------------- ----- ---------------- -------------
Cash and cash equivalents 13.2 9.5
--------------------------------------- ----- ---------------- -------------
126.2 110.1
--------------------------------------- ----- ---------------- -------------
Current liabilities
--------------------------------------- ----- ---------------- -------------
Borrowings 4.2 4.3 4.1
--------------------------------------- ----- ---------------- -------------
Current tax payables 0.7 -
--------------------------------------- ----- ---------------- -------------
Trade and other payables 34.6 42.3
--------------------------------------- ----- ---------------- -------------
Provisions for liabilities and charges 0.4 0.7
--------------------------------------- ----- ---------------- -------------
40.0 47.1
--------------------------------------- ----- ---------------- -------------
Net current assets 86.2 63.0
--------------------------------------- ----- ---------------- -------------
Non-current liabilities
--------------------------------------- ----- ---------------- -------------
Borrowings 4.2 94.3 73.4
--------------------------------------- ----- ---------------- -------------
Deferred tax liabilities 6.2 5.8
--------------------------------------- ----- ---------------- -------------
Retirement benefit obligations 40.2 6.3
--------------------------------------- ----- ---------------- -------------
Provisions for liabilities and charges 8.0 4.9
--------------------------------------- ----- ---------------- -------------
148.7 90.4
--------------------------------------- ----- ---------------- -------------
Net assets 159.4 210.5
--------------------------------------- ----- ---------------- -------------
Shareholders' equity
--------------------------------------- ----- ---------------- -------------
Ordinary shares 50.3 50.3
--------------------------------------- ----- ---------------- -------------
Share premium account 54.3 54.3
--------------------------------------- ----- ---------------- -------------
Other reserves (13.9) (14.2)
--------------------------------------- ----- ---------------- -------------
Cash flow hedging reserve 0.8 0.4
--------------------------------------- ----- ---------------- -------------
Retained earnings 67.9 119.7
--------------------------------------- ----- ---------------- -------------
Total equity 159.4 210.5
--------------------------------------- ----- ---------------- -------------
Consolidated Cash Flow Statement
For the 52 weeks ended 30 September 2023
52 weeks 52 weeks
ended ended
1 October
30 September 2022
2023 (restated)(1)
Note $m $m
----- -------------- ---------------
Cash flows from operating activities
-------------------------------------------------- ----- -------------- ---------------
Cash flows from continuing operations 4.1 0.2 57.7
-------------------------------------------------- ----- -------------- ---------------
Cash flows from discontinued operations 4.1 3.2 (24.2)
-------------------------------------------------- ----- -------------- ---------------
Cash flows from operations 4.1 3.4 33.5
-------------------------------------------------- ----- -------------- ---------------
Retirement benefit deficit recovery contributions - (8.5)
-------------------------------------------------- ----- -------------- ---------------
Tax received 3.7 3.7
-------------------------------------------------- ----- -------------- ---------------
Net cash flows from operating activities 7.1 28.7
-------------------------------------------------- ----- -------------- ---------------
Cash flows used in investing activities
-------------------------------------------------- ----- -------------- ---------------
Proceeds from disposal of discontinued
operations 2.2 7.9 -
-------------------------------------------------- ----- -------------- ---------------
Costs of disposal 2.2 (0.4) -
-------------------------------------------------- ----- -------------- ---------------
Purchase of property, plant and equipment (7.4) (2.9)
-------------------------------------------------- ----- -------------- ---------------
Capitalised development costs and purchased
software 3.1 (3.6) (6.0)
-------------------------------------------------- ----- -------------- ---------------
Other finance income 4.3 0.4 -
-------------------------------------------------- ----- -------------- ---------------
Finance lease capital receipts 0.5 -
-------------------------------------------------- ----- -------------- ---------------
Investing cash flows used in discontinued
operations - (3.2)
-------------------------------------------------- ----- -------------- ---------------
Net cash flows used in investing activities (2.6) (12.1)
-------------------------------------------------- ----- -------------- ---------------
Cash flows used in financing activities
-------------------------------------------------- ----- -------------- ---------------
Proceeds from loan drawdowns 4.4 48.0 42.9
-------------------------------------------------- ----- -------------- ---------------
Loan repayments 4.4 (24.0) (30.1)
-------------------------------------------------- ----- -------------- ---------------
Finance costs paid in respect of bank
loans and overdrafts 4.3 (6.3) (2.7)
-------------------------------------------------- ----- -------------- ---------------
Finance costs paid in respect of leases 4.3 (0.7) (0.7)
-------------------------------------------------- ----- -------------- ---------------
Repayment of lease liability (3.5) (3.2)
-------------------------------------------------- ----- -------------- ---------------
Dividends paid to shareholders 4.5 (13.4) (13.4)
-------------------------------------------------- ----- -------------- ---------------
Purchase of own shares - Share Buyback
Programme - (12.4)
-------------------------------------------------- ----- -------------- ---------------
Financing cash flows used in discontinued
operations (0.9) (1.2)
-------------------------------------------------- ----- -------------- ---------------
Net cash flows used in financing activities (0.8) (20.8)
-------------------------------------------------- ----- -------------- ---------------
Net increase/(decrease) in cash and cash
equivalents 3.7 (4.2)
-------------------------------------------------- ----- -------------- ---------------
Cash and cash equivalents at the beginning
of the period 9.5 14.1
-------------------------------------------------- ----- -------------- ---------------
Effects of exchange rate changes - (0.4)
-------------------------------------------------- ----- -------------- ---------------
Cash and cash equivalents at the end
of the period 13.2 9.5
-------------------------------------------------- ----- -------------- ---------------
1 Comparatives for the 52 weeks ended 1 October 2022 have been
restated to reflect the discontinuation of the Armour business.
Consolidated Statement of Changes in Equity
For the 52 weeks ended 30 September 2023
Share Share Hedging Other Retained Total
capital premium reserve reserves earnings equity
Note $m $m $m $m $m $m
---- -------- -------- -------- --------- --------- -------
At 2 October 2021 50.3 54.3 - (15.0) 115.8 205.4
------------------------------ ---- -------- -------- -------- --------- --------- -------
Loss for the period - - - - (7.6) (7.6)
------------------------------ ---- -------- -------- -------- --------- --------- -------
Net exchange differences
offset in reserves - - - 0.8 - 0.8
------------------------------ ---- -------- -------- -------- --------- --------- -------
Deferred tax relating to
other temporary differences - - - - (0.1) (0.1)
------------------------------ ---- -------- -------- -------- --------- --------- -------
Remeasurement gain recognised
on retirement benefit scheme - - - - 50.1 50.1
------------------------------ ---- -------- -------- -------- --------- --------- -------
Deferred tax relating to
change in tax rates - - - - (3.4) (3.4)
------------------------------ ---- -------- -------- -------- --------- --------- -------
Deferred tax relating to
retirement benefit scheme - - - - (9.6) (9.6)
------------------------------ ---- -------- -------- -------- --------- --------- -------
Interest rate swaps - cash
flow hedge - - 0.5 - - 0.5
------------------------------ ---- -------- -------- -------- --------- --------- -------
Current tax on interest
rate swaps - cash flow
hedge - - (0.1) - - (0.1)
------------------------------ ---- -------- -------- -------- --------- --------- -------
Total comprehensive income
for the period - - 0.4 0.8 29.4 30.6
------------------------------ ---- -------- -------- -------- --------- --------- -------
Dividends paid 4.5 - - - - (13.4) (13.4)
------------------------------ ---- -------- -------- -------- --------- --------- -------
Own shares acquired - - - - (12.4) (12.4)
------------------------------ ---- -------- -------- -------- --------- --------- -------
Fair value of share-based
payments - - - - 1.0 1.0
------------------------------ ---- -------- -------- -------- --------- --------- -------
Deferred tax relating to
employee share schemes
charged directly to equity - - - - (0.7) (0.7)
------------------------------ ---- -------- -------- -------- --------- --------- -------
At 1 October 2022 50.3 54.3 0.4 (14.2) 119.7 210.5
------------------------------ ---- -------- -------- -------- --------- --------- -------
Loss for the period - - - - (14.4) (14.4)
------------------------------ ---- -------- -------- -------- --------- --------- -------
Net exchange differences
offset in reserves - - - 0.3 - 0.3
------------------------------ ---- -------- -------- -------- --------- --------- -------
Deferred tax relating to
other temporary differences - - - - (0.2) (0.2)
------------------------------ ---- -------- -------- -------- --------- --------- -------
Remeasurement loss recognised
on retirement benefit scheme - - - - (31.8) (31.8)
------------------------------ ---- -------- -------- -------- --------- --------- -------
Deferred tax relating to
retirement benefit scheme - - - - 6.9 6.9
------------------------------ ---- -------- -------- -------- --------- --------- -------
Deferred tax relating to
change in tax rates - - - - 1.1 1.1
------------------------------ ---- -------- -------- -------- --------- --------- -------
Interest rate swaps - cash
flow hedge - - 0.4 - - 0.4
------------------------------ ---- -------- -------- -------- --------- --------- -------
Total comprehensive income
for the period - - 0.4 0.3 (38.4) (37.7)
------------------------------ ---- -------- -------- -------- --------- --------- -------
Dividends paid 4.5 - - - - (13.4) (13.4)
------------------------------ ---- -------- -------- -------- --------- --------- -------
Fair value of share-based
payments - - - - 0.7 0.7
------------------------------ ---- -------- -------- -------- --------- --------- -------
Deferred tax relating to
employee share schemes
charged directly to equity - - - - (0.7) (0.7)
------------------------------ ---- -------- -------- -------- --------- --------- -------
At 30 September 2023 50.3 54.3 0.8 (13.9) 67.9 159.4
------------------------------ ---- -------- -------- -------- --------- --------- -------
Other reserves consist of the capital redemption reserve of $0.6
million (2022: $0.6 million) and the translation reserve of $(14.5)
million (2022: $(14.8) million). All movements in other reserves
relate to the translation reserve.
Notes to the accounts
1 Basis of preparation
Avon Protection plc is a public limited company incorporated and
domiciled in England and Wales and its ordinary shares are traded
on the London Stock Exchange.
The financial period presents 52 weeks ended 30 September 2023
(prior financial period 52 weeks ended 1 October 2022). The
financial statements have been prepared on a going concern basis
and in accordance with U.K. adopted International Accounting
Standards. The financial statements have been prepared under the
historical cost convention except for derivative instruments which
are held at fair value.
The financial information set out above does not constitute the
company's statutory accounts for the periods ended 30 September
2023 or 1 October 2022 but is derived from those accounts.
Statutory accounts for 2022 have been delivered to the registrar of
companies, and those for 2023 will be delivered in due course. The
auditor has reported on those accounts; their reports were (i)
unqualified, (ii) did not include a reference to any matters to
which the auditor drew attention by way of emphasis without
qualifying their report and (iii) did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006.
2.1 Operating segments
The Group Executive team is responsible for allocating resources
and assessing performance of the operating segments. Operating
segments are therefore reported in a manner consistent with the
internal reporting provided to the Group Executive team.
The Group has, following a reorganisation, two different
continuing operating and reportable segments, these being Head
Protection and Respiratory Protection. In the prior period the
Group had two continuing operating and reportable segments,
Respiratory and Head Protection, and Armour. The Armour business
was formally closed in the second half of the 2023 financial period
and has therefore been reclassified as into discontinued
operations, with comparatives restated accordingly.
Adjustments
Respiratory Head and
52 weeks ended 30 September Protection Protection Total discontinued(1) Total
2023 $m $m $m $m $m
----------- ----------- ------ ---------------- -------
Revenue 156.9 86.9 243.8 - 243.8
------------------------------------- ----------- ----------- ------ ---------------- -------
Adjusted EBITDA 36.6 (0.9) 35.7 (2.9) 32.8
------------------------------------- ----------- ----------- ------ ---------------- -------
Depreciation and amortisation (7.3) (7.2) (14.5) - (14.5)
------------------------------------- ----------- ----------- ------ ---------------- -------
Impairment charges - - - (24.6) (24.6)
------------------------------------- ----------- ----------- ------ ---------------- -------
Amortisation of acquired intangibles - - - (6.3) (6.3)
------------------------------------- ----------- ----------- ------ ---------------- -------
Operating profit/(loss) 29.3 (8.1) 21.2 (33.8) (12.6)
------------------------------------- ----------- ----------- ------ ---------------- -------
Finance costs (7.2) (0.4) (7.6)
------------------------------------- ----------- ----------- ------ ---------------- -------
Profit/(loss) before taxation 14.0 (34.2) (20.2)
------------------------------------- ----------- ----------- ------ ---------------- -------
Taxation (1.9) 5.7 3.8
------------------------------------- ----------- ----------- ------ ---------------- -------
(Loss)/profit for the period
from continuing operations 12.1 (28.5) (16.4)
------------------------------------- ----------- ----------- ------ ---------------- -------
Discontinued operations - profit
for the year - 2.0 2.0
------------------------------------- ----------- ----------- ------ ---------------- -------
(Loss)/profit for the year 12.1 (26.5) (14.4)
------------------------------------- ----------- ----------- ------ ---------------- -------
Basic earnings per share (cents) 40.3c (88.3c) (48.0c)
------------------------------------- ----------- ----------- ------ ---------------- -------
Diluted earnings per share
(cents) 40.3c (88.3c) (48.0c)
------------------------------------- ----------- ----------- ------ ---------------- -------
Adjustments
Respiratory Head and
52 weeks ended 1 October 2022 Protection Protection Total discontinued(1) Total
(restated)(2) $m $m $m $m $m
------------------------------------- ----------- ----------- ------ ---------------- -------
Revenue 193.0 70.5 263.5 - 263.5
------------------------------------- ----------- ----------- ------ ---------------- -------
Adjusted EBITDA 42.4 (3.6) 38.8 (1.6) 37.2
------------------------------------- ----------- ----------- ------ ---------------- -------
Depreciation and amortisation (8.5) (6.5) (15.0) - (15.0)
------------------------------------- ----------- ----------- ------ ---------------- -------
Impairment charges (0.4) - (0.4) (4.0) (4.4)
------------------------------------- ----------- ----------- ------ ---------------- -------
Amortisation of acquired intangibles - - - (6.8) (6.8)
------------------------------------- ----------- ----------- ------ ---------------- -------
Operating profit/(loss) 33.5 (10.1) 23.4 (12.4) 11.0
------------------------------------- ----------- ----------- ------ ---------------- -------
Finance costs (3.7) (1.3) (5.0)
------------------------------------- ----------- ----------- ------ ---------------- -------
Profit/(loss) before taxation 19.7 (13.7) 6.0
------------------------------------- ----------- ----------- ------ ---------------- -------
Taxation (3.1) 2.8 (0.3)
------------------------------------- ----------- ----------- ------ ---------------- -------
Profit/(loss) for the period
from continuing operations 16.6 (10.9) 5.7
------------------------------------- ----------- ----------- ------ ---------------- -------
Discontinued operations - loss
for the year - (13.3) (13.3)
------------------------------------- ----------- ----------- ------ ---------------- -------
Profit/(loss) for the year 16.6 (24.2) (7.6)
------------------------------------- ----------- ----------- ------ ---------------- -------
Basic earnings per share (cents) 54.7c (79.8c) (25.1c)
------------------------------------- ----------- ----------- ------ ---------------- -------
Diluted earnings per share
(cents) 54.4c (79.3c) (24.9c)
------------------------------------- ----------- ----------- ------ ---------------- -------
1 Refer to Adjusted Performance Measures section for a full
breakdown of adjusted measures, including a reconciliation between
adjusted EBITDA and statutory operating profit by line item. The
($2.9) million adjusted EBITDA is the $1.5 million transition costs
and $1.4 million of restructuring costs (2022: $1.6 million of
restructuring costs).
2 Comparatives for the 52 weeks ended 1 October 2022 have been
restated to reflect the discontinuation of the Armour business.
Revenue by line of business
52 weeks ended 30 September 52 weeks ended 1 October
2023 2022
------------------------------- ---------------------------------
Respiratory Head Respiratory Head
Protection Protection Total Protection Protection Total
$m $m $m $m $m $m
----------- ----------- ----- ----------- ----------- -------
U.S. DOD 67.1 42.5 109.6 63.2 35.5 98.7
--------------------- ----------- ----------- ----- ----------- ----------- -----
Commercial Americas 30.5 27.0 57.5 40.5 25.2 65.7
--------------------- ----------- ----------- ----- ----------- ----------- -----
U.K. & International 59.3 17.4 76.7 89.3 9.8 99.1
--------------------- ----------- ----------- ----- ----------- ----------- -----
156.9 86.9 243.8 193.0 70.5 263.5
--------------------- ----------- ----------- ----- ----------- ----------- -----
U.S. DOD revenues, sold directly and through indirect channels,
represent the only customer which individually contributes more
than 10% to Group revenues.
2.2 Discontinued operations
At 30 September 2023 all outstanding armour orders have been
delivered to customers, and Armour operations have fully closed. As
such the Armour business has been classified as discontinued,
including restatement of prior period comparatives. The closure of
Armour included the sale of assets relating to the Lexington
facility as further described in the gain on disposal section
below.
In September 2020 the Group divested of the milkrite | InterPuls
business, resulting in its classification as discontinued. As part
of the divestment, the Group entered into a Manufacturing Service
Agreement with the purchasers to provide manufacturing support,
which was extended to 30 September 2023 during the period. As the
activity under this agreement is not part of the continuing
operations of the Group, related revenue and costs have been
classified as discontinued operations.
milkrite milkrite
| |
Armour InterPuls 2023 Armour InterPuls 2022
$m $m $m $m $m $m
------- ----------- ------ ------- ----------- -------
Revenue 30.5 6.2 36.7 8.4 3.2 11.6
--------------------------------------- ------- ----------- ------ ------- ----------- -------
Cost of sales (36.5) (4.0) (40.5) (21.3) (5.8) (27.1)
--------------------------------------- ------- ----------- ------ ------- ----------- -------
Gross (loss)/profit (6.0) 2.2 (3.8) (12.9) (2.6) (15.5)
--------------------------------------- ------- ----------- ------ ------- ----------- -------
Research and development costs - - - (0.2) - (0.2)
--------------------------------------- ------- ----------- ------ ------- ----------- -------
General and administrative
expenses (2.8) - (2.8) (3.9) - (3.9)
--------------------------------------- ------- ----------- ------ ------- ----------- -------
Release of contingent consideration(1) - - - 3.9 - 3.9
--------------------------------------- ------- ----------- ------ ------- ----------- -------
Operating loss (8.8) 2.2 (6.6) (13.1) (2.6) (15.7)
--------------------------------------- ------- ----------- ------ ------- ----------- -------
Finance costs (0.2) - (0.2) (1.4) - (1.4)
--------------------------------------- ------- ----------- ------ ------- ----------- -------
(Loss)/profit before taxation (9.0) 2.2 (6.8) (14.5) (2.6) (17.1)
--------------------------------------- ------- ----------- ------ ------- ----------- -------
Taxation 1.8 (0.5) 1.3 3.2 0.6 3.8
--------------------------------------- ------- ----------- ------ ------- ----------- -------
(Loss)/profit from discontinued
operations related to trading (7.2) 1.7 (5.5) (11.3) (2.0) (13.3)
--------------------------------------- ------- ----------- ------ ------- ----------- -------
Gain on disposal before tax 9.1 - 9.1 - - -
--------------------------------------- ------- ----------- ------ ------- ----------- -------
Tax on disposal (1.6) - (1.6) - - -
--------------------------------------- ------- ----------- ------ ------- ----------- -------
Gain on disposal after tax 7.5 - 7.5 - - -
--------------------------------------- ------- ----------- ------ ------- ----------- -------
Total profit/(loss) from discontinued
operations 0.3 1.7 2.0 (11.3) (2.0) (13.3)
--------------------------------------- ------- ----------- ------ ------- ----------- -------
Basic earnings per share 1.0c 5.7c 6.7c (37.3c) (6.6c) (43.9c)
--------------------------------------- ------- ----------- ------ ------- ----------- -------
Diluted earnings per share 1.0c 5.7c 6.7c (37.0c) (6.6c) (43.6c)
--------------------------------------- ------- ----------- ------ ------- ----------- -------
1 In 2022 revenue expectations from the DLA ESAPI body armour
contract were reduced, resulting in a gain of $3.9 million on
release of the net present value of contingent consideration
payable.
Gain on disposal - Armour
In the second half of the financial period the Group completed
the sale of Armour assets at the Lexington facility for cash
consideration of $7.4 million. The sale agreement also included a
sublease of the Lexington facility to the purchaser. The Group has
retained its lease liabilities relating to the Lexington head
lease. The Group also separately disposed of other Armour assets
for cash consideration of $0.5 million.
The total gain on disposal relating to Armour operations is
reconciled below.
2023
$m
-----
Cash consideration received - Lexington 7.4
------------------------------------------- -----
Cash consideration received - other assets 0.5
------------------------------------------- -----
Inventories disposed (2.0)
------------------------------------------- -----
Plant and machinery disposed (0.5)
------------------------------------------- -----
Finance lease adjustment 4.1
------------------------------------------- -----
Transaction costs (0.4)
------------------------------------------- -----
Gain on disposal before tax 9.1
------------------------------------------- -----
Tax on disposal (1.6)
------------------------------------------- -----
Gain on disposal after tax 7.5
------------------------------------------- -----
The finance lease adjustment recognises the present value of the
finance lease receipts over the sublease term. The right of use
lease asset for the Lexington site was previously impaired to $nil
in the 2021 financial period. Cash consideration was fully paid in
the current period.
3.1 Intangible assets
Acquired Development Computer
Goodwill intangibles expenditure software Total
$m $m $m $m $m
-------- ------------ ------------ --------- -------
At 2 October 2021
---------------------------- -------- ------------ ------------ --------- -------
Cost 88.8 98.2 64.6 15.1 266.7
---------------------------- -------- ------------ ------------ --------- -------
Accumulated amortisation
and impairment - (39.3) (41.4) (5.0) (85.7)
---------------------------- -------- ------------ ------------ --------- -------
Net book amount 88.8 58.9 23.2 10.1 181.0
---------------------------- -------- ------------ ------------ --------- -------
52 weeks ended 1 October
2022
---------------------------- -------- ------------ ------------ --------- -------
Opening net book amount 88.8 58.9 23.2 10.1 181.0
---------------------------- -------- ------------ ------------ --------- -------
Exchange differences (0.1) - (1.2) - (1.3)
---------------------------- -------- ------------ ------------ --------- -------
Additions - - 5.8 0.2 6.0
---------------------------- -------- ------------ ------------ --------- -------
Impairments - - (2.0) - (2.0)
---------------------------- -------- ------------ ------------ --------- -------
Amortisation - (6.8) (4.7) (1.2) (12.7)
---------------------------- -------- ------------ ------------ --------- -------
Closing net book amount 88.7 52.1 21.1 9.1 171.0
---------------------------- -------- ------------ ------------ --------- -------
At 1 October 2022
---------------------------- -------- ------------ ------------ --------- -------
Cost 88.7 98.2 69.2 15.3 271.4
---------------------------- -------- ------------ ------------ --------- -------
Accumulated amortisation
and impairment - (46.1) (48.1) (6.2) (100.4)
---------------------------- -------- ------------ ------------ --------- -------
Net book amount 88.7 52.1 21.1 9.1 171.0
---------------------------- -------- ------------ ------------ --------- -------
52 weeks ended 30 September
2023
---------------------------- -------- ------------ ------------ --------- -------
Opening net book amount 88.7 52.1 21.1 9.1 171.0
---------------------------- -------- ------------ ------------ --------- -------
Exchange differences 0.1 - 0.3 - 0.4
---------------------------- -------- ------------ ------------ --------- -------
Additions - - 3.1 0.5 3.6
---------------------------- -------- ------------ ------------ --------- -------
Impairments (23.4) - (0.2) (0.6) (24.2)
---------------------------- -------- ------------ ------------ --------- -------
Amortisation - (6.3) (4.1) (1.2) (11.6)
---------------------------- -------- ------------ ------------ --------- -------
Closing net book amount 65.4 45.8 20.2 7.8 139.2
---------------------------- -------- ------------ ------------ --------- -------
At 30 September 2023
---------------------------- -------- ------------ ------------ --------- -------
Cost 88.8 98.2 69.5 15.0 271.5
---------------------------- -------- ------------ ------------ --------- -------
Accumulated amortisation
and impairment (23.4) (52.4) (49.3) (7.2) (132.3)
---------------------------- -------- ------------ ------------ --------- -------
Net book amount 65.4 45.8 20.2 7.8 139.2
---------------------------- -------- ------------ ------------ --------- -------
The remaining useful economic life of the development
expenditure is up to ten years.
Computer software associated with Armour was impaired by $0.6
million in the period, following the closure of this business.
Impairment review of goodwill
Goodwill is tested for impairment annually and whenever there is
an indication of impairment at the level of the cash-generating
unit (CGU) to which it is allocated.
In line with the change in operating segments set out in note
2.1, goodwill has been allocated to Head Protection and Respiratory
Protection CGUs. Head Protection includes goodwill from the
Ceradyne and Team Wendy acquisitions, which are now part of a fully
integrated business segment. Respiratory goodwill is related to
three legacy acquisitions that completed in 2016 and earlier
financial periods.
Goodwill has been allocated to CGUs on the basis of historic
acquisitions, which provides a more accurate basis than allocating
by relative value given each of the acquisitions related fully to
Head Protection or Respiratory products individually.
Net book
Cost Impairment amount
2023 allocation of goodwill by CGU $m $m $m
---- ---------- --------
Respiratory Protection 2.5 - 2.5
----------------------------------- ---- ---------- --------
Head Protection 86.3 (23.4) 62.9
----------------------------------- ---- ---------- --------
Total goodwill 88.8 (23.4) 65.4
----------------------------------- ---- ---------- --------
In the prior period goodwill was entirely allocated to the
previous single operating segment and CGU, Respiratory and Head
Protection.
The total carrying value of each CGU is tested for impairment
against corresponding recoverable amounts. CGU carrying values
include associated goodwill, other intangible assets and property,
plant and equipment, and attributable working capital.
The recoverable amount of the CGUs has been determined based on
value in use calculations, using discounted cash flow projections
for a five-year period plus a terminal value based upon a long-term
perpetuity growth rate of 1.5% (2022: 2.0%). The growth rate was
selected as specifically appropriate for the Head Protection review
considered further below. Any reasonable adjustment to the growth
rate that could be made for the Respiratory protection review would
still leave substantial headroom.
Value in use calculations are based on the Group's Board
approved five-year plan which has been adjusted to exclude the
impact of capital expenditure considered expansionary and certain
linked earnings and cash flows. Excluded expansionary items relate
to new helmet programmes which, although specifically identified
and planned, have yet to incur significant capital expenditure.
Central costs in the five-year plan are allocated to Respiratory
Protection and Head Protection CGUs based on an average of relative
net assets, payroll costs and revenues. Central costs include
Board, Finance, IT, HR, Legal and Communications, where these are
not directly attributable to an individual CGU.
It is considered appropriate to extrapolate cash flows into
perpetuity as the fifth year represents a reasonable estimate of
steady state business operations, excluding expansionary items.
Long-term growth has been adjusted to a slightly lower level this
year, accounting for the risk of slower incremental progress once
the significant opportunities in the five-year plan have been
delivered without further expansionary expenditure. The post-tax
discount rates applied were 10.4% (Respiratory Protection) and
10.9% (Head Protection) (2022: 9.9%, sole Respiratory and Head
Protection CGU). Equivalent pre-tax rates were 14.2% and 14.9%
(2022: 14.3%). Post-tax discount rates were derived by external
experts taking into consideration current market conditions.
The Group's Board-approved five-year plan includes management's
estimate of revenue, gross margin and other financial assumptions
that will be achieved under the new STAR strategy. These
consolidate risk-adjusted granular forecasts for individual
products or initiatives that consider market opportunities,
execution risk, past experience and other relevant factors.
The Group has assessed the potential impact of climate change
for the next five years to be low, and have therefore not included
climate related impacts in the value in use calculation. Beyond
2028 although there are potential costs associated with climate
change, these are balanced with significant opportunity for
increased demand for protective products in a changing global
security environment. Given this balanced view no climate related
risk adjustments have been made to long-term projections beyond
five years.
Head Protection CGU
The recoverable amount of the Head Protection CGU of $182.1
million, determined based on value in use calculations, is less
than the carrying amount of the associated CGU net assets and has
therefore resulted in an impairment to goodwill of $23.4
million.
An impairment has arisen due to a Head Protection level CGU test
being performed for the first time which includes all goodwill
associated with the 2020 Ceradyne acquisition of $28.0 million and
2021 Team Wendy acquisition of $58.3 million. In 2021, goodwill
related to the Ceradyne acquisition was allocated in full to the
sole Respiratory and Head protection operating segment, and as such
was unaffected by the 2021 armour-related impairments. In 2022, the
decision to present Armour as a separate operating segment was
taken, with nil goodwill value allocated to the Armour segment.
This was based on a relative value approach, which attributed no
value to Armour given trading losses forecast to closure.
The exclusion of cash flows considered expansionary, which form
a part of the Group's long-term forecasts, have also contributed to
the impairment.
The calculation of the recoverable amount for the Head
Protection CGU is highly sensitive to small changes in key
assumptions, considered to be revenue growth, gross profit margins,
the discount rate and the perpetuity growth rate. The Group has
carried out sensitivity analysis on the Head Protection CGU
impairment test, using reasonably plausible scenarios focused on
changes to key assumptions applied in the value in use
calculations. The table below provides the expected revenue and
gross margin growth rates included in the calculation. Annual
growth is expected to be higher in earlier years of the five-year
plan.
Annual growth in revenue from 2024/25 to 2027/28 5 to 18%
------------------------------------------------------ --------
Annual growth in gross margin from 2024/25 to 2027/28 8 to 31%
------------------------------------------------------ --------
If the compound annual revenue growth rate over the first five
years of the forecast was reduced by 1.0%, with the impact on the
fifth year extrapolated in calculating terminal value, the
impairment to Head Protection CGU goodwill would be increased by
$22.0 million. There are many revenue assumptions which are
included in the forecast, with the impact a 1.0% change in revenue
growth rate disclosed. Small changes in other aspects of the
revenue assumptions would have material impact on the value in use
which we have not disclosed. A 1.0% change in the revenue growth
rate demonstrates the significant impact on a wide range of these
revenue assumptions.
Sensitivity to other key assumptions is as follows:
Increase
to Head
CGU impairment
$m
---------------------------------------------- ---------------
Gross margin for all products reduced by 1.0% 13.8
---------------------------------------------- ---------------
Post-tax discount rate increased by 0.5% 9.5
---------------------------------------------- ---------------
Perpetuity growth rate reduced by 0.5% 6.3
---------------------------------------------- ---------------
Respiratory Protection CGU
Value in use for the Respiratory Protection CGU is substantially
greater than it's carrying amount. Sensitivity analysis has been
performed which shows there are no reasonable changes in
assumptions that would result in an impairment to goodwill and
other net assets associated with the Respiratory Protection
CGU.
Impairment review of development costs
Development assets are grouped into the smallest identifiable
group of assets generating future cash flows largely independent
from other assets, known as cash-generating units (CGU). Included
in CGUs are development expenditure, tangible assets and inventory
related to the product group. CGUs are tested for impairment
annually and whenever there is an indication of impairment. The
CGUs have been tested against their recoverable amount deemed to be
their value in use. Cash flows were discounted using a post-tax
rate of 10.9% (2022: 9.9%). Equivalent pre-tax rates were 14.9%
(2022: 14.3%). Cash flows were adjusted to incorporate risks
specific to each CGU. Sensitivity analysis demonstrated any
reasonably possible change in discount rate to incorporate an
uplift to the size premium for smaller CGUs would not result in any
additional impairments.
As a result of the review the following impairment charges were
identified. Following the impairment charges recognised,
recoverable amounts were equal to carrying amounts.
Current period:
-- Assets relating to one of the products in the Group's escape
hood range fully exceptionally impaired by $0.5 million due to its
discontinuation ($0.2 million development expenditure, $0.3 million
plant and machinery).
Prior period:
-- General Service Respirator (GSR) fully exceptionally impaired
by $2.9 million due to a change made on costing assumptions and
forecast cash flow periods, driven by changes in market factors
($0.7 million development expenditure, $2.2 million plant and
machinery).
-- Other respiratory asset development expenditure impaired by
$1.1 million due to a change in expected forecast cash flows and
market factors. $0.7 million of these impairments were considered
exceptional.
-- Armour-specific development expenditure impaired by $0.2
million for a small number of reclassified assets.
Development costs include $1.2 million relating to the boots and
gloves product range, which was awarded an NSPA framework contract
during the period. Given reliance on forecast future NSPA revenues
and other upcoming commercial opportunities impairment sensitivity
for the boots and gloves CGU has been disclosed. The carrying
amount of the CGU includes attributable fixed assets and inventory.
Given the need to secure profitable future orders the changes in
revenue and gross margin to the breakeven position disclosed in the
table below are considered reasonably possible. A further reduction
of 50% in forecast revenues would lead to an impairment of $1.1m
and a 1500bps reduction in gross margin would lead to an impairment
of $0.7m.
Individual assumptions required
for the estimated recoverable
amount to equal to the carrying
amount
------------------------------------
Carrying Value in Post-tax Forecast Change in
amount use discount revenue gross margin
$m $m rate reduction
--------------------- -------- -------- --------- ---------- -------------
Boots and gloves CGU 3.0 5.7 27.0% (35.0%) (1200bps)
--------------------- -------- -------- --------- ---------- -------------
At the period end $2.6 million of development costs relate to
technology under development (2022: $12.2 million), including $2.6
million relating to ACH GEN II First Article Testing approval
(2022: $1.5 million). Formal ACH GEN II First Article Testing
approval was received post period end.
4.1 Cash flows from operations
2022
2023 (restated)(1)
$m $m
------ ---------------
Continuing operations
----------------------------------------------------------- ------ ---------------
(Loss)/profit for the period (16.4) 5.7
----------------------------------------------------------- ------ ---------------
Taxation (3.8) 0.3
----------------------------------------------------------- ------ ---------------
Depreciation 9.2 9.1
----------------------------------------------------------- ------ ---------------
Amortisation of intangible assets 11.6 12.7
----------------------------------------------------------- ------ ---------------
Loss on disposal (excluding Armour sale transaction) 0.3 -
----------------------------------------------------------- ------ ---------------
Restructuring-related impairment of non-current
assets 0.7 0.4
----------------------------------------------------------- ------ ---------------
Impairment of other non-current assets (excluding
restructuring-related impairments) 0.5 4.0
----------------------------------------------------------- ------ ---------------
Impairment of goodwill 23.4 -
----------------------------------------------------------- ------ ---------------
Defined benefit pension scheme cost 1.0 0.8
----------------------------------------------------------- ------ ---------------
Net finance costs 7.6 5.0
----------------------------------------------------------- ------ ---------------
Fair value of share-based payments 0.7 1.0
----------------------------------------------------------- ------ ---------------
Transition costs expensed 1.5 -
----------------------------------------------------------- ------ ---------------
Restructuring costs expensed 1.4 1.6
----------------------------------------------------------- ------ ---------------
(Increase)/decrease in inventories (6.8) 1.7
----------------------------------------------------------- ------ ---------------
(Increase)/decrease in receivables (26.2) 13.2
----------------------------------------------------------- ------ ---------------
(Decrease)/increase in payables and provisions (2.2) 3.2
----------------------------------------------------------- ------ ---------------
Cash flows from continuing operations before restructuring
and transition costs 2.5 58.7
----------------------------------------------------------- ------ ---------------
Restructuring and transition costs paid (2.3) (1.0)
----------------------------------------------------------- ------ ---------------
Cash flows from continuing operations 0.2 57.7
----------------------------------------------------------- ------ ---------------
Discontinued operations
----------------------------------------------------------- ------ ---------------
Profit/(loss) for the period 2.0 (13.3)
----------------------------------------------------------- ------ ---------------
Taxation 0.3 (3.8)
----------------------------------------------------------- ------ ---------------
Impairments 0.6 0.2
----------------------------------------------------------- ------ ---------------
Net finance costs 0.2 1.4
----------------------------------------------------------- ------ ---------------
Change in contingent consideration - (3.9)
----------------------------------------------------------- ------ ---------------
Gain on disposal before tax (9.1) -
----------------------------------------------------------- ------ ---------------
Decrease/(increase) in inventories 16.7 (6.6)
----------------------------------------------------------- ------ ---------------
Increase in receivables (1.3) (1.4)
----------------------------------------------------------- ------ ---------------
(Decrease)/increase in payables and provisions (6.2) 3.2
----------------------------------------------------------- ------ ---------------
Cash flows from discontinued operations 3.2 (24.2)
----------------------------------------------------------- ------ ---------------
Cash flows from operations 3.4 33.5
----------------------------------------------------------- ------ ---------------
1 Comparatives for the 52 weeks ended 1 October 2022 have been
restated to reflect the discontinuation of the Armour business.
4.2 Borrowings
2023 2022
$m $m
----- -----
Current
----------------------- ----- -----
Lease liabilities 4.3 4.1
----------------------- ----- -----
Non-current
----------------------- ----- -----
Bank loans 77.7 53.7
----------------------- ----- -----
Lease liabilities 16.6 19.7
----------------------- ----- -----
94.3 73.4
----------------------- ----- -----
Total Group borrowings 98.6 77.5
----------------------- ----- -----
Bank loans comprise drawings under the revolving credit
facility.
The Group has the following undrawn committed facilities:
2023 2022
$m $m
----- -----
Expiring beyond one year
--------------------------------------------- ----- -----
Total undrawn committed borrowing facilities 127.3 151.3
--------------------------------------------- ----- -----
Bank loans and overdrafts utilised 77.7 53.7
--------------------------------------------- ----- -----
Total Group 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.
The RCF is subject to financial covenants measured on a biannual
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 financial periods.
The RCF is drawn in short to medium-term tranches of debt which
are repayable within 12 months of draw-down. These tranches of debt
can be rolled over provided certain conditions are met, including
covenant compliance. The Group considers that it is highly unlikely
it would be unable to exercise its right to roll over the debt
based on forecast covenant compliance. Even in a severe downside
scenario there are mitigating actions (within the control of the
Group) that could be taken to maintain compliance with these
conditions, including future covenant requirements. The Directors
therefore believe that the Group has the ability and the intent to
roll over the drawn RCF amounts when due and consequently has
presented the RCF as a non-current liability.
The RCF is floating rate priced on the Secured Overnight
Financing Rate (SOFR) plus a margin of 1.45-2.35% depending on
leverage. The Group has provided the lenders with a negative pledge
in respect of certain shares in Group companies.
In addition to the RCF our U.S. operations have access to a $5.0
million overdraft facility, used to manage short-term liquidity
requirements.
4.3 Net finance costs
2023 2022
(restated)
(1)
$m $m
----- ------------
Interest payable on bank loans and overdrafts (6.3) (2.5)
------------------------------------------------ ----- ------------
Interest payable in respect of leases (0.7) (0.7)
------------------------------------------------ ----- ------------
Amortisation of finance fees (0.6) (0.5)
------------------------------------------------ ----- ------------
Net interest cost: U.K. defined benefit pension
scheme (0.4) (1.3)
------------------------------------------------ ----- ------------
Other finance income 0.4 -
------------------------------------------------ ----- ------------
Net finance costs (7.6) (5.0)
------------------------------------------------ ----- ------------
1 Comparatives for the 52 weeks ended 1 October 2022 have been
restated to reflect the discontinuation of the Armour business.
Other finance income comprises $0.1 million finance lease
interest and $0.3 million bank interest on cash balances.
4.4 Analysis of net cash/(debt)
At At
1 October Non-cash Exchange 30 September
2022 Cash flow movements movements 2023
$m $m $m $m $m
----------- ---------- ----------- ----------- --------------
Cash and cash equivalents 9.5 3.7 - - 13.2
-------------------------- ----------- ---------- ----------- ----------- --------------
Bank loans (53.7) (24.0) - - (77.7)
-------------------------- ----------- ---------- ----------- ----------- --------------
Net debt excluding
lease liabilities (44.2) (20.3) - - (64.5)
-------------------------- ----------- ---------- ----------- ----------- --------------
Lease liabilities (23.8) 5.1 (1.5) (0.7) (20.9)
-------------------------- ----------- ---------- ----------- ----------- --------------
Net debt (68.0) (15.2) (1.5) (0.7) (85.4)
-------------------------- ----------- ---------- ----------- ----------- --------------
At At
2 October Non-cash Exchange 1 October
2021 Cash flow movements movements 2022
$m $m $m $m $m
----------- ---------- ----------- ----------- -----------
Cash and cash equivalents 14.1 (4.2) - (0.4) 9.5
-------------------------- ----------- ---------- ----------- ----------- -----------
Bank loans (40.9) (12.8) - - (53.7)
-------------------------- ----------- ---------- ----------- ----------- -----------
Net debt excluding
lease liabilities (26.8) (17.0) - (0.4) (44.2)
-------------------------- ----------- ---------- ----------- ----------- -----------
Lease liabilities (29.1) 5.1 (1.4) 1.6 (23.8)
-------------------------- ----------- ---------- ----------- ----------- -----------
Net debt (55.9) (11.9) (1.4) 1.2 (68.0)
-------------------------- ----------- ---------- ----------- ----------- -----------
Cash flows against lease liabilities were as follows:
2023 2022
$m $m
----- -----
Repayment of lease liability - continuing operations 3.5 3.2
----------------------------------------------------- ----- -----
Finance costs paid in respect of leases - continuing
operations 0.7 0.7
----------------------------------------------------- ----- -----
Lease cash flows related to discontinued operations 0.9 1.2
----------------------------------------------------- ----- -----
Total lease cash flows 5.1 5.1
----------------------------------------------------- ----- -----
4.5 Dividends
On 27 January 2023, the shareholders approved a final dividend
of 30.6c per qualifying ordinary share in respect of the 52 weeks
ended 1 October 2022. This was paid on 10 March 2023 utilising $9.1
million of shareholders' funds.
The Board of Directors declared an interim dividend of 14.3c
(2022: 14.3c) per qualifying ordinary share in respect of the 52
weeks ended 30 September 2023. This was paid on 8 September 2023
utilising $4.3 million (2022: $4.3 million) of shareholders'
funds.
The Board is recommending a final dividend of 15.3c per share
(2022: 30.6c) which together with the 14.3c interim dividend gives
a total dividend of 29.6c (2022: 44.9c). The final dividend will be
paid on 8 March 2024 to shareholders on the register at 9 February
2024 with an ex-dividend date of 8 February 2024.
5.1 Restatements
Prior period comparatives have been restated to present the
Armour business as a discontinued operation, and to reclassify
certain expenses in the Consolidated Statement of Comprehensive
Income.
Expense reclassifications include disclosure of research and
development costs as a separate line item below gross profit, and
recategorisation of selling and distribution costs. The 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. Selling and distribution costs have been disaggregated into
sales and marketing expenses, presented in a separate line below
gross profit, and freight and distribution costs which have been
reclassified into cost of sales.
This presentation reflects the way the business performance will
be monitored in future, with separate disclosure of research and
development appropriate as an integral part of operations. It is
also consistent and comparable with common market practice and
therefore provides reliable and more relevant information to the
reader. Overall operating loss figures for the previous period
remain unchanged as this is only a presentational restatement. A
reconciliation of reported prior period to restated figures is
presented below. Equivalent reconciliations for restatement of
adjusted performance metrics are provided in APMs note 13.
Consolidated Statement of Comprehensive Income for the 52 weeks
ended 1 October 2022
Statutory total
----------------------------------------------------------
Research Selling
Previously Remove and and
reported Armour development distribution Restated
Continuing operations $m $m $m $m $m
------------------------------------ ---------- ------- ------------ ------------- --------
Revenue 271.9 (8.4) - - 263.5
------------------------------------ ---------- ------- ------------ ------------- --------
Cost of sales (193.7) 20.1 8.8 (9.8) (174.6)
------------------------------------ ---------- ------- ------------ ------------- --------
Gross profit 78.2 11.7 8.8 (9.8) 88.9
------------------------------------ ---------- ------- ------------ ------------- --------
Selling and distribution costs
/ Sales and marketing expenses (26.0) 1.2 - 9.8 (15.0)
------------------------------------ ---------- ------- ------------ ------------- --------
Research and development costs - - (10.2) - (10.2)
------------------------------------ ---------- ------- ------------ ------------- --------
General and administrative expenses (54.3) 0.2 1.4 - (52.7)
------------------------------------ ---------- ------- ------------ ------------- --------
Operating profit (2.1) 13.1 - - 11.0
------------------------------------ ---------- ------- ------------ ------------- --------
Net finance costs (6.4) 1.4 - - (5.0)
------------------------------------ ---------- ------- ------------ ------------- --------
Profit before tax (8.5) 14.5 - - 6.0
------------------------------------ ---------- ------- ------------ ------------- --------
Armour discontinued operations (note 2.2)
Armour
-------------------------------------------------
Research Selling
Previously and and
reported development distribution Restated
$m $m $m $m
------------------------------------------------- ---------- ------------ ------------- --------
Revenue 8.4 - - 8.4
------------------------------------------------- ---------- ------------ ------------- --------
Cost of sales (20.1) - (1.2) (21.3)
------------------------------------------------- ---------- ------------ ------------- --------
Gross profit (11.7) - (1.2) (12.9)
------------------------------------------------- ---------- ------------ ------------- --------
Selling and distribution costs / Sales
and marketing expenses (1.2) - 1.2 -
------------------------------------------------- ---------- ------------ ------------- --------
Research and development costs - (0.2) - (0.2)
------------------------------------------------- ---------- ------------ ------------- --------
General and administrative expenses
(including release of contingent consideration) (0.2) 0.2 - -
------------------------------------------------- ---------- ------------ ------------- --------
Operating profit/(loss) (13.1) - - (13.1)
------------------------------------------------- ---------- ------------ ------------- --------
Net finance costs (1.4) - - (1.4)
------------------------------------------------- ---------- ------------ ------------- --------
Profit before tax (14.5) - - (14.5)
------------------------------------------------- ---------- ------------ ------------- --------
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END
FR PPGUWGUPWPGU
(END) Dow Jones Newswires
November 21, 2023 02:00 ET (07:00 GMT)
Avon Technologies (AQSE:AVON.GB)
過去 株価チャート
から 11 2024 まで 12 2024
Avon Technologies (AQSE:AVON.GB)
過去 株価チャート
から 12 2023 まで 12 2024
