TIDMAVON
RNS Number : 6530Z
Avon Rubber PLC
25 May 2021
AVON RUBBER P.L.C.
INTERIM RESULTS FOR THE HALF YEAR
ED 31 MARCH 2021
POSITIONED FOR GROWTH
Paul McDonald, Chief Executive Officer:
"Following the transformation of the Group in 2020 into a
leading provider of life critical personal protection systems, we
have made a strong start to 2021, continuing to deliver organic
growth in orders and revenues, together with further progress
against our strategic objectives.
We have seen significant growth in respiratory protection from
both Military and First Responder customers, while Team Wendy has
performed well following the acquisition in November 2020, and we
completed the integration of the ballistic protection business
acquired in January 2020 from 3M.
We are making good progress to resolve the delays in product
approval for our body armor programmes and remain on track to
commence shipments in the first half of our 2022 financial
year.
Given the $157m order book and strong pipeline of opportunities
across our personal protection portfolio, we are confident of
delivering full year expectations and remain excited by the
medium-term prospects.
Reflecting our transformation into a focussed provider of life
critical personal protection systems we plan to change our name to
Avon Protection plc during the second half of the year. "
31 March 2021 31 March 2020 Growth
(Restated)(2)
-------------------------------------- -------------- --------------- -------
Orders received $167.9m $114.6m 46.5%
Closing order book $156.6m $135.2m 15.8%
Revenue $122.0m $86.5m 41.0%
Adjusted(1) operating profit $17.5m $14.0m 25.0%
Adjusted(1) profit before tax $16.0m $13.0m 23.1%
Adjusted(1) basic earnings per share 41.1c 32.1c 28.0%
Interim dividend per share 14.3c 11.0c 30.0%
Net debt excluding lease liabilities $12.9m $65.6m
Statutory results
Operating profit(3) $6.2m ($0.3m)
Profit before tax $5.4m ($1.8m)
Basic earnings per share 9.8c 5.9c
Net debt $44.1m $91.5m
-------------------------------------- -------------- --------------- -------
Strategic and operational highlights
-- Strong order intake up 46.5% (30.5% excluding Team Wendy),
with Military up 31.3%, First Responder up 28.3% and a first-time
contribution of $18.4m from Team Wendy
o First orders worth $38 million under the NATO Support &
Procurement Agency ("NSPA") contract
o Further follow-on order for $17m under M69 aircrew mask
contract with the U.S. Department of Defense ("U.S. DOD")
o Contract modification to the existing IHPS helmet contract
with a value of up to $28m secured with U.S. DOD together with an
initial $19m order
-- Team Wendy acquisition completed on 2 November and performing in line with expectations
-- Completed the integration of the ballistic protection
business acquired in January 2020 from 3M
o Business absorbed into our Military and First Responder lines
of business
o U.S. DOD contracts novated and exited transitional service
arrangements with 3M
-- Product approval process for the Defense Logistics Agency
("DLA") Enhanced Small Arms Protective Inserts ("ESAPI") body armor
contract remains on track for deliveries to commence at the start
of FY 2022 as previously guided
-- Propose to change our name to Avon Protection plc during the second half
o Reflecting our transformation into a focussed provider of
personal protection systems
Financial highlights
-- Another half year of positive financial performance
o Revenue growth of 41.0%, 17.6% excluding Team Wendy
contribution of $20.5m
o Adjusted EBITDA margin of 19.7%, down 120bps, reflecting the
expected weighting of revenues to the second half and even spread
of overheads across the year. Team Wendy contributed EBITDA of
$6.6m at a margin of 32.2%
o Adjusted operating profit up 25.0% reflecting the benefits of
strong respiratory trading performance and the $6.1m contribution
from Team Wendy. Operating profit excluding team Wendy impacted by
weighting of revenues and the even spread of overheads.
o Adjusted earnings per share up 28.0%
-- Cash conversion of 58.5% reflects the expected weighting of
revenues to the second half and increased inventory holdings to
mitigate supply chain risks and support second half deliveries
-- Strong financial position maintained
o Net debt excluding finance leases of $12.9m represents
leverage of less than 0.2 x consensus EBITDA for the full year.
Including lease liabilities of $31.2m, reported net debt was
$44.1m
o Strong liquidity with $200m Revolving Credit Facility largely
undrawn, with $11.0m utilised at the half year, and fully compliant
with all debt facility covenants with significant headroom
-- Interim dividend per share of 14.3c, up 30.0%
o Reflecting our continued commitment to our progressive
dividend policy and positive outlook
Outlook
-- Confident in the full year outlook
o Trading has continued in line with expectations in the second
half to date
o Given the current $156.6m order book and expected order intake
in the second half, the Board remains confident of achieving its
expectations for the current financial year
-- Strong medium-term growth prospects
o Our long-term contracts, strong order intake momentum and
order book provide excellent revenue visibility going into 2022 and
beyond
o Our leading technology and product offering, together with a
strong pipeline of opportunities, underpin our confidence in our
future growth prospects
Notes:
(1) The Directors believe that adjusted measures provide a more
useful comparison of business trends and performance. Adjusted
results exclude exceptional items, costs associated with
acquisitions, the amortisation of acquired intangibles and
discontinued operations. The term adjusted is not defined under
IFRS and may not be comparable with similarly titled measures used
by other companies.
(2) 2020 has been restated to reflect the continuing operations
of the Group following the change in reporting currency to US
dollars, the divestment of milkrite | InterPuls on 25 September
2020 and to reflect the prior period adjustment for Barber pension
equalisation included in the 2020 full year financial
statements.
(3) Reported operating profit includes $7.0m of amortisation of
acquired intangibles and $4.3m of costs related to the acquisition
and integration of Team Wendy and the 3M ballistic protection
business.
For further enquiries, please contact:
Avon Rubber p.l.c.
Paul McDonald, Chief Executive Officer +44 1225 896 848
Nick Keveth, Chief Financial Officer
MHP Communications
Andrew Jaques +44 7834 623 818
Charlie Barker +44 7710 032 657
Peter Lambie avonrubber@mhpc.com
Ailsa Prestige
Analyst and investor webcast
Paul McDonald, Chief Executive Officer and Nick Keveth, Chief
Financial Officer, will host a webcast for analysts and investors
at 9.00am this morning.
The webcast will be broadcast live at:
https://webcasting.brrmedia.co.uk/broadcast/607fce500386285386cc9e8a
Dial in: +44 (0) 330 336 9424
PIN: 2257111
A copy of the presentation for the webcast will be uploaded to
www.avon-rubber.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.
Note to editors:
Avon Rubber is listed on the London Stock Exchange (LSE: AVON)
and is a constituent of the FTSE 250 Index.
Avon Rubber is an innovative technology group, which designs and
produces life critical personal protection systems to maximise the
performance and capabilities of its customers, with leading
positions in the respiratory and ballistic protection markets for
the world's militaries and first responders.
For further information, please visit our website: www.avon-rubber.com .
CHIEF EXECUTIVE OFFICER'S REVIEW
The first six months of 2021 have been a period of further
strong growth and development for the business as we have continued
to deliver on the strategy we launched in 2017. This strategy is
based on three core pillars:
-- Growing the core by maximising organic sales growth from our current product portfolio;
-- Pursuing selective product development to maintain our innovation leadership position; and
-- Targeting value enhancing acquisitions to complement our
existing businesses and add additional growth opportunities for the
Group.
GROWING THE CORE
The strong revenue and order intake growth in the first half of
the year has been delivered through our focus on providing life
critical personal protection solutions to our customers across both
Military and First Responder end markets.
Our revenues remained underpinned by long-term contract
positions with the U.S. DOD, a growing and significant Rest of
World customer base and an attractive aftermarket proposition for
our installed platforms, providing more visible and sustainable
revenues.
In turn, our respiratory and ballistic protection portfolios are
supported by our technology leadership and the strength of our
specialisms in advanced materials and respiratory protection, and
well-invested manufacturing facilities.
A diversified portfolio of long-term contracts in Military
Over recent years we have established a position as the sole
source provider of General-Purpose Respirators, Tactical Forces
Respirators, Powered Air Purifying Respirators ("PAPR") and
Tactical Self Container Breathing Apparatus ("SCBA") across the
entire U.S. DOD. We continue to install the base volumes of the M69
aircrew mask and the third delivery order under this framework
contract for $17.0m continues to provide good revenue visibility in
the short-term.
The M50 mask system remains important to the respiratory
portfolio and this was confirmed last year with the award of the
new sustainment contract. We have completed the first deliveries
under this new contract and alongside the original equipment
installation we continue to see the benefit of the installed base
of over two million masks which has supported strong sustainable
revenues from our filters, spares and accessories portfolio.
Alongside this we continue to supply all four military branches
of the U.S. DOD and other national and federal agencies with the
M53A1 tactical mask which also draws from a wider range of
respiratory protection products, including the MP PAPR powered air
systems and the ST54 self-contained breathing apparatus as well as
other spares and accessories. As expected, we have received regular
follow-on orders over the first half of the year and this contract
and order profile is continuing to demonstrate the breadth of our
customer base.
Alongside the diverse and visible order pipeline with the U.S.
DOD, we have seen continued success with the broader respiratory
portfolio in meeting a wider range of needs for our Rest of World
customers. The award by the NATO Support & Procurement Agency
("NSPA") of a 10-year contract to provide access to the entire
respiratory portfolio for its members and associate members was
very significant. During the first half we have received orders
totalling $38m under this contract from four NSPA members with
Norway, Finland, Belgium and the Netherlands joining the programme
and we remain excited by other opportunities under this contract.
Alongside this we have continued to deliver the sustainment volumes
of the U.K. General Service Respirator ("U.K. GSR").
Last year was transformational for Avon Protection with the
completion of the acquisition of 3M's ballistic protection business
in January 2020 adding market leading ballistic protection
technologies across helmets and body armor to our leading
respiratory protection portfolio.
The legacy DLA ESAPI contract remains an important part of the
medium-term revenue outlook for the ballistic portfolio. We have
conducted a thorough review of the first article testing failure
that was confirmed in December and have finalised revised product
designs to address the identified issue. We are currently
manufacturing test samples of the new design and remain on track
for these samples to be submitted for testing during our fourth
quarter and for deliveries to commence in the first half of our
next financial year.
We announced the $93m contract award for the next generation
U.S. Army Integrated Head Protection System ("IHPS") in September
2020. As previously announced, this was subsequently protested by a
competitor with that protest upheld. The ongoing customer
requirement for the supply of IHPS was confirmed by the award of
the $28.4m contract modification to the existing low rate
production volume contract in March 2021. Following the sole source
contract extension for the first generation IHPS we are now in
discussion with the customer in advance of the tender process for
the next generation IHPS helmet, which we expect to commence in the
second half of the year with production commencing in our next
financial year. This major programme, which we expect to be
multi-sourced, will provide medium-term revenue visibility for this
important product.
First Responder well positioned in a post-COVID environment
The First Responder line of business is delivering the benefits
of our committed commercial focus on this core growth market. The
COVID-19 pandemic has changed the landscape of the requirements of
the First Responder community and we have seen more of our
customers looking for the benefits of the protection provided by
our leading technologies for both respiratory and ballistic
protection. We have seen strong order intake and revenues through
original equipment orders and, as with our Military customers, the
benefit of the legacy global installed mask base provides more
sustainable revenues from filters, spares and accessories.
Significant growth opportunities
We are seeing positive market dynamics for our respiratory and
ballistic portfolio and our current growth trajectory is
underpinned by existing contracts but there is importantly
significant scope for new contracts and expansion of current
platforms into both new geographies and product ranges through our
development activity.
SELECTIVE PRODUCT DEVELOPMENT
We continue to focus on maintaining our reputation for
technological excellence and innovation. The strategic objective of
our product development programme is to both increase the
capability of the current platforms we provide and also to move up
the value chain by providing more advanced systems for our
specialist user groups. We continue to ensure our development
pipeline is designed in partnership with our customers to ensure
that their exacting performance requirements are met whilst
ensuring we have a committed and commercial route to market to
maximise our return on investment.
Maintaining our technology leadership in partnership with our
customers
We have continued this focus on selective new product
development in the first half, with $10.5m of investment in
research and development projects. The increase in investment over
the prior year primarily reflects the Group's growth with
additional development resources and capability across the
respiratory and ballistic product portfolio being supplemented with
the addition of Team Wendy.
Over the first half we have made notable investment in the
Supplied Air ST54 tactical self-contained breathing apparatus and
the FM61 filter development for the NSPA contract. There has also
been a focus on enhancements to the MCM100 underwater rebreather in
association with the ongoing full dive test programme with the U.S.
Navy. Development expenditure for the ballistic protection
portfolio has focused on the next generation IHPS programme and
body armor development for the DLA ESAPI and VTP ESAPI.
During the first half we have expanded distribution of our next
generation CH15 escape hood to our European commercial customers
following successful completion of CE safety approvals. We
anticipate securing NIOSH safety approvals later in the year to
allow the product to be launched for North American commercial
customers.
Over the long-term, the strategy of our selective product
development programme is focused on looking to the future of ever
more sophisticated technical and operational requirements of
serving Military and First Responder personnel through the
development of seamlessly integrated respiratory and ballistic
protection systems with data and communications technology.
VALUE ENHANCING ACQUISITIONS
We have executed on three significant strategic transactions
over the last two years with the acquisitions of Team Wendy and
3M's ballistic protection business and the divestment of milkrite |
InterPuls. As such, our current priority is completing the
integration into the Group of the two newly acquired businesses and
the transition of milkrite | InterPuls to new ownership.
Successful integration of ballistic protection
Our ballistic protection business is now fully integrated into
Avon Protection, and we have established a fully aligned management
structure through our Executive Leadership Team. All customer
relationships are managed through our Military and First Responder
lines of business and the manufacturing operations have been
integrated into our Global Operations organisation.
In terms of back office integration, we have successfully
transferred the business onto our IT systems and infrastructure,
along with integrating our support functions across IT, finance and
HR. Following novation of the U.S. DOD contracts to Avon Protection
Ceradyne LLC in March we have now exited the transitional services
arrangements with 3M.
We have implemented the Avon Protection Research and Development
processes and made significant progress aligning the businesses so
they can work effectively together and share best practice.
We remain on track to deliver the $5m of annualised synergies in
2021 and see the potential for further operational efficiencies
over the medium-term.
Team Wendy integration on track and performing well
Following completion of the acquisition in November 2020, Team
Wendy has performed in line with expectations. Whilst Team Wendy
continues to operate on a standalone basis, we have migrated the
business onto the Avon Rubber governance and performance management
processes. Team Wendy has also started to work together with Avon
Protection on major tender processes as well as opportunities to
enhance our helmet portfolio. In particular, Team Wendy and Avon
Protection are collaborating on the development of the IHPS liner
pad system and our first combined commercial helmet, incorporating
the Ceradyne helmet forming capabilities and Team Wendy's impact
and retention capabilities, which we are expecting to launch in
First Responder markets in the second half of the year. In
addition, we have delivered procurement benefits from utilising
Avon Protection's buying power and supplier relationships.
Strong balance sheet to support future activity
We will continue to explore further acquisition opportunities
where we see potential to deliver significant strategic and
financial value against our clear criteria. Our strong balance
sheet, supported by our $200m RCF facility, and cash generation
capability mean we are well positioned to pursue other potential
acquisitions that also meet our criteria and act quickly and
decisively where we identify them.
GROUP RESULTS
We have delivered a positive start to the year benefitting from
the momentum from our respiratory portfolio in both our Military
and First Responder businesses and the completion of the Team Wendy
acquisition. As a result, revenue and adjusted operating profit
grew by 41.0% and 25.0% respectively.
The positive performance over the first half of the year and the
opening order book of $156.6m (HY20: $135.2m), provides excellent
visibility going into the second half of 2021.
31 March
31 March 2020
2021 (Restated)(1) Growth
----------------------------------- --------- --------------- -------
Orders received $167.9m $114.6m 46.5%
Closing order book $156.6m $135.2m 15.8%
Revenue $122.0m $86.5m 41.0%
Adjusted EBITDA $24.1m $18.1m 33.1%
Adjusted EBITDA margin 19.7% 20.9% (1.2%)
Adjusted operating profit $17.5m $14.0m 25.0%
Operating profit $6.2m ($0.3m)
Adjusted profit after tax $12.6m $9.8m 28.6%
Profit after tax $4.4m ($1.9m)
Adjusted basic earnings per share 41.1c 32.1c 28.0%
Basic earnings per share 9.8c 5.9c
----------------------------------- --------- --------------- -------
Orders received totalled $167.9m (HY20: $114.6m) up 46.5%,
reflecting strong momentum across our portfolio of life critical
personal protection systems for the world's militaries and first
responders. Excluding Team Wendy, which contributed $18.4m of
orders in the period, orders received grew by 30.5% with Military
growing by 31.3% and First Responder by 28.3%.
The closing order book of $156.6m (HY20: $135.2m) reflects a
15.8% increase on last half year, or 12.6% excluding the $4.3m Team
Wendy closing order book.
The strong order momentum and first-time contribution from Team
Wendy supported revenue growth of 41.0% to $122.0m (HY20: $86.5m),
an increase of 17.3% excluding Team Wendy. This comprised
exceptionally strong organic growth with both Military and First
Responder customers of 17.0% and 19.1% respectively.
Adjusted EBITDA of $24.1m is up 33.1% versus last half year. The
a djusted EBITDA margin of 19.7%, down 120bps, reflects the
expected weighting of revenues to the second half and an even
allocation of overheads across the whole year. With stronger second
half revenues we expect the adjusted EBITDA margin percentage to
significantly improve in the second half. However, given the impact
of exchange rate movements in the year to date and the lower
ballistic protection revenues we expect the full year adjusted
EBITDA margin to be up to 100 basis points lower than the 2020 full
year adjusted EBITDA margin of 22.9%.
Adjusted operating profit increased by 25.0%, to $17.5m (HY20:
$14.0m) reflecting the benefits of strong respiratory trading
performance and the $6.1m contribution from Team Wendy. Operating
profit excluding Team Wendy of $11.4m was lower than the prior year
due to the weighting of Avon Protection revenues to the second half
and the even spread of overheads across the year.
After an adjusted tax charge of $3.4m (HY20: $3.2m), the Group
recorded an adjusted profit for the period after tax of $12.6m
(HY20: $9.8m). The adjusted tax rate of 21% is consistent with the
prior half year and is reflective of the medium-term expectations
for the Group tax rate in the absence of any increase to US federal
tax rates.
Adjusted basic earnings per share increased by 28.0% to 41.1c
(HY20: 32.1c).
On a reported basis, after taking account of the increase in
amortisation of acquired intangibles following the acquisitions of
Team Wendy and 3M's ballistic protection business and the
associated acquisition costs and acquisition accounting adjustments
to account for acquired inventory at fair value, statutory
operating profit was $6.2m (HY20: $0.3m loss). Profit before tax
was $5.4m (HY20: ($1.8m)) and, after a tax cost of $1.0m (HY20:
$0.1m), profit for the period was $4.4m (HY20: $1.9m loss). Basic
earnings per share were 9.8c (HY20: 5.9c).
REVENUE
31 March 31 March
2021 2020
$m $m
Respiratory Ballistic Total Respiratory Ballistic Total
Military 60.6 13.7 74.3 46.8 16.7 63.5
First Responder 24.7 2.7 27.4 22.2 0.8 23.0
----------------- ------------ ---------- --------- ------------ ---------- ---------
Avon Protection 85.3 16.4 101.7 69.0 17.5 86.5
Team Wendy - 20.5 20.5 - - -
Eliminations - (0.2) (0.2) - - -
----------------- ------------ ---------- --------- ------------ ---------- ---------
Total 85.3 36.7 122.0 69.0 17.5 86.5
----------------- ------------ ---------- --------- ------------ ---------- ---------
Military
Military revenues of $74.3m (HY20: $63.5m) were 17.0% higher
versus last half year, driven by a 29.5% increase in respiratory
revenues. U.S. DOD revenues of $62.5m (HY20: $47.1m), reflect the
broad contribution across the portfolio. We continue to install the
base volumes for the IHPS low rate production contract, the M69
aircrew mask and the M53A1 mask and powered air system. Alongside
this, we continue to see the benefit of the large installed base of
two million M50 masks with strong associated revenues from filters,
spares and accessories alongside new mask deliveries across the
period.
Rest of World revenues of $11.8m compared to $16.4m in the first
half for 2020, with a significant mask contract completed in the
first half of last year and first deliveries under the NSPA
contract commencing towards the end of the second quarter
continuing into the second half of the year. We expect the benefits
of a contract vehicle being in place for NSPA members to access the
broad respiratory portfolio to underpin more visible rest of world
revenue opportunities.
Alongside the growth in Military revenues in the first half of
the year, we have also delivered a strong opening order book for
the second half of the year of $136.6m. The receipt of the
modification to the IHPS low rate production volumes contract, a
further follow-on M69 delivery order, strong Rest of World demand
driven primarily by the NSPA contract and significant filters,
spares and accessories orders in the first half has provided us
with excellent visibility for Military sales in the second half, as
well as contributing to building a strong order book for 2022.
Discussions with the U.S. DOD for the next generation IHPS dual
source contract, which will further underpin the Military outlook,
continue to progress well. We also continue to actively pursue a
number of other targeted opportunities with Rest of World Military
customers.
First Responder
First Responder revenue increased by 19.1% to $27.4m (HY20:
$23.0m). This was due to the continued strong momentum from our
global customer base for the respiratory protection portfolio but
importantly also with increasing demand for the ballistic
portfolio.
The COVID 19 pandemic continues to drive demand in our First
Responder markets. Our portfolio of life critical personal
protection equipment is increasingly being used more widely with
strong order intake particularly for our original equipment masks
but also from the legacy installed base across supporting
sustainable revenues for spares and accessories in the second half
and beyond.
The momentum and benefit of adding the ballistic protection
portfolio last year continues to build and we are pleased with the
progress being made through our distribution network as sales of
ballistic helmets have delivered strong growth from HY20. We have
strong traction in our First Responder markets and together with a
$15.7m opening order book these supportive trends continue to
underpin our confidence in our full year expectations.
Team Wendy
We completed the acquisition of Team Wendy on 2 November 2020,
so the period to date includes the first five months of ownership.
Over the period we have benefitted from revenue of $20.5m with
broadly half of those sales being for ballistic helmets and the
balance of sales to a very broad range of customers procuring
non-ballistic helmets, helmet pads and liner and retention
systems.
Team Wendy contributed EBITDA of $6.6m at an EBITDA margin of
32.2%.
Team Wendy benefits from a diversified customer base with
broadly two thirds of the revenues being to Military customers and
one third to First Responder customers. The opening order book of
$4.3m for the second half is typical for the business given the
quick turnaround of order fulfilment and with a significant
opportunity pipeline drawn from the broad global customer base we
are confident on the business performing in line with our
expectations over our first 11 months of ownership.
RESEARCH & DEVELOPMENT EXPITURE
In line with our strategy and to maintain our leadership
position in technological excellence we continue to invest in the
next generation of products and our total investment in research
and development (capitalised and expensed) amounted to $10.5m
(HY20: $6.0m) as shown below. Total research and development as a
percentage of revenue was 8.6% (HY20: 6.9%), which is an increase
on prior year levels and reflects our ongoing product development
objectives.
Half year to Half year to Year to
31 Mar 2021 31 Mar 2020 30 Sep 2020
-------------------------------------------- ------------- ------------- -------------
Total research and development expenditure $10.5m $6.0m $11.8m
Less customer funded ($0.9m) ($1.7m) ($2.6m)
-------------------------------------------- ------------- ------------- -------------
Group expenditure $9.6m $4.3m $9.2m
Capitalised ($9.0m) ($3.1m) ($6.8m)
-------------------------------------------- ------------- ------------- -------------
Income statement impact $0.6m $1.2m $2.4m
Amortisation $2.0m $1.5m $3.6m
Total income statement impact $2.6m $2.7m $6.0m
-------------------------------------------- ------------- ------------- -------------
Revenue $122.0m $86.5m $213.6m
R&D spend as % of revenue 8.6% 6.9% 5.5%
-------------------------------------------- ------------- ------------- -------------
The most significant expenditure on the respiratory portfolio
has been continuing the development of the Supplied Air ST54
tactical self-contained breathing apparatus and the FM61 filter
development for the NSPA contract. There has also been a focus on
enhancements to the MCM100 underwater rebreather in association
with the ongoing full dive test programme with the U.S. Navy.
Development expenditure for the ballistic protection portfolio has
focused on the next generation IHPS programme and body armor
development for the DLA ESAPI and VTP ESAPI.
ADJUSTED PERFORMANCE MEASURES
31 March 2021 31 March 2020
Adjusted Adjustments Total
Adjusted Adjustments Total (Restated)(5) (Restated)(5) (Restated)(5)
$m $m $m $m $m $m
----------------------------- --------- ------------ -------- ---------------- ---------------- ----------------
Continuing operations
EBITDA 24.1 (4.3) 19.8 18.1 (11.2) 6.9
Depreciation and
amortisation (6.6) (7.0) (13.6) (4.1) (3.1) (7.2)
----------------------------- --------- ------------ -------- ---------------- ---------------- ----------------
Operating profit 17.5 (11.3)(1) 6.2 14.0 (14.3)(1) (0.3)
----------------------------- --------- ------------ -------- ---------------- ---------------- ----------------
Net finance costs (1.5) 0.7(2) (0.8) (1.0) (0.5)(2) (1.5)
----------------------------- --------- ------------ -------- ---------------- ---------------- ----------------
Profit before taxation 16.0 (10.6) 5.4 13.0 (14.8) (1.8)
Taxation (3.4) 2.4(3) (1.0) (3.2) 3.1(3) (0.1)
----------------------------- --------- ------------ -------- ---------------- ---------------- ----------------
Profit for the period from
continuing operations 12.6 (8.2) 4.4 9.8 (11.7) (1.9)
Discontinued operations
(Loss) / profit from
discontinued operations - (1.4)(4) (1.4) - 3.7(4) 3.7
----------------------------- --------- ------------ -------- ---------------- ---------------- ----------------
Profit for the period 12.6 (9.6) 3.0 9.8 (8.0) 1.8
----------------------------- --------- ------------ -------- ---------------- ---------------- ----------------
Basic earnings per share 41.1c (31.3c) 9.8c 32.1c (26.2c) 5.9c
----------------------------- --------- ------------ -------- ---------------- ---------------- ----------------
Diluted basic earnings per
share 40.7c (30.9c) 9.8c 31.7c (25.9c) 5.8c
----------------------------- --------- ------------ -------- ---------------- ---------------- ----------------
(1) Operating Profit
Adjustments to operating profit are summarised as follows:
31 March 2021 31 March 2020
$m $m
-------------------------------------- -------------- --------------
Amortisation of acquired intangibles 7.0 3.1
Acquisition related costs 1.9 3.8
Inventory fair value adjustment 2.4 7.4
-------------------------------------- -------------- --------------
Operating profit adjustments 11.3 14.3
-------------------------------------- -------------- --------------
(2) Net finance costs
31 March 2021 31 March 2020
$m $m
------------------------------------------------------ -------------- --------------
Bank interest - RCF commitment and utilisation fees 0.6 0.5
Interest in respect of leases 0.6 0.5
Amortisation of RCF finance fees 0.3 -
------------------------------------------------------ -------------- --------------
Adjusted net finance costs 1.5 1.0
------------------------------------------------------ -------------- --------------
Adjustments to finance costs:
UK Pension scheme cost - discount rate change 0.4 0.5
Change in discount rate for contingent consideration (1.1) -
------------------------------------------------------ -------------- --------------
Net finance costs 0.8 1.5
------------------------------------------------------ -------------- --------------
(3) Taxation
The tax charge of $1.0m (HY20: $0.1m) is comprised of an
adjusted tax charge of $3.4m (HY20: $3.2m), at an adjusted
effective rate of 21% (HY20: 21%), offset by the tax effects of the
acquisition costs, amortisation of acquired intangibles and the
defined benefit pension scheme of $2.4m (HY20: $3.1m).
(4) Loss from Discontinued Operations
The loss from discontinued operations of $1.4m in the period
comprised costs associated with the divestment of milkrite |
InterPuls. The prior period also contains the profit after tax of
milkrite | InterPuls prior to the disposal on 25 September
2020.
(5) Restatement
The previously reported prior year adjusted performance measure
comparatives have been restated for the following items: to present
milkrite | InterPuls as a discontinued operation following the
disposal in September 2020 and to include the pension
administration costs within the adjusted performance measures as
these were previously excluded.
The table below shows the reconciliation of the previously
reported key measures to the restated prior half year
comparatives:
As reported 31 Discontinued operations Pension adjustments 31 Mar 2020
Mar 2020 Restated
$m $m $m $m
--------------------------------------- --------------- ------------------------ -------------------- ------------
Adjusted EBITDA 25.9 (7.2) (0.6) 18.1
--------------------------------------- --------------- ------------------------ -------------------- ------------
Adjusted operating profit 19.7 (5.1) (0.6) 14.0
--------------------------------------- --------------- ------------------------ -------------------- ------------
Adjusted profit for the period 15.0 (4.7) (0.5) 9.8
--------------------------------------- --------------- ------------------------ -------------------- ------------
Adjusted Basic earnings per share
(cents) 49.3c (15.5c) (1.7c) 32.1c
--------------------------------------- --------------- ------------------------ -------------------- ------------
CASH FLOW AND NET DEBT
31 March 2021 31 March 2020
$m $m
-------------------------------------------------------------------- -------------- --------------
Cash flows from continuing operations 14.1 (13.8)
Cash flows from discontinued operations (1.6) 6.2
-------------------------------------------------------------------- -------------- --------------
Cash flows from operations 12.5 (7.6)
Net interest (2.5) (1.2)
Payments to pension plan - (1.3)
Tax (11.0) (1.8)
Purchase of property, plant and equipment (2.1) (1.7)
Capitalised development costs and purchased software (13.7) (2.1)
Acquisition costs (135.2) (93.4)
Divestment costs (0.6) -
Proceeds from disposal of discontinued operations 3.4 -
Investing and financing activities used in discontinued operations - (2.3)
Purchase of own shares (4.3) -
Dividends to shareholders (7.7) (5.2)
Net (repayment) / proceeds from loan drawdowns (28.5) 69.3
Foreign exchange and other items 0.6 (2.8)
-------------------------------------------------------------------- -------------- --------------
Decrease in net cash (189.1) (50.1)
-------------------------------------------------------------------- -------------- --------------
Cash flows from continuing operations were $14.1m. Total capital
expenditure was $15.8m (HY20: $3.8m) including $9.0m of capitalised
development costs and $4.7m of IT infrastructure investment
relating to the integration of the ballistic protection
business.
Dividends and purchase of own shares were $12.0m (HY20: $5.2m)
reflecting the 30% increase in the 2020 final dividend. Tax paid of
$11.0m was principally associated with the gain following the
divestment of milkrite | InterPuls offset by the receipt of the
final consideration payment of $3.4m.
Cash flows from continuing operations as a percentage of
adjusted EBITDA of 58.5% was impacted by the timing of revenues and
the build-up of inventory both in advance of second half shipments
but also to mitigate the impact of longer material lead times. With
the delivery of expected revenues in the second half and the
associated reduction of on hand inventory we expect cash conversion
by the end of year to return in line with our normal 90%+
expectations.
Net debt at the half year was $44.1m (FY20 net cash: $118.7m),
which includes lease liabilities of $31.2m (FY20: $29.0m).
Excluding lease liabilities net debt was $12.9m (FY20 net cash
$147.7m).
The move from a net cash to a net debt position during the half
year, is principally due to the acquisition of Team Wendy which
completed at the start of November for consideration of $132.0m,
with associated acquisition costs of $4.3m paid in the period.
CURRENCY EFFECT AND CHANGE OF REPORTING CURRENCY
On 1 October 2020 the Group changed its reporting currency to
U.S. dollars for the 2021 financial year.
Following the change in reporting currency, the Group has
translational exposure arising on the consolidation of UK company
results into U.S. dollars. A one cent movement in the exchange rate
impacts operating profit by approximately $160,000 primarily due to
the UK administration and manufacturing cost base.
DIVIDS
The Board has declared an interim dividend of 14.3c per ordinary
share, an increase of 30% on the 2020 interim dividend reflecting
our continued commitment to our progressive dividend policy. This
will be paid on 3 September 2021 to shareholders on the register on
6 August 2021. Following the change in reporting currency,
dividends for the 2021 financial year and beyond will be set in
U.S. dollars and converted into pounds sterling for payment at the
prevailing exchange rate immediately prior to payment.
BOARD CHANGE
As detailed in a separate RNS announcement made by the company
today, Nick Keveth, Chief Financial Officer and Executive Director,
has informed the Board of his desire and intention to retire for
personal reasons before the end of March 2022. This will enable him
to manage the completion of the current financial year ending 30
September 2021 and to make an orderly handover of his duties to his
successor.
The Board has initiated a process to search for a suitable
external candidate to succeed Nick and will make a further
announcement once that process has been completed.
OUTLOOK
The opening order book of $156.6m and a strong pipeline of
opportunities provides excellent visibility as we enter the second
half of the financial year and the Board remains confident in
delivering its current year expectations.
Across the Group, with the timing of our current year revenue
expectations phased more to the second half we expect our margin
and cash conversion metrics to significantly improve as we benefit
from greater operational efficiency, and an easing on the longer
lead times for critical materials and components as we continue to
manage and mitigate the ongoing supply chain impacts of
COVID-19.
Having transformed the business over the last two years, we have
a strong platform to deliver sustainable growth over the
medium-term. We remain focused on delivering growth through our
three strategic priorities of growing the core, selective product
development and value enhancing acquisitions.
We believe our broad portfolio of life critical personal
protection systems represents the optimum solution for the world's
militaries and first responders and the strength of our customer
relationships, in conjunction with our ongoing technology
leadership, underpin our business. Underlying momentum in our
business remains healthy and we are well placed to continue to
deliver sustainable growth for the second half and beyond.
Paul McDon ald Nick Keveth
Chief Executive Officer Chief Financial Officer
25 May 2021 25 May 2021
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 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.
Miles Ingrey-Counter
Company Secretary
25 May 2021
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
www.avon-rubber.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.
Consolidated Statement of Comprehensive Income for the half year
ended 31 March 2021
Note Half year to Half year to Year to
31 March 31 March 30 Sept
2021 2020 2020
(Restated) (Restated)
$m $m $m
----------------------------------------------------------- ----- ------------- ------------- ------------
Continuing operations
Revenue 2.1 122.0 86.5 213.6
Cost of sales (81.1) (54.4) (130.1)
----------------------------------------------------------- ----- ------------- ------------- ------------
Gross profit 40.9 32.1 83.5
Selling and distribution costs (10.7) (7.8) (17.4)
General and administrative expenses (24.0) (24.6) (57.2)
----------------------------------------------------------- ----- ------------- ------------- ------------
Operating profit / (loss) 6.2 (0.3) 8.9
Finance costs 3.3 (1.2) (1.0) (2.6)
Other finance income / (expense) 3.3 0.4 (0.5) (4.1)
----------------------------------------------------------- ----- ------------- ------------- ------------
Net finance costs (0.8) (1.5) (6.7)
Profit / (loss) before taxation 5.4 (1.8) 2.2
Taxation 2.4 (1.0) (0.1) 1.6
----------------------------------------------------------- ----- ------------- ------------- ------------
Profit / (loss) for the period from continuing operations 4.4 (1.9) 3.8
Discontinued operations
Gain on divestment 4.3 - - 160.7
(Loss) / profit from discontinued operations 2.2 (1.4) 3.7 6.9
----------------------------------------------------------- ----- ------------- ------------- ------------
Profit for the period 3.0 1.8 171.4
----------------------------------------------------------- ----- ------------- ------------- ------------
Consolidated Statement of Comprehensive Income for the half year
ended 31 March 2021 (Continued)
Note Half year to Half year to Year to
31 March 2021 31 March 30 Sept
2020 2020
$m ( Restated) ( Restated)
$m $m
-------------
Other comprehensive income/(expense)
Items that are not subsequently reclassified to the income
statement
Remeasurement loss recognised on retirement benefit scheme (9.0) (7.0) (36.7)
Deferred tax relating to retirement benefit scheme 1.8 2.1 8.1
Cash flow hedges - 1.3 1.7
Deferred tax relating to cash flow hedges - (0.2) (0.3)
Translation reserve recycled on divestment - - (0.7)
Other comprehensive expense for the period, net of taxation
from continuing operations (7.2) (3.8) (27.9)
------------------------------------------------------------ ----- --------------- ------------- -------------
Items that may be subsequently reclassified to the income
statement
Net exchange differences offset in reserves 2.4 2.4 (1.7)
------------------------------------------------------------ ----- --------------- ------------- -------------
Other comprehensive income/(expense) for the period, net of
taxation from discontinued operations 2.4 2.4 (1.7)
Total comprehensive (expense)/ income for the period (1.8) 0.4 141.8
------------------------------------------------------------ ----- --------------- ------------- -------------
Earnings per share (cents)
Basic 2.3 9.8c 5.9c 560.5c
Diluted 9.8c 5.8c 552.9c
Earnings per share from continuing operations (cents) 2.3
Basic 14.4c (6.3c) 12.5c
Diluted 14.3c (6.2c) 12.3c
------------------------------------------------------------ ----- --------------- ------------- -------------
Consolidated Balance Sheet
Note As at As at As at As at
31 March 2021 31 March 2020 30 Sept 2020 30 Sept 2019 (Restated)
(Restated) (Restated) $m
$m $m $m
Assets
Non-current assets
Intangible assets 206.6 102.9 89.4 43.5
Property, plant and equipment 74.6 73.5 65.9 37.7
Deferred tax assets 34.5 21.8 29.7 18.3
---------------------------------- ----- --------------- --------------- -------------- -------------------------
315.7 198.2 185.0 99.5
---------------------------------- ----- --------------- --------------- -------------- -------------------------
Current assets
Inventories 55.1 53.7 36.3 25.5
Trade and other receivables 54.3 62.2 46.0 43.6
Cash and cash equivalents - 9.5 187.2 59.6
---------------------------------- ----- --------------- --------------- -------------- -------------------------
109.4 125.4 269.5 128.7
Liabilities
Current liabilities
Borrowings 3.1 16.8 68.2 42.7 1.7
Trade and other payables 42.2 55.5 39.5 36.8
Derivative financial instruments - 0.3 - 1.6
Current tax liabilities 1.5 1.3 9.6 5.1
Provisions for liabilities and
charges 4.1 9.2 - 9.6 -
---------------------------------- ----- --------------- --------------- -------------- -------------------------
69.7 125.3 101.4 45.2
Net current assets 39.7 0.1 168.1 83.5
---------------------------------- ----- --------------- --------------- -------------- -------------------------
Non-current liabilities
Borrowings 3.1 27.3 23.3 25.8 14.3
Deferred tax liabilities 5.6 10.2 5.5 6.7
Retirement benefit obligations 95.7 73.1 79.7 66.6
Provisions for liabilities and
charges 4.1 12.2 3.5 12.6 2.8
---------------------------------- ----- --------------- --------------- -------------- -------------------------
140.8 110.1 123.6 90.4
Net assets 214.6 88.2 229.5 92.6
---------------------------------- ----- --------------- --------------- -------------- -------------------------
Shareholders' equity
Ordinary shares 3.4 50.3 50.3 50.3 50.3
Share premium account 3.4 54.3 54.3 54.3 54.3
Other reserves (13.2) (10.8) (15.6) (13.2)
Retained earnings / (deficit) 123.2 (5.6) 140.5 1.2
---------------------------------- ----- --------------- --------------- -------------- -------------------------
Total equity 214.6 88.2 229.5 92.6
---------------------------------- ----- --------------- --------------- -------------- -------------------------
Consolidated Cash Flow Statement
Half year to Half year to 31 March Year to
31 March 2020 (Restated) 30 Sept
2021 2020
( Restated)
Note $m $m $m
--------------------------------------------------------- ----- ------------- ---------------------- -------------
Cash flows from / (used in) operating activities
Cash flows from / (used in) continuing operations 4.2 14.1 (13.8) 29.1
Cash flows (used in) / from discontinued operations 4.2 (1.6) 6.2 9.0
--------------------------------------------------------- ----- ------------- ---------------------- -------------
Cash flows from / (used in) operations 12.5 (7.6) 38.1
Retirement benefit deficit recovery contributions - (1.3) (27.8)
Tax paid (11.0) (1.8) (3.5)
--------------------------------------------------------- -----
Net cash flows from / (used in) operating activities 1.5 (10.7) 6.8
--------------------------------------------------------- ----- ------------- ---------------------- -------------
Cash flows (used in) / from investing activities
Proceeds from disposal of discontinued operations 3.4 - 217.2
Costs of divestment (0.6) - (10.0)
Purchase of property, plant and equipment (2.1) (1.7) (7.8)
Capitalised development costs and computer software (13.7) (2.1) (12.1)
Acquisition of business (135.2) (93.4) (91.2)
Investing cash flows used in discontinued operations - (1.6) (1.8)
--------------------------------------------------------- -----
Net cash (used in) / from investing activities (148.2) (98.8) 94.3
--------------------------------------------------------- ----- ------------- ---------------------- -------------
Cash flows used in financing activities
Proceeds from loan drawdowns 11.0 69.3 65.5
Loan repayments (39.5) - (27.5)
Finance costs paid in respect of bank loans and
overdrafts (0.3) (0.1) (1.1)
Finance costs paid in respect of leases (0.2) (0.4) (1.0)
Repayment of lease liability (2.0) (0.7) (2.0)
Dividends paid to shareholders (7.7) (5.2) (8.9)
Purchase of own shares (4.3) - -
Financing cashflows used in discontinued operations - (0.7) (0.8)
--------------------------------------------------------- -----
Net cash (used in) / from financing activities (43.0) 62.2 24.2
--------------------------------------------------------- ----- ------------- ---------------------- -------------
Net (decrease) / increase in cash, cash equivalents and
bank overdrafts (189.7) (47.3) 125.3
Cash, cash equivalents, and bank overdrafts at beginning
of the period 187.2 59.6 59.6
Effects of exchange rate changes 0.6 (2.8) 2.3
--------------------------------------------------------- -----
Cash, cash equivalents and bank overdrafts at end of the
period (1.9) 9.5 187.2
--------------------------------------------------------- ----- ------------- ---------------------- -------------
Consolidated Statement of Changes in Equity
Note Share Share premium Other reserves Retained earnings / (deficit) Total equity
capital (Restated)
(Restated)
$m $m $m $m $m
---------------------- ----- --------- -------------- --------------- ------------------------------ ---------------
At 30 September 2019 50.3 54.3 (13.2) 1.2 92.6
Profit for the period - - - 1.8 1.8
---------------------- ----- --------- -------------- --------------- ------------------------------ -------------
Net exchange
differences offset
in reserves - - 2.4 - 2.4
Cash flow hedges - - - 1.3 1.3
Deferred tax relating
to cash flow hedges (0.2) (0.2)
Actuarial loss
recognised on
retirement benefit
scheme - - - (7.0) (7.0)
Deferred tax relating
to retirement
benefit scheme 2.1 2.1
---------------------- ----- --------- -------------- --------------- ------------------------------ ---------------
Total comprehensive
income for the
period - - 2.4 (2.0) 0.4
Dividends paid - - - (5.2) (5.2)
Fair value of
share-based payments - - - 0.4 0.4
---------------------- ----- --------- -------------- --------------- ------------------------------ ---------------
At 31 March 2020
(restated) 50.3 54.3 (10.8) (5.6) 88.2
---------------------- ----- --------- -------------- --------------- ------------------------------ ---------------
Profit for the period - - - 169.6 169.6
---------------------- ----- --------- -------------- --------------- ------------------------------ ---------------
Net exchange
differences offset
in reserves - - (4.1) - (4.1)
Cash flow hedges - - - 0.4 0.4
Deferred tax relating
to cash flow hedges - - - (0.1) (0.1)
Translation reserve
recycled to P&L on
divestment - - (0.7) - (0.7)
Actuarial loss
recognised on
retirement benefit
scheme - - - (29.7) (29.7)
Deferred tax relating
to retirement
benefit scheme - - - 6.0 6.0
---------------------- ----- --------- -------------- --------------- ------------------------------ ---------------
Total comprehensive
income for the
period - - (4.8) 146.2 141.4
Dividends paid - - - (3.7) (3.7)
Fair value of
share-based payments - - - 1.8 1.8
Deferred tax relating
to employee share
schemes - - - 1.8 1.8
At 30 September 2020
(restated) 50.3 54.3 (15.6) 140.5 229.5
Profit for the period - - - 3.0 3.0
Net exchange
differences offset
in reserves - - 2.4 - 2.4
Actuarial loss
recognised on
retirement benefit
scheme - - - (9.0) (9.0)
Deferred tax relating
to retirement
benefit scheme - - - 1.8 1.8
Total comprehensive
income for the
period - - 2.4 (4.2) (1.8)
Dividends paid 3.5 - - - (7.7) (7.7)
Deferred tax relating
to employee share
schemes - - - (1.8) (1.8)
Own shares acquired 3.4 - - - (4.3) (4.3)
Fair value of
share-based payments - - - 0.7 0.7
---------------------- ----- --------- -------------- --------------- ------------------------------ ---------------
At 31 March 2021 50.3 54.3 (13.2) 123.2 214.6
---------------------- ----- --------- -------------- --------------- ------------------------------ ---------------
Other reserves consist of the capital redemption reserve of
$0.7m (31 March 2020: $0.7m, 30 September 2019: $0.7m) and the
translation reserve of ($13.9m) (31 March 2020: ($11.5m), 30
September 2020: ($16.3m).
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 25 May 2021.
The financial information set out in this document does not
constitute the Group's statutory accounts for the period ended 30
March 2021 or 30 September 2020. Statutory accounts for the year
ended 30 September 2020 were approved by the Board of Directors on
2 December 2020 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 half year ended 31 March 2021 has been prepared in accordance
with the Disclosure and Transparency Rules of the Financial Conduct
Authority and with IAS 34, 'Interim financial reporting' as adopted
by the United Kingdom. These interim financial results should be
read in conjunction with the annual financial statements for the
year ended 30 September 2020, which have been prepared in
accordance with International Financial Reporting Standards as
adopted by the United Kingdom.
Based on the Group's funding position, budgets for 2021, and
three-year plan, the Directors have concluded that there is a
reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future.
The unprecedented COVID-19 crisis is affecting all the key
markets and locations of the Group but has not significantly
impacted financial performance to date and the Group has continued
to trade in line with expectations. Given the business remains
robust with good liquidity, a strong balance sheet and excellent
medium-term revenue visibility, the Directors remain confident of
achieving expectations for the current financial year. For these
reasons the Directors continue to adopt the going concern basis in
preparing the condensed consolidated interim financial
information.
The financial information presented in this Interim Report has
been prepared in accordance with the accounting policies expected
to be used in preparing the 2021 Annual Report and Accounts which
do not differ significantly from those used in the preparation of
the 2020 Annual Report and Accounts.
From 1 October 2020 the Group changed its reporting currency to
U.S. dollars. Comparatives for prior periods have been restated in
U.S dollars.
The comparators for the half year to 31 March 2020 have also
been restated to reflect the treatment of milkrite | InterPuls as a
discontinued operation and to reflect the prior year pension
adjustment included in the financial statements for the year ended
30 September 2020. See note 4.7 for further details.
Section 2: Results for the Period
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.
Following the divestment of milkrite I InterPuls the Group has
one clearly defined reportable segment, which is made up of two
aggregated operating segments, Avon Protection and Team Wendy and
operates primarily out of Europe and the U.S. The presentation of
the two operating segments as a single reportable segment is
considered appropriate due to the very close alignment of
customers, markets, manufacturing processes, distribution
methods
and regulatory environment across the underlying business.
Half year to Half year to Year to
31 March 31 March 30 Sept
2021 2020 2020
$m (Restated) (Restated)
$m $m
----------------------------------------------------------- ------------- ------------- ------------
Revenue 122.0 86.5 213.6
----------------------------------------------------------- ------------- ------------- ------------
Segment result 24.1 18.1 49.0
Unallocated expense (4.3) (11.2) (21.4)
Depreciation and amortisation (13.6) (7.2) (18.7)
----------------------------------------------------------- ------------- ------------- ------------
Operating profit / (loss) 6.2 (0.3) 8.9
Net finance costs (0.8) (1.5) (6.7)
----------------------------------------------------------- ------------- ------------- ------------
Profit / (loss) before taxation 5.4 (1.8) 2.2
Taxation (1.0) (0.1) 1.6
----------------------------------------------------------- ------------- ------------- ------------
Profit / (loss) for the period from continuing operations 4.4 (1.9) 3.8
Discontinued operations - (loss)/ profit for the period (1.4) 3.7 167.6
----------------------------------------------------------- ------------- ------------- ------------
Profit for the period 3.0 1.8 171.4
----------------------------------------------------------- ------------- ------------- ------------
Segment assets 425.1 323.6 454.5
----------------------------------------------------------- ------------- ------------- ------------
Segment liabilities (210.5) (235.4) (225.0)
----------------------------------------------------------- ------------- ------------- ------------
Other segment items
Capital expenditure
* Intangible assets 13.7 2.1 12.1
* Property, plant and equipment 2.1 1.7 7.8
----------------------------------------------------------- ------------- ------------- ------------
Revenue analysed by geographic region by origin
Half year to Half year to Year to
31 March 31 March 2020 31 Sept
2021 (Restated) 2020
(Restated)
$m $m $m
-------- ------------------ --------------- ------------
Europe 13.6 8.0 19.3
US 108.4 78.5 194.3
-------- ------------------ --------------- ------------
Total 122.0 86.5 213.6
-------- ------------------ --------------- ------------
Revenue by line of business and nature of performance
obligation
Half Year to 31 March 2021
Military First Responder Team Wendy Eliminations Total
$m $m $m $m $m
--------------------------- --------- ---------------- ----------- ------------- ------
Sale of Goods(1) 73.8 27.2 20.5 (0.2) 121.3
Provision of services (2) 0.5 0.2 - - 0.7
--------------------------- --------- ---------------- ----------- ------------- ------
74.3 27.4 20.5 (0.2) 122.0
--------------------------- --------- ---------------- ----------- ------------- ------
Half Year to 31 March 2020
(Restated)
Military First Responder Team Wendy Eliminations Total
$m $m $m $m $m
--------------------------- --------- ---------------- ----------- ------------- ------
Sale of Goods(1) 61.6 22.9 - - 84.5
Provision of services (2) 1.9 0.1 - - 2.0
--------------------------- --------- ---------------- ----------- ------------- ------
63.5 23.0 - - 86.5
--------------------------- --------- ---------------- ----------- ------------- ------
Year to 30 September 2020
(Restated)
Military First Responder Team Wendy Eliminations Total
$m $m $m $m $m
--------------------------- --------- ---------------- ----------- ------------- ------
Sale of Goods(1) 147.5 63.0 - - 210.5
Provision of services (2) 2.7 0.4 - - 3.1
--------------------------- --------- ---------------- ----------- ------------- ------
150.2 63.4 - - 213.6
--------------------------- --------- ---------------- ----------- ------------- ------
(1) Products transferred to the customer and therefore revenue
recognised at a point in time.
(2) Products and services transferred over time and therefore
revenue recognised over that period of time.
2.2 Discontinued Operations
In September 2020 the Group divested the entire milkrite |
InterPuls business. As a result of the divestment the milkrite |
InterPuls business has been classified as discontinued and prior
periods have been restated to reflect this. As part of the sale and
purchase agreement, the Group entered into a Manufacturing Service
Agreement with the purchasers of milkrite | InterPuls to support
ongoing manufacturing whilst arrangements are made to relocate
manufacturing equipment from a previously shared UK facility. The
Group also entered into agreements to provide certain other
information technology and administrative services under a 12-month
Transitional Services Agreement. As the activities under these
agreements are not part of the continuing operations of the Group,
the revenue and costs associated with these agreements have been
classified as discontinued operations in the half year to 31 March
2021.
The results of discontinued operations are as follows:
Half year to Half year to Year to
31 March 31 March 30 Sept
2021 2020 2020
(Restated) (Restated)
$m $m $m
Revenue 2.0 33.8 68.6
Cost of Sales (2.8) (17.9) (35.7)
------------ ------------ ----------
Gross (loss) / profit (0.8) 15.9 32.9
Selling and distribution costs - (6.5) (12.0)
General and administrative expenses (1.0) (5.3) (12.9)
------------ ------------ ----------
Operating (loss) / profit (1.8) 4.1 8.0
Finance costs - (0.1) (0.1)
------------ ------------ ----------
Profit before taxation (1.8) 4.0 7.9
Taxation 0.4 (0.3) (1.0)
------------ ------------ ----------
(Loss) / profit for the period (1.4) 3.7 6.9
--------------------------------------------- ------------ ------------ ----------
Gain on divestment (note 4.3) - - 172.4
Tax on gain on divestment - - (11.7)
Gain on divestment - - 160.7
--------------------------------------------- ------------ ------------ ----------
(Loss) / profit from discontinued operations (1.4) 3.7 167.6
--------------------------------------------- ------------ ------------ ----------
Basic earnings per share (cents) (4.6c) 12.2c 548.0c
Diluted earnings per share (cents) (4.6c) 12.0c 540.6c
--------------------------------------------- ------------ ------------ ----------
2.3 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 in the employee share ownership trust. 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 the calculations are set out below:
Weighted average number of shares
Half year to Half year to Year to
31 March 31 March 30 Sept
2021 2020 2020
----------------------------------------------------------------------------- ------------- ------------- ---------
Weighted average number of ordinary shares in issue used in basic
calculations (thousands) 30,649 30,527 30,576
Potentially dilutive shares (weighted average) (thousands) 246 383 423
----------------------------------------------------------------------------- ------------- ------------- ---------
Fully diluted number of ordinary shares (weighted average) (thousands) 30,895 30,910 30,999
----------------------------------------------------------------------------- ------------- ------------- ---------
Earnings
Half year to Half year to Year to
31 March 2021 31 March 30 Sept
2020 2020
$m (Restated) (Restated)
$m $m
------------------------------- --------------- ------------- ------------
Basic 3.0 1.8 171.4
------------------------------- --------------- ------------- ------------
Basic - continuing operations 4.4 (1.9) 3.8
------------------------------- --------------- ------------- ------------
Earnings per share (cents)
Half year to Half year to Year to
31 March 31 March 30 Sept
2021 2020 2020
(Restated) (Restated)
----------------------------------- ------------- ------------- ------------
Basic 9.8c 5.9c 560.5c
Basic - continuing operations 14.4c (6.3c) 12.5c
Basic - discontinued operations (4.6c) 12.2c 548.0c
Diluted 9.8c 5.8c 552.9c
Diluted - continuing operations 14.3c (6.2c) 12.3c
Diluted - discontinued operations (4.6c) 12.0c 540.6c
----------------------------------- ------------- ------------- ------------
2.4 Taxation
Half year to Half year to Year to
31 March 31 March 30 Sept
2021 2021 2020
$m (Restated) (Restated)
$m $m
----------------------------------------------------------------------------- ------------ ------------ -----------
Profit / (loss) before taxation 5.4 (1.8) 2.2
----------------------------------------------------------------------------- ------------ ------------ -----------
Profit / (loss) before taxation at the average standard rate of 19.0% (2020:
19.0%) 1.0 (0.3) 0.4
----------------------------------------------------------------------------- ------------ ------------ -----------
Differences in overseas tax rates - 0.4 (2.0)
----------------------------------------------------------------------------- ------------ ------------ -----------
Tax charge/(credit) 1.0 0.1 (1.6)
----------------------------------------------------------------------------- ------------ ------------ -----------
The effective tax rate for the period is a charge of 18.5% (31
March 2020: charge of 5.6%, 30 September 2020: credit of
72.7%).
Section 3: Funding
The Group has maintained a strong balance sheet in order to fund
its growth strategy and make further acquisitions. Additional
funding is available via undrawn committed facilities.
The following section provides disclosures about the Group's
funding position.
3.1 Borrowings
As at As at As at
31 March 31 March 30 Sept
2021 2020 2020
$m (Restated) (Restated)
$m $m
Current
Overdrafts 1.9 - -
Bank Loans 11.0 65.6 39.5
Lease liabilities 3.9 2.6 3.2
----------------------- --------- ----------- -----------
16.8 68.2 42.7
----------------------- --------- ----------- -----------
Non-Current
Lease liabilities 27.3 23.3 25.8
----------------------- --------- ----------- -----------
Total Group facilities 44.1 91.5 68.5
----------------------- --------- ----------- -----------
The table below presents the maturity analysis in respect of
lease liabilities:
As at As at As at
31 March 31 March 30 Sept
2021 2020 2020
(Restated) (Restated)
$m $m $m
In one year
or less, or
on demand 3.9 2.6 3.2
Two to five
years 16.0 11.6 14.0
More than
five years 11.3 11.7 11.8
------------- ------ ----- ------------
Total lease
liabilities 31.2 25.9 29.0
------------- ------ ----- ------------
The Group has the following committed facilities:
As at As at As at
31 March 31 March 30 Sept
2021 2020 2020
(Restated) (Restated)
$m $m $m
--------------------------------------------- --------- ----------- -----------
Expiring beyond one year:
Total undrawn committed borrowing facilities 191.7 19.0 165.1
Bank loans and overdrafts utilised 12.9 65.6 39.5
Utilised in respect of guarantees 0.4 0.4 0.4
--------------------------------------------- --------- ----------- ---------------
Total Group facilities 205.0 85.0 205.0
--------------------------------------------- --------- ----------- ---------------
All facilities are at floating interest rates.
During the prior year the Group refinanced its revolving credit
facility. The new facility has total commitments of $200m across
six lenders with an accordion option of an additional $50m. The
facility has a three-year term ending 8 September 2023 with two
separate one-year extensions give a possible five-year duration in
total. The facility is priced by reference to the dollar LIBOR
interest rate plus a margin of between 1.45-2.35% depending on
leverage and includes financial covenants which are measured on a
semi-annual basis. The Group also has separate $5m overdraft
facility with Comerica. The Group has complied with its financial
covenants during 2021 and 2020. The Group has provided the lenders
with a negative pledge in respect of certain shares in Group
companies.
The effective interest rates at the balance sheet dates were as
follows:
Half Year to 31 March 2021 Half Year to 31 March 2020
Sterling Dollar Sterling Dollar
% % % %
------------------- ---------------- ----------- ---------------- -----------
Bank loans - 1.82 - 1.85
------------------- ---------------- ----------- ---------------- -----------
Lease liabilities 6.50 2.50 6.50 2.50
------------------- ---------------- ----------- ---------------- -----------
3.2 Analysis of net cash/debt
As at
30 Sept 2020 (Restated)
$m Team Wendy Acquisition $m Cash flow $m Non-cash movements $m Exchange movements $m As at 31 March 2021 $m
------------------- ------------------------- -------------------------- ------------- ---------------------- ---------------------- -----------------------
Cash at bank and
in
hand/(overdrafts) 187.2 (130.9) (57.7) - 0.6 (0.8)
Cash acquired - (1.1) - - - (1.1)
------------------- ------------------------- -------------------------- ------------- ---------------------- ---------------------- -----------------------
Cash at bank and
in
hand/(overdrafts) 187.2 (132.0) (57.7) - 0.6 (1.9)
------------------- ------------------------- -------------------------- ------------- ---------------------- ---------------------- -----------------------
Bank loans due in
less than one
year (39.5) - 28.5 - - (11.0)
------------------- ------------------------- -------------------------- ------------- ---------------------- ---------------------- -----------------------
Net cash and bank
loans 147.7 (132.0) (29.2) - 0.6 (12.9)
Lease Liabilities (29.0) (3.2) 2.2 (0.7) (0.5) (31.2)
------------------- ------------------------- -------------------------- ------------- ---------------------- ---------------------- -----------------------
Net cash/(debt) 118.7 (135.2) (27.0) (0.7) 0.1 (44.1)
------------------- ------------------------- -------------------------- ------------- ---------------------- ---------------------- -----------------------
3.3 Net finance costs
Half year Half year Year to
to 31 March to
2021 31 March 30 Sept
$m 2020 2020
(Restated) (Restated)
$m $m
------------------------------- --- ------------ ----------- -----------
Interest payable on bank loans
and overdrafts (0.6) (0.5) (1.4)
Interest payable in respect
of leases (0.6) (0.5) (1.2)
------------------------------------ ------------ ----------- -----------
Net finance costs (1.2) (1.0) (2.6)
------------------------------------ ------------ ----------- -----------
Other finance expense
Half year to Half year to Year to
31 March 2021 31 March 30 Sept
$m 2020 2020
(Restated) (Restated)
$m GBPm
U.K. defined benefit pension scheme net interest expense (0.4) (0.5) (1.0)
Amortisation of finance fees (0.3) - (0.4)
Change in discount on contingent consideration (note 4.1) 1.1 - (2.7)
Net other finance income / (expense) 0.4 (0.5) (4.1)
---------------------------------------------------------- -------------- ------------ ------------
3.4 Equity
Share Capital
No. of Ordinary Share premium No. of Ordinary Share
shares shares shares shares premium
as at as at as at as at as at as at
31 March 31 March 31 March 30 March 30 March 30 March
2021 2021 2021 2020 2020 2020
$m $m $m $m
-------------------- ----------- ---------- -------------- ----------- ---------- ----------
Called up allotted
and fully paid
ordinary shares
of GBP1 each
At the beginning
of the period 31,023,292 50.3 54.3 31,023,292 50.3 54.3
At the end of the
period 31,023,292 50.3 54.3 31,023,292 50.3 54.3
-------------------- ----------- ---------- -------------- ----------- ---------- ----------
Ordinary shareholders are entitled to receive dividends and to
vote at meetings of the Company.
Own shares held
As at As at As at
31 March 31 March 30 Sept
2021 2020 2020
No. of shares No. of shares No. of shares
------------------------------------------- -------------- -------------- --------------
Balance at 1 October 398,560 506,274 506,274
Acquired in the period 95,855 - -
Issued to employees on exercise of options (159,482) (107,714) (107,714)
------------------------------------------- -------------- -------------- --------------
At 31 March 334,933 398,560 398,560
------------------------------------------- -------------- -------------- --------------
Own shares held represent shares held in trust in respect of
awards made under the Avon Rubber p.l.c. Long Term Incentive Plan.
Dividends on these shares have been waived. The market value of the
shares held in the trust at 31 March 2021 was $14.6m (31 March
2020: $11.4m, 30 September 2020: $21.5m). These shares are held at
cost as treasury shares and deducted from shareholders' equity.
Since 30 September 2020 95,855 shares were acquired by the Avon
ESOT No 1 trust for a cost of $4.3m. In January 2021 159,482 shares
vested under the Avon Rubber p.l.c. Long Term Incentive Plan and
were distributed to employees.
3.5 Dividends
On 29 January 2021, the shareholders approved a final dividend
of 18.04p per qualifying ordinary share in respect of the year
ended 30 September 2020. This was paid on 13 March 2021 utilising
$7.7m of shareholders' funds.
The Board of Directors has declared an interim dividend of 14.3c
(2019: 9.02p (11.0c)) per qualifying ordinary share in respect of
the year ending 30 September 2021. This interim dividend will be
paid in sterling at the prevailing exchange rate immediately prior
to payment on 3 September 2021 to shareholders on the register at
the close of business on 6 August 2021. In accordance with
accounting standards, this dividend has not been provided for. It
will be recognised in shareholders' funds in the year to 30
September 2021 and is expected to utilise $4.4m (2020: $3.4m) of
shareholders' funds.
Section 4: Other
4.1 Provisions for liabilities and charges
Property Obligations Contingent consideration Total
$m $m $m
--------------------- ------------------------- ------
Balance at 30 September 2020 2.7 19.5 22.2
----------------------------------- --------------------- ------------------------- ------
Change in discount on provisions - (1.1) (1.1)
Foreign exchange movements 0.3 - 0.3
----------------------------------- --------------------- ------------------------- ------
Balance at 31 March 2021 3.0 18.4 21.4
----------------------------------- --------------------- ------------------------- ------
As at As at As at
31 March 31 March 30 Sept
2021 2020 2020
(Restated) (Restated)
Analysis of total provisions $m $m $m
Non-current 12.2 3.5 12.6
Current 9.2 - 9.6
------------------------------ ---------- ------------ -------------
Total provisions 21.4 3.5 22.2
------------------------------ ---------- ------------ -------------
Property obligations relate to leased premises of the Group
which are subject to dilapidation risks and are expected to be
utilised within the next ten years. Property provisions are subject
to uncertainty in respect of any final negotiated settlement of any
dilapidation claims with landlords.
The purchase consideration in relation to the Helmets &
Armor acquisition included contingent consideration up to a maximum
of $25.0m depending on the outcome of certain tenders which were
pending at the acquisition date and the level of sales which were
generated on these contracts if secured. At acquisition the fair
value of the contingent consideration was recognised as $20.0m
based on the expected value and timing of those payments after
applying a discount rate of 12% to reflect the risk in the
cashflows at that date.
The contract that triggered the contingent consideration was
awarded shortly after the acquisition date and an initial order was
subsequently received resulting in the first payment of $3.4m being
made during the year ended 30 September 2020. At the balance sheet
date, taking account of the change in fair value in relation to the
contingent consideration of $1.8m, the remaining contingent
consideration is presented as a provision with a fair value of
$18.4m being the present value of the future expected cashflows
relating to the contract. Current expectations are that the
contingent consideration will be settled in full over the next
three years as the level of sales which triggers full payment of
the consideration $240.5m is considered to be very achievable and
therefore highly probable. The range of possible outcomes is
additional payments between nil and $21.5m, there has been no
change in the range of expected outcomes during the period.
4.2 Cash flows from operations
Half year Half year Year to
to 31 March 31 March 30 Sep
2021 2020 (Restated) 2020 (Restated)
$m $m $m
------------------------------------------------ ------------- ----------------- -----------------
Continuing operations
Profit for the period 4.4 (1.9) 3.8
Adjustments for:
Taxation 1.0 (0.1) (0.3)
Depreciation 4.5 1.6 6.5
7.0
Amortisation of intangible assets 9.1 4.2 12.2
Defined benefit pension scheme cost 0.4 0.5 0.9
Finance costs 1.2 1.4 2.6
Other finance (income) / expense (0.4) 0.5 4.1
Fair value of share-based payments 0.7 0.4 1.8
(Increase)/decrease in inventories (5.9) (1.7) (2.4)
(Increase)/decrease in receivables (5.4) (16.7) (1.9)
Increase/(decrease) in payables and provisions 4.5 (2.0) 1.8
------------------------------------------------
Cash flows from continuing operations 14.1 (13.8) 29.1
------------------------------------------------ ------------- ----------------- -----------------
Discontinued operations
Profit for the period (1.4) 3.8 167.6
Adjustments for:
Taxation (0.4) 0.5 1.0
Depreciation - 1.4 3.6
Amortisation of intangible assets - 2.5 4.7
Finance income - - -
Finance costs - 1.1 0.1
Gain on divestment - - (160.7)
(Increase)/decrease in inventories - (1.7) (1.0)
(Increase)/decrease in receivables - (1.1) (8.3)
Increase/(decrease) in payables and provisions 0.2 (0.3) 2.0
------------------------------------------------ ------------- ----------------- -----------------
Cash flows from discontinued operations (1.6) 6.2 9.0
------------------------------------------------ ------------- ----------------- -----------------
Cash flows from operations 12.5 (7.6) 38.1
------------------------------------------------ ------------- ----------------- -----------------
4.3 Acquisitions & Divestments
Acquisition - Team Wendy
The results of the Team Wendy business are consolidated for the
first time in the current period's financial statements as the
acquisition was completed and control passed on 2 November
2020.
The Group acquired 100% of the equity for a total consideration
of $132.0m, being the $130.0m initial consideration and purchase
price adjustments of $2.0m reflecting the cash and working capital
position at close. The net assets acquired had a book value of
$22.3m before fair value adjustments.
Set out below is an analysis of the assigned fair values of the
assets acquired and liabilities assumed relating to this
acquisition:
Fair value
$m
------------------------------------- -----------
Customer relationships 28.2
Brand 10.4
Other intangible assets 13.1
Property, plant and equipment 8.7
Inventories 12.2
Trade Debtors and other receivables 5.8
Cash 1.1
Lease liability (3.1)
Trade and other payables (2.7)
------------------------------------- -----------
Net assets acquired 73.7
Goodwill 58.3
------------------------------------- -----------
Total consideration 132.0
------------------------------------- -----------
Initial cash consideration 130.0
Post completion working capital adjustment 0.9
Cash acquired 1.1
-------------------------------------------- ------
Total consideration 132.0
-------------------------------------------- ------
Goodwill of $58.3m was recognised in respect of this
acquisition, representing the amount paid for future sales growth
from both new customers and new products, operating cost synergies
and employee know-how. 100% of the value of goodwill is expected to
be deductible for tax purposes.
From the date of acquisition to 31 March 2021, Team Wendy
contributed $20.5m to revenue and reported an operating profit of
$1.8m. The operating profit is stated after amortisation of
acquired intangibles of $1.8m and expensing the $2.4m inventory
fair value step up following the sell through of the acquired
inventory.
Acquisition costs of $0.7m were expensed in the half year,
following the recognition of $8.5m of such costs, including legal,
due diligence and tax advisory fees during the 2020 financial year.
Acquisition costs of $4.3m were paid in the period (2020
$4.8m).
Acquisition - 3M's ballistic protection business
The acquisition of the 3M ballistic protection business and the
rights to the Ceradyne brand completed on 2 January 2020. The
acquisition took the form of a trade and assets purchase.
Set out below is an analysis of the assigned fair values of the
assets acquired and liabilities assumed relating to this
acquisition:
Fair value
$m
--------------------------------------------------- -----------
Customer relationships 25.2
Brand 2.3
Other intangible assets 9.8
Property, plant and equipment 37.2
Inventories 17.9
Other assets 0.6
Lease liability (11.2)
Accruals (1.4)
Dilapidations provisions (0.8)
Deferred tax 0.4
--------------------------------------------------- -----------
Net assets acquired 80.0
Goodwill 27.2
--------------------------------------------------- -----------
Total 107.2
--------------------------------------------------- -----------
Cash paid excluding acquisition expenses 89.4
Post completion inventory true up due from 3M (2.2)
Fair value of deferred contingent consideration * 20.0
--------------------------------------------------- -----------
Total consideration 107.2
--------------------------------------------------- -----------
* $3.4m of the deferred contingent consideration payable was
paid during the year ending 30 September 2020.
Goodwill of $27.2m was recognised in respect of this
acquisition, representing the amount paid for future sales growth
from both new customers and new products, operating cost synergies
and employee know-how. 100% of the value of goodwill is deductible
for tax purposes.
Divestment - milkrite | InterPuls
In September 2020, the Group divested milkrite | InterPuls to
DeLaval Holding BV for a cash consideration of $227.3m after
customary closing adjustments.
$m
-------------------------------------------------------------- ------
Total consideration received 227.3
Net assets disposed (44.3)
Costs of divestment (11.3)
Translation reserve recycled to profit and loss on divestment 0.7
--------------------------------------------------------------- ------
Gain on divestment 172.4
Tax on gain on divestment (11.7)
--------------------------------------------------------------- ------
Gain on divestment after tax 160.7
--------------------------------------------------------------- ------
Assets and liabilities at the date of divestment were:
$m
Intangible assets 18.2
Property, plant and equipment 17.8
Inventories 7.6
Cash 3.4
Receivables 10.1
Payables (6.0)
Other liabilities (6.8)
------------------------------- -----
Total net assets disposed 44.3
------------------------------- -----
4.4 Exchange rates
The following significant exchange rates applied during the
period.
Average Closing Average Closing Average Closing
rate rate rate rate rate rate
31 March 31 March 31 March 31 March 30 Sept 30 Sept
2021 2021 2020 2020 2020 2020
----- --------- --------- --------- --------- -------- --------
GBP 0.7423 0.7253 0.7794 0.8177 0.7842 0.7854
----- --------- --------- --------- --------- -------- --------
Fair value of financial instruments
The fair value of forward exchange contracts is determined by
using valuation techniques using period end spot rates, adjusted
for the forward points to the contract's value date.
4.5 Principal risks and uncertainties
The principal risks and uncertainties impacting the Group are
described on pages 40-45 of our 2020 Annual Report and remain
largely unchanged at 31 March 2021.
The principal risks include strategic initiatives, market threat
to core business, talent management, cybersecurity and information
technology, customer dependency, financial management,
manufacturing risk, compliance and legal matters and political and
economic instability.
The COVID-19 pandemic is affecting all the key markets and
locations of the Group. The business has continued to operate
throughout the crisis so far and there has been no significant
disruption to our trading and no significant impact on our
financial performance to date. The Directors continue to closely
manage and monitor the impact on the business whilst prioritising
the safety and wellbeing of employees and their families.
As noted in the 2020 Annual Report we are less exposed to the
political instability and potential impact on trading from Brexit
as our US-based businesses currently constitute around eighty
percent of the Group. The Directors remain active in continuing to
monitor the potential im pacts from the situation.
4.6 Related party transactions
There were no related party transactions during the period or
outstanding at the end of the period (2020: nil) other than
compensation of key management personnel which will be disclosed in
the Group's Annual Report for the year ending 30 September
2021.
4.7 Restatements
The comparatives for the half year to 31 March 2020 have been
restated for the following items:
Firstly, to present the comparatives in US$. Please see note 4.8
for details.
Sec ondly, to present the milkrite | InterPuls business as
discontinued operations f ollowing the divestment in September
2020.
Finally, during the second half of the year ended 30 September
2020 the Directors identified that the retirement benefit
obligation was understated in prior years due to it not including
the cost of equalising the benefits between male and female pension
scheme members under the Barber equalisation ruling of May 1990 in
respect of years 1990-1992. The financial statements for the half
year ended 31 March 2020 have been restated in the 2021 interim
statements, the results for the year ended 30 September 2019 were
previously restated in the 2020 financial statements to correct
this understatement.
A reconciliation of the previously reported figu res for the
half year to 31 March 2020 to the restated figures for key measures
is presented below:
Impact on performance measures
As reported Discontinued Restated
31 March Operations 31 March
2020 $m 2020
$m $m
---------------------------- ------------ ------------- ----------
Operating profit 3.8 (4.1) (0.3)
---------------------------- ------------ ------------- ----------
Profit for the half year 1.8 (3.7) (1.9)
---------------------------- ------------ ------------- ----------
Earnings per share (cents) 5.9c (12.2c) (6.3c)
---------------------------- ------------ ------------- ----------
Impact on Net Assets
As reported 31 Change in Discontinued Pension Adjustments Restated 31 March
March 2020 Accounting Policy Operations 2020
$m $m $m $m $m
------------ ------------------- ------------------- ------------------- -------------------- -------------------
Net assets 96.4 - - (8.2) 88.2
------------ ------------------- ------------------- ------------------- -------------------- -------------------
4.8 Change in accounting policy
The Directors have elected to change the Group's reporting
currency from Sterling to United States (US) dollars effective from
1 October 2020. The change in reporting currency is a voluntary
change which is accounted for retrospectively. All other accounting
policies are consistent with those adopted in the annual report and
accounts for the year ended 30 September 2020. The financial
statements have been restated to US dollars using the procedures
outlined below:
Consolidated Statement of Comprehensive Income and Statement of
Cash Flows
The Consolidated Statement of Comprehensive Income and Statement
of cash flows have been translated by extracting the actual
underlying transactions in US$ from the ledgers of the US
subsidiaries and adding them to the results of non-US$ functional
subsidiaries using average monthly exchange rates for the
period.
Earnings per share and dividend disclosures have been restated
to US dollars to reflect the change in reporting currency.
Consolidated Balance Sheet
Assets and liabilities in the Consolidated Balance Sheet have
been translated into US dollars at the closing foreign exchange
rates at the relevant balance sheet dates.
The equity section of the Consolidated Balance sheet, including,
share capital, share premium, foreign currency translation reserve,
retained earnings and other reserves have been translated into US
dollars using historical rates.
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