REG - Avon Technologies - Interim Results
21/05/2025 07:00
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250521:nRSU4889Ja&default-theme=true
RNS Number : 4889J Avon Technologies Plc 21 May 2025
For Immediate Release
21 May 2025
AVON TECHNOLOGIES PLC
("Avon Technologies", "Avon" or the "Group")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2025
GROWING FAST AND IMPROVING EVERY DAY
Change (constant currency)(3)
31 March 2025 (4) 30 March 2024 (4)
Group
Orders received $170.5m $190.3m (10.1%)
Closing order book $247.0m $199.0m 24.0%
Revenue $148.7m $127.1m 16.8%
Adjusted(1) operating profit $17.5m $11.9m 48.3%
Adjusted(1) profit before tax $14.8m $8.8m 70.1%
Adjusted(1) basic earnings per share 38.8c 22.3c 76.4%
Interim dividend per share 7.6c 7.2c 5.6%
Net debt excluding lease liabilities $54.9m $57.3m (4.2%)
Statutory results
Operating profit(2) $6.2m $2.6m
Profit/(loss) before tax $3.1m $(1.5)m
Basic earnings/(losses) per share 8.1c (3.7c)
Net debt $74.7m $76.5m
Excellent year-on-year growth
· Excellent growth in order book, revenue, operating profit and
earnings per share
· Adjusted operating margin >200bps higher, at 11.8% (H124: 9.4%)
with ROIC at 16.3% (H124: 9.7%)
· Leverage down 0.7x at 0.99x (H124: 1.69x)
Cultural change and capability accelerating
· New 'Strengthen System' designed to build Continuous Improvement
capability and accelerate improvement action
· Good scrap reduction in Avon Protection helping drive margins
· Good progress building capability in Team Wendy with the focus during
H1 on the site move and meeting increased customer demand
Focused on operational execution
· Successful closure of California facility and production readiness
approval received in Cleveland
· Plant improvement projects at all plants progressing well
· Transformation investments still on track to largely complete by
FY2026
Order book providing future confidence
· 69% increase in order book in Avon Protection:
o Four NATO nations funding orders to be sent to Ukraine
o Three new NSPA (NATO Support & Procurement Agency) FM50 respirator
customers
o Long-term contract renewal with Thales for a critical UK defence programme
· $10m increase in order book in Team Wendy:
o $74m Next Generation Integrated Head Protection System orders from the US
Army
o US DOD orders totalling $59m for ACH (Advanced Combat Helmet) GEN II
On track to deliver target adjusted operating margin within 14-16% range in FY
2026
· Expected to deliver double digit revenue growth in FY25 with improved
returns in H2 as we generate further benefits from our operational improvement
programmes
· Strong progress made on our operational goals, expect to reach our
medium-term financial targets a year early in FY2026
· Do not expect US tariffs or DOGE to impact our ability to meet our
medium-term target margin range
Jos Sclater, Chief Executive Officer, commented:
"Our strategy is delivering and we remain confident that our approach to
improving businesses creates value. This is illustrated by our strong order
book and our revenue and profit growth in the first half. We remain resolute
in pursuing our strategy and improving our businesses, notwithstanding an
increasingly uncertain macro-economic and geopolitical environment.
The pace of change in Avon Technologies is accelerating and we continue to
build our people's capability to enable this to happen. I am grateful to all
our colleagues for supporting the changes we are all making to enable Avon
Technologies to thrive.
The next six months are important to us. While we still have a lot to do, we
are optimistic that we will achieve our margin target a year early in 2026."
For further enquiries, please contact:
Avon Technologies plc
Jos Sclater, Chief Executive Officer
+44 1225 896 848
Rich Cashin, Chief Financial
Officer
Gabby Colley, Corporate Affairs
Director
+44 7891 206 239
Sodali & Co
Pete Lambie
avontechnologies@sodali.com (mailto:avontechnologies@sodali.com)
James White
+44 7855 432 699
Analyst and investor webcast & retail investor presentation
Jos Sclater, Chief Executive Officer, and Rich Cashin, Chief Financial
Officer, will host a presentation for analysts and Institutional investors at
9.00am this morning, at Sodali & Co, 13(th) Floor, 122 Leadenhall St, City
of London, EC3V 4AB.
The presentation will also be broadcast live at:
https://brrmedia.news/AVON_HY_25 (https://brrmedia.news/AVON_HY_25) . To
attend in person please contact: avontechnologies@sodali.com
avontechnologies@sodali.com (mailto:avontechnologies@sodali.com)
A presentation for retail investors will be held 15.30pm today. Registration
is available on the following
link: https://www.investormeetcompany.com/avon-technologies-plc/register-investor
(https://www.investormeetcompany.com/avon-technologies-plc/register-investor)
Notes
(1) The Directors believe that adjusted measures provide a useful comparison
of business trends and performance. Adjusted results exclude adjusting items
and discontinued operations. The term adjusted is not defined under IFRS and
may not be comparable with similarly titled measures used by other companies.
(2) Reported HY25 operating profit includes $2.9m amortisation of acquired
intangibles and transformation costs of $8.4m. See adjusted performance
section 2.1 for full breakdown of adjustments and comparatives.
(3) Constant currency measures are provided in note 2.1.
(4) The interim financial period presents the 6 months ended 31 March 2025
(prior interim financial period 26 weeks ended 30 March 2024).
About Avon Technologies plc:
We are a world leader in protective equipment, trusted to protect the world's
militaries and first responders, 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-technologiesplc.com
(http://www.avon-technologiesplc.com)
Legal Entity Identifier: 213800JM1AN62REBWA71
CEO REVIEW
FINANCIAL SUMMARY
We had a strong start to FY2025 with another record closing order book of
$247m, a 24% increase vs H1 last year. (HY24: $199m). This growth was
predominantly driven by Avon Protection's 69% growth in order book from
Ukraine related NATO orders and continued strong UK & International
demand. In Team Wendy, there is continued consistent demand from the US DOD
for our NG IHPS and ACH GEN II helmets.
Heightened global instability continues to drive defence and security spending
across the world. Russia is increasingly using drones to drop chemical gas
weapons on the Ukrainian troops. These tactics are likely to drive home the
need for all militaries to have excellent CBRN protection for many years to
come. As a result, we have seen substantial growth in orders from NATO
countries looking to increase and improve their respiratory protection
equipment. Within the United States we are seeing a pivot in sentiment to
investment in border and homeland security that is increasing demand for our
respirator and helmet products in commercial North American markets.
Group revenue at constant currency increased 16.8% to $148.7m (HY24: $127.1m)
reflecting Australian Military sales of our FM54 respirators, delivery of
rebreathers to the German Navy and ramp up of ACH GEN II helmets.
Adjusted operating profit increased by 48.3% at constant currency, resulting
in an adjusted operating profit margin of 11.8% (HY24: 9.4%). Avon Protection
saw excellent adjusted operating margin growth in the period to 18.9% (HY24:
16.5%) driven by revenue growth, a favourable product mix, commercial
optimisation and our continuous improvement efforts reducing scrap levels.
Team Wendy delivered an increase in adjusted operating profit margins to 4.4%
(HY24: 1.3%), with further improvement expected as we execute the facility
move and continue to ramp up manufacturing rates in Cleveland.
Adjusted basic EPS increased by 76.4% on a constant currency basis to 38.8
cents per share (HY24: 22.3 cents per share), which reflects the growth in
adjusted operating profit and a reduction in finance charges year-on-year. Net
debt excluding lease liabilities reduced to $54.9m, from $57.3m in the
comparative period, with a bank leverage ratio of 0.99 times net debt: EBITDA
(HY24: 1.69 times).
Cash conversion reduced to 56% this half, from 155% in H1 2024. The H1 2025
result reflects planned inventory build to support the Team Wendy site
consolidation programme. We expect to see an improvement in H2 as this
inventory build starts to unwind. H1 2024 benefited from the unwind of a high
FY23 closing receivables balance.
Return on Invested Capital increased to 16.3% (HY24: 9.7%), close to our
medium-term target of 17%, reflecting the increase in operating profit. Again,
we expect further improvement as the inventory build in Team Wendy starts to
unwind.
OPERATIONAL SUMMARY
Our STAR strategy was launched in 2023 with medium-term financial goals of at
least 5% revenue CAGR, adjusted operating profit margins of 14-16%, ROIC of
more than 17% and cash conversion of 80-100%. Our STAR Strategy comprises four
focus areas:
o STRENGTHEN THROUGH CONTINUOUS IMPROVEMENT to always deliver quality
products on time while using capital efficiently and improving productivity.
o TRANSFORM the cost base to increase margins through a programmatic
approach to transformation
o ADVANCE organically by growing the core and scaling up emerging
opportunities
o REVOLUTIONISE by developing the next generation of products to drive
long-term growth
We continue to focus on executing this STAR strategy. Every six months we
review and refresh the underlying strategic initiatives to reflect what we
have learnt and any changes we see in the broader market. But the big picture
is that the strategy has stood the test of time. It's delivering profitable
growth and increasingly strong returns on capital but there is much more we
can do. We are staying on course.
1. Strengthen through Continuous Improvement
We have developed our "Strengthen System to build continuous improvement
capability and to drive improvement in Safety, Quality, Delivery, Inventory
turns and Productivity across the organisation.
The pillars of the Strengthen System are to implement just in time
manufacturing by introducing flow into our factories, develop a culture and
capability to drive improvement actions and to ensure we do not make defective
product. The foundations are to level load the factories as far as possible
and to relentlessly remove waste from our processes, on and off the shop
floor.
We want to move away from traditional batch manufacturing. We want to
manufacture to the beat of our customer's demand, with the materials flowing
where possible or, where flow is not possible, pulling from the upstream
process using a pull system. We believe this will result in reduced scrap,
shorter lead times and improved customer delivery, much lower inventory
levels, happier employees and wealth creation.
Operational KPIs:
Overall, we are making good progress and are on track to achieve our group
operational targets of a 35% increase in productivity, >60% scrap reduction
and >5x Inventory Turns. Since H1 2023, when we set these targets:
· Productivity has increased 26%
· Scrap has reduced 55%
· Group Inventory Turns increased 33%
During the last six months, we have been very focused on building the
foundations in our two remaining Team Wendy factories and supporting the major
production ramp up. Over the past year, versus H1 2024:
· Productivity has increased 2.3%
· Scrap has reduced 5%
· Inventory turns have fallen by 3% due to buffer stock required to
support the Irvine site move.
Our primary objective in H2 is to deliver high quality product from our
Cleveland facility at a rate that meets customer demand. Once we have done
that, we will focus more on improving productivity, reducing scrap and rework
rates and driving inventory turns. We expect to see improvements in our
metrics start to accelerate again during the next six months.
2. Transform: Focused on Operational Execution
Our transformation programmes are all tracking to plan with expected total
operational investment in FY25 unchanged at around $13m. We expect capital
expenditure to be c.$1m lower than originally guided for the year. During the
half we invested $8.4m into Footprint Optimisation and Operational Excellence,
the majority as cash costs related to our site consolidation programme in Team
Wendy. Costs related to our Functional Excellence and Commercial Optimisation
programmes are now in our 'business-as-usual' investments.
Workstream Goals Progress in H1
Footprint Optimisation 50% improvement in revenue/sq ft We have now stopped manufacturing in Irvine California.
10ppts improvement in Team Wendy gross margin Salem is increasing production of NG IHPS helmet shells. The DOD has approved
production readiness in Cleveland for both the NG IHPS and ACH lines and
Cleveland is now focused on successfully ramping up production.
We expect this project to save us c.$10m per year with the cost reduction
increasingly dropping through to the bottom line in FY 2026.
Operational Excellence 25% productivity improvement We have made good progress improving both of our Avon Protection plants. In
our UK facility we have achieved more than 60% of our ambitious space
60% scrap improvement utilisation target while also meeting increased customer demand and reducing
overall scrap levels.
Inventory turns >5
We are also working to improve our Team Wendy Salem and Cleveland plants,
which start from a lower level of maturity. Building the capability and
processes we need is going to take some time, but both are making good
progress.
The more we look at our processes, the more opportunity we see. We know how to
improve our businesses but can only give them as much food as they can digest.
As capability improves, we will be able to go even faster.
Functional Excellence Roll out of SBU functions Finance excellence - We are planning the removal of the SAP ERP system from
the one plant it is still currently used in FY26, which is anticipated to save
us over $1m a year. The team have also embraced Kaizen to improve back-office
processes with streamlined internal financial reporting and a 71% reduction in
monthly close timing vs FY2024.
Sales excellence - We have made good progress strengthening the front end of
the business, with key hires in sales, marketing, product development and
aftermarket support.
Commercial Optimisation Accelerating commercial and international sales We remain of the view that we can accelerate commercial sales both in North
America and internationally. We have therefore increased investment into our
sales, business development and marketing teams.
We continue to strengthen our commercial e-commerce platforms. We will launch
the Avon Protection online shop outside of North America this quarter and are
gaining market share in Team Wendy by reducing lead times with their new
online shop to be launched this financial year.
3. Advance: Order book providing future confidence
The Advance part of our STAR strategy aims to deliver organic growth through
investment in short and medium-term growth opportunities.
Avon Protection:
Order book - We continue to see very strong demand for our respiratory
products and have delivered a 69% year on year increase in orderbook with more
in our pipeline to support the second half and beyond:
· Three new NATO countries were signed in the first half under our FM50
NSPA supplier agreement and two more under our boots & gloves agreement.
This brings us to 13 nations now supplied under this contract. These are in
addition to the Ukraine related awards, funded by European and International
NATO countries, which we announced in March.
· We were pleased to sign a long-term contract with Thales to supply
parts worth around $10m over six years in support of a long-term defence
programme. This, in addition to orders under the GSR UK MoD contract and
continued demand for rebreathers, helps underpin our UK manufacturing
facility.
· The FM54 programme to equip the Australian military is progressing
well. We delivered around $6m of FM54 masks in the first half.
· The order book does not currently include expected mask and filter
orders from the US DOD, , although we have seen good spares & accessories
orders from the DOD continuing.
· We built on the significant underwater rebreather wins for Germany
and New Zealand with contracts from two additional European NATO navies in the
first half. Avon has also recently entered a partnership with the Royal
Canadian Navy for the supply of deep water MCM rebreathers.
MITR (Modular Integrated Tactical Respirator) - In non-CBRN respiratory
protection we have made exceptional progress having launched our MITR half
mask product in January. MITR is a modular respiratory and ocular protection
system which fills a capability gap for those who need to operate in
lower-threat environments and where existing high-end protective equipment can
be cumbersome and impact on their mission effectiveness. We are already seeing
early market success having secured initial supply contracts with several
special force users across the five eyes community.
Integrated CBRN (Chemical, Biological, Radiological and Nuclear) protection -
We are securing greater market share having launched our EXOSKIN boots, gloves
and suits range. We now have eight NATO nations signed up to the boots and
gloves framework and are in advanced state discussions with several other NATO
nations to join the framework over the next 12 months. As a result, our
medium-term pipeline in this space is increasing.
MCM100 deep sea rebreather - We continue to see a very strong pipeline of
demand with additional upcoming tenders across NATO and five-eyes nations,
alongside some wider export opportunities where there is an increasing need
for modernisation of deep sea and special forces naval operations. Our
production lines are increasing their output to meet this ramp up in demand.
Team Wendy:
Order book - Team Wendy's order book of $153m is up $10m over the last six
months, reflecting good order intake on both ACH and NG IHPS, as well as pads
and bump helmets:
· On the NG IHPS programme we announced two new US DOD orders for
$17.6m and $18m. We currently have $74m of orders from the US Army in our
orderbook, up from $58m at the end of FY2024
· For our ACH Gen II Helmets, our order book has remained steady at
$59m.
· We are also making progress with continued demand for our bump
helmets from the US Navy with a new $2m order received in the period
· We continue to see good demand from the DOD for our pad systems with
a $7m orderbook at the end of H1
· In commercial helmets, we continue to pursue market share both in the
US and internationally with our leading technology. Shorter lead times have
helped build our order book to $8m.
RIFLETECH - During H1 we launched our new RIFLETECH helmet into the
international military and police markets. This helmet can stop common rounds
from weapons such as AK47. This helmet is the lightest of its kind and has
been well received by customers. We have a good pipeline of opportunities
and requests for quotes and hope to start seeing orders during H2.
We also have exciting plans to expand our helmet accessories range and launch
a new generation of our popular EXFIL SL commercial helmet.
4. Revolutionise: Innovating for the next stage of growth
Revolutionise includes our longer-term projects. In H2 2025 we expect to
increase R&D spend as we build our leading technology base and develop
protection equipment of the future. In the first half we invested a total of
$6.2m in R&D, including capitalised, expensed and customer funded spend
(HY24: $5.2m). This represented 4.2% of revenue for the period (HY24: 4.1%).
Avon Protection:
Non-CBRN Respiratory - Our MITR system is currently in trials with US and
European SWAT teams. Most notably, we are now able to announce we have secured
a new Programme of Record with the US DOD called ENBD which will
collaboratively develop an innovative personal protective respirator solution,
based on our MITR architecture, which improves user's comfort and reduces the
overall physiological burden when operating in lower-threat environments. We
are in the early stages of this programme but plan to move over the coming
years to a production ready system that can be fielded across the US military
personnel base.
Integrated CBRN - We were successfully selected by the US DoD for the ' Hood
Mask Interface program' which is three new Programmes of Record with the US
Government. These put Avon at the heart of the integration challenge for CBRN
protective systems.
Team Wendy:
Pads - We are now starting to deploy new 3D printed lattice structures within
our pad systems, beginning with our RIFLETECH helmet. The lattice pads have an
open structure that promotes a high level of airflow, decreasing heat buildup
while maintaining the comfortable fit and exceptional protection that Team
Wendy is known for.
Traumatic Brain Injury (TBI) mitigation - We've also made good progress on
R&D contracts under the PANTHER research programme to advance our ability
to predict brain tissue strains and other key brain injury metrics. This will
serve as a basis for designing future products that improve protection against
ballistic, blunt impact, and blast threats. This work is due to be presented
at both US defence and international ballistics conferences later this year.
RISKS & OPPORTUNITIES
Operational execution - The speed of the ramp up of helmet manufacturing in
our Cleveland and Salem factories is unusual and therefore inherently
challenging. We are very focused on mitigating this risk and have made several
changes to strengthen operational leadership and our recruitment, training
and onboarding processes in Team Wendy. We made good progress retiring some
operational risks during H1. We redesigned our ACH production line to resolve
scrap issues and the DOD approved both our IHPS and ACH production lines in
Cleveland.
US tariffs and government efficiency (DOGE) - President Trump's approach to
both tariffs and government efficiency is challenging and changes frequently.
So far, we see both risks and opportunities:
· If the 10% tariff on the UK subsists, then we will have to pay some
$800k of tariffs on components we make in the UK and ship to our US factory.
There is potential to localise production in the US over time but we will not
make this decision until there is more certainty. In the meantime, we will
look to mitigate the relatively limited impact through pricing.
· If NATO or Five Eye countries were to implement reciprocal tariffs,
this could also impact us because we make helmets and most respiratory filters
in the US. Again, we do have options to move production out of the US but will
not act until there is more clarity.
· The tariffs also represent an opportunity because a number of our
competitors in the US market make their products in Europe and will now be
subject to tariffs.
· We have seen some development programmes impacted by DOGE but our key
funded development programmes look to be continuing as expected.
International helmet growth - Looking at opportunities, we have some
interesting international leads for our helmets. We know from experience that
decision timeframes can be hard to predict but we hope to have something to
announce later this year.
SUMMARY & OUTLOOK - On track to deliver target adjusted operating margin
range of 14-16% in FY 2026.
We are improving our businesses fast. We do this through our Strengthen
System, which is probably a year ahead of where we thought it would be, our
transformation programme and by aligning the organisation to a strategy that
it has created and owns.
Our markets remain attractive, with European defence spending increasing in
the face of Russian aggression. In Avon Protection we are winning new
countries with the deployment of masks to Ukraine, Australia and across 13
NATO countries. In Team Wendy, we see emerging opportunities outside the US
and are growing market share in the US commercial market. We continue to
deploy the ACH and NG IHPS helmets to the US DOD.
As the leading supplier of both air purifying respirators and helmets to the
US and many other countries we have a large installed base that drives
recurring revenue, on top of which we now have a large order book which helps
us level load our factories and drive efficiency.
We have a strong competitive moat, with long term dual or sole source
contracts and leading technology.
We remain of the view that we can reach our medium-term targets in 2026, a
year earlier than originally guided to at our capital markets day in 2024.
FINANCIAL REVIEW
We have seen excellent year-on-year growth, with order intake ahead of sales
and another record closing order book of $247.0m (HY24 $199.0m). Revenue has
increased by 16.8% on a constant currency basis to $148.7m (HY24: $127.1m),
reflecting ramp up of ACH Gen II volumes in Team Wendy and growth in demand
across Europe for our respiratory portfolio in Avon Protection. Adjusted
operating profit margin rose to 11.8% (HY24: 9.4%) reflecting increased
profitability in both Team Wendy and Avon Protection compared to H1 last year.
31 March 2025 30 March 2024 Change Change (constant currency)(2)
Period ended:
Orders received $170.5m $190.3m (10.4%) (10.1%)
Closing order book $247.0m $199.0m 24.1% 24.0%
Revenue $148.7m $127.1m 17.0% 16.8%
Adjusted(1) operating profit $17.5m $11.9m 47.1% 48.3%
Adjusted(1) operating profit margin 11.8% 9.4% 240bps 250bps
Adjusted(1) net finance costs $(2.7)m $(3.1)m (12.9%)
Adjusted(1) profit before tax $14.8m $8.8m 68.2% 70.1%
Adjusted(1) taxation $(3.3)m $(2.1)m
Adjusted(1) profit after tax $11.5m $6.7m 71.6% 74.2%
Adjusted(1) basic earnings per share 38.8c 22.3c 74.0% 76.4%
Interim dividend per share 7.6c 7.2c 5.6%
Net debt excluding lease liabilities $54.9m $57.3m (4.2%)
Cash conversion(1) 56% 155%
Return on invested capital(1) 16.3% 9.7%
Statutory results
Operating profit $6.2m $2.6m
Net finance costs $(3.1)m $(4.1)m
Profit/(loss) before tax $3.1m $(1.5)m
Taxation $(0.7)m $0.4m
Profit/(loss) for the period $2.4m $(1.1)m
Basic earnings/(losses) per share 8.1c (3.7c)
Net debt $74.7m $76.5m
1 The Directors believe that adjusted measures provide a useful comparison of
business trends and performance. Adjusted results exclude adjusting items and
discontinued operations. The term adjusted is not defined under IFRS and may
not be comparable with similarly titled measures used by other companies.
2 Constant currency measures are provided in the Adjusted Performance Measures
section.
Order intake for the Group was $170.5m (HY24: $190.3m). Team Wendy order
intake of $73.3m was down 29% on the prior period, predominantly due to the
phasing of U.S. DOD NG IHPS and ACH Gen II orders. Avon Protection order
intake was up 11.7% to an exceptional $97.2m, with notable mask and filter
orders for Ukraine, and a long-term contract renewal with Thales for a
critical UK defence programme.
The closing order book of $247.0m reflects an increase of 24.1% (24.0%
constant currency) compared to HY24. Team Wendy closed the half with $153.3m
in the order book, an increase of 6.8%, which includes $74m of orders for NG
IHPS and $59m for ACH Gen II. The Avon Protection closing order book of $93.7m
is an increase of 68.8% and includes the previously mentioned orders in
support of Ukraine which are scheduled for delivery in the second half of the
year.
Revenue for the Group totalled $148.7m, an increase of 17.0% (16.8% constant
currency) compared to the prior period of $127.1m, reflecting growth in both
Team Wendy and Avon Protection.
Team Wendy revenue totalled $73.2m, an increase of 22.4% over the first half
of 2024. This is a result of ACH Gen II helmet ramp up and deliveries of EXFIL
LTP bump helmets to US Naval Air Systems Command (NAVAIR). Overall U.S. DOD
revenue increased by 36.2% to $49.7m (HY24: $36.5m). Commercial Americas
revenue was up 38.8% half on half reflecting stronger domestic sales of our
EPIC and EXFIL helmets, whilst U.K. & International revenue declined by
$4.5m reflecting timing of deliveries to our larger international customers.
Avon Protection delivered revenue of $75.5m in the first half, an increase of
12.2% compared to HY24 revenue of $67.3m. We saw a 50.8% increase in sales to
the U.S. DOD to $19.6m, primarily as the result of increased accessory demand.
Sales within the U.K. & International market increased 16.9% to $41.5m,
reflecting shipments of FM54 respirators to the Australian Defence Force and
increasing volumes of underwater rebreather systems. Commercial Americas
revenue fell by $4.4m. We have recently appointed a new global sales leader to
drive future growth in commercial markets.
Adjusted operating profit of $17.5m (HY24: $11.9 million) increased by 47.1%,
resulting in an adjusted operating profit margin of 11.8% (HY24: 9.4%), up
240bps (250 bps constant currency). This was the result of operational gearing
effects from increased revenue in both sides of the business, and further
benefits from our continuous improvement efforts, although these were tempered
in Team Wendy as we ramp up production in Cleveland.
Statutory operating profit from continuing operations of $6.2m (HY24: $2.6m)
reflected adjusting items in the period which are summarised below.
The Adjusted Performance Measures section contains a full breakdown and
explanation of adjustments.
Statutory operating profit HY25 HY24
$m $m
6.2 2.6
Amortisation of acquired intangibles 2.9 3.1
Transformational costs 8.4 6.2
Adjusted operating profit 17.5 11.9
After adjusted net finance costs of $2.7m (HY24: $3.1m) and an adjusted tax
charge of $3.3m (HY24: $2.1m), the Group recorded an adjusted profit for the
period after tax of $11.5m (HY24: $6.7m). Adjusted basic earnings per share
grew to 38.8 cents (HY24: 22.3 cents).
Return on invested capital, calculated on a rolling 12-month basis, was 16.3%
(HY24: 9.7%), reflecting the increase in operating profit. We expect further
improvement as inventory built to de-risk Team Wendy site optimisation starts
to unwind.
Statutory net finance costs of $3.1m (HY24: $4.1m) include $0.4m (HY24: $1.0m)
net interest expense on the U.K. defined benefit pension scheme liability.
Statutory profit before tax was $3.1m (HY24: loss of $1.5m) and, after a tax
charge of $0.7m (HY24: credit of $0.4m), the profit for the period was $2.4m
(HY24: loss of $1.1m).
Transformation costs
HY25 HY24
$m $m
Footprint optimisation (1) 7.5 4.8
Operational excellence 0.9 0.4
Functional Excellence - 0.8
Programme management excellence - 0.2
Total transformation costs 8.4 6.2
(1) Including $1.3m for acceleration of amortisation related to legacy ERP
systems (HY24: $0.8m), and $1.1m acceleration of deprecation for assets held
in Irvine that will no longer be used (HY24: nil).
Investment in the transformation initiatives have been in line with
expectations and guidance set out with the FY24 results. The majority of spend
in H1 related to Team Wendy footprint optimisation. We have ceased
manufacturing in Irvine and are now focused on ramp up of ACH and NG IHPS
lines in Cleveland, as well as NG IHPS shell production in Salem. We expect to
see previously communicated cost reductions of $10m drop through towards the
end of the financial year.
Segmental performance
HY25 HY24
Avon Protection Team Wendy Total Avon Protection Team Wendy
$m Total
Orders received 97.2 73.3 170.5 87.0 103.3 190.3
Closing order book 93.7 153.3 247.0 55.5 143.5 199.0
Revenue 75.5 73.2 148.7 67.3 59.8 127.1
Adjusted operating profit 14.3 3.2 17.5 11.1 0.8 11.9
Adjusted operating 18.9% 4.4% 11.8% 16.5% 1.3% 9.4%
profit margin
Avon Protection continues to deliver strong operating profit margins, up 240
bps to 18.9% compared to HY24. Margins benefited from the operational gearing
effect of the increase in revenue, favourable mix towards our higher
specification products, commercial optimisation and continuous improvement
programmes reducing scrap.
Team Wendy margins were 4.4%, an increase of 310bps compared to HY24, but
slightly down on the 6.0% achieved in H2 last year. Margin growth was impacted
by site consolidation, particularly increased labour costs in Cleveland to
ensure successful ramp up of the new manufacturing lines.
Research and development expenditure
Total investment in research and development (capitalised, expensed and
customer funded) was $6.2m (HY24: $5.2m), broadly in line with the prior
period as a percentage of revenue.
HY25 HY24
$m $m
Total expenditure 6.2 5.2
Less customer funded (0.7) (0.7)
Group expenditure 5.5 4.5
Capitalised (0.7) (0.3)
Income statement impact 4.8 4.2
Amortisation of development expenditure 1.7 1.6
Total income statement impact 6.5 5.8
Revenue 148.7 127.1
Total R&D expenditure as a % of revenue 4.2% 4.1%
( )
Avon Protection expenditure has primarily focused on completing the
development of MITR, whilst Team Wendy expenditure related to RIFLETECH helmet
development.
Net debt and cash flow
HY25 HY24
$m $m
Adjusted continuing EBITDA 23.4 17.7
Share-based payments and defined benefit pension scheme costs 3.3 1.5
Working capital (13.7) 8.3
Cash flows from continuing operations before adjusting items 13.0 27.5
Transformational costs paid (6.5) (4.1)
Cash flows from continuing operations 6.5 23.4
Cash flows from discontinued operations - 4.9
Cash flow from operations 6.5 28.3
Payments to pension plan (3.0) (6.3)
Net finance costs (2.3) (2.7)
Net repayment of leases (1.7) (1.7)
Tax paid - (0.1)
Capital expenditure (3.4) (5.7)
Purchase of own shares - Long Term Incentive Plan (2.5) -
Dividends to shareholders (4.9) (4.6)
Foreign exchange on cash (0.1) -
Change in net debt (11.4) 7.2
Opening net debt, excluding lease liabilities (43.5) (64.5)
Closing net debt, excluding lease liabilities (54.9) (57.3)
Cash flows from continuing operations before adjusting items were $13.0m
(HY24: $27.5m) with the movement largely due to working capital outflows of
$13.7m, compared to inflows of $8.3m in the prior period. This was driven
principally by sales phasing and a planned inventory build related to the Team
Wendy site consolidation project.
Net debt was $74.7m (HY24: net debt $76.5m), which includes lease liabilities
of $19.8m (HY24: $19.2m). Excluding lease liabilities, net debt was $54.9m
(HY24: net debt $57.3m).
Defined benefit pension scheme
The Group operated a contributory defined benefits plan to provide pension and
death benefits for the employees of Avon Technologies 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 eleven years. The net pension liability for
the scheme amounted to $8.5m as at 31 March 2025 (FY24: $17.2m). The decrease
was mainly due to deficit contributions of $3.0m, and a $5.7m favourable
actuarial gain
In accordance with the deficit recovery plan agreed following the 31 March
2022 actuarial valuation, the Group will make payments in H2 FY25 of £2.2m,
FY26 of £4.7m and FY27 of £5.1m. The next triennial valuation at 31 March
2025 is now underway, with the outcome of the process expected mid-FY26.
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 decreases annual
revenue by approximately $0.2m and increases annual operating profit by
approximately $0.2m.
Financing and interest rate risk management
The Group has a $137m revolving credit facility (RCF), together with a $50m
accordion. The RCF is held with a syndicate of four lenders and is available
until May 2028, having recently been extended by one-year. The RCF has a
further one-year extension option to May 2029 subject to lender approval.
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 31 March 2025 was $30.0m (FY24: $30.0m), expiring on 8
September 2025. The Group also has additional interest rate swaps in place
with a notional value of $20.0m starting on 8 September 2025 and expiring on 8
September 2026 (FY24: $20.0m). The financial value of interest rate swaps at
31 March 2025 was $0.1m (FY24: $0.4m).
Dividends
The Board has proposed an interim dividend of 7.6 cents per share (HY24: 7.2
cents). This interim dividend will be paid on 5 September 2025 to shareholders
on the register at 8 August 2025. 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 2025
21 May 2025
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE HALF-YEARLY
FINANCIAL REPORT
The Directors confirm that to the best of our knowledge:
· the condensed set of financial statements has been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted for use in the
UK;
· the interim management report includes a true and fair review of the
information required by:
- DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an
indication of important events that have occurred during the first six months
of the financial year and their impact on the condensed set of financial
statements; and a description of the principal risks and uncertainties for the
remaining six months of the year; and
- DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being
related party transactions that have taken place in the first six months of
the current financial year and that have materially affected the financial
position or performance of the entity during that period; and any changes in
the related party transactions described in the last annual report that could
do so.
Zoe Holland
Company Secretary
21 May 2025
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-technologiesplc.com (http://www.avon-technologiesplc.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 TECHNOLOGIES PLC
Conclusion
We have been engaged by Avon Technologies plc ("the Company") to review the
condensed set of financial statements in the half-yearly financial report for
the six months ended 31 March 2025 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 six months ended 31 March 2025 is not prepared, in
all material respects, in accordance with IAS 34 Interim Financial Reporting
as adopted for use in the UK and the Disclosure Guidance and Transparency
Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 Review of Interim Financial Information Performed by the
Independent Auditor of the Entity ("ISRE (UK) 2410") issued for use in the UK.
A review of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. We read the other information
contained in the half-yearly financial report and consider whether it contains
any apparent misstatements or material inconsistencies with the information in
the condensed set of financial statements.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention that causes us to believe that the directors
have inappropriately adopted the going concern basis of accounting, or that
the directors have identified material uncertainties relating to going concern
that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410. However, future events or conditions may cause the Group to
cease to continue as a going concern, and the above conclusions are not a
guarantee that the Group will continue in operation.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the Group are
prepared in accordance with UK-adopted international accounting standards.
The directors are responsible for preparing the condensed set of financial
statements included in the half-yearly financial report in accordance with IAS
34 as adopted for use in the UK.
In preparing the condensed set of financial statements, the directors are
responsible for assessing the Group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the Group or to cease operations, or have no realistic alternative
but to do so.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review. Our conclusion, including our conclusions relating to going concern,
are based on procedures that are less extensive than audit procedures, as
described in the Basis for conclusion section of this report.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Company in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the DTR of the
UK FCA. Our review has been undertaken so that we might state to the Company
those matters we are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company for our review work, for this
report, or for the conclusions we have reached.
Huw Brown
for and on behalf of KPMG LLP
Chartered Accountants
66 Queen Square
Bristol
BS1 4BE
21 May 2025
Consolidated Statement of Comprehensive Income for the 6 months ended 31 March
2025
6 months ended 31 March 2025 26 weeks to 30 March 2024
Adjusted Adjustments Total Adjusted Adjustments Total
$m $m $m $m $ $
m m
Note (Note 2.1) (
N
o
t
e
2
.
1
)
Revenue 2.2 148.7 - 148.7 127.1 - 127.1
Cost of sales (89.9) (1.0) (90.9) (80.9) - (80.9)
Gross profit 58.8 (1.0) 57.8 46.2 - 46.2
Sales and marketing expenses (9.1) - (9.1) (6.0) - (6.0)
Research and development costs (4.8) (1.7) (6.5) (5.8) - (5.8)
General and administrative expenses (27.4) (8.6) (36.0) (22.5) (9.3) (31.8)
Operating profit/(loss) 17.5 (11.3) 6.2 11.9 (9.3) 2.6
Net finance costs 4.3 (2.7) (0.4) (3.1) (3.1) (1.0) (4.1)
Profit/(loss) before taxation 14.8 (11.7) 3.1 8.8 (10.3) (1.5)
Taxation 2.4 (3.3) 2.6 (0.7) (2.1) 2.5 0.4
Profit/(loss) for the period 11.5 (9.1) 2.4 6.7 (7.8) (1.1)
( )
Consolidated Statement of Comprehensive Income for the 6 months ended 31 March
2025 (Continued)
Note 6 months ended 26 weeks to
31 March 30 March 2024
2025 $m
$m
Profit/loss for the period 2.4 (1.1)
Other comprehensive income/(expense)
Items that are not subsequently reclassified to the income statement
Remeasurement loss recognised on retirement benefit scheme 5.2 5.7 (13.5)
Deferred tax relating to retirement benefit scheme (2.0) 2.3
Items that may be subsequently reclassified to the income statement
Cash flow hedges - (0.4)
Net exchange differences offset in reserves 0.7 (0.5)
Other comprehensive income/(expense) for the period 4.4 (12.1)
Total comprehensive income/(expense) for the period 6.8 (13.2)
Earnings per share (cents)
Basic 8.1c (3.7c)
Diluted 7.7c (3.7c)
Consolidated Balance Sheet
Note As at As at
31 March 30 Sept
2025 2024
$m $m
Assets
Non-current assets
Intangible assets 3.1 120.8 126.4
Property, plant and equipment 3.2 41.5 43.7
Finance leases 3.3 4.9 5.4
Deferred tax assets 28.9 31.1
196.1 206.6
Current assets
Inventories 58.7 54.9
Trade and other receivables 47.2 36.9
Derivative financial instruments 0.1 0.2
Current tax receivables - 0.3
Cash and cash equivalents 9.6 14.0
115.6 106.3
Liabilities
Current liabilities
Borrowings 4.1 3.2 3.9
Current tax payables 0.4 -
Trade and other payables 36.9 36.4
Provisions for liabilities and charges 5.1 7.7 6.6
48.2 46.9
Net current assets 67.4 59.4
Non-current liabilities
Borrowings 4.1 81.1 75.5
Derivative financial instruments - 0.2
Retirement benefit obligations 5.2 8.5 17.2
Provisions for liabilities and charges 5.1 5.5 6.6
95.1 99.5
Net assets 168.4 166.5
Shareholders' equity
Ordinary shares 4.4 50.3 50.3
Share premium account 4.4 54.3 54.3
Other reserves (15.0) (15.7)
Retained earnings 78.8 77.6
Total equity 168.4 166.5
Consolidated Cash Flow Statement
6 months ended 26 weeks to
31 March 30 March
2025 2024
Note $m $m
Cash flow from operating activities
Cash flow from continuing operations 5.3 6.5 23.4
Cash flow from discontinued operations 5.3 - 4.9
Cash flow from operations 6.5 28.3
Retirement benefit deficit recovery contributions 5.2 (3.0) (6.3)
Tax payments - (0.1)
Net cash flow from operating activities 3.5 21.9
Cash flow used in investing activities
Purchase of property, plant and equipment 3.2 (2.8) (5.1)
Capitalised development costs and computer software 3.1 (0.7) (0.6)
Bank interest income 4.3 0.1 0.3
Finance lease interest 0.3 0.2
Finance lease capital receipts 0.5 0.5
Net cash used in investing activities (2.6) (4.7)
Cash flow used in financing activities
Proceeds from loan drawdowns 4.2 17.5 17.5
Loan repayments 4.2 (10.5) (26.7)
Finance costs paid in respect of bank loans and overdrafts 4.3 (2.1) (2.9)
Finance costs paid in respect of leases 4.3 (0.5) (0.3)
Repayment of lease liability (2.2) (2.2)
Purchase of own shares - Long-Term Incentive Plan (2.5) -
Dividends paid to shareholders 4.5 (4.9) (4.6)
Net cash used in financing activities (5.2) (19.2)
Net decrease in cash and cash equivalents (4.3) (2.0)
Cash and cash equivalents at beginning of the period 14.0 13.2
Effects of exchange rate changes (0.1) -
Cash and cash equivalents at end of the period 9.6 11.2
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 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 on 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
Profit for the period - - - - 4.1 4.1
Net exchange differences offset in reserves - - - (1.3) - (1.3)
Actuarial gain on retirement benefit scheme - - - - 33.1 33.1
Deferred tax on other temporary differences - - - - 0.3 0.3
Deferred tax on retirement benefit scheme - - - - (7.3) (7.3)
Interest rate swaps - cash flow hedge - - (0.4) - - (0.4)
Total comprehensive income for the period - - (0.4) (1.3) 30.2 28.5
Dividends paid 4.5 - - - - (2.2) (2.2)
Own share acquired - - - - (5.0) (5.0)
Fair value of share-based payments - - - - 2.4 2.4
Deferred tax on employee share schemes - - - - 0.3 0.3
At 30 September 2024 50.3 54.3 - (15.7) 77.6 166.5
Profit for the period - - - - 2.4 2.4
Net exchange differences offset in reserves - - - 0.7 - 0.7
Actuarial gain on retirement benefit scheme - - - - 5.7 5.7
Deferred tax on retirement benefit scheme - - - - (2.0) (2.0)
Total comprehensive income for the period - - - 0.7 6.1 6.8
Dividends paid 4.5 - - - - (4.9) (4.9)
Own share acquired - - - (2.5) (3.0)
Fair value of share-based payments - - - - 2.5 3.0
At 31 March 2025 50.3 54.3 - (15.0) 78.8 168.4
Other reserves consist of the capital redemption reserve of $0.6m (30 March
2024: $0.6m, 30 September 2024: $0.6m) and the translation reserve of ($15.6m)
(30 March 2024: ($15.0m), 30 September 2024: ($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 21 May 2025.
The interim financial period presents the 6 months ended 31 March 2025 (prior
interim financial period 26 weeks ended 30 March 2024, prior annual financial
year ended 30 September 2024). The Company has adopted a calendar based
interim reporting period, aligning with the calendar based financial year
adopted in the second half of FY24.
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 19
November 2024 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 6 months
ended 31 March 2025 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 period ended 30 September 2024, 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 2024 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 $137m to May 2028. 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 adjusting 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
6 months ended 26 weeks to
31 March 30 March
2025 2024
$m $m
Operating profit 6.2 2.6
Amortisation of acquired intangibles 2.9 3.1
Transformational costs 6.0 5.4
Acceleration of Irvine depreciation - transformational 1.1 -
Acceleration of software amortisation - transformational 1.3 0.8
Adjusted operating profit 17.5 11.9
Depreciation 3.8 3.6
Other amortisation charges 2.1 2.2
Adjusted EBITDA 23.4 17.7
Amortisation charges for acquired intangible assets of $2.9m (HY24: $3.1m) are
excluded from adjusted measures as they do not change each period based on
underlying business trading and performance.
Transformational costs excluding depreciation and amortisation were $6.0m
(HY24: $5.4m). These include $5.1m related to planned footprint optimisation
through closure of the Irvine California facility (HY24: $3.6m), and $0.9m
related to other transformational programmes (HY24: $1.8m).
Transformational accelerated depreciation and amortisation charges were $2.4m
(HY24: $0.8m). These include $1.3m related to one of the Group's legacy ERP
systems (HY24: $0.8m), and $1.1m for assets held in Irvine that will not be
used following operational closure (HY24: nil).
Transformational costs are considered an adjusting item as they related to
specific programmes which do not form part of the underlying business trading
and performance.
Adjustments to finance costs 6 months ended 31 March 2025 26 weeks to
30 March 2024
$m $m
Net finance costs (3.1) (4.1)
U.K. defined benefit pension scheme net interest expense 0.4 1.0
Adjusted net finance costs (2.7) (3.1)
$0.4m (HY24: $1.0m) net interest expense on the U.K. defined benefit pension
scheme liability is treated as an adjusting item 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 22% (HY24: 24%)
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
current period exchange rates.
26 weeks to 26 weeks to
30 March 2024 30 March 2024
constant currency reported
$m $m
Orders received 189.6 190.3
Closing order book 199.2 199.0
Revenue 127.3 127.1
Adjusted operating profit 11.8 11.9
Adjusted profit before tax 8.7 8.8
Adjusted basic earnings per share 22.0c 22.3c
( )
6 months ended 26 weeks to
Inventory Turns 31 March 2025 30 March 2024
$m $m
Inventory 58.7 56.4
Last 12 months adjusted cost of sales 177.3 175.3
Group inventory turns 3.0 3.1
Inventory turns measure how many times inventory was turned over in the period
by dividing adjusted cost of sales over the last 12 months, by the inventory
value.
6 months ended 31 March 2025 26 weeks to
Productivity 30 March 2024
Direct headcount 598 556
Last 12 months revenue $296.6m $269.3m
Group productivity $496k $484k
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.
6 months ended 31 March 2025 26 weeks to
Scrap (% of revenue) 30 March 2024
$m $m
Last 6 months scrap 2.0 2.1
Last 6 months revenue 148.7 127.1
Group scrap (% of revenue) 1.4% 1.7%
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)
6 months ended 31 March 2025 26 weeks to
30 March 2024
$m
$m
Net assets 168.4 142.5
Net debt excluding lease liabilities 54.9 57.3
Lease liabilities 19.8 19.2
Retirement benefit obligations 8.5 50.7
Derivatives (0.1) (0.6)
Net tax (28.5) (36.4)
Total invested capital 223.0 232.7
Average invested capital 227.9 250.3
Adjusted operating profit (preceding 12 months) 37.2 24.2
ROIC 16.3% 9.7%
( )
Cash conversion
Cash conversion excludes the impact of adjusting items from operating cash
flow and EBITDA.
6 months ended 31 March 2025 26 weeks to
$m 30 March 2024
$m
Cash flow from continuing operations before adjusting items 13.0 27.5
Adjusted EBITDA 23.4 17.7
Cash conversion 56% 155%
2.2 Operating segments
The Group Executive team is responsible for allocating resources and assessing
performance of its operating segments. Operating segments are therefore
reported in a manner consistent with the internal reporting provided to the
Group Executive team.
The Group has two different operating and reportable segments: Avon Protection
and Team Wendy.
6 months ended 31 March 2025 Avon Protection Team Wendy Adjusted Total Adjustments & discontinued (Notes 2.1) Total
$m $m $m $m $m
Revenue 75.5 73.2 148.7 - 148.7
Adjusted operating profit/(loss) 14.3 3.2 17.5 (11.3) 6.2
Net finance costs (2.7) (0.4) (3.1)
Profit/(loss) before taxation 14.8 (11.7) 3.1
Taxation (3.3) 2.6 (0.7)
Profit/(loss) for the period 11.5 (9.1) 2.4
Basic earnings per share (cents) 38.8c (30.7c) 8.1c
Diluted earnings per share (cents) 37.2c (29.5c) 7.7c
26 weeks to 30 March 2024 Avon Protection Team Wendy Adjusted Total Adjustments & discontinued (Notes 2.1) 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 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)
Revenue analysed by line of business
6 months ended 31 March 2025 26 weeks to 30 March 2024
Total Total
Avon Protection Team Wendy $m Avon Protection $m Team Wendy $m
$m $m $m
U.S. DOD 19.6 49.7 69.3 13.0 36.5 49.5
Commercial Americas 14.4 16.8 31.2 18.8 12.1 30.9
U.K. & International 41.5 6.7 48.2 35.5 11.2 46.7
Total 75.5 73.2 148.7 67.3 59.8 127.1
Revenue analysed by geographic region by origin
6 months ended 31 March 2025 26 weeks to
30 March
2024
$m $m
U.K. 25.6 21.0
U.S. 123.1 106.1
Total 148.7 127.1
(
)
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 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
6 months ended 26 weeks to
31 March 30 March
2025 2024
Weighted average number of ordinary shares in issue used in basic calculations 29,638 29,996
(thousands)
Potentially dilutive shares (weighted average) (thousands) 1,259 970
Fully diluted number of ordinary shares (weighted average) (thousands) 30,897 30,966
2.4 Taxation
Tax charged within the 6 months ended 31 March 2025 has been calculated using
a 22% estimated annual effective rate of tax which is expected to apply to the
Group for the financial year (HY24: 24%). The estimated effective rate of tax
was calculated by aggregating separate estimates for UK and US tax
jurisdictions.
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 2024 65.4 39.6 15.7 5.7 126.4
Additions - - 0.7 - 0.7
Amortisation - (2.9) (1.7) (1.7) (6.3)
At 31 March 2025 65.4 36.7 14.7 4.0 120.8
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 2024 1.4 10.9 27.1 4.3 43.7
Additions - - 2.8 - 2.8
Depreciation (0.1) (1.4) (3.1) (0.3) (4.9)
Exchange differences - (0.1) - - (0.1)
At 31 March 2025 1.3 9.4 26.8 4.0 41.5
3.3 Finance leases
Finance leases
$m
At 30 September 2024 5.4
Interest Income 0.3
Payments received (0.8)
At 31 March 2025 4.9
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. Payments received include $0.3m interest and $0.5m capital receipts.
Section 4: Funding
4.1 Borrowings
As at As at
31 March 30 Sept
2025 2024
$m $m
Current
Lease liabilities 3.2 3.9
Non-Current
Bank Loans 64.5 57.5
Lease liabilities 16.6 18.0
81.1 75.5
Total Group borrowings 84.3 79.4
The Group had the following committed facilities at the balance sheet date:
As at As at
31 March 30 Sept
2025 2024
$m $m
Total undrawn committed borrowing facilities 75.5 82.5
Bank loans and overdrafts utilised 64.5 57.5
Total Group committed facilities 140.0 140.0
Comprising:
Revolving credit facility 137.0 137.0
Bank overdraft 3.0 3.0
At 30 March 2024 the Group had a revolving credit facility (RCF) with a total
commitment of $200m.
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 2028, having recently
been extended by one-year (previously until May 2027). The RCF has a further
one-year extension option to May 2029 subject to lender approval.
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 2024 31 March 2025 $m
$m
Cash at bank and in hand 14.0 (4.3) - (0.1) 9.6
Bank loans (57.5) (7.0) - - (64.5)
Net debt excluding lease liabilities (43.5) (11.3) - (0.1) (54.9)
Lease liabilities (21.9) 2.7 (0.5) (0.1) (19.8)
Net debt (65.4) (8.6) (0.5) (0.2) (74.7)
Cash flow relating to bank loans consisted of $17.5m proceeds from drawdowns,
less $10.5m repayments.
4.3 Net finance costs
6 months ended 31 March 26 weeks to 30 March
2025 2024
$m $m
Interest payable on bank loans and overdrafts (2.3) (2.9)
Interest payable in respect of leases (0.5) (0.3)
Amortisation of finance fees (0.3) (0.4)
U.K. defined benefit pension scheme net interest expense (0.4) (1.0)
Bank interest income 0.1 0.3
Finance lease interest 0.3 0.2
Net finance costs (3.1) (4.1)
( )
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
31 March 2025 31 March 2025 31 March 2025 30 Sept 2024 30 Sept 2024 30 Sept
2024
$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
6 months ended Year ended
31 March 30 Sept
2025 2024
No. of shares No. of shares
Opening balance 765,098 765,098
Acquired in the period - -
Closing balance 765,098 765,098
In 2022 the Group completed a £9.25m ($12.4m) 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
6 months ended Year ended
31 March 30 Sept
2025 2024
No. of shares No. of shares
Opening balance 555,205 261,714
Acquired in the period 142,403 301,947
Disposed on exercise of options (77,692) (8,456)
Closing balance 619,916 555,205
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 31 March 2025 was $11.6m
(30 September 2024: $9.1m). The shares are held at cost as treasury shares and
deducted from shareholders' equity.
During the period the trust acquired 142,403 (FY24: 301,947) shares at a cost
of $2.5m (FY24: $5.0m). FY24 purchases were completed in the second half of
financial year.
4.5 Dividends
On 31 January 2025, the shareholders approved a final dividend of 16.1c per
qualifying ordinary share in respect of the year ended 30 September 2024. This
was paid on 7 March 2025 utilising $4.9m of shareholders' funds.
The Board of Directors has declared an interim dividend of 7.6c (2024: 7.2c)
per qualifying ordinary share in respect of the year ending 30 September 2025.
This interim dividend will be paid on 5 September 2025 to shareholders on the
register at 8 August 2025 with an ex-dividend date of 7 August 2025.
In accordance with accounting standards, this dividend has not been provided
for. It will be recognised in shareholders' funds in H2 FY25 and is expected
to utilise $2.2m of shareholders' funds.
Section 5: Other
5.1 Provisions for liabilities and charges
Warranty Property Obligations Restructuring Offset Other
Total
$m $m $m $m $m $m
Balance at 30 September 2024 4.0 5.1 1.4 1.0 1.7 13.2
Provision created 0.7 0.4 0.5 - 0.2 1.8
Payments in the period (0.3) (0.1) (0.8) - (0.5) (1.7)
Foreign exchange movements - (0.1) - - - (0.1)
Balance at 31 March 2025 4.4 5.3 1.1 1.0 1.4 13.2
As at As at
31 March 2025 30 Sept
2024
Analysis of total provisions $m $m
Current 7.7 6.6
Non-current 5.5 6.6
Total provisions 13.2 13.2
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. 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.
5.2 Defined benefit pension scheme
As at As at
31 March 30 Sept
2025 2024
$m $m
Net pension liability 8.5 17.2
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. An updated actuarial valuation for IAS 19
purposes was carried out by an independent actuary at 31 March 2025 using the
projected unit method.
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. The next
triennial valuation at 31 March 2025 is now underway, with the outcome of the
process expected mid-FY26.
During the period the Group made payments to the fund of $3.0m (HY24: $6.3m)
in respect of scheme expenses and deficit recovery plan payments. In
accordance with the plan agreed following the 31 March 2022 actuarial
valuation, the Group will make payments in H2 FY25 of £2.2m, FY26 of £4.7m
and FY27 of £5.1m.
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.
Movement in net defined benefit liability
Defined benefit Defined benefit Net defined benefit
obligation asset liability
31 March 30 Sept 31 March 30 Sept 31 March 30 Sept
2025 2024 2025 2024 2025 2024
$m $m $m $m $m $m
At 30 September (329.3) (321.7) 312.1 281.5 (17.2) (40.2)
Included in profit or loss
Administrative expenses - - (0.3) (1.1) (0.3) (1.1)
Net interest cost (7.8) (17.7) 7.4 15.6 (0.4) (2.1)
(7.8) (17.7) 7.1 14.5 (0.7) (3.2)
Included in other comprehensive income
Remeasurement gain:
- Actuarial gain/(loss) arising from:
- Demographic assumptions 2.1 7.3 - - 2.1 7.3
- Financial assumptions 24.0 (11.6) - - 24.0 (11.6)
- Experience adjustment - 21.1 - - - 21.1
- Return on plan assets excluding interest income - - (20.4) 2.8 (20.4) 2.8
26.1 16.8 (20.4) 2.8 5.7 19.6
Other
Contributions by the employer - - 3.0 9.1 3.0 9.1
Net benefits paid out 10.9 22.0 (10.9) (22.0) - -
FX gain/(loss) 10.8 (28.7) (10.1) 26.2 0.7 (2.5)
At 31 March/30 September (289.3) (329.3) 280.8 312.1 (8.5) (17.2)
Actuarial assumptions
The main financial assumptions used by the independent qualified actuaries to calculate the liabilities under IAS 19 are set out below:
31 March 30 Sept
2025 2024
% p.a. % p.a.
Inflation (RPI) 3.05 3.10
Inflation (CPI) 2.65 2.70
Pension increases post August 2005 2.10 2.15
Pension increases pre August 2005 2.85 2.90
Discount rate for scheme liabilities 5.75 5.05
Plan assets
31 March 30 Sept
2025 2024
$m $m
Equities and other securities 112.8 96.2
Liability Driven Investment 115.8 138.2
Infrastructure fund 46.5 46.9
Other receivable - 26.1
Cash 5.7 4.7
Fair value of assets 280.8 312.1
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.
$93.4m (FY24: $114.2m) 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
6 months ended 26 weeks to
31 March 30 March
2025 2024
m
$m $m
Continuing operations
Profit/(loss) for the period 2.4 (1.1)
Adjustments for:
Taxation 0.7 (0.4)
Depreciation 4.9 3.6
Amortisation of intangible assets 6.3 6.1
Defined benefit pension scheme cost 0.3 0.6
Net finance costs 3.1 4.1
Fair value of share-based payments 3.0 0.9
Transformational costs expensed(1) 6.0 5.4
Increase in inventories (3.8) (2.0)
(Increase)/decrease in receivables (10.4) 8.3
Increase in payables and provisions 0.5 2.0
Cash flow from continuing operations before adjusting items 13.0 27.5
Transformational costs paid (6.5) (4.1)
Cash flow from continuing operations 6.5 23.4
Discontinued operations
Loss for the period - -
Adjustments for:
Taxation - -
Decrease in receivables - 5.1
Decrease in payables and provisions - (0.2)
Cash flow from discontinued operations - 4.9
Cash flow from operations 6.5 28.3
Cash flows from discontinued operations relate to final working capital
receipts and payments for the Armour business which closed in FY23.
(1)Transformational costs expensed exclude amortisation and depreciation (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
31 March 31 March 30 March 30 March 30 Sept
2025 2025 2024 2024 2024
USD/GBP 0.7866 0.7721 0.7976 0.7910 0.7469
5.5 Principal risks and uncertainties
The nature of the principal risks and uncertainties impacting the Group are
described on pages 70-75 of our 2024 Annual Report. Successful ramp up of
volumes in Team Wendy remains a risk following the end of manufacturing
operations in Irvine. Further information, with an assessment of political and
economic risk including tariffs, is provided in the risks and opportunities
section of this announcement.
5.6 Related party transactions
There were no related party transactions during the period or outstanding at
the end of the period (2024: 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 period ending 30
September 2025.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR SEFFASEISESIRecent news on Avon Technologies
See all newsREG - Avon Technologies - Interim Results
AnnouncementREG - Avon Technologies - Notification of change in particulars of director
AnnouncementREG - Avon Technologies - Notification of change in particulars of director
AnnouncementREG - Avon Technologies - Holding(s) in Company
AnnouncementREG - Avon Technologies - Directors'/PDMR Shareholding
Announcement