TIDMAVON
RNS Number : 6149L
Avon Rubber PLC
29 April 2015
News Release
Strictly embargoed until 07:00 29 April 2015
AVON RUBBER p.l.c.
("Avon", the "Group" or the "Company")
Unaudited interim results for the six months ended 31 March
2015
31 March 31 March Increase
2015 2014
GBPMillions GBPMillions
REVENUE 62.8 61.5 2%
ADJUSTED EBITDA (*) 12.2 11.1 9%
ADJUSTED OPERATING PROFIT
(*) 8.5 8.2 4%
ADJUSTED PROFIT BEFORE
TAX (*) 8.4 8.0 4%
NET CASH / (DEBT) 7.3 (5.5)
EARNINGS PER SHARE:
Adjusted basic (*) 22.3p 20.4p 9%
Adjusted diluted (*) 21.7p 19.8p 10%
INTERIM DIVIDEND 2.43p 1.87p 30%
FINANCIAL HIGHLIGHTS
-- 10% earnings per share growth against a very strong comparator period last year
-- Continuing strong cash generation increased cash balances to
GBP7.3m in an already strong balance sheet
-- 30% increase in interim dividend to 2.43p per share
OPERATIONAL HIGHLIGHTS
-- Dairy delivered a record half year performance as our
investment in routes to market and innovative products and services
delivered returns
-- Dairy Cluster Exchange service growth of 34% since 30 September 2014
-- Encouraging progress in Dairy in China; Brazil sales and distribution operation opened
-- Healthy order intake in Protection & Defence of GBP47m.
Closing order book of GBP38m with GBP28m for delivery in H2
2015
-- Our new Deltair SCBA gained market share in the US Fire market
Peter Slabbert, Chief Executive commented:
"Avon has enjoyed another positive half year, achieving a 10%
increase in earnings per share against a very strong comparator
period last year that included a 52,000 C50 delivery to a customer
in the Middle East.
Trading is normally second-half weighted in our Protection &
Defence business and we believe this will continue to be the case
this year. We have a strong forward order book in Protection &
Defence and believe that the momentum in Dairy will continue.
The Board therefore expects to make good progress as the year
develops and to meet market expectations for the full year."
(*) Note:
The Directors believe that adjusted measures provide a more
useful comparison of business trends and performance. Adjusted
results exclude exceptional items, defined benefit pension scheme
costs and the amortisation of acquired intangibles. The term
adjusted is not defined under IFRS and may not be comparable with
similarly-titled measures used by other companies.
All profit and earnings per share figures in these interim
results relate to adjusted business performance (as defined above)
unless otherwise stated. A reconciliation of adjusted measures to
non-adjusted measures is provided below:
Statutory Adjustments Adjusted
-------------------------------- ---------- ------------ ---------
Group EBITDA (GBPm) 12.7 (0.5) 12.2
-------------------------------- ---------- ------------ ---------
Group operating profit
(GBPm) 8.9 (0.4) 8.5
-------------------------------- ---------- ------------ ---------
Other finance expense
(GBPm) 0.4 (0.3) 0.1
-------------------------------- ---------- ------------ ---------
Basic earnings per share
(pence) 22.4 (0.1) 22.3
-------------------------------- ---------- ------------ ---------
Diluted earnings per share
(pence) 21.8 (0.1) 21.7
-------------------------------- ---------- ------------ ---------
Protection & Defence operating
profit (GBPm) 6.2 0.1 6.3
-------------------------------- ---------- ------------ ---------
The adjustments comprise:
-- amortisation of acquired intangibles of GBP0.1m
-- defined benefit pension scheme costs which relate to a scheme
closed to future accrual and therefore do not relate to current
operations:
o Administrative expenses of GBP0.2m
o Settlement gain of GBP0.7m following a trivial commutation
exercise
o Other finance expense of GBP0.3m
Avon Rubber p.l.c. Weber Shandwick
Financial
Peter Slabbert, Chief Executive: Nick Oborne: 020
020 7067 0000 7067 0000
Andrew Lewis, Group Finance Director:
01225 896 830
Sarah Matthews-DeMers, Group Financial
Controller: 01225 896 835
Jo Wotton, Public Relations Manager:
01225 896 563
An analyst meeting will be held at 9.30am this morning at the
offices of Weber Shandwick Financial, 2 Waterhouse Square, 140
Holborn, London, EC1N 2AE.
NOTES TO EDITORS:
The Group has transformed itself over recent years into an
innovative design and engineering group specialising in two core
markets, Protection & Defence and Dairy. With a strong emphasis
on research and development we design, test and manufacture
specialist products from a number of sites in the US and UK,
serving markets around the world. We achieve this through nurturing
the talent and aspirations of our employees to realise their
highest potential.
Avon Protection is the recognised global market leader in
advanced Chemical, Biological, Radiological and Nuclear (CBRN)
respiratory protection systems technology for the world's military,
homeland security, first responder, fire and industrial markets.
With an unrivalled pedigree in mask design dating back to the
1920's, Avon Protection's advanced products are the first choice
for Personal Protective Equipment (PPE) users worldwide and are
placed at the heart of many international defence and tactical PPE
deployment strategies. Our expanding global customer base now
includes military forces, civil and first line defence troops,
emergency service teams and industrial, marine, mineral and oil
extraction site personnel. All put their trust in Avon's advanced
respiratory solutions to shield them from every possible
threat.
Our world-leading Dairy supplies business and its Milkrite brand
have a global market presence. With a long history of manufacturing
liners and tubing for the dairy industry, we have become the
leading innovator and designer for products and services right at
the heart of milking. Our goal is always to improve and maintain
animal health. Working with the leading scientists and health
specialists in the global dairy industry we continue to invest in
technology to further improve the milking process and animal
welfare. Our products provide exceptional results for both the
animal and the milker, making the milk extraction process run
smoothly. As our market share and milking experience continue to
improve, so does our global presence.
For further information please visit the Group's website:
www.avon-rubber.com
Interim Management Report
Introduction
Avon has enjoyed another positive half year with a 10% increase
in earnings per share against a very strong comparator period last
year. Our Dairy division returned record results as our strategy of
product and service innovation and geographic expansion continues
to deliver success. In Protection & Defence revenues for the
half year were, as planned, weighted towards US Department of
Defense (DOD) sales under our 10 year sole source contract and
gross margins were, as a consequence, lower than in the record
prior period. Despite this, net margins for the division increased,
continuing the long-term trend of improvement. We have also made
encouraging progress in generating opportunities in the North
American Fire market and in the Middle East which are likely to be
realised in the second half.
Group Results
Group revenue at GBP62.8m (2014: GBP61.5m) increased by 2% and
operating profit of GBP8.5m (2014: GBP8.2m) increased by 4%.
Earnings before interest, tax, depreciation and amortisation
('EBITDA') increased by 9% to GBP12.2m (2014: GBP11.1m)
representing a return on sales (defined as EBITDA divided by
revenue) of 19.4% (2014: 18.1%).
The impact of foreign exchange translation was a slight tailwind
of GBP0.4m as the $/GBP average rate of $1.54 was lower than the
$1.63 prevailing in the same period last year. This translation
benefit has been offset by transactional losses, where the
weakening Euro together with US dollar transactions covered by
forward contracts at rates higher than the average rate have given
rise to mark to market foreign exchange losses of GBP0.3m in the
period.
If the currently stronger US dollar were to prevail throughout
the remainder of the financial year, it would create further
translation tailwinds for the full year. Our sensitivity analysis
on the full year 2014 results showed that a 5c movement in the
$/GBP exchange rate would result in a GBP0.4m impact on annual
operating profit.
Profit before tax was GBP8.4m (2014: GBP8.0m) and after a tax
charge of GBP1.7m (2014: GBP1.9m), an effective rate of 20% (2014:
24%), the Group recorded a profit for the period after tax of
GBP6.7m (2014: GBP6.1m). The reduced tax rate reflects the
anticipated geographic split of taxable profits for 2015. Basic
earnings per share were up 9% at 22.3p (2014: 20.4p) and fully
diluted earnings per share were up 10% at 21.7p (2014: 19.8p).
Net Debt and Cashflow
Net cash at the half year was GBP7.3m, up from GBP2.9m at the
2014 year end, which had benefitted from early payments from
certain customers.
Operating cash conversion remained strong at 138% of operating
profit. Turning profits into cash has enabled us to continue to
invest in the future of the business with GBP3.1m of capital
investment, while, at the same time, increasing dividends to
shareholders by 30%.
Total bank facilities at 31 March 2015 were $40m. These
facilities are committed until 30 November 2017.
Protection & Defence
Performance
Revenue for the division was GBP45.3m (2014: GBP45.6m) and
operating profit was GBP6.4m (2014: GBP6.8m). The decrease was
expected and arose from the mix of product shipped in the period
being heavily DOD biased, whereas the comparable period had a heavy
non-DOD weighting. As we have always said, while predicting the
timing of non-DOD orders and sales is difficult, our long-term DOD
contract and manufacturing excellence affords us the flexibility to
fulfil non-DOD orders as and when they arise and to meet the DOD's
demand in periods when non- DOD orders are lower.
EBITDA was up 1% at GBP9.4m (2014: GBP9.2m) as the effect of the
change in mix towards DOD sales was more than offset by cost
savings following the consolidation of our US sites, increases in
sales to Fire customers as our new Deltair product gained traction
and AEF enjoying another successful period. Return on sales, as
defined above, was 21% (2014: 20%).
Markets
M50 respirator sales to the DOD were, as expected, significantly
higher in the first half of the year at 112,000 (2014: 58,000) mask
systems. During the period we received a further order for 160,000
mask systems which means we exit the half year with mask order
coverage well into 2016, providing good visibility of revenue under
this sole source long-term contract.
We did not deliver any M61 filters during the period (2014:
162,000 pairs). We understand that the second source has
successfully qualified its filter and has fulfilled its first
order. In the long term, we believe the end user demand for this
consumable product will grow as fielding of the mask accelerates
but we continue to recognise that, in the current DOD procurement
environment, obtaining short-term visibility of future filter
orders remains challenging. However, we do expect to see some
further filter requirements later this year.
Since the comparable period last year included delivery of the
52,000 C50 order, as expected, sales to foreign military, law
enforcement and first responder customers reduced year on year.
However, during the period we have been encouraged by the level of
international enquiries for our respiratory protection products
and, although the timing of converting some of the larger
opportunities has not fallen into the first half, we are encouraged
that the underlying pipeline of individually smaller sales
opportunities has grown and we have a number of opportunities that
leave us well placed to deliver a richer mix of sales in the second
half of the year.
We saw strong growth in sales to the North American Fire market
this period following the release of our new NFPA-approved Deltair
SCBA. Our product, which is designed to meet the new US regulations
and to deliver enhanced operational performance, has been well
received by the market and remains one of only four units to
receive approval to date. The product procurement cycle in the Fire
market is longer than in the Law Enforcement market due to trial
and evaluation processes and the level of enquires and continuing
customer trials gives us confidence that this product has the
opportunity to enhance our market share further.
Other DOD spares sales were lower than the same period last year
reflecting normal variability in the timing of orders and delivery
schedules. Order intake for spares has however been positive and
thus we expect higher levels of revenue in this area in the second
half. Our industrial escape product, launched in 2014, has
continued to be well received in oil and gas markets. AEF has seen
a continuation of the high level of order intake experienced last
year and has contributed positively again this period.
Order intake for the first half totalled GBP47m. Of the closing
order book of GBP38m, GBP28m is for delivery in the second half of
our financial year giving good visibility for the remainder of the
year.
Opportunities
Our funded development programme with the US Air Force to design
and test the MM53 Joint Service Aircrew Mask (JSAM) has progressed
well with the prototype product passing the customer's critical
design review during the period. The customer has also confirmed
that it has budget monies allocated to the production phase of the
programme and that it expects this to commence in 2017.
Our Emergency Escape Breathing Device (EEBD) received NIOSH
approval late in 2014. In December 2014 we responded to a US Navy
solicitation to supply EEBDs to replace its existing fielded
product. We have not yet received a response from the US Navy to
this solicitation but expect to hear during the second half of the
year.
Dairy
Performance
Revenue for the Dairy business was 10% higher at GBP17.5m (2014:
GBP15.9m) as we grew in all of our markets, supplemented by the
positive translation effect of the stronger US dollar. An
increasing proportion of higher-margin Milkrite product and service
sales contributed to an increased operating profit of GBP3.3m
(2014: GBP2.7m). Return on sales, as defined above, increased to
22% (2014: 20%).
Markets
Market conditions have been positive during the period. In
global markets, milk prices have remained at acceptable levels and
farmer input costs have been favourable meaning there has been less
pressure on farmer revenues and margins and therefore normal levels
of demand for our consumable products.
In Europe, Milkrite's market share has increased as a result of
our increased sales force, enhanced technical support and a larger
distributor network. Our Impulse Air mouthpiece vented liner, first
launched in Europe late in 2013, continues to gain traction, with
its market share increasing to 3.0% (31 March 2014: 2.0%, 30
September 2014: 2.6%).
In the US, the Milkrite Impulse Air mouthpiece vented liner
continued to perform well, with its market share increasing to 22%
(31 March 2014: 20%, 30 September 2014: 21%).
Our Cluster Exchange service was launched in the US and Europe
in 2014 and growth rates are now exceeding our expectations. By the
end of the period it was servicing 342,000 cows on 1,100 farms in
the US and Europe. This added-value service enhances the value of
each direct liner sale we make and should lead to a more robust and
sustainable business model.
In China, year on year revenue grew strongly against a weak
comparator period. The industrialisation of the milking process
continues apace, creating excellent long-term potential for our
consumable products.
Opportunities
In many other emerging markets, including Brazil and India, the
number of dairy cows being milked using automated milking processes
is growing rapidly. This is adding to the market potential for the
products we sell. We opened a sales and distribution centre in
Brazil in the period to service Brazil and the wider South
American market. Our first sales were made late in the period and
we expect a full period of trading in the second half of our
financial year. As with any start up, we expect this to be a
short-term drag on divisional profit growth but our target for this
operation is to make a positive contribution to profit in 2017.
Retirement Benefit Obligations
The IAS 19R valuation of the Group's UK retirement benefit
obligations has moved from a deficit of GBP16.0m at 30 September
2014 to a reduced deficit of GBP15.6m at 31 March 2015. This arose
from a strong asset performance from our return-seeking assets
offset by a fall in AA corporate bond rates which increased
liabilities.
During the period the Group made cash contributions in respect
of deficit recovery payments and administration costs of GBP275,000
(2014: GBP237,000).
The last actuarial valuation undertaken as at 31 March 2013
showed the scheme to be 98.0% funded.
Dividends
The final dividend for the 2014 financial year of 3.74p per
ordinary share was paid to shareholders on 20 March 2015 and
absorbed GBP1,127,000 of shareholders' funds.
Following the period end, the Board has declared an interim
dividend of 2.43p per ordinary share for 2015, an increase of 30%
on the 2014 interim dividend. This will be paid on 4 September 2015
to shareholders on the register on 7 August 2015. It is expected to
absorb GBP732,000 of shareholders' funds and there are no
corporation tax consequences.
Board Changes
The Board is separately announcing today that Peter Slabbert has
informed the Board of his intention to step down from his role as
Chief Executive and retire from the Company.
This change will become effective 30 September 2015. The search
for a successor has already commenced.
Outlook
The Board remains confident that the Group will continue to
deliver organic growth in this financial year in line with current
market expectations and that our strong cash generation and balance
sheet will allow us to invest in future growth opportunities.
As is usual, we expect a second half bias to the financial
performance of our Protection & Defence business. Although the
timing of receipt of orders remains difficult to predict, the DOD
order we received late in the first half and our sales pipeline of
other opportunities give us confidence that Protection &
Defence will make further progress in the second half of this
year.
In Dairy, the business has good momentum with our high
technology differentiated products and services gaining market
share. This, together with the sales and distribution platforms we
have established in China and Brazil to service the rapidly growing
emerging markets, means we have a Dairy business with excellent
short and longer term growth prospects.
Peter Slabbert Andrew Lewis
Chief Executive Group Finance Director
29 April 2015 29 April 2015
Statement of Directors' Responsibilities
The Directors confirm that this condensed consolidated interim
financial information has been prepared in accordance with the
International Accounting Standard 34, 'Interim Financial Reporting'
as adopted by the European Union, 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
The Directors are as listed on page 41 of the 2014 Annual
Report, except that Stella Pirie retired from the Board on 29
January 2015 and Pim Vervaat was appointed on 1 March 2015.
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 interim statement 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.
Miles Ingrey-Counter
Company Secretary
29 April 2015
Consolidated Statement of Comprehensive
Income
Half year to 31 March Half year to 31 March Year to 30 Sep 2014
2015 2014
Statutory Adjustments Adjusted Statutory Adjustments Adjusted Statutory Adjustments Adjusted
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ ----- ---------- ------------ --------- ---------- ------------ --------- ---------- ------------ ----------
Revenue 4 62,821 - 62,821 61,491 - 61,491 124,779 - 124,779
Cost of sales (41,389) - (41,389) (40,718) - (40,718) (83,264) - (83,264)
------------------ ----- ---------- ------------ --------- ---------- ------------ --------- ---------- ------------ ----------
Gross profit 21,432 - 21,432 20,773 - 20,773 41,515 - 41,515
Selling and
distribution
costs (6,984) - (6,984) (4,894) - (4,894) (11,505) - (11,505)
General and
administrative
expenses (5,540) (363) (5,903) (9,983) 2,330 (7,653) (15,685) 2,678 (13,007)
Operating profit 4 8,908 (363) 8,545 5,896 2,330 8,226 14,325 2,678 17,003
------------------ ----- ---------- ------------ --------- ---------- ------------ --------- ---------- ------------ ----------
Operating profit
is analysed
as:
Before
depreciation
and amortisation 12,662 (493) 12,169 8,933 2,200 11,133 20,486 2,417 22,903
Depreciation
and amortisation (3,754) 130 (3,624) (3,037) 130 (2,907) (6,161) 261 (5,900)
------------------ ----- ---------- ------------ --------- ---------- ------------ --------- ---------- ------------ ----------
Operating profit 8,908 (363) 8,545 5,896 2,330 8,226 14,325 2,678 17,003
------------------ ----- ---------- ------------ --------- ---------- ------------ --------- ---------- ------------ ----------
Finance income 6 9 - 9 - - - 1 - 1
Finance costs 6 (51) - (51) (103) - (103) (275) - (275)
Other finance
expense 6 (453) 329 (124) (97) 6 (91) (187) 12 (175)
------------------ ----- ---------- ------------ --------- ---------- ------------ --------- ---------- ------------ ----------
Profit before
taxation 8,413 (34) 8,379 5,696 2,336 8,032 13,864 2,690 16,554
Taxation 7 (1,683) - (1,683) (1,590) (350) (1,940) (3,053) (450) (3,503)
------------------ ----- ---------- ------------ --------- ---------- ------------ --------- ---------- ------------ ----------
Profit for
the period 6,730 (34) 6,696 4,106 1,986 6,092 10,811 2,240 13,051
------------------ ----- ---------- ------------ --------- ---------- ------------ --------- ---------- ------------ ----------
Consolidated Statement of Comprehensive Income
(continued)
Half year to 31 March Half year to 31 March Year to 30 Sep 2014
2015 2014
Statutory Adjustments Adjusted Statutory Adjustments Adjusted Statutory Adjustments Adjusted
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ ----- ---------- ------------ --------- ---------- ------------ --------- ---------- ------------ ----------
Other
comprehensive
income/(expense)
Actuarial
gain/(loss)
recognised
in retirement
benefit scheme
(*) 22 - 22 5,446 - 5,446 (4,851) - (4,851)
Net exchange
differences
offset in
reserves
(**) 3,008 - 3,008 (1,147) - (1,147) (306) - (306)
Other
comprehensive
income/(expense)
for the period,
net of taxation 3,030 - 3,030 4,299 - 4,299 (5,157) - (5,157)
------------------ ----- ---------- ------------ --------- ---------- ------------ --------- ---------- ------------ ----------
Total
comprehensive
income for
the period 9,760 (34) 9,726 8,405 1,986 10,391 5,654 2,240 7,894
------------------ ----- ---------- ------------ --------- ---------- ------------ --------- ---------- ------------ ----------
Earnings per
share
Basic 9 22.4 22.3 13.8p 20.4p 36.2p 43.7p
Diluted 9 21.8 21.7 13.3p 19.8p 35.0p 42.3p
* Items that are not subsequently reclassified to the income
statement
**Items that may be subsequently reclassified to the income
statement
Consolidated Balance Sheet
As at As at As at
31 Mar 31 Mar 30 Sep
15 14 14
Note GBP'000 GBP'000 GBP'000
---------------------------------- ----- ---------- ---------- ---------
Assets
Non-current assets
Intangible assets 19,011 16,317 17,240
Property, plant and equipment 20,249 19,832 19,575
39,260 36,149 36,815
---------------------------------- ----- ---------- ---------- ---------
Current assets
Inventories 16,722 15,431 12,887
Trade and other receivables 15,630 16,276 19,157
Derivative financial instruments - 137 2
Cash and cash equivalents 13 7,273 217 2,925
---------------------------------- -----
39,625 32,061 34,971
---------------------------------- ----- ---------- ---------- ---------
Liabilities
Current liabilities
Trade and other payables 17,947 15,236 17,755
Derivative financial instruments 284 - -
Provisions for liabilities
and charges 10 689 1,830 1,846
Current tax liabilities 7,711 6,158 6,852
---------------------------------- -----
26,631 23,224 26,453
---------------------------------- ----- ---------- ---------- ---------
Net current assets 12,994 8,837 8,518
---------------------------------- ----- ---------- ---------- ---------
Non-current liabilities
Borrowings 13 - 5,755 -
Deferred tax liabilities 2,716 2,481 2,315
Retirement benefit obligations 15,568 5,802 16,029
Provisions for liabilities
and charges 10 1,241 2,659 1,973
---------------------------------- -----
19,525 16,697 20,317
---------- ---------- ---------
Net assets 32,729 28,289 25,016
---------------------------------- ----- ---------- ---------- ---------
Shareholders' equity
Ordinary shares 11 31,023 31,023 31,023
Share premium account 11 34,708 34,708 34,708
Capital redemption reserve 500 500 500
Translation reserve 2,076 (1,773) (932)
Accumulated losses (35,578) (36,169) (40,283)
---------------------------------- -----
Total equity 32,729 28,289 25,016
---------------------------------- ----- ---------- ---------- ---------
Consolidated Cash Flow
Statement
Half year Half year Year
to to to
31 Mar 31 Mar 30 Sep
15 14 14
Note GBP'000 GBP'000 GBP'000
---------------------------------- ----- ---------- ---------- ---------
Cash flows from operating
activities
---------------------------------- ----- ---------- ---------- ---------
Cash generated before
the impact of exceptional
items 11,828 11,302 26,500
Cash impact of exceptional
items (694) - (983)
---------------------------------- ----- ---------- ---------- ---------
Cash generated from operations 12 11,134 11,302 25,517
Finance income received 9 - 1
Finance costs paid (51) (101) (315)
Retirement benefit deficit
recovery contributions (275) (237) (513)
Tax paid (1,232) (1,778) (2,903)
Net cash generated from
operating activities 9,585 9,186 21,787
---------------------------------- ----- ---------- ---------- ---------
Cash flows from investing
activities
Proceeds from sale of
property, plant and equipment - 17 19
Purchase of property,
plant and equipment (1,411) (1,893) (3,753)
Capitalised development
costs and software (1,733) (1,265) (3,062)
Acquisition of VR Technology
Holdings (25) - (50)
Net cash used in investing
activities (3,169) (3,141) (6,846)
---------------------------------- ----- ---------- ---------- ---------
Cash flows from financing
activities
Net movements in loans - (5,149) (10,805)
Dividends paid to shareholders (1,127) (862) (1,422)
Purchase of own shares (1,152) - -
Net cash used in financing
activities (2,279) (6,011) (12,227)
---------------------------------- ----- ---------- ---------- ---------
Net increase in cash,
cash equivalents and bank
overdrafts 4,137 34 2,714
Cash, cash equivalents
and bank overdrafts at
beginning of the year 2,925 184 184
Effects of exchange rate
changes 211 (1) 27
---------------------------------- ----- ---------- ---------- ---------
Cash, cash equivalents
and bank overdrafts at
end of the period 13 7,273 217 2,925
---------------------------------- ----- ---------- ---------- ---------
Consolidated Statement of Changes
in Equity
Share Share Other Accumulated
capital Premium reserves losses Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ----- -------- -------- --------- ------------ ---------
At 30 September 2013 30,723 34,708 (126) (44,609) 20,696
Profit for the period - - - 4,106 4,106
Unrealised exchange
differences on overseas
investments - - (1,147) - (1,147)
Actuarial gain recognised
in retirement benefit
scheme - - - 5,446 5,446
---------------------------- ----- -------- -------- --------- ------------ ---------
Total comprehensive
income for the period - - (1,147) 9,552 8,405
Dividends paid - - - (862) (862)
Issue of shares 300 - - - 300
Purchase of shares by
the employee benefit
trust - - - (300) (300)
Movement in respect
of employee share schemes - - - 50 50
---------------------------- ----- -------- -------- --------- ------------ ---------
At 31 March 2014 31,023 34,708 (1,273) (36,169) 28,289
Profit for the period - - - 6,705 6,705
Unrealised exchange
differences on overseas
investments - - 841 - 841
Actuarial loss recognised
in retirement benefit
scheme - - - (10,297) (10,297)
---------------------------- ----- -------- -------- --------- ------------ ---------
Total comprehensive
expense for the period - - 841 (3,592) (2,751)
Dividends paid 8 - - - (560) (560)
Movement in respect
of employee share schemes - - - 38 38
---------------------------- ----- -------- -------- --------- ------------ ---------
At 30 September 2014 31,023 34,708 (432) (40,283) 25,016
Profit for the period - - - 6,730 6,730
Unrealised exchange
differences on overseas
investments - - 3,008 - 3,008
Actuarial gain recognised
in retirement benefit
scheme - - - 22 22
---------------------------- ----- -------- -------- --------- ------------ ---------
Total comprehensive
income for the period - - 3,008 6,752 9,760
Dividends paid 8 - - - (1,127) (1,127)
Movement in shares held
by the employee benefit
trust 11 - - - (962) (962)
Movement in respect
of employee share schemes - - - 42 42
---------------------------- ----- -------- -------- --------- ------------ ---------
At 31 March 2015 31,023 34,708 2,576 (35,578) 32,729
---------------------------- ----- -------- -------- --------- ------------ ---------
Notes to the Interim Financial Statements
1. General information
The company is a limited liability company incorporated in
England and domiciled in the UK. The address of its registered
office is Hampton Park West, Semington Road, Melksham, Wiltshire,
SN12 6NB. The company has its primary listing on the London Stock
Exchange.
This unaudited condensed consolidated interim financial
information was approved for issue on 29 April 2015.
These interim financial results do not comprise statutory
accounts within the meaning of Section 434 of the Companies Act
2006. Statutory accounts for the year ended 30 September 2014 were
approved by the Board of Directors on 19 November 2014 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.
2. Basis of preparation
This condensed consolidated interim financial information for
the half year ended 31 March 2015 has been prepared in accordance
with the Disclosure and Transparency Rules of the Financial
Services Authority and with IAS 34, 'Interim financial reporting'
as adopted by the European Union. These interim financial results
should be read in conjunction with the annual financial statements
for the year ended 30 September 2014, which have been prepared in
accordance with IFRSs as adopted by the European Union.
Having considered the Group's funding position, budgets for 2015
and three year plan, the Directors have formed a judgment that
there is a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable
future. For this reason the Directors continue to adopt the going
concern basis in preparing the condensed consolidated interim
financial information.
3. Accounting policies
The accounting policies adopted are consistent with those of the
annual financial statements for the year ended 30 September 2014,
as described in those financial statements, except as described
below. For the period ended 31 March 2014 , the classification of
overhead costs between selling and distribution costs and general
and administrative expenses has been represented to provide more
relevant information. There is no impact on operating profit.
Recent accounting developments
The following standards, amendments and interpretations have
been issued by the International Accounting Standards Board (IASB)
or by the International Financial Reporting Interpretations
Committee (IFRIC). The Group's approach to these is as follows:
a) Standards, amendments and interpretations effective in 2015
The following standards and amendments have been adopted in
preparing the condensed consolidated half-yearly financial
information and will be adopted for the year ending 30 September
2015 but have no impact on the interim financial information:
- IAS 32, 'Offsetting Financial Assets and Financial Liabilities'
- IAS 36, 'Recoverable Amount Disclosures for Non-Financial Assets'
- IAS 39, 'Novation of Derivatives and Continuation of Hedge Accounting'
- IFRIC 21, 'Levies'
- Amendments to IFRS 10, IFRS 12 and IAS 27, 'Investment Entities'
- Amendments to IAS 19, 'Defined Benefit Plans: Employee Contributions'
- Annual improvements cycle 2010-2012
- Annual improvements cycle 2011-2013
b) Standards, amendments and interpretations to existing
standards issued but not yet effective in 2015 and not adopted
early:
- IFRS 9, 'Financial instruments'
- IFRS 14, 'Regulatory Deferral Accounts'
- IFRS 15, 'Revenue from Customer Contracts'
- Amendments to IAS 1, 'Disclosure initiative'
- Amendment to IFRS 10 and IAS 28, 'Sale or Contribution of
Assets between and Investor and its Associate or Joint Venture'
- Amendments to IFRS 10, IFRS 12 and IAS 28, 'Applying the consolidation exemption'
- Amendments to IFRS 11, 'Accounting for Acquisition Interests in Joint Operations'
- Amendments to IAS 16 and IAS 38, 'Clarification of Acceptable
Methods of Depreciation and Amortisation'
- Amendments to IAS 16 and IAS 41, 'Agriculture - Bearer Plants'
- Amendments to IAS 27, 'Equity Method in Separate Financial Statements'
- Annual improvements cycle 2012-2014
4. Segment information
Operating segments are reported in a manner
consistent with the internal reporting provided
to the chief operating decision-maker. The
chief operating decision-maker, who is responsible
for allocating resources and assessing performance
of the operating segments, has been identified
as the Group Executive team.
The Group has two clearly defined business
segments, Protection & Defence and Dairy,
and operates out of the UK and the US.
Business segments
Half year to 31 March
2015
Protection
& Defence Dairy Unallocated Group
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------- -------------- -------- ------------ --------
Revenue 45,333 17,488 62,821
---------------------------------------
Segment result before
depreciation, amortisation
and defined benefit
pension scheme credit 9,358 3,872 (1,061) 12,169
Depreciation of property,
plant and equipment (1,724) (533) (26) (2,283)
Amortisation of intangibles (1,275) (61) (5) (1,341)
--------------------------------------- -------------- -------- ------------ --------
Segment result before
amortisation of acquired
intangibles and defined
benefit pension scheme
credit 6,359 3,278 (1,092) 8,545
Amortisation of acquired
intangibles (130) (130)
Defined benefit pension
scheme credit 493 493
--------------------------------------- -------------- -------- ------------ --------
Segment result 6,229 3,278 (599) 8,908
Finance costs (42) (42)
Other finance expense (453) (453)
--------------------------------------- -------------- -------- ------------ --------
Profit before taxation 6,229 3,278 (1,094) 8,413
Taxation (1,683) (1,683)
---------------------------------------
Profit for the period 6,229 3,278 (2,777) 6,730
--------------------------------------- -------------- -------- ------------ --------
Half year to 31 March
2014
Protection
& Defence Dairy Unallocated Group
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ ----------- -------- ------------ --------
Revenue 45,639 15,852 61,491
------------------------------
Segment result before
depreciation, amortisation,
exceptional items and
defined benefit pension
scheme costs 9,237 3,176 (1,280) 11,133
Depreciation of property,
plant and equipment (1,597) (382) (30) (2,009)
Amortisation of intangibles (837) (57) (4) (898)
------------------------------ ----------- -------- ------------ --------
Segment result before
amortisation of acquired
intangibles, exceptional
items and defined benefit
pension scheme costs 6,803 2,737 (1,314) 8,226
Amortisation of acquired
intangibles (130) (130)
Exceptional items (2,000) (2,000)
Defined benefit pension
scheme costs (200) (200)
------------------------------ ----------- -------- ------------ --------
Segment result 4,673 2,737 (1,514) 5,896
Finance costs (103) (103)
Other finance expense (97) (97)
------------------------------ ----------- -------- ------------ --------
Profit before taxation 4,673 2,737 (1,714) 5,696
Taxation (1,590) (1,590)
------------------------------
Profit for the period 4,673 2,737 (3,304) 4,106
------------------------------ ----------- -------- ------------ --------
Year to 30 September
2014
Protection
& Defence Dairy Unallocated Group
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ ----------- -------- ------------ --------
Revenue 92,818 31,961 124,779
------------------------------
Segment result before
depreciation, amortisation,
exceptional items and
defined benefit pension
scheme costs 18,542 6,600 (2,239) 22,903
Depreciation of property,
plant and equipment (3,289) (771) (67) (4,127)
Amortisation of intangibles (1,670) (94) (9) (1,773)
------------------------------ ----------- -------- ------------ --------
Segment result before
amortisation of acquired
intangibles, exceptional
items and defined benefit
pension scheme costs 13,583 5,735 (2,315) 17,003
Amortisation of acquired
intangibles (261) (261)
Exceptional items (2,017) (2,017)
Defined benefit pension
scheme costs (400) (400)
------------------------------ ----------- -------- ------------ --------
Segment result 11,305 5,735 (2,715) 14,325
Finance income 1 1
Finance costs (275) (275)
Other finance expense (187) (187)
------------------------------ ----------- -------- ------------ --------
Profit before taxation 11,305 5,735 (3,176) 13,864
Taxation (3,053) (3,053)
------------------------------
Profit for the year 11,305 5,735 (6,229) 10,811
------------------------------ ----------- -------- ------------ --------
Revenue by origin
Half year Half year Year
to to to
31 Mar 31 Mar 30 Sep
15 14 14
GBP'000 GBP'000 GBP'000
----------------------- ------------ ----------- ---------
UK 11,819 14,725 23,508
US 51,002 46,766 101,271
62,821 61,491 124,779
----------------------- ------------ ----------- ---------
Segment assets in the UK and US were GBP17.3m and
GBP61.6m respectively (30 September 2014: GBP14.0m
and GBP57.8m, 31 March 2014: GBP12.9m and GBP55.3m).
5. Amortisation of acquired intangibles, exceptional
items and defined benefit pension scheme costs
Half year Half year Year
to to to
31 Mar 31 Mar 30 Sep
15 14 14
GBP'000 GBP'000 GBP'000
----------------------------- ---------- ---------- --------
Amortisation of acquired
intangible assets 130 130 261
------------------------------ ---------- ---------- --------
Exceptional items GBP'000 GBP'000 GBP'000
Relocation of Lawrenceville
facility - 2,000 2,017
- 2,000 2,017
----------------------------- ---------- ---------- --------
The tax impact of the above is a GBPnil reduction in overseas
tax payable (31 March 2014: GBP0.35m, 30 September 2014:
GBP0.45m).
The statutory results have also been adjusted to exclude items
in relation to the defined benefit pension scheme as this is closed
to future accrual and therefore does not relate to current
operations. The adjustments comprise:
o Administrative expenses of GBP0.2m
o Settlement gain of GBP0.7m following a trivial commutation exercise
o Other finance expense of GBP0.3m
6. Finance income and
costs
Half year Half year Year
to to to
31 Mar 31 Mar 30 Sep
15 14 14
GBP'000 GBP'000 GBP'000
--------------------------------------------------------- ---- ----------- ------------ --------
Interest payable on bank loans
and overdrafts 51 103 275
Finance income (9) - (1)
42 103 274
-------------------------------------------------------------- ----------- ------------ --------
Other finance expense
Half year Half year Year
to to to
31 Mar 31 Mar 30 Sep
15 14 14
GBP'000 GBP'000 GBP'000
--------------------------------------------------------- ---- ----------- ------------ --------
Net interest cost: UK defined
benefit pension scheme 329 6 12
Provisions: Unwinding
of discount 124 91 175
453 97 187
-------------------------------------------------------------- ----------- ------------ --------
7. Taxation
Half year Half year Year
to to to
31 Mar 31 Mar 30 Sep
15 14 14
GBP'000 GBP'000 GBP'000
---------------------------------------------------------- --- ----------- ------------ --------
United Kingdom - - -
Overseas 1,683 1,590 3,053
---------------------------------------------------------- --- ----------- ------------ --------
1,683 1,590 3,053
Effect of exceptional
items - 350 450
---------------------------------------------------------- --- ----------- ------------ --------
Adjusted tax charge 1,683 1,940 3,503
---------------------------------------------------------- --- ----------- ------------ --------
The statutory effective tax rate for the period
is 20% (31 March 2014: 28%, 30 September 2014: 22%).
The adjusted effective tax rate, where the tax charge
and the profit before taxation are adjusted for
exceptional items, the amortisation of acquired
intangibles and defined benefit pension scheme charges
is 20% (31 March 2014: 24%, 30 September 2014: 21%).
8. Dividends
On 29 January 2015, the shareholders approved a
final dividend of 3.74p per qualifying ordinary
share in respect of the year ended 30 September
2014. This was paid on 20 March 2015 absorbing GBP1,127,000
of shareholders' funds.
The Board of Directors has declared an interim dividend
of 2.43p (2014: 1.87p) per qualifying ordinary share
in respect of the year ended 30 September 2015.
This will be paid on 4 September 2015 to shareholders
on the register at the close of business on 7 August
2015. In accordance with accounting standards this
dividend has not been provided for and there are
no corporation tax consequences. It will be recognised
in shareholders' funds in the year to 30 September
2015 and is expected to absorb GBP732,000 (2014:
GBP560,000) of shareholders' funds.
9. Earnings per share
Basic earnings per share is based on a profit attributable
to ordinary shareholders of GBP6,730,000 (2014:
GBP4,106,000) and 30,077,000 (2014: 29,800,000)
ordinary shares being the weighted average number
of shares in issue during the period.
Adjusted earnings per share is based on a profit
attributable to ordinary shareholders of GBP6,696,000
(2014: GBP6,092,000) after adding back amortisation
of acquired intangible assets, exceptional items
and defined benefit pension scheme costs.
The Company has 824,000 (2.7%) (2014: 953,000 (3.2%))
potentially dilutive ordinary shares in respect
of the Performance Share Plan.
10. Provisions for liabilities
and charges
Facility Property
relocation obligations Total
GBP'000 GBP'000 GBP'000
--------------------------------------------------------- --- ------------ ------------ --------
Balance at 30 September
2014 454 3,365 3,819
Payments in the period (471) (1,578) (2,049)
Unwinding of discount - 124 124
Exchange difference 17 19 36
Balance at 31 March 2015 - 1,930 1,930
-------------------------------------------------------------- ------------ ------------ --------
11. Share capital
Half year Half year Year to
to to
31 Mar 31 Mar 30 Sep
15 14 14
--------------------------------------------------------- --- ------------ ------------ --------
Number of shares (thousands) 31,023 31,023 31,023
Ordinary shares (GBP'000) 31,023 31,023 31,023
Share premium (GBP'000) 34,708 34,708 34,708
-------------------------------------------------------------- ------------ ------------ --------
During the period 162,095 ordinary shares with a nominal value
of GBP1 each were purchased by the Avon Rubber p.l.c. Employer
Share Ownership Trust at a cost of GBP1,152,000 and 29,459 ordinary
shares of GBP1 each were issued in relation to the 2014 annual
incentive plan.
12. Cash generated from
operations
Half year Half year Year to
to to
31 Mar 31 Mar 30 Sep
15 14 14
GBP'000 GBP'000 GBP'000
------------------------------------------------- -------- ----------- ---------- --------
Profit for the period 6,730 4,106 10,811
Adjustments for:
Taxation 1,683 1,590 3,053
Depreciation 2,283 2,009 4,127
Amortisation of intangible
assets 1,471 1,028 2,034
Defined benefit pension scheme
(credit)/costs (493) 200 400
Net finance expense 42 103 274
Other finance expense 453 97 187
Loss on disposal of intangible
assets and property, plant
and equipment - - 358
Movements in working capital
and provisions (1,077) 2,119 4,185
Other movements 42 50 88
------------------------------------------------- -------- ----------- ---------- --------
11,134 11,302 25,517
----------------------------------------------------------- ----------- ---------- --------
13. Analysis of net
cash
As at Exchange As at
30 Sep Cash flow movements 31 Mar
14 15
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------- ------------------ ----------- ---------- --------
Cash at bank and in
hand 2,925 4,137 211 7,273
--------------------------------------- ------------------ ----------- ---------- --------
Cash and cash equivalents 2,925 4,137 211 7,273
--------------------------------------- ------------------ ----------- ---------- --------
Borrowing facilities As at As at As at
31 Mar 31 Mar 30 Sep
15 14 14
GBP'000 GBP'000 GBP'000
--------------------------------------- ------------------ ----------- ---------- --------
Total undrawn committed
facilities 26,521 17,247 24,191
Bank loans and overdrafts
utilised - 5,755 -
Utilised in respect
of guarantees 370 330 337
Total Group facilities 26,891 23,332 24,528
--------------------------------------- ------------------ ----------- ---------- --------
The above facilities are with Barclays Bank and
Comerica Bank. The combined facility comprises a
revolving credit facility of $40m and expires on
30 November 2017. This facility is priced on the
US dollar LIBOR plus margin of 1.25% and includes
financial covenants which are measured on a quarterly
basis. The Group was in compliance with its financial
covenants during 2015 and 2014.
14. Exchange rates
The following significant exchange
rates applied during the period.
Average Closing Average Closing Average Closing
rate rate rate rate rate rate
H1 2015 H1 2015 H1 2014 H1 2014 FY 2014 FY 2014
------------------------ ------------- -------- -------- ----------- ---------- --------
US dollar 1.539 1.488 1.633 1.664 1.654 1.631
Euro 1.309 1.370 1.198 1.210 1.221 1.281
------------------------ ------------- -------- -------- ----------- ---------- --------
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 value date of the contract.
15. Principal risks and uncertainties
The principal risks and uncertainties impacting the Group are
described on pages 28-31 of our Annual Report 2014 and remain
unchanged at 31 March 2015.
They include: product development, market threat, business
interruption - supply chain, quality risks and product recall,
customer dependency, talent management and non-compliance with
legislation.
CORPORATE INFORMATION
REGISTERED OFFICE
Corporate Headquarters
Hampton Park West
Semington Road
Melksham
Wiltshire
SN12 6NB
Registered in England and Wales No. 32965
V.A.T. No. GB 137 575 643
BOARD OF DIRECTORS
David Evans (Chairman)
Pim Vervaat (Non-Executive Director)
Richard Wood (Non-Executive Director)
Peter Slabbert (Chief Executive)
Andrew Lewis (Group Finance Director)
COMPANY SECRETARY
Miles Ingrey-Counter
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP
REGISTRARS & TRANSFER OFFICE
Capita Asset Services
The Registry
34 Beckenham Road
Beckenham
BR3 4TU
Tel: 0871 664 0300
(calls cost 10p per minute plus network extras,
lines are open 8.30am-5.30pm Mon-Fri)
BROKERS
Arden Partners plc
SOLICITORS
TLT LLP
PRINCIPAL BANKERS
Barclays Bank PLC
Comerica Inc.
CORPORATE FINANCIAL ADVISER
Arden Partners plc
CORPORATE WEBSITE
www.avon-rubber.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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