REG - Avon Protection PLC - Interim Results
21/05/2024 07:15
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RNS Number : 2511P Avon Protection PLC 21 May 2024
AVON PROTECTION PLC
("Avon" or the "Group")
INTERIM RESULTS FOR THE 26-WEEK PERIOD ENDED 30 MARCH 2024
STRONG FIRST HALF, TRANSFORMATION GAINING MOMENTUM
30 March 2024 1 April 2023 Change (constant currency)(4)
(restated) (1)
Group
Orders received $190.3m $125.4m 50.3%
Closing order book $199.0m $144.7m 37.1%
Revenue $127.1m $101.6m 24.2%
Adjusted(2) operating profit $11.9m $8.9m 40.0%
Adjusted(2) profit before tax $8.8m $5.7m 66.0%
Adjusted(2) basic earnings per share 22.3c 15.3c 59.3%
Interim dividend per share 7.2c 14.3c (49.7%)
Net debt excluding lease liabilities $57.3m $71.8m (20.2%)
Statutory results
Operating profit(3) from continuing operations $2.6m $3.9m
(Loss)/profit before tax from continuing operations $(1.5)m $0.3m
Basic loss per share from continuing operations (3.7c) (11.4c)
Net debt $76.5m $94.9m
Record $199m order book
· Significant strategic wins and orders in the first half and since H1
period end, including:
o New contract award worth up to £38m for the UK MoD General Service
Respirator and filters
o New rebreather contract from the German Navy
o US DOD $14m ACH (Advanced Combat Helmet) GEN II order
o $36m Next Generation IHPS (Integrated Head Protection System) delivery order
from the US Army
Transformation on track - excellent strategic progress
· IHPS successfully reached full run rate for delivery orders
· Consolidation of helmet manufacturing sites progressing as planned:
o Building production capacity for DOD programmes in Cleveland, Ohio
o First lot of ACH Gen II helmets finished in Cleveland and approved by
DCMA(5) for ballistic testing
o EPIC helmet finishing in Cleveland successfully ramped up to meet customer
demand
Group operational KPIs improving
· 23% productivity improvement(6) vs H1 2023
· 45% reduction in scrap(6) across all factories vs H1 2023
· Group inventory turns(6) increased 37% to 3.11x (H1 2023: 2.27x)
Gaining momentum
· On track to meet medium term goals set out in Capital Markets Day
· Continuous Improvement results so far give us confidence we can
achieve or exceed our operational targets
Confident in the outlook for H2, issuing updated FY 2024 guidance:
· Revenue growth c.10%
· Adjusted operating profit margin 10%
· Transformation investment c.$15m
· Cash conversion over 100%
· Net debt: EBITDA <1.5x, new $137m financing facility successfully
agreed
Jos Sclater, Chief Executive Officer, commented:
"We are making excellent progress towards our medium-term goals and are
increasingly excited by the growing momentum in our transformation programme.
The results in H1 demonstrate that our strategy is working and pace is
increasing, though we still have a lot to do. The work we have done so far to
drive improvement has revealed further opportunities for operational
improvement; this reinforces our confidence that we will deliver our
medium-term goals.
"We are seeing a growing awareness of the importance of high-quality
protection against chemical warfare and head injury. In particular, Russia's
deployment of chemical weapons in Ukraine has highlighted the need for
effective respiratory protection. As the leading supplier of mission-critical
head and respiratory protection to the US Department of Defence and other NATO
countries, we are well positioned to help protect the people who are
protecting us.
"More broadly, I am very pleased that we now have a much stronger business
that is delivering on major programmes and is improving fast. We have moved
quickly into execution phase of our STAR strategic plan and are already seeing
productivity improvement, new contract wins and further innovation to
revolutionise our world leading product portfolio."
For further enquiries, please contact:
Avon Protection plc
Jos Sclater, Chief Executive Officer +44 1225 896 848
Rich Cashin, Chief Financial Officer
Gabby Colley, Corporate Affairs Director +44 7891 206 239
Powerscourt
James White avonprotection@powerscourt-group.com
(mailto:avonprotection@powerscourt-group.com)
Maxim Hibbs
+44 7855 432 699
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 broadcast live at: https://brrmedia.news/AVON_HY_24
(https://brrmedia.news/AVON_HY_24)
To attend in person please contact: avonprotection@powerscourt-group.com
(mailto:avonprotection@powerscourt-group.com)
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.
Notes
(1) At 30 September 2023 Armour operations were 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 HY24 operating profit includes $3.1 million amortisation of
acquired intangibles and transformation costs of $6.2 million. See adjusted
performance section for full breakdown of adjustments and comparatives.
(4) Constant currency measures are provided in note 2.1.
(5) US Defense Contract Management Agency
(6) Productivity improvement is measured as revenue / direct headcount, scrap
is measured as scrap value / revenue and inventory turns is measured as cost
of sales / inventory. Full calculations are provided in note 2.1.
About Avon Protection plc:
We are a world leader in protective equipment, with a reputation for
innovative design, high quality and specialist materials expertise.
Our two businesses, Avon Protection and Team Wendy, supply our respiratory and
head protection portfolio to customers across the globe from our manufacturing
sites in the UK and North America.
With over 900 talented people, our shared purpose and core beliefs are to be
#FIERCE about Protecting Lives. It's why we come to work - and it's what
motivates us, every day, to do the best work we can.
For further information, please visit our website www.avon-protection-plc.com
(http://www.avon-protection-plc.com)
As a reminder, following a rebranding exercise carried out in H2 2023, the
previously reported operating segments of Respiratory Protection and Head
Protection will now be referred to as their trading business names: Avon
Protection and Team Wendy respectively throughout this document.
CEO REVIEW
Financial Summary
We made an excellent start to 2024 with strong order intake up 50% driven by
U.S. DOD & NSPA (NATO Support & Procurement Agency) orders in Avon
Protection and IHPS and ACH Gen II helmets in Team Wendy. This resulted in our
highest ever closing order book of $199m. The order pipeline is also
increasingly positive, with a strong degree of recurring business alongside
some large one-off opportunities that we are pursuing, but not counting on.
We continue to operate in strong and growing markets, and the current
geo-political situation is increasing the need for the unparalleled protection
that our products provide. Within Avon Protection, the threat of the use of
chemical or biological agents has increased and most recently we have seen the
U.S. State Department formally accuse Russia of using chemical weapons "as a
method of warfare" against Ukrainian troops. In Team Wendy, we continue to
operate in very supportive markets with ongoing replacement of aging helmet
fleets.
Group revenue, at constant currency, grew 24% to $127.1m, predominantly driven
by strong growth in deliveries of Team Wendy Next Generation IHPS and ACH Gen
II helmets to the U.S. DOD. Avon Protection saw a slight decline in revenue
reflecting the lack of U.S. DOD filter sales following our shipment of two
years-worth of orders in FY23, and a lower volume of U.S. mask shipments,
partially offset by NSPA mask deliveries and initial rebreather deliveries to
the German Navy.
Adjusted operating profit increased by 40% at constant currency, delivering an
adjusted operating margin of 9.4% (H1 2023: 8.8%). We saw a slight decline in
margin in Avon Protection due to:
· Nearly doubling inventory turns from 2.5 to nearly 5 turns. This
meant that some $1.8m of overhead unwound from the balance sheet, adversely
impacting H1 margin but the improvement in inventory turns converted $23m of
stock into cash.
· Expensed R&D costs running $0.5m higher than H1 2023 reflecting
our higher internal threshold for capitalisation of development programmes.
Our work to improve operational gearing in Team Wendy, pricing reviews across
the Group and cost savings within Avon Protection and the Corporate Centre
partly offset this.
Adjusted basic EPS increased by 59% at constant currency vs H1 2023. Net debt
excluding lease liabilities reduced from $71.8 million to $57.3m in the
period, resulting in a significant decrease in our bank leverage ratio to 1.69
times net debt:EBITDA (HY23: 2.58 times).
During the half we successfully refinanced our revolving credit facility for a
further three years plus two option years, comfortably ahead of the deadline
of September this year. The new facility is for $137m plus a $50m accordion,
and has been secured on new, more favourable terms.
Excellent Strategic Progress
Our STAR strategy was launched in 2023 and set out the strategic priorities
required to achieve our medium-term goals of 5% revenue CAGR, adjusted
operating profit margins of 14-16%, ROIC of more than 17% and cash conversion
of 80-100%:
Strengthen - Create the platform for superb execution: The strengthen stage
has worked well. We now have much more capability to deliver our strategy,
with more accountability, more pace and more consistency. Furthermore, we now
have much more reliable delivery to our customers on our major programmes.
Transform - Reduce costs, improve working capital turns and drive operational
efficiency: Our transformation programme has now progressed into the execution
stage. Importantly, we have made good progress building the case for change
and have pushed through most of the internal resistance. As a result, momentum
is increasing.
Advance - Organically grow the core and scale up emerging opportunities: We
have seen record levels of order intake and have a strong pipeline of
opportunities. Our win rate is excellent, giving us confidence that we have
the right products to enable heroes to survive and thrive.
Revolutionise - Leverage innovation to drive further growth: Now that the
Group is performing more strongly, we are increasing our focus on long term
growth and are very pleased with the opportunities we see to develop cutting
edge new products with both the UK MoD and the U.S. DOD.
Strengthen
The strengthen part of the strategy is now largely complete. We have the right
organisational and leadership structure and a strong, highly motivated team.
We moved quickly to right-size Avon Protection, which has resulted in a much
stronger business able to deliver strong margins and cash flow without
counting on large one-off orders. In Team Wendy, we have improved our
reliability of delivery to our customers. This provides the foundation from
which we can drive productivity improvement.
The quality of our management of complex programmes has also increased
substantially, reducing risk and increasing the likelihood that we will
achieve or exceed our medium-term goals.
Transform
The transformation team is now largely at full strength and there has been a
step change in the quality of programme management, which supports our view
that we will achieve our medium-term goals.
Total investment for transformation programs in execution is accelerating,
which has resulted in a pull forward of planned transformation investment in
FY24 to c.$15m.
During the first half we found some additional opportunities which look to
have strong payback potential to add into our transformation funnel; these are
currently in the appraisal and planning stages. These projects would involve
some additional cost but could potentially accelerate achievement of our
medium-term goals.
Our current transformation programmes are all tracking on plan with good
progress made in H1:
Workstream Goals Progress in H1
Footprint Optimisation 50% improvement in revenue/sq ft The project to consolidate helmet manufacturing is progressing well and on
track for completion in the middle of the 2025 calendar year. We have achieved
10ppts improvement in Team Wendy gross margin some notable milestones such as the DCMA approval of the first ACH Gen II lot
finished in our Cleveland factory for ballistic testing, the successful ramp
up of EPIC finishing in Cleveland. and the moving of one of our large presses
from California to Salem.
Operational Excellence 25% productivity improvement We've seen some dramatic improvements in our operational KPIs in Avon
Protection with an almost doubling of inventory turns and a 44% increase in
60% scrap improvement productivity half on half. We still see opportunities to improve Avon
Protection's operations further, particularly by introducing operational flow
Inventory turns >5 into our UK factory, but are very pleased with progress.
In Team Wendy, we have launched a new project to introduce flow to all four
helmet lines in our Cleveland factory. As part of this project, we have
re-laid out all four lines and have an 18-month plan to transform the entire
factory. We see more opportunity in this workstream than we originally assumed
in our transformation plan. This increases our confidence that we will achieve
our medium-term margin targets.
Functional Excellence Roll out of SBU functions We have completed the restructuring of the finance function, saving $1m per
annum on a recurring basis. We are now moving our attention onto how we
develop our people to build capability and bench strength.
Commercial Optimisation Complete screening of product portfolio - identifying potential improvements We have reviewed the portfolio with a view to ensuring the value we deliver is
reflected in our pricing. As a result, we have reviewed prices, particularly
in product categories that have historically been under managed.
Operational KPIs improving
There are four operational metrics which are very important to us:
1) Productivity, which is revenue per direct factory labour;
2) Scrap rates as a percentage of revenue;
3) Inventory turns; and
4) On time delivery to the customer.
At our Capital Markets Day in February 2024, we set targets of a 25%
productivity increase, 60% scrap reduction and inventory turns of over 5 in
the medium-term. We want to achieve this whilst retaining excellent on time
delivery to our customers.
Half on half, at a group level, productivity has improved 23%, scrap has
reduced 45% and inventory turns has improved by 37%. Whilst we are very
pleased with progress, it is only one year since we launched the new strategy.
There is much more we can do.
Advance
Avon Protection
In Avon Protection, we are seeing the order pipeline strengthen, largely
driven by demand under the NSPA contract and increased demand for masks from
the DOD. The relationship with the U.S. DOD continues to strengthen. The DOD
exercised its option to extend the M53A1 contract in the first half, providing
a vehicle for them to buy further M53A1 tactical masks until March 2025, with
one further one-year extension available whilst a new contract is negotiated.
We also recently won the contract for the General Service Respirator for the
UK MoD. This is a four-year contract with five option years. This win is
important to us because it cements our position as the sovereign UK CBRN
expert and provides the foundation for us to work the with UK MoD to keep
enhancing the GSR mask and filters.
In the commercial and international sectors, demand in the U.S. has been
solid, demand under the NSPA contract has been encouraging and we won a
seven-year framework contract with the Swedish Police.
Our rebreather continues to be the system of choice across NATO, with the
important win from the German Navy which will be followed up with spares,
consumables and training. We have further rebreather opportunities in the
pipeline and remain of the view that we have a technological advantage over
our competitors which improves diver safety and mission effectiveness.
Looking forward, we are excited to launch the Modular Integrated Tactical
Respirator (MITR) mask and are focusing on ramping up production of
rebreathers and boots and gloves.
Team Wendy
In Team Wendy, the order book remains very strong. Our focus is on
successfully delivering on existing programmes.
We continue to deliver excellent quality helmets to the DOD. NG IHPS
deliveries are now on a steady cadence with no lot failures and the first two
lots of ACH Gen II were delivered ahead of schedule. This has no doubt
contributed to further orders in the half of $36m for NG IHPS and $14m for ACH
Gen II. We also saw strong ongoing demand in the half for pads and bump
helmets from within the DOD.
Looking forward, we are working with the DOD to agree a new comfort pad system
for NG IHPS and are focused on reaching run rate on ACH Gen II. We are also
working on launching new bump and rifle helmets in the medium term and
expanding internationally.
Revolutionise
Whilst we are very excited about the short- and medium-term opportunities, we
continue to invest in the long term.
Within Avon Protection we have been down-selected on three DOD development
programmes and have now received our first order for ensemble (suits, boots
and gloves). Our strong relationship with the DOD and technical leadership has
led to three new DOD funded programmes and our co-funded programmes to deliver
a next generation of filters which will provide enhanced protection are
progressing well.
In Team Wendy we are already using hybrid tooling to increase production
capacity of the ACH Gen II and EPIC helmets and further R&D is being
invested in next generation pad and liner systems to help prevent traumatic
brain injury.
Outlook - Gaining momentum
We are increasingly confident that Avon is well positioned to deliver
exceptional value to shareholders. In the first half of this year we have
demonstrated:
· Our platform for superb execution is in place. The changes made to
the organisation, people and processes have enabled us to successfully ramp up
NG IHPS production and deliver the first ACH Gen II lots ahead of the
competition.
· We have reported a record closing order book with a number of
strategic wins in the first half.
· Our transformation is on track, our operational KPIs are improving
and the pace of change is accelerating.
· We remain the leading supplier of CRBN protection and helmets to the
U.S. DOD and continue our sole source position on masks and filters to the UK
MoD.
· And finally, our markets continue to grow, providing further
opportunities for our world leading products.
We are making excellent progress and are increasingly excited by the
opportunities we are finding which gives us confidence to update our guidance
for FY24 and to re-confirm our medium-term goals.
FINANCIAL REVIEW
We have seen a strong start to the year, with order intake up more than 50%
resulting in a record closing order book of $199.0 million (HY23: $144.7
million), a 47% increase since the start of this financial year. Following the
successful ramp up of the NG IHPS helmet programme in the second half of last
year, and initial deliveries of ACH Gen II helmets made ahead of expectations,
revenue for the group has increased by 24.2% on a constant currency basis to
$127.1 million (HY23: $101.6 million). Adjusted operating profit margin
increased to 9.4% (HY23: 8.8%) with significant improvement in Team Wendy more
than offsetting a small decline in the Avon Protection business even after the
dilution effect of a greater proportion of lower margin Team Wendy sales ahead
of the benefits of our transformation programmes.
30 March 2024 1 April Change Change (constant currency)(3)
2023 (restated) (1)
26 weeks ended:
Continuing operations (1)
Orders received $190.3m $125.4m 51.8% 50.3%
Closing order book $199.0m $144.7m 37.5% 37.1%
Revenue $127.1m $101.6m 25.1% 24.2%
Adjusted(2) operating profit $11.9m $8.9m 33.7% 40.0%
Adjusted(2) operating profit margin 9.4% 8.8% 60bps 110bps
Adjusted(2) net finance costs $(3.1)m $(3.2)m (3.1%) (3.1%)
Adjusted(2) profit before tax $8.8m $5.7m 54.4% 66.0%
Adjusted(2) taxation $(2.1)m $(1.1)m
Adjusted(2) profit after tax $6.7m $4.6m
Adjusted(2) basic earnings per share 22.3c 15.3c 45.8% 59.3%
Interim dividend per share 7.2c 14.3c (49.7%)
Net debt excluding lease liabilities $57.3m $71.8m (20.2%)
Cash conversion(2) 155.4% (91.2)%
Return on invested capital(2) 9.7% 10.2%
Statutory results
Operating profit from continuing operations(3) $2.6m $3.9m
Net finance costs $(4.1)m $(3.6)m
(Loss)/profit before tax from continuing operations $(1.5)m $0.3m
Taxation $0.4m $-
(Loss)/profit after tax from continuing operations $(1.1)m $0.3m
Loss from discontinued operations $- $(3.7)m
Loss for the period $(1.1)m $(3.4)m
Basic loss per share (3.7c) (11.4c)
Net debt $76.5m $94.9m
1 At 30 September 2023, Armour operations were 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 Constant currency measures are provided in the Adjusted Performance Measures
section.
Order intake for the Group of $190.3 million (HY23: $125.4 million) was up
51.8% (50.3% constant currency). Team Wendy order intake grew by 139.6%,
predominantly from the U.S. DOD with $36 million of NG IHPS and $14 million of
ACH Gen II orders received in the first half. Avon Protection order intake was
up 5.7%, with notable orders including the previously announced German Navy
contract for our rebreathers, and with the Swedish Police Authority for our
C50 mask and MP-PAPR powered air system.
The closing order book of $199.0 million reflects an increase of 37.5% (37.1%
constant currency) compared to HY23. Team Wendy closed the half with $143.5
million in the order book, an increase of 102.7%, which includes $75 million
of orders for NG IHPS and $41 million for ACH Gen II. The Avon Protection
closing order book of $55.5 million is a decrease of 24.9% reflecting the
successful delivery of the Middle Eastern mask contract and U.S. DOD filters
during H2 2023.
Revenue for the Group totalled $127.1 million, an increase of 25.1% (24.2%
constant currency) compared to the prior year of $101.6 million, due to the
growth in the Team Wendy business.
Team Wendy revenue totalled $59.8m, an increase of 80.7% over the first half
of 2023. This is as a result of full run-rate of NG IHPS helmets deliveries
from the start of the year and commencement of ACH Gen II helmet deliveries
ahead of schedule. U.S. DOD revenue increased by 339.8% to $36.5 million
(HY23: $8.3 million). Commercial Americas revenue was flat half on half, and
U.K. & International revenue declined slightly by 11.8%.
Avon Protection delivered revenue of $67.3 million in the first half, a
decline of 1.8% compared to HY23 revenue of $68.5 million. We saw a large
decline in sales to the U.S. DOD, primarily as the result of delivering 2
years' worth of M61 filter demand during 2023, although there was also a
decrease in mask and accessories revenue compared to the first half of 2023.
The decline in U.S. DOD sales was partially offset by a large increase in
sales within the U.K. & International market following strong sales of
masks and accessories as part of the NSPA contract, and the first shipment of
30 rebreathers to the German Navy as part of the contract announced earlier in
the year. Commercial Americas revenue increased by 28.8%, driven by increased
sales of masks and supplied air systems.
Adjusted operating profit of $11.9 million (HY23: $8.9 million) increased by
33.7%, resulting in an adjusted operating profit margin of 9.4% (HY23: 8.8%),
up 60bps (110bps constant currency). Team Wendy benefited from the operational
gearing effects of very strong growth in revenue, with the benefits of
transformation initiatives driving cost savings in Avon Protection and
corporate centre.
Statutory operating profit from continuing operations of $2.6 million (HY23:
$3.9 million) reflected exceptional items in the period which are summarised
below.
The Adjusted Performance Measures section contains a full breakdown and
explanation of adjustments.
Statutory operating profit HY24 HY23
$m $m
2.6 3.9
Amortisation of acquired intangibles 3.1 3.1
Impairment of goodwill and other non-current assets - 0.7
Transformational and restructuring costs 6.2 1.2
Adjusted operating profit 11.9 8.9
After adjusted net finance costs of $3.1 million (HY23: $3.2 million) and an
adjusted tax charge of $2.1 million (HY23: $1.1 million), the Group recorded
an adjusted profit for the period after tax of $6.7 million (HY23: $4.6
million). Adjusted basic earnings per share grew to 22.3 cents (HY23: 15.3
cents).
Return on invested capital, calculated on a rolling 12-month basis, was 9.7%
(HY23: 10.2%), reflecting lower adjusted operating profit in H2 2023 compared
to H2 2022.
Statutory net finance costs of $4.1 million (HY23: $3.6 million) include $1.0
million (HY23: $0.4 million) net interest expense on the U.K. defined benefit
pension scheme liability.
Statutory loss before tax from continuing operations was $1.5 million (HY23:
profit of $0.3 million) and, after a tax credit of $0.4 million (HY23: $nil
charge), the loss for the period from continuing operations was $1.1 million
(HY23: profit of $0.3 million).
Transformation costs
HY24
$m
Footprint optimisation (1) 4.8
Operational excellence 0.4
Commercial optimisation 0.0
Functional excellence 0.8
Programme management excellence 0.2
Total transformation costs 6.2
(1) Including $0.8m for acceleration of amortisation charges related to legacy
ERP systems.
Investment in the transformation initiatives within the STAR strategy has been
ahead of our expectations and those set out with the FY23 results, with an
acceleration of costs associated with footprint optimisation efforts within
the Team Wendy business following the plans announced earlier this year to
consolidate our Irvine, California facility into our other Team Wendy sites.
As a result, we now expect transformational costs for FY24 to total c. $15m
(including $1-2m of capital expenditure), but total investment in FY24 and
FY25 related to the projects identified last year remains unchanged.
Segmental performance
Following a rebranding exercise carried out in H2 2023, the previously
reported operating segments of Respiratory Protection and Head Protection have
been renamed to Avon Protection and Team Wendy respectively.
HY24 HY23
Avon Protection Team Wendy Total Avon Protection Team Wendy
$m Total
Orders received 87.0 103.3 190.3 82.3 43.1 125.4
Closing order book 55.5 143.5 199.0 73.9 70.8 144.7
Revenue 67.3 59.8 127.1 68.5 33.1 101.6
Adjusted operating profit 11.1 0.8 11.9 13.6 (4.7) 8.9
Adjusted operating profit margin 16.5% 1.3% 9.4% 19.9% (14.2%) 8.8%
Avon Protection continues to deliver strong operating profit margin, although
they did decline by 340 bps to 16.5% compared to HY23 margins of 19.9%. Cost
savings from the right-sizing and operational efficiency initiatives completed
in the second half of last year were more than offset by the unwinding of
inventory built up in H1 23 which was absorbing overhead costs onto the
balance sheet, higher P&L R&D costs half-on-half reflecting the higher
internal threshold for capitalisation of development programmes.
Team Wendy margins improved dramatically in the period, improving from a loss
of 14.2% in HY23 to a profit margin of 1.3% in HY24. The majority of this
improvement came from the operational gearing effects of the large revenue
increase compared to last year reflecting a full first half of NG IHPS
deliveries and the earlier than expected commencement of ACH Gen II shipments.
There is a still a long way to go to bring the profitability of Team Wendy up
to our target levels. Even so, the latest margin improvement estimates from
the site consolidation and other operational efficiency initiatives continue
to provide confidence in our original expectations.
Research and development expenditure
Total investment in research and development (capitalised and expensed) was
$5.2 million (HY23: $5.1 million), in line with the prior period. Excluding
amortisation, we have seen an increase in costs expensed to the P&L, with
significantly lower levels of capitalisation.
HY24 HY23
Continuing operations $m (restated)(1)
$m
Total expenditure 5.2 5.1
Less customer funded (0.7) (0.6)
Group expenditure 4.5 4.5
Capitalised (0.3) (2.2)
Income statement impact 4.2 2.3
Amortisation of development expenditure 1.6 2.5
Total income statement impact 5.8 4.8
Revenue 127.1 101.6
Total R&D expenditure as a % of revenue 4.1% 5.0%
( )
(1) Comparatives for revenue and percentage spend for the 26 weeks to 1 April
2023 have been restated to reflect the discontinuation of the Armour business.
Avon Protection expenditure has primarily focused on completing the
development of MITR, whilst Team Wendy expenditure continued to centre around
NG IHPS and ACH Gen II helmet development.
Net debt and cash flow
HY24 HY23
$m (restated)(1)
$m
Adjusted continuing EBITDA 17.7 15.9
Share-based payments and defined benefit pension scheme costs 1.5 1.2
Working capital 8.3 (31.6)
Cash flows from continuing operations before exceptional items 27.5 (14.5)
Transformational and restructuring costs paid (4.1) (1.2)
Cash flows from continuing operations 23.4 (15.7)
Cash flows from discontinued operations 4.9 2.7
Cash flow from operations 28.3 (13.0)
Payments to pension plan (6.3) -
Net finance costs (2.7) (2.9)
Net repayment of leases (1.7) (1.1)
Tax (paid)/received (0.1) 3.9
Capital expenditure (5.7) (4.9)
Discontinued operation financing cash flows - (0.5)
Dividends to shareholders (4.6) (9.1)
Change in net debt 7.2 (27.6)
Opening net debt, excluding lease liabilities (64.5) (44.2)
Closing net debt, excluding lease liabilities (57.3) (71.8)
( )
(1) The comparatives for the 26 weeks to 1 April 2023 have been restated to
reflect the discontinuation of the Armour business.
Cash flows from continuing operations before exceptional items were $27.5
million (HY23: $14.5 million outflow) with the movement principally due to
working capital inflows of $8.3 million, compared to outflows of $31.6 million
in the prior period. This was driven principally by improving inventory turns
and the achievement of a steady run-rate of NG IHPS deliveries.
Dividends were $4.6 million (HY23: $9.1 million), reflecting the rebased level
of distribution under the revised capital allocation policy announced in FY23.
Net debt was $76.5 million (HY23: net debt $95.0 million), which includes
lease liabilities of $19.2 million (FY23: $23.2 million). Excluding lease
liabilities, net debt was $57.3 million (HY23: net debt $71.8 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 $50.7 million as at 30 March 2024 (FY23: $40.2 million).
The increase results from the adoption of a lower discount rate assumption
reflecting reduced corporate bond yields. The increased accounting deficit
does not impact the cash funding requirements of the scheme, which are driven
by the repayment schedule determined as part of the triennial valuation.
Contributions in respect of scheme expenses and deficit recovery plan payments
in the period were $6.3 million in accordance with the deficit recovery plan
agreed last year following the 31 March 2022 actuarial valuation. (FY23: $nil,
due to contributions having been prepaid in FY22). The Group will make
payments in the second half of 2024 of £2.1 million, FY25 of £4.3 million
and FY26 of £4.7 million in respect of deficit recovery and scheme expenses.
Foreign exchange 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 $0.1 million and increased operating profit by
approximately $0.1 million for HY24.
Financing and interest rate risk management
On 14 May 2024, the Group signed a new $137m RCF, together with a $50m
accordion replacing the previous facility. The new RCF was agreed with a
syndicate of four lenders and is available until May 2027, with two further
one-year extension options taking it out to May 2029.
RCF borrowings are floating rate priced using the U.S. Secured Overnight
Financing Rate (SOFR). The Group hedges interest rate exposure using swaps to
fix a portion of SOFR floating rate interest. The notional value of active
interest rate swaps at 30 March 2024 was $30.0 million (FY23: $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 (FY23: $20.0 million). The financial
value of interest rate swaps at 30 March 2024 was $0.6 million (FY23: $0.9
million), an asset position as hedged fixed rates are lower than current
market forecasts for SOFR.
Dividends
The Board has proposed an interim dividend of 7.2 cents per share (HY23: 14.3
cents), rebasing distributions in-line with the revised capital allocation
policy as set out with the FY23 results. This interim dividend will be paid on
6 September 2024 to shareholders on the register at 9 August 2024 with an
ex-dividend date of 8 August 2024. The interim dividend will be converted into
pounds sterling for payment at the prevailing exchange rate which will be
announced prior to payment.
Jos Sclater Rich Cashin
Chief Financial Officer
Chief Executive Officer
21 May 2024
21 May 2024
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors confirm that this condensed consolidated interim financial
information has been prepared in accordance with International Accounting
Standard 34, 'Interim Financial Reporting' as adopted by the United Kingdom,
and that the interim management report herein includes a true and fair review
of the information required by DTR 4.2.7 and DTR 4.2.8, namely:
· an indication of important events that have occurred during the first
six months and their impact on the condensed consolidated interim financial
information, and a description of the principal risks and uncertainties for
the remaining six months of the financial year; and
· material related party transactions in the first six months and any
material changes in the related party transactions described in the last
annual report.
· A true and fair view of the assets, liabilities, financial position
and profit or loss of the undertakings included in the consolidation.
Miles Ingrey-Counter
Company Secretary
21 May 2024
FORWARD-LOOKING STATEMENTS
Certain statements in this half year report are forward‐looking. Although
the Group believes that the expectations reflected in these forward‐looking
statements are reasonable, we can give no assurance that these expectations
will prove to have been correct. Because these statements involve risks and
uncertainties, actual results may differ materially from those expressed or
implied by these forward‐looking statements.
We undertake no obligation to update any forward‐looking statements whether
as a result of new information, future events or otherwise.
COMPANY WEBSITE
The half year report is available on the Company's website at
https://www.avon-protection-plc.com/ (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.
Independent Review Report to Avon Protection plc
Conclusion
We have been engaged by Avon Protection plc ("the Company") to review the
condensed set of financial statements in the half-yearly financial report for
the 26-week period ended 30 March 2024 which comprises Consolidated Statement
of Comprehensive Income, Consolidated Balance Sheet, Consolidated Cash Flow
Statement, Consolidated Statement of Changes in Equity and the related
explanatory notes.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the 26-week period ended 30 March 2024 is not prepared,
in all material respects, in accordance with IAS 34 Interim Financial
Reporting as adopted for use in the UK and the Disclosure Guidance and
Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the
UK FCA").
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 Review of Interim Financial Information Performed by the
Independent Auditor of the Entity ("ISRE (UK) 2410") issued for use in the UK.
A review of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. We read the other information
contained in the half-yearly financial report and consider whether it contains
any apparent misstatements or material inconsistencies with the information in
the condensed set of financial statements.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention that causes us to believe that the directors
have inappropriately adopted the going concern basis of accounting, or that
the directors have identified material uncertainties relating to going concern
that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410. However, future events or conditions may cause the group to
cease to continue as a going concern, and the above conclusions are not a
guarantee that the group will continue in operation.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the DTR of the UK FCA.
As disclosed in Section 1, the annual financial statements of the group are
prepared in accordance with UK-adopted international accounting standards.
The directors are responsible for preparing the condensed set of financial
statements included in the half-yearly financial report in accordance with IAS
34 as adopted for use in the UK.
In preparing the condensed set of financial statements, the directors are
responsible for assessing the group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the group or to cease operations, or have no realistic alternative
but to do so.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review. Our conclusion, including our conclusions relating to going concern,
are based on procedures that are less extensive than audit procedures, as
described in the Basis for conclusion section of this report.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Company in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the DTR of the
UK FCA. Our review has been undertaken so that we might state to the Company
those matters we are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company for our review work, for this
report, or for the conclusions we have reached.
Paul Glendenning
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square,
London,
E14 5GL
21 May 2024
Consolidated Statement of Comprehensive Income for the 26 weeks ended 30 March
2024
26 weeks to 30 March 2024 26 weeks to 01 April 2023
(restated) (1)
Adjusted Adjustments Total Adjusted Adjustments Total
$m $m $m $m $ $
m m
Note (Note 2.1) (
N
o
t
e
2
.
1
)
Continuing operations
Revenue 2.2 127.1 - 127.1 101.6 - 101.6
Cost of sales (80.9) - (80.9) (63.5) - (63.5)
Gross profit 46.2 - 46.2 38.1 - 38.1
Sales and marketing expenses (6.0) - (6.0) (6.9) - (6.9)
Research and development costs (5.8) - (5.8) (4.8) - (4.8)
General and administrative expenses (22.5) (9.3) (31.8) (17.5) (5.0) (22.5)
Operating profit/(loss) 11.9 (9.3) 2.6 8.9 (5.0) 3.9
Net finance costs 4.3 (3.1) (1.0) (4.1) (3.2) (0.4) (3.6)
(Loss)/profit before taxation 8.8 (10.3) (1.5) 5.7 (5.4) 0.3
Taxation 2.5 (2.1) 2.5 0.4 (1.1) 1.1 -
(Loss)/profit for the period from continuing operations 6.7 (7.8) (1.1) 4.6 (4.3) 0.3
Discontinued operations
Loss from discontinued operations 2.3 - - - - (3.7) (3.7)
(Loss)/profit for the period 6.7 (7.8) (1.1) 4.6 (8.0) (3.4)
( )
(1) The comparatives for the 26 weeks to 01 April 2023 have been restated to
reflect reclassification of selling and distribution costs and the
discontinuation of the Armour business. These are disclosed in note 5.5.
Consolidated Statement of Comprehensive Income for the 26 weeks ended 30 March
2024 (Continued)
Note 26 weeks to 26 weeks to
30 March 2024$m 01 April
2023
$m
Loss for the period (1.1) (3.4)
Other comprehensive income/(expense)
Items that are not subsequently reclassified to the income statement
Remeasurement loss recognised on retirement benefit scheme 5.2 (13.5) (8.3)
Deferred tax relating to retirement benefit scheme 2.3 2.1
Items that may be subsequently reclassified to the income statement
Cash flow hedges (0.4) (0.1)
Net exchange differences offset in reserves (0.5) 0.3
Other comprehensive expense for the period (12.1) (6.0)
Total comprehensive expense for the period (13.2) (9.4)
Earnings per share (cents)
Basic (3.7c) (11.4c)
Diluted (3.7c) (11.4c)
Earnings per share from continuing operations (cents)
Basic (3.7c) 1.0c
Diluted (3.7c) 1.0c
Earnings per share from discontinued operations (cents)
Basic - (12.4c)
Diluted - (12.4c)
Consolidated Balance Sheet
Note As at As at
30 March 30 Sept
2024 2023
$m $m
Assets
Non-current assets
Intangible assets 3.1 133.8 139.2
Property, plant and equipment 3.2 37.7 35.8
Finance leases 3.3 5.9 6.2
Deferred tax assets 2.5 37.7 40.1
Derivative financial instruments 0.3 0.6
215.4 221.9
Current assets
Inventories 56.4 54.4
Trade and other receivables 44.5 58.3
Derivative financial instruments 0.3 0.3
Cash and cash equivalents 11.2 13.2
112.4 126.2
Liabilities
Current liabilities
Borrowings 4.1 4.3 4.3
Current tax payables 1.3 0.7
Trade and other payables 35.9 34.6
Provisions for liabilities and charges 5.1 4.0 0.4
45.5 40.0
Net current assets 66.9 86.2
Non-current liabilities
Borrowings 4.1 83.4 94.3
Deferred tax liabilities 2.5 - 6.2
Retirement benefit obligations 5.2 50.7 40.2
Provisions for liabilities and charges 5.1 5.7 8.0
139.8 148.7
Net assets 142.5 159.4
Shareholders' equity
Ordinary shares 4.4 50.3 50.3
Share premium account 4.4 54.3 54.3
Other reserves (14.4) (13.9)
Cash flow hedging reserve 0.4 0.8
Retained earnings 51.9 67.9
Total equity 142.5 159.4
Consolidated Cash Flow Statement
26 weeks to 26 weeks to
30 March 01 April
2024 2023
(restated)(1)
Note $m $m
Cash flow from operating activities
Cash flow from continuing operations 5.3 23.4 (15.7)
Cash flow from discontinued operations 5.3 4.9 2.7
Cash flow from operations 28.3 (13.0)
Retirement benefit deficit recovery contributions 5.2 (6.3) -
Tax (payments)/receipts (0.1) 3.9
Net cash flow (used in)/from operating activities 21.9 (9.1)
Cash flow used in investing activities
Purchase of property, plant and equipment 3.2 (5.1) (2.1)
Capitalised development costs and computer software 3.1 (0.6) (2.8)
Bank interest income 4.3 0.3 0.2
Finance lease interest 0.2 -
Finance lease capital receipts 0.5 -
Net cash used in investing activities (4.7) (4.7)
Cash flow used in financing activities
Proceeds from loan drawdowns 4.2 17.5 42.0
Loan repayments 4.2 (26.7) (9.0)
Finance costs paid in respect of bank loans and overdrafts 4.3 (2.9) (2.7)
Finance costs paid in respect of leases 4.3 (0.3) (0.4)
Repayment of lease liability (2.2) (1.1)
Dividends paid to shareholders 4.5 (4.6) (9.1)
Financing cash flows used in discontinued operations - (0.5)
Net cash (used in)/from financing activities (19.2) 19.2
Net (decrease)/increase in cash and cash equivalents (2.0) 5.4
Cash and cash equivalents at beginning of the period 13.2 9.5
Cash and cash equivalents at end of the period 11.2 14.9
( )
(1) The comparatives for the 26 weeks to 01 April 2023 have been restated to
reflect the discontinuation of the Armour business.
Consolidated Statement of Changes in Equity
Share Share premium Hedging reserve Other reserves Retained earnings Total equity
capital
Note $m $m $m $m $m $m
At 01 October 2022 50.3 54.3 0.4 (14.2) 119.7 210.5
Loss for the period - - - - (3.4) (3.4)
Net exchange differences offset in reserves - - - 0.3 - 0.3
Actuarial loss on retirement benefit scheme - - - - (8.3) (8.3)
Deferred tax relating to retirement benefit scheme - - - - 2.1 2.1
Interest rate swaps - cash flow hedge - - (0.1) - - (0.1)
Total comprehensive income for the period - - (0.1) 0.3 (9.6) (9.4)
Dividends paid 4.5 - - - - (9.1) (9.1)
Fair value of share-based payments - - - - 0.8 0.8
At 01 April 2023 50.3 54.3 0.3 (13.9) 101.8 192.8
Profit for the period - - - - (11.0) (11.0)
Deferred tax relating to other temporary differences - - - - (0.2) (0.2)
Actuarial gain on retirement benefit scheme - - - - (23.5) (23.5)
Deferred tax relating to retirement benefit scheme - - - - 4.8 4.8
Deferred tax relating to change in tax rates - - - - 1.1 1.1
Interest rate swaps - cash flow hedge - - 0.5 - - 0.5
Total comprehensive income for the period - - 0.5 - (28.8) (28.3)
Dividends paid 4.5 - - - - (4.3) (4.3)
Fair value of share-based payments - - - - (0.1) (0.1)
Deferred tax relating to employee share schemes - - - - (0.7) (0.7)
At 30 September 2023 50.3 54.3 0.8 (13.9) 67.9 159.4
Loss for the period - - - - (1.1) (1.1)
Net exchange differences offset in reserves - - - (0.5) - (0.5)
Actuarial loss on retirement benefit scheme - - - - (13.5) (13.5)
Deferred tax relating to retirement benefit scheme - - - - 2.3 2.3
Interest rate swaps - cash flow hedge - - (0.4) - - (0.4)
Total comprehensive income for the period - - (0.4) (0.5) (12.3) (13.2)
Dividends paid 4.5 - - - - (4.6) (4.6)
Fair value of share-based payments - - - - 0.9 0.9
At 30 March 2024 50.3 54.3 0.4 (14.4) 51.9 142.5
Other reserves consist of the capital redemption reserve of $0.6m (01 April
2023: $0.6m, 30 September 2023: $0.6m) and the translation reserve of ($15.0m)
(01 April 2023: ($14.5m), 01 September 2023: ($14.5m)).
NOTES TO THE FINANCIAL STATEMENTS
Section 1: General Information and Basis of Preparation
The Company is a public limited Company incorporated in England and Wales and
domiciled in England with its ordinary shares being traded on the London Stock
Exchange. The address of its registered office is Hampton Park West, Semington
Road, Melksham, Wiltshire, SN12 6NB.
This unaudited condensed consolidated interim financial information was
approved for issue on 21 May 2024.
The financial period presents the 26 weeks ended 30 March 2024 (prior
financial period 26 weeks ended 1 April 2023, prior financial period 52 weeks
ended 30 September 2023).
The financial information set out in this document does not constitute the
Group's statutory accounts for the period or the full year. Statutory accounts
for the previous financial year were approved by the Board of Directors on 20
November 2023 and delivered to the Registrar of Companies.
The report of the auditors on those accounts was unqualified, did not contain
an emphasis of matter paragraph and did not contain any statement under
Section 498 of the Companies Act 2006.
This condensed consolidated interim financial information for the 26 weeks
ended 30 March 2024 has been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Conduct Authority and with IAS 34,
'Interim financial reporting' as adopted by the United Kingdom. These interim
financial results should be read in conjunction with the annual financial
statements for the 52 weeks ended 30 September 2023, which have been prepared
in accordance with UK-adopted International accounting standards.
The financial information presented in this Interim Report has been prepared
in accordance with the accounting policies expected to be used in preparing
the 2024 Annual Report and Accounts which do not differ significantly from
those used in the preparation of the 2023 Annual Report and Accounts.
The Directors have prepared a going concern assessment covering the 12 month
period from the date of approval of these interim financial statements. The
assessment indicates that the Group will have sufficient funds to meet its
liabilities as they fall due for that period.
The Group has committed RCF facilities of $137 million to May 2027. Related
loan covenants include a limit of 3.0 times for the ratio of net debt,
excluding lease liabilities, to bank-determined adjusted EBITDA
(leverage). As part of the going concern assessment, the Directors considered
sensitivity of financial covenants and liquidity headroom to a reverse stress
test to determine the deterioration against the base case forecast required to
challenge covenant levels. This demonstrated significant headroom, with the
downside movement required not considered plausible given the secured order
book and mitigating actions available to reduce future cash outflows or
expenses within managements control.
On this basis, the Directors are confident that the Group will have sufficient
funds to continue to meet its liabilities as they fall due for at least 12
months from the approval of these interim financial statements. Accordingly,
the Group continues to adopt the going concern basis in preparing its interim
financial statements.
Section 2: Results for the Period
2.1 Adjusted performance measures
The Directors assess the operating performance of the Group based on adjusted
measures of 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, 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 measures 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.
Adjustments to operating profit
26 weeks to 26 weeks to
30 March 01 April
2024 2023
(restated) (1)
$m $m
Operating profit 2.6 3.9
Amortisation of acquired intangibles 3.1 3.1
Transformational and restructuring costs 5.4 1.2
Acceleration of software amortisation - transformational 0.8 -
Impairment of non-current assets - restructuring - 0.7
Adjusted operating profit 11.9 8.9
Depreciation 3.6 3.9
Other amortisation charges 2.2 3.1
Adjusted EBITDA 17.7 15.9
(1) The comparatives for the 26 weeks to 01 April 2023 been restated to
reflect the discontinuation of the Armour business.
Amortisation charges for acquired intangible assets of $3.1 million (HY23:
$3.1 million) are excluded from adjusted measures as they do not change each
period based on underlying business trading and performance.
Current period total transformational costs were $6.2 million. These include
$3.6 million related to the planned closure of the Irvine California facility
as part of site optimisation, $0.8 million for acceleration of amortisation
charges related to one of the Group's legacy ERP systems and $1.8 million
related to other transformational programmes.
Prior period restructuring costs were $1.9 million. These costs include a $0.5
million right of use asset impairment relating to the closure of one of our
U.S. offices, and $0.2 million other impairments.
Transformational and restructuring costs are considered exceptional as they
related to specific programmes which do not form part of the underlying
business trading and performance.
26 weeks to 26 weeks to
Adjustments to finance costs 30 March 2024 01 April 2023
(restated) (1)
$m $m
Net finance costs (4.1) (3.6)
U.K. defined benefit pension scheme net interest expense 1.0 0.4
Adjusted net finance costs (3.1) (3.2)
(1) The comparatives for the 26 weeks to 01 April 2023 have been restated to
reflect the discontinuation of the Armour business.
$1.0 million (HY23: $0.4 million) net interest expense on the U.K. defined
benefit pension scheme liability is treated as exceptional given the scheme
relates to employees employed prior to 31 January 2003 and was closed to
future accrual of benefits on 1 October 2009 (note 5.2).
Adjustments to taxation
Adjustments to taxation represent the tax effects of the adjustments to
operating profit and finance costs. Adjusting items do not have significantly
different tax rates, with the overall effective rate of 24% (HY23: 21%)
approximating statutory rates applicable in the U.S. and U.K.
Constant currency reporting
Constant currency measures remove the impact of changes in exchange rates.
Constant currency measures are calculated by translating the prior period at
HY24 exchange rates.
26 weeks to 26 weeks to Change
Continuing operations 30 March 2024 01 April 2023 (constant currency)
$m $m
Orders received 190.3 126.6 50.3%
Closing order book 199.0 145.2 37.1%
Revenue 127.1 102.3 24.2%
Adjusted operating profit 11.9 8.5 40.0%
Adjusted profit before tax 8.8 5.3 66.0%
Adjusted basic earnings per share 22.3c 14.0c 59.3%
( )
26 weeks to 26 weeks to
Inventory Turns 30 March 2024 01 April 2023
$m $m
Inventory 56.4 69.5
Last 12 months cost of sales 175.3 157.7
Group inventory turns 3.11 2.27
Inventory turns measures how many times the inventory was turned over in the
period by dividing the cost of sales over the last 12 months, by the inventory
value. Group inventory turns have been presented on continuing basis.
26 weeks to 26 weeks to
30 March 2024 01 April 2023
$m $m
Inventory 36.3 26.6
Last 12 months cost of sales 79.6 51.4
Team Wendy inventory turns 2.19 1.93
26 weeks to 26 weeks to
30 March 2024 01 April 2023
$m $m
Inventory 20.1 42.9
Last 12 months cost of sales 95.7 106.3
Avon Protection inventory turns 4.76 2.48
26 weeks to 26 weeks to
Productivity 30 March 2024 01 April 2023
Direct headcount 556 625
Last 12 months revenue $269.3m $245.7m
Group productivity $484k $393k
Productivity measures how much revenue was generated per direct employee by
dividing the revenue over the last 12 months, by the total number of direct
heads.
26 weeks to 26 weeks to
30 March 2024 01 April 2023
Direct headcount 196 324
Last 12 months revenue $155.7m $178.6m
Avon Protection productivity $794k $551k
26 weeks to 26 weeks to
Scrap (% of revenue) 30 March 2024 01 April 2023
$m $m
Last 6 months scrap 2.1 3.1
Last 6 months revenue 127.1 101.6
Group scrap (% of revenue) 1.7% 3.1%
Scrap (% of revenue) is calculated by dividing the total value of scrap
produced in the period, by the revenue generated in the period.
Return on invested capital (ROIC)
26 weeks to 26 weeks to
30 March 2024 01 April 2023
(restated) (1)
$m $m
Net assets 142.5 192.8
Net assets associated with discontinued operations - (1.5)
Net assets associated with continuing operations 142.5 191.3
Net debt 57.3 71.8
Lease liabilities 19.2 14.2
Retirement benefit obligations 50.7 16.5
Derivatives (0.6) (0.4)
Net tax (36.4) (25.4)
Total invested capital 232.7 268.0
Average invested capital 250.3 267.9
Adjusted operating profit (preceding 12 months) 24.2 27.2
ROIC 9.7% 10.2%
( )
(1) The comparatives for the 26 weeks to 01 April 2023 have been restated to
reflect the discontinuation of the Armour business.
Cash conversion
Cash conversion excludes the impact of exceptional items from operating cash
flow and EBITDA.
26 weeks to 26 weeks to
30 March 2024 01 April 2023
(restated) (1)
$m $m
Cash flow from continuing operations before exceptional items 27.5 (14.5)
Adjusted EBITDA 17.7 15.9
Cash conversion 155.4% (91.2%)
(1) The comparatives for the 26 weeks to 01 April 2023 have been restated to
reflect the discontinuation of the Armour business.
2.2 Operating segments
The Group Executive team is responsible for allocating resources and assessing
performance of its operating segments. Operating segments are therefore
reported in a manner consistent with the internal reporting provided to the
Group Executive team.
The Group has, following a reorganisation in H2 2023, two different continuing
operating and reportable segments, these being Avon Protection and Team Wendy.
In the prior interim reporting period the Group had two continuing operating
and reportable segments, Respiratory Protection 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. Respiratory Protection has
been renamed Avon Protection, and Head Protection renamed Team Wendy.
26 weeks to 30 March 2024 Avon Protection Team Wendy Adjusted Total Adjustments & discontinued (Notes 2.1, 2.3) Total
$m $m $m $m $m
Revenue 67.3 59.8 127.1 - 127.1
Adjusted operating profit/(loss) 11.1 0.8 11.9 (9.3) 2.6
Net finance costs (3.1) (1.0) (4.1)
Profit/(loss) before taxation 8.8 (10.3) (1.5)
Taxation (2.1) 2.5 0.4
Profit/(loss) for the period from continuing operations 6.7 (7.8) (1.1)
Loss from discontinued operations - - - - -
Profit/(loss) for the period 6.7 (7.8) (1.1)
Basic earnings per share (cents) 22.3c (26.0c) (3.7c)
Diluted earnings per share (cents) 22.3c (26.0c) (3.7c)
26 weeks to 01 April 2023 Avon Protection Team Wendy Adjusted Total Adjustments & discontinued (Notes 2.1, 2.3) Total
$m $m $m $m $m
Revenue 68.5 33.1 101.6 - 101.6
Adjusted operating profit/(loss) 13.6 (4.7) 8.9 (5.0) 3.9
Net finance costs (3.2) (0.4) (3.6)
Profit/(loss) before taxation 5.7 (5.4) 0.3
Taxation (1.1) 1.1 -
Profit/(loss) for the period from continuing operations 4.6 (4.3) 0.3
Loss from discontinued operations - (3.7) (3.7)
Profit/(loss) for the period 4.6 (8.0) (3.4)
Basic earnings per share (cents) 15.3c (26.7c) (11.4c)
Diluted earnings per share (cents) 15.3c (26.7c) (11.4c)
Revenue analysed by line of business
26 weeks to 30 March 2024 26 weeks to 01 April 2023
Total Total
Avon Protection Team Wendy $m Avon Protection $m Team Wendy $m
$m $m $m
U.S. DOD 13.0 36.5 49.5 34.1 8.3 42.4
Commercial Americas 18.8 12.1 30.9 14.6 12.1 26.7
U.K. & International 35.5 11.2 46.7 19.8 12.7 32.5
Total 67.3 59.8 127.1 68.5 33.1 101.6
Revenue analysed by geographic region by origin
26 weeks to 26 weeks to
30 March 01 April
2024 2023
$m $m
U.K. 21.0 16.5
U.S. 106.1 85.1
Total 127.1 101.6
(
)
( )
2.3 Discontinued Operations
At 30 September 2023 all armour orders had been delivered to customers, and
Armour operations were fully closed. As such the Armour business has been
classified as discontinued, including restatement of comparatives.
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 ended on 30 September 2023. As the
activity under this agreement was not part of continuing operations, related
revenue and costs were classified as discontinued.
26 weeks to 30 March 2024 26 weeks to 01 April 2023
Armour milkrite | Total Armour milkrite | Total
InterPuls InterPuls
$m $m $m $m $m $m
Revenue - - - 14.6 2.6 17.2
Cost of sales - - - (18.3) (1.6) (19.9)
Gross profit - - - (3.7) 1.0 (2.7)
General and administrative expenses - - - (1.8) - (1.8)
Operating (loss)/profit - - - (5.5) 1.0 (4.5)
Net finance costs - - - (0.1) - (0.1)
(Loss)/profit before taxation - - - (5.6) 1.0 (4.6)
Taxation - - - 1.1 (0.2) 0.9
(Loss)/profit from discontinued operations - - - (4.5) 0.8 (3.7)
Basic earnings per share (cents) - - - (15.1c) 2.7c (12.4c)
Diluted earnings per share (cents) - - - (15.1c) 2.7c (12.4c)
2.4 Earnings Per Share
Basic earnings per share is calculated by dividing the earnings attributable
to ordinary shareholders by the weighted average number of ordinary shares in
issue during the period, excluding those held as treasury shares (note 4.4).
The company has dilutive potential ordinary shares in respect of the
Performance Share Plan. Reconciliations of the earnings and weighted average
number of shares used in calculations of earnings per share are set out below:
Weighted average number of shares
26 weeks to 26 weeks to
30 March 01 April
2024 2023
Weighted average number of ordinary shares in issue used in basic calculations 29,996 29,996
(thousands)
Potentially dilutive shares (weighted average) (thousands) 970 331
Fully diluted number of ordinary shares (weighted average) (thousands) 30,966 30,327
2.5 Taxation
26 weeks to 26 weeks to
30 March 01 April
2024 2023
(restated) (1)
$m $m
(Loss)/profit before taxation from continuing operations (1.5) 0.3
Tax (credit)/charge at the average standard U.K. rate of 25.0% (HY23: 22.0%) (0.4) 0.1
Permanent differences - (0.1)
Tax credit (0.4) -
(1) The comparatives for the 26 weeks to 01 April 2023 have been restated to
reflect the discontinuation of the Armour business.
Deferred tax assets and liabilities of $37.7 million have been offset in the
30 March 2024 statement financial position as the Group has a right to set off
current and deferred tax balances levied by tax authorities in relevant
taxable jurisdictions. The Directors have considered the impact on the prior
period and determined the classification change not material for restatement.
Section 3: Non-current assets
3.1 Intangible assets
Acquired intangibles Development expenditure Computer software
Goodwill Total
Net book amounts $m $m $m $m $m
At 30 September 2023 65.4 45.8 20.2 7.8 139.2
Additions - - 0.3 0.3 0.6
Amortisation - (3.1) (1.6) (1.4) (6.1)
Exchange differences - - - 0.1 0.1
At 30 March 2024 65.4 42.7 18.9 6.8 133.8
Assessments of potential impairment indicators for the Avon Protection and
Team Wendy CGUs that include associated goodwill, acquired intangible assets
and property, plant and equipment, and attributable working capital were
conducted at the interim reporting date. No indicators were noted.
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. At
the interim reporting date an assessment of development asset CGUs was
performed with no impairments noted.
3.2 Property, plant and equipment
Net book amounts Freeholds Right of use assets Plant and machinery Leasehold improvements Total
$m $m $m $m $m
At 30 September 2023 1.5 8.5 23.5 2.3 35.8
Additions - - 5.1 - 5.1
Depreciation - (1.3) (2.0) (0.3) (3.6)
Exchange differences - - 0.4 - 0.4
At 30 March 2024 1.5 7.2 27.0 2.0 37.7
The Group sub-leases legacy commercial premises where they are no longer
required for operations, resulting in lease assets being held on the balance
sheet.
3.3 Finance leases
Finance leases
$m
At 30 September 2023 6.2
Additions 0.2
Interest Income 0.2
Payments received (0.7)
At 30 March 2024 5.9
Payments received include $0.2 million interest and $0.5 million capital
receipts.
Section 4: Funding
4.1 Borrowings
As at As at
30 March 30 Sept
2024 2023
$m $m
Current
Lease liabilities 4.3 4.3
Non-Current
Bank Loans 68.5 77.7
Lease liabilities 14.9 16.6
83.4 94.3
Total Group borrowings 87.7 98.6
The Group had the following committed facilities at the balance sheet date:
As at As at
30 March 30 Sept
2024 2023
$m $m
Total undrawn committed borrowing facilities 136.5 127.3
Bank loans and overdrafts utilised 68.5 77.7
Total Group committed facilities 205.0 205.0
Comprising:
Revolving credit facility 200.0 200.0
Bank overdraft 5.0 5.0
At 30 March 2024 the Group had a revolving credit facility (RCF) with a total
commitment of $200 million.
On 14 May 2024, the Group signed a new $137 million RCF, together with a $50
million accordion replacing the previous facility. The new RCF was agreed with
a syndicate of four lenders and is available until May 2027, with two further
one-year extension options.
The previous and new RCF are subject to financial covenants measured on a
bi-annual basis. These include a limit of 3.0 times for the ratio of net debt,
excluding lease liabilities, to bank-defined adjusted EBITDA (leverage). The
Group was in compliance with all financial covenants during the current and
prior period.
The Group has provided the lenders with a negative pledge in respect of
certain shares in Group companies.
4.2 Analysis of net debt
As at Cash flow $m Non-cash movements $m Exchange movements $m As at
30 Sept 2023 30 March 2024 $m
$m
Cash at bank and in hand 13.2 (2.0) - - 11.2
Bank loans (77.7) 9.2 - - (68.5)
Net debt excluding lease liabilities (64.5) 7.2 - - (57.3)
Lease liabilities (20.9) 2.5 (0.3) (0.5) (19.2)
Net debt (85.4) 9.7 (0.3) (0.5) (76.5)
Cash flow relating to bank loans consisted of $17.5 million proceeds from
drawdowns, less $26.7 million repayments.
4.3 Net finance costs
26 weeks to 30 March 26 weeks to 01 April
2024 2023
$m $m
(restated) (1)
Interest payable on bank loans and overdrafts (2.9) (2.7)
Interest payable in respect of leases (0.3) (0.4)
Amortisation of finance fees (0.4) (0.3)
U.K. defined benefit pension scheme net interest expense (1.0) (0.4)
Bank interest income 0.3 0.2
Finance lease interest 0.2 -
Net finance costs (4.1) (3.6)
( )
(1) The comparatives for the 26 weeks to 01 April 2023 been restated to
reflect the discontinuation of the Armour business.
4.4 Equity
Share Capital
No. of shares Ordinary shares Share premium No. of shares Ordinary shares Share premium
as at as at as at as at as at as at
30 March 2024 30 March 2024 30 March 2024 30 Sept 2023 30 Sept 2023 30 Sept
2023
$m $m $m $m
Called up, allotted and fully paid ordinary shares of £1 each
At the beginning of the period 31,023,292 50.3 54.3 31,023,292 50.3 54.3
At the end of the period 31,023,292 50.3 54.3 31,023,292 50.3 54.3
Ordinary shareholders are entitled to receive dividends and to vote at
meetings of the Company.
Own shares held - Share Buyback Programme
26 weeks to Period ended
30 March 30 sept
2024 2023
No. of shares No. of shares
Opening balance 765,098 765,098
Acquired in the period - -
Closing balance 765,098 765,098
In the 52 weeks ended 1 October 2022, the Group completed a £9.25 million
($12.4 million) Share Buyback Programme, purchasing 765,098 ordinary shares.
Dividends on these shares have been waived. Purchased shares under the
programme are held at cost as treasury shares and deducted from shareholders'
equity.
Own shares held - Long-Term Incentive Plan
26 weeks to Period ended
30 March 30 Sept
2024 2023
No. of shares No. of shares
Opening balance 261,714 261,714
Acquired in the period - -
Disposed on exercise of options - -
Closing balance 261,714 261,714
These shares are held in trust in respect of awards made under the Avon
Protection Long-Term Incentive Plan (LTIP). Dividends on the shares have been
waived. The market value of shares held in trust at 30 March 2024 was $3.6
million (30 September 2023: $2.0 million). The shares are held at cost as
treasury shares and deducted from shareholders' equity. In H2 the trust has
commenced a programme to buy further shares which are intended to be used to
satisfy the award of share options granted to employees under the LTIP.
4.5 Dividends
On 26 January 2024, the shareholders approved a final dividend of 15.3c per
qualifying ordinary share in respect of the 52 weeks ended 30 September 2023.
This was paid on 8 March 2024 utilising $4.6 million of shareholders' funds.
The Board of Directors has declared an interim dividend of 7.2c (2023: 14.3c)
per qualifying ordinary share in respect of the 52 weeks ending 28 September
2024. This interim dividend will be paid on 6 September 2024 to shareholders
on the register at 9 August 2024 with an ex-dividend date of 8 August 2024.
In accordance with accounting standards, this dividend has not been provided
for. It will be recognised in shareholders' funds in the 52 weeks to 28
September 2024 and is expected to utilise $2.1 million (2023: $4.3 million) of
shareholders' funds.
Section 5: Other
5.1 Provisions for liabilities and charges
Warranty Property Obligations Offset Restructuring
provisions provisions provisions Total
$m $m $m $m $m
Balance at 30 September 2023 1.8 4.2 2.4 - 8.4
Provision created/(released) in the period 0.8 - (0.9) 1.9 1.8
Transfer to accruals - - (0.5) - (0.5)
Payments in the period (0.2) - - - (0.2)
Foreign exchange movements - 0.2 - - 0.2
Balance at 30 March 2024 2.4 4.4 1.0 1.9 9.7
As at As at
30 March 2024 30 Sept
2023
Analysis of total provisions $m $m
Current 4.0 0.4
Non-current 5.7 8.0
Total provisions 9.7 8.4
Warranty provisions cover expected costs under guarantees provided with
certain products. Property obligations relate to leased premises of the Group
which are subject to dilapidation risks and are expected to be utilised within
the next 15 years. Offset provisions relate to the Group's estimated
obligations under programmes to generate economic value for specific
countries. Restructuring provisions relate to costs associated with the
closure of the Irvine California facility and other transformational
programmes.
5.2 Defined benefit pension scheme
As at As at
30 March 30 Sept
2024 2023
$m $m
Net pension liability 50.7 40.2
Defined benefit pension scheme
The Group operated a contributory defined benefit plan to provide pension and
death benefits for the employees of Avon Protection plc and its Group
undertakings in the U.K. employed prior to 31 January 2003. The plan was
closed to future accrual of benefit on 1 October 2009 and has a weighted
average maturity of approximately 11 years. The assets of the plan are held in
separate trustee administered funds and are invested by professional
investment managers. The Trustee is Avon Rubber Pension Trust Limited, the
Directors of which are members of the plan. Three of the Directors are
appointed by the Company and two are elected by the members. The defined
benefit plan exposes the Group to actuarial risks such as longevity risk,
inflation risk and investment risk.
The funding of the plan is based on regular actuarial valuations. The most
recent finalised actuarial valuation of the plan was carried out at 31 March
2022 when the market value of the plan's assets was £337.5 million. The fair
value of those assets represented 91% of the value of the benefits which had
accrued to members, after allowing for future increase in pensions.
During the period the Group made payments to the fund of $6.3 million (HY23:
nil) in respect of scheme expenses and deficit recovery plan payments. In
accordance with the deficit recovery plan agreed following the 31 March 2022
actuarial valuation, the Group will make payments in the second half of 2024
of £2.1 million, FY25 of £4.3 million and FY26 of £4.7 million in respect
of deficit recovery and scheme expenses.
The Directors have confirmed no additional liability is required to be
recognised as a consequence of minimum funding requirements. The trustees have
no rights to wind up the scheme or improve benefits without Company consent.
An updated actuarial valuation for IAS 19 purposes was carried out by an
independent actuary at 30 March 2024 using the projected unit method.
Movement in net defined benefit liability
Defined benefit Defined benefit Net defined benefit
obligation asset liability
30 March 30 Sept 30 March 30 Sept 30 March 30 Sept
2024 2023 2024 2023 2024 2023
$m $m $m $m $m $m
At 30 September/01 October (321.7) (284.9) 281.5 278.6 (40.2) (6.3)
Included in profit or loss
Administrative expenses (0.6) (1.0) - - (0.6) (1.0)
Net interest cost (8.8) (16.2) 7.7 15.8 (1.1) (0.4)
(9.4) (17.2) 7.7 15.8 (1.7) (1.4)
Included in other comprehensive income
Remeasurement gain:
- Actuarial gain/(loss) arising from:
- Demographic assumptions - (2.6) - - - (2.6)
- Financial assumptions (18.7) 15.0 - - (18.7) 15.0
- Experience adjustment - (24.4) - - - (24.4)
- Return on plan assets excluding interest income - - 5.2 (19.8) 5.2 (19.8)
(18.7) (12.0) 5.2 (19.8) (13.5) (31.8)
Other
Contributions by the employer - - 6.3 - 6.3 -
Net benefits paid out 11.6 23.7 (11.6) (23.7) - -
FX gain/(loss) (10.4) (31.3) 8.8 30.6 (1.6) (0.7)
At 30 March/30 September (348.6) (321.7) 297.9 281.5 (50.7) (40.2)
Actuarial assumptions
The main financial assumptions used by the independent qualified actuaries to calculate the liabilities under IAS 19 are set out below:
30 March 30 Sept
2024 2023
% p.a. % p.a.
Inflation (RPI) 3.25 3.30
Inflation (CPI) 2.65 2.65
Pension increases post August 2005 2.10 2.10
Pension increases pre August 2005 3.05 3.10
Discount rate for scheme liabilities 4.95 5.50
Plan assets
30 March 30 Sept
2024 2023
$m $m
Equities and other securities 90.6 83.2
Liability Driven Investment 133.9 73.8
Infrastructure fund 67.7 64.0
Cash 5.7 60.5
Fair value of assets 297.9 281.5
Equity securities are valued using quoted prices in active markets where
available.
Liability Driven Investments (LDI) comprises an investment in a level 2 pooled investment vehicle which combines a series of variable interest-earning cash deposits combined with contracts to hedge interest rate and inflation risk. The LDI is valued using a Net Asset Value published on the Irish Stock Exchange.
$129.1 million (FY23: $126.0 million) of the remaining investments are classified as level 3 within the fair value hierarchy. Holdings unquoted securities are valued at fair value which is typically the Net Asset Value provided by the fund administrator at the most recent quarter end. Holdings in the infrastructure fund are valued by an independent valuer using a model-based valuation such as a discounted cash flow approach.
The significant assumptions used in the valuation are the discount rate and the expected cash flow, both of which are subject to estimation uncertainty. Changes in assumptions relating to these variables could positively or negatively impact the reported fair value of these instruments.
5.3 Cash flow from operations
26 weeks to 26 weeks to
30 March 01 April
2024 2023
$m
$m $m
(restated) (1)
Continuing operations
(Loss)/profit for the period (1.1) 0.3
Adjustments for:
Taxation (0.4) -
Depreciation 3.6 3.9
Amortisation of intangible assets 6.1 6.2
Impairments - 0.7
Defined benefit pension scheme cost 0.6 0.4
Net finance costs 4.1 3.6
Fair value of share-based payments 0.9 0.8
Transformational and restructuring costs expensed(2) 5.4 1.2
Increase in inventories (2.0) (22.8)
Decrease/(increase) in receivables 8.3 (4.4)
Increase/(decrease) in payables and provisions 2.0 (4.4)
Cash flow from continuing operations before exceptional items 27.5 (14.5)
Transformational and restructuring costs paid (4.1) (1.2)
Cash flow from continuing operations 23.4 (15.7)
Discontinued operations
Loss for the period - (3.7)
Adjustments for:
Taxation - (0.9)
Finance costs - 0.1
Decrease in inventories - 6.1
Decrease in receivables 5.1 0.2
Decrease in payables and provisions (0.2) 0.9
Cash flow from discontinued operations 4.9 2.7
Cash flow from operations 28.3 (13.0)
(1) The comparatives for the 26 weeks to 01 April 2023 have been restated to
reflect the discontinuation of the Armour business.
(2) Transformational and restructuring costs expensed exclude amortisation and
impairment (note 2.1).
5.4 Exchange rates
The following significant exchange rates applied during the period.
Average rate Closing rate Average rate Closing rate Closing rate
30 March 30 March 01 April 01 April 30 Sept
2024 2024 2023 2023 2023
USD/GBP 0.7976 0.7910 0.8380 0.8085 0.8161
5.5 Restatements
Prior interim 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. 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. Overall operating loss figures as
reported in the previous period remain unchanged as this is only a
presentational change. This presentation reflects the way the business
performance is monitored by management, and classifications adopted in the
2023 annual accounts. A reconciliation of reported and adjusted prior period
to restated figures is presented below.
Adjusted
Previously reported Remove Armour Selling and distribution
Restated
Continuing operations $m $m $m $m
Revenue 116.2 (14.6) - 101.6
Cost of sales (77.4) 17.2 (3.3) (63.5)
Gross profit 38.8 2.6 (3.3) 38.1
Selling and distribution costs / Sales and marketing expenses (10.9) 0.7 3.3 (6.9)
Research and development costs (4.8) - - (4.8)
General and administrative expenses (18.9) 1.4 - (17.5)
Operating profit 4.2 4.7 - 8.9
Net finance costs (3.3) 0.1 - (3.2)
Profit before tax 0.9 4.8 - 5.7
Adjustments
Previously reported Remove Armour
Restated
Continuing operations $m $m $m
Revenue - - -
Cost of sales (0.4) 0.4 -
Gross profit (0.4) 0.4 -
General and administrative expenses (5.4) 0.4 (5.0)
Operating profit (5.8) 0.8 (5.0)
Statutory Total
Previously reported Remove Armour Selling and distribution
Restated
Continuing operations $m $m $m $m
Revenue 116.2 (14.6) - 101.6
Cost of sales (77.8) 17.6 (3.3) (63.5)
Gross profit 38.4 3.0 (3.3) 38.1
Selling and distribution costs / Sales and marketing expenses (10.9) 0.7 3.3 (6.9)
Research and development costs (4.8) - - (4.8)
General and administrative expenses (24.3) 1.8 - (22.5)
Operating profit (1.6) 5.5 - 3.9
Net finance costs (3.7) 0.1 - (3.6)
Profit before tax (5.3) 5.6 - 0.3
5.6 Principal risks and uncertainties
The nature of the principal risks and uncertainties impacting the Group are
described on pages 62-69 of our 2023 Annual Report and remain largely
unchanged, although the characterisation of some risks has changed as our
understanding and mitigation plans have developed.
The principal risks include the delivery of strategic projects and new product
introduction, market threat to core business, talent management, cybersecurity
and information technology, customer dependency, financial management,
manufacturing risk, sustainability, compliance and legal matters and political
and economic instability.
5.7 Related party transactions
There were no related party transactions during the period or outstanding at
the end of the period (2023: nil) other than internal transactions between
Group companies, and compensation of key management personnel which will be
disclosed as required in the Group's Annual Report for the 52 weeks ending 28
September 2024.
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