TIDMAVON

RNS Number : 1296X

Avon Rubber PLC

04 May 2016

News Release

Strictly embargoed until 07:00 4 May 2016

AVON RUBBER p.l.c.

("Avon", the "Group" or the "Company")

Unaudited interim results for the six months ended 31 March 2016

 
                                                      31 March   Increase 
                                   31 March 2016          2015 
                                     GBPMillions   GBPMillions 
 REVENUE                                    66.3          62.8         5% 
 ADJUSTED EBITDA (*)                        13.2          12.2         9% 
 ADJUSTED OPERATING PROFIT (*)               9.0           8.5         6% 
 ADJUSTED PROFIT BEFORE TAX (*)              8.8           8.4         5% 
 NET (DEBT)/CASH                           (8.4)           7.3 
 EARNINGS PER SHARE: 
  Adjusted basic (*)                       28.7p         22.3p        29% 
  Adjusted diluted (*)                     28.1p         21.7p        29% 
 INTERIM DIVIDEND                          3.16p         2.43p        30% 
 

FINANCIAL HIGHLIGHTS

   --           Operating profit growth of 6% 
   --           Diluted earnings per share increased 29% 
   --           Return on sales (EBITDA divided by revenue) improved 0.5% from 19.4% to 19.9% 
   --           Continuing healthy conversion of operating profit to operating cash at 163% 

-- Net debt reduced by GBP4.8m during H1 to GBP8.4m, after the GBP3.5m cash acquisition of Argus

   --           Dividend of 3.16p per share up 30% 

OPERATIONAL HIGHLIGHTS

   --           Acquisition of Argus in October 2015 broadened Protection & Defence product range 
   --           Successful integration of InterPuls and Argus into the organisation 
   --           Delivered 107,000 M50 mask systems under our long-term sole source DOD contract 
   --           Military order pipeline healthy, timing of receipt remains difficult to predict 
   --           Milkrite brand continues to grow in cyclically softer dairy market conditions 
   --           Cluster Exchange now servicing 446,000 cows on 1,411 farms 

Rob Rennie, Chief Executive commented:

"Avon has enjoyed another positive half year, successfully integrating our recent acquisitions which broaden our product range and routes to market. In Dairy, whilst market conditions have, as previously highlighted, reflected cyclically low milk prices, we are encouraged that our own brand Milkrite products and Cluster Exchange service have continued to gain market share.

Trading is normally second-half weighted in our Protection & Defence business and we believe this will again be the case this year. We have a strong forward order book for DOD M50s and a growing pipeline of non-DOD opportunities.

The Board therefore expects to make progress as the year develops and 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)                           12.5           0.7       13.2 
---------------------------------------  ----------  ------------  --------- 
 Group operating profit (GBPm)                  6.6           2.4        9.0 
---------------------------------------  ----------  ------------  --------- 
 Other finance expense (GBPm)                   0.4         (0.3)        0.1 
---------------------------------------  ----------  ------------  --------- 
 Group profit before taxation (GBPm)            6.1           2.7        8.8 
---------------------------------------  ----------  ------------  --------- 
 Taxation (GBPm)                              (0.4)           0.5        0.1 
---------------------------------------  ----------  ------------  --------- 
 Group profit for the period (GBPm)             6.5           2.2        8.7 
---------------------------------------  ----------  ------------  --------- 
 Basic earnings per share (pence)              21.6           7.1       28.7 
---------------------------------------  ----------  ------------  --------- 
 Diluted earnings per share (pence)            21.2           6.9       28.1 
---------------------------------------  ----------  ------------  --------- 
 Protection & Defence operating profit 
  (GBPm)                                        5.3           1.3        6.6 
---------------------------------------  ----------  ------------  --------- 
 Dairy operating profit (GBPm)                  2.6           0.8        3.4 
---------------------------------------  ----------  ------------  --------- 
 

The adjustments comprise:

   --           exceptional items of GBP0.5m relating to acquisition integration costs 
   --           amortisation of acquired intangibles of GBP1.7m 

-- defined benefit pension scheme costs which relate to a scheme closed to future accrual and therefore do not relate to current operations:

   --           administrative expenses of GBP0.2m 
   --           other finance expense of GBP0.3m 
   --           tax effect of adjustments of GBP0.5m 
 
 Avon Rubber p.l.c. 
----------------------------------------------------------------- 
 Rob Rennie, Chief Executive: 020 7067 0000 (until 12 noon today) 
----------------------------------------------------------------- 
 Andrew Lewis, Group Finance Director: 01225 896 830 
----------------------------------------------------------------- 
 Sarah Matthews-DeMers, Associate Group Finance Director: 01225 
  896 835 
----------------------------------------------------------------- 
 
 Weber Shandwick Financial 
----------------------------------------------------------------- 
 Nick Oborne: 020 7067 0000 
----------------------------------------------------------------- 
 

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 Europe, serving markets around the world. We achieve this through nurturing the talent and aspirations of our employees to realise their highest potential.

Avon Protection Systems is the recognised global market leader in advanced Chemical, Biological, Radiological and Nuclear (CBRN) respiratory protection systems 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 Systems' 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 whether land, air or sea based.

Our world-leading Dairy supplies business and its Milkrite and InterPuls brands 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. The acquisition of InterPuls in 2015, a specialist in electro-mechanical milking components, such as pulsators, milk meters, automatic cluster removers, milking clusters, washing systems, vacuum pumps, bucket milkers and pipeline system components, has added significantly to our product range, making us the complete milking point solutions provider. Working with 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 more efficient. 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, successfully integrating our recent acquisitions which broaden our product range and routes to market.

In Protection & Defence revenues for the half year were, as planned, weighted towards US Department of Defense (DOD) sales under our ten year sole source contract against which we received an additional order for 167,000 M50s, giving us a strong forward order book for DOD mask systems. We also have a growing pipeline of higher margin non-DOD opportunities in the Americas and the Middle East for which the timing of order receipt remains unpredictable, although we believe the time horizon for some of these opportunities is shortening.

In Dairy, whilst market conditions have, as previously highlighted, reflected cyclically low milk prices, we are encouraged that our own brand Milkrite products and Cluster Exchange service have continued to gain market share.

Group Results

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Group revenue at GBP66.3m (2015: GBP62.8m) increased by 5% and operating profit of GBP9.0m (2015: GBP8.5m) increased by 6%. Earnings before interest, tax, depreciation and amortisation ('EBITDA') increased by 9% to GBP13.2m (2015: GBP12.2m) representing a return on sales (defined as EBITDA divided by revenue) of 19.9% (2015: 19.4%).

The impact of foreign exchange translation was a slight tailwind of GBP0.4m as the $/GBP average rate of $1.46 was lower than the $1.54 prevailing in the same period last year. This translation benefit has, for the most part, been offset by transactional losses, where Euro and US dollar transactions, covered by forward contracts at rates higher than the period rate, have given rise to mark to market foreign exchange losses of GBP0.3m at the period end.

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 2015 results showed that a 5c movement in the $/GBP exchange rate would result in a GBP0.7m impact on annual operating profit.

Profit before tax was GBP8.8m (2015: GBP8.4m) and after a tax charge of GBP0.1m (2015: GBP1.7m), an effective rate of 1% (2015: 20%), the Group recorded a profit for the period after tax of GBP8.7m (2015: GBP6.7m). The reduced tax rate reflects the anticipated geographic split of taxable profits for 2016, the finalisation of the 2015 tax returns and the positive outcome of certain tax enquiries. Basic earnings per share were up 29% at 28.7p (2015: 22.3p) and fully diluted earnings per share were up 29% at 28.1p (2015: 21.7p).

Net Debt and Cashflow

Net debt at the half year was GBP8.4m, down from GBP13.2m at the 2015 year end and after the GBP3.5m cash payment to acquire Argus in October 2015.

Operating cash conversion continues to be strong at 163% of operating profit. Turning profits into cash has enabled us to continue to invest in the future of the business with GBP3.8m of capital investment, while increasing dividends to shareholders by 30%.

Our main bank facilities at 31 March 2016 totalled $40m. These facilities are committed until 30 November 2018.

Protection & Defence

Performance

Revenue for the division was GBP45.7m (2015: GBP45.3m) and operating profit was GBP6.6m (2015: GBP6.4m). EBITDA was up 3% at GBP9.6m (2015: GBP9.4m) and return on sales, as defined above, was 21.1% (2015: 20.6%). The increase arose from the mix of product shipped, an improvement in DOD pricing and operational efficiencies.

As we have always highlighted, 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.

Markets

M50 respirator sales to the DOD were 107,000 (2015: 112,000) mask systems. During the period we received a further order for 167,000 mask systems which means we exit the half year with mask order coverage well into 2017, providing good visibility of revenue under this sole source long-term contract.

We delivered 36,000 M61 filter pairs during the period (2015: nil) and have secured an order for a further 85,000 pairs which we expect to deliver in the second half. In the long term, we believe the end user demand for this consumable product will grow as fielding of the mask continues but we continue to recognise that, in the current DOD procurement environment, obtaining short-term visibility of future filter spares orders remains challenging.

Sales to foreign military, law enforcement and first responder customers increased year on year as the underlying portfolio continues to grow. In addition, 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 been in the first half of the year, we believe that the conversion timeline for some of these opportunities is shortening.

We saw growth in sales to the Fire market following the acquisition of Argus and the launch of the new Mi-TIC Storm thermal imaging camera which has now received NFPA and CE approval.

Other DOD spares sales were higher than the same period last year, reflecting normal variability in the timing of orders and delivery schedules.

AEF has experienced a softer first half, reflecting the variability in timing of certain DOD procurement programmes for hovercraft skirt and fuel and water storage tanks.

Order intake for the first half totalled GBP55m (2015: GBP47m). Of the closing order book of GBP30m, GBP22m 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. This will provide respiratory protection to a wide range of operators on the DOD's fleet of fixed-wing aircraft. The testing phase of this development contract is expected to conclude at the end of our 2016 financial year and should lead to a production contract commencing in 2017 which could be worth in excess of $70m.

A number of other military opportunities exist in relation to both new and existing products that provide long-term growth potential.

Dairy

Performance

Revenue for the Dairy business was 18% higher at GBP20.6m (2015: GBP17.5m) following the acquisition of InterPuls which offset softer market conditions caused by low milk prices. An increasing proportion of higher margin Milkrite product and service sales contributed to an increased operating profit of GBP3.4m (2015: GBP3.3m). EBITDA grew 17% to GBP4.5m (2015: GBP3.9m) and return on sales, as defined above, was flat at 22.0% (2015: 22.1%).

Markets

Market conditions for dairy farmers, particulary in Europe, have been weak as milk prices have been low. This typically cyclical market dynamic has, as expected, reduced demand for our consumable products as farmers extend the life through over using our products. The capital nature of the InterPuls products makes the replacement cycle longer, meaning InterPuls is more affected by the cyclical market dynamics than Milkrite consumable products.

Our existing dairy business has become substantially less dependent on original equipment manufacturers (OEMs) in recent years as we continue to grow sales of our own higher margin Milkrite branded products and services. In difficult market conditions we are encouraged that our Milkrite market share continues to increase, meaning that we will exit this cyclical downturn with a more robust business.

In Europe, where Avon-manufactured liners have a 61% market share, Milkrite's market share has increased to 23% due to growth in traditional Milkrite products and the success of our Impulse Air mouthpiece vented liner, first launched in Europe late in 2013. This product continues to gain traction, with its market share increasing to 4.0% (31 March 2015: 3.0%, 30 September 2015: 3.5%).

In the US, where Avon-manufactured liners have a 63% market share, the Milkrite Impulse Air mouthpiece vented liner continued to perform well, with its market share increasing to 28% (31 March 2015: 22%, 30 September 2015: 25%).

The take up by farms of our innovative Cluster Exchange Service, launched in 2014, remains at encouraging levels in both North America and Europe. By the end of the period it was servicing 446,000 cows on 1,411 farms in the US and Europe, up from 342,000 cows and 1,100 farms at the same time last year. 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, with the potential to grow a significant recurring revenue stream in the years to come, as more farms continue to sign up.

We are pleased with the integration of InterPuls, acquired in August 2015, into the wider Dairy business and are on track to realise the long-term strategic benefits that have been identified, in particular the sales synergies available in the North American market.

Opportunities

Plans for the rollout of InterPuls products to the US are underway, with dealers being trained, samples being issued through our extensive distributor network and products launched at the recent World Agricultural Expo in Tulare, California, positioning the business to start delivering additional revenue in our 2017 financial year.

In emerging markets, including China, 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. The sales and distribution operations we have opened in China and Brazil are progressing to plan as we build our dealer and distributor networks in these regions.

Taxation

The statutory tax credit totalled GBP0.4m (2015: charge of GBP1.7m) on a statutory profit before tax of GBP6.1m (2015: GBP8.4m). The effective tax rate for the period reflects the charge arising from the anticipated geographic split of taxable profits for 2016, offset by credits in relation to the positive outcome of certain tax enquiries and the finalisation of the 2015 tax returns in which we were able to take the benefit of certain deductions allowed by legislation enacted after our 2015 financial statements were approved.

Retirement Benefit Obligations

The IAS 19 valuation of the Group's UK retirement benefit obligations has moved from a deficit of GBP16.6m at 30 September 2015 to a deficit of GBP18.7m at 31 March 2016. 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 GBP325,000 (2015: GBP275,000).

The last actuarial triennial valuation undertaken as at 31 March 2013 showed the scheme to be 98.0% funded.

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Dividends

The final dividend for the 2015 financial year of 4.86p per ordinary share was paid to shareholders on 18 March 2016 and absorbed GBP1,473,000 of shareholders' funds.

For the current financial year the Board has declared an interim dividend of 3.16p per ordinary share, an increase of 30% on the 2015 interim dividend. This will be paid on 5 September 2016 to shareholders on the register on 8 August 2016. It is expected to absorb GBP958,000 of shareholders' funds and there are no corporation tax consequences.

Outlook

The Board remains confident that the Group will continue to make progress as the year develops and maintain our record of strong cash generation.

Trading is normally second-half weighted in our Protection & Defence business and we believe this will again be the case this year. We continue to see a number of higher margin export opportunities and while, as always, the timing of order receipt remains unpredictable, the DOD order we received late in the first half affords us production flexibility to fulfil these as and when they are received.

In Dairy, despite weak market conditions, the acquisition of InterPuls and the encouraging gains in Milkrite market share provide us with significant opportunity at the point milk prices start to improve. This, together with the sales and distribution platforms we have established in China and Brazil to service these rapidly growing emerging markets, means we have a Dairy business with excellent short and longer term growth prospects.

 
 
 Rob Rennie         Andrew Lewis 
  Chief Executive    Group Finance Director 
  4 May 2016         4 May 2016 
 

Statement of Directors' Responsibilities

The Directors confirm that this condensed consolidated interim financial information has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting' as adopted by the 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 43 of the 2015 Annual Report, except that Richard Wood retired from the Board on 26 January 2016, Rob Rennie was appointed on 1 December 2015 and Chloe Ponsonby was appointed on 1 March 2016.

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 
  4 May 2016 
 
 
 Consolidated Statement of Comprehensive Income 
                                                                                 Half year to 31 March 
                                      Half year to 31 March 2016                          2015                      Year to 30 Sep 2015 
                          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 
----------------  -----  ----------  ------------  ---------  --------------  ------------  ------------  ----------  ------------  ------------ 
 Continuing 
 operations 
 Revenue              4      66,273             -     66,273          62,821             -        62,821     134,318             -       134,318 
 Cost of sales             (41,882)             -   (41,882)        (41,389)             -      (41,389)    (88,618)                    (88,618) 
----------------  -----  ----------  ------------  ---------  --------------  ------------  ------------  ----------  ------------  ------------ 
 Gross profit                24,391             -     24,391          21,432             -        21,432      45,700             -        45,700 
 Selling and 
  distribution 
  costs                     (8,238)             -    (8,238)         (6,984)             -       (6,984)    (13,007)             -      (13,007) 
 General and 
  administrative 
  expenses            5     (9,512)         2,375    (7,137)         (5,540)         (363)       (5,903)    (13,807)         1,329      (12,478) 
 Operating 
  profit              4       6,641         2,375      9,016           8,908         (363)         8,545      18,886         1,329        20,215 
----------------  -----  ----------  ------------  ---------  --------------  ------------  ------------  ----------  ------------  ------------ 
 
 Operating 
 profit is 
 analysed as: 
 Before 
  depreciation 
  and 
  amortisation               12,491           718     13,209          12,662         (493)        12,169      26,981           286        27,267 
 Depreciation 
  and 
  amortisation              (5,850)         1,657    (4,193)         (3,754)           130       (3,624)     (8,095)         1,043       (7,052) 
----------------  -----  ----------  ------------  ---------  --------------  ------------  ------------  ----------  ------------  ------------ 
 Operating 
  profit                      6,641         2,375      9,016           8,908         (363)         8,545      18,886         1,329        20,215 
----------------  -----  ----------  ------------  ---------  --------------  ------------  ------------  ----------  ------------  ------------ 
 
 Finance income       6           8             -          8               9             -             9          45             -            45 
 Finance costs        6       (162)             -      (162)            (51)             -          (51)       (192)             -         (192) 
 Other finance 
  expense             6       (393)           318       (75)           (453)           329         (124)       (901)           654         (247) 
----------------  -----  ----------  ------------  ---------  --------------  ------------  ------------  ----------  ------------  ------------ 
 Profit before 
  taxation                    6,094         2,693      8,787           8,413          (34)         8,379      17,838         1,983        19,821 
 Taxation             7         449         (550)      (101)         (1,683)             -       (1,683)     (2,672)         (253)       (2,925) 
----------------  -----  ----------  ------------  ---------  --------------  ------------  ------------  ----------  ------------  ------------ 
 Profit for the 
  period 
  from 
  continuing 
  operations 
  Discontinued 
  operations                  6,543         2,143      8,686           6,730          (34)         6,696      15,166         1,730        16,896 
  - loss for the 
  period              5           -             -          -               -             -             -     (1,500)         1,500             - 
----------------  -----  ----------  ------------  ---------  --------------  ------------  ------------  ----------  ------------  ------------ 
 Profit for the 
  period                      6,543         2,143      8,686           6,730          (34)         6,696      13,666         3,230        16,896 
----------------  -----  ----------  ------------  ---------  --------------  ------------  ------------  ----------  ------------  ------------ 
 
 
                                Consolidated Statement of Comprehensive Income (continued) 
                                        Half year to 31 March                          Half year to 31 March 
                                                 2016                                           2015                           Year to 30 Sep 2015 
                          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 
 Actuarial 
  (loss)/gain 
  recognised in 
  retirement 
  benefit scheme 
  (*)                       (1,824)             -                    (1,824)            22             -          22       (1,040)             -    (1,040) 
 Deferred tax 
  relating 
  to retirement 
  benefit 
  scheme (*)                    425             -                        425             -             -           -         3,321             -      3,321 
 Net exchange 
  differences 
  offset in 
  reserves (**)               3,727             -                      3,727         3,008             -       3,008         3,311             -      3,311 
----------------  -----  ----------  ------------  -------------------------  ------------  ------------  ----------  ------------  ------------  --------- 
 Other 
  comprehensive 

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  income 
  for the 
  period, net of 
  taxation                    2,328             -                      2,328         3,030             -       3,030         5,592             -      5,592 
----------------  -----  ----------  ------------  -------------------------  ------------  ------------  ----------  ------------  ------------  --------- 
 Total 
  comprehensive 
  income 
  for the period              8,871         2,143                     11,014         9,760          (34)       9,726        19,258         3,230     22,488 
----------------  -----  ----------  ------------  -------------------------  ------------  ------------  ----------  ------------  ------------  --------- 
 Earnings per 
 share 
 Basic                9       21.6p                                    28.7p         22.4p                     22.3p         45.4p                    56.1p 
 Diluted              9       21.2p                                    28.1p         21.8p                     21.7p         44.2p                    54.6p 
----------------  -----  ----------  ------------  -------------------------  ------------  ------------  ----------  ------------  ------------  --------- 
 Earnings per 
 share from 
 continuing 
 operations 
 Basic                9       21.6p                                    28.7p         22.4p                     22.3p         50.4p                    56.1p 
 Diluted              9       21.2p                                    28.1p         21.8p                     21.7p         49.0p                    54.6p 
----------------  -----  ----------  ------------  -------------------------  ------------  ------------  ----------  ------------  ------------  --------- 
 
 

* 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 16   31 Mar 15     30 Sep 
                                                                               15 
                                          Note     GBP'000     GBP'000    GBP'000 
---------------------------------------  -----  ----------  ----------  --------- 
 Assets 
 Non-current assets 
 Intangible assets                                  45,476      19,011     41,309 
 Property, plant and equipment                      29,094      20,249     28,212 
 Deferred tax assets                                 4,607           -      4,574 
                                                    79,177      39,260     74,095 
---------------------------------------  -----  ----------  ----------  --------- 
 
 Current assets 
 Inventories                                        20,813      16,722     17,123 
 Trade and other receivables                        15,111      15,630     17,023 
 Derivative financial instruments                        -           -          3 
 Cash and cash equivalents                  13         823       7,273        332 
---------------------------------------  ----- 
                                                    36,747      39,625     34,481 
---------------------------------------  -----  ----------  ----------  --------- 
 
 Liabilities 
 Current liabilities 
 Borrowings                                 13         438           -      2,350 
 Trade and other payables                           18,048      17,947     17,150 
 Derivative financial instruments                      297         284          - 
 Provisions for liabilities and 
  charges                                   10       1,360         689        855 
 Current tax liabilities                             8,732       7,711      6,823 
---------------------------------------  ----- 
                                                    28,875      26,631     27,178 
---------------------------------------  -----  ----------  ----------  --------- 
 
 Net current assets                                  7,872      12,994      7,303 
---------------------------------------  -----  ----------  ----------  --------- 
 
 Non-current liabilities 
 Borrowings                                 13       8,801           -     11,143 
 Deferred tax liabilities                            9,996       2,716      9,734 
 Retirement benefit obligations                     18,732      15,568     16,605 
 Provisions for liabilities and 
  charges                                   10       1,631       1,241      1,712 
---------------------------------------  ----- 
                                                    39,160      19,525     39,194 
                                                ----------  ----------  --------- 
 Net assets                                         47,889      32,729     42,204 
---------------------------------------  -----  ----------  ----------  --------- 
 
 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                                 6,106       2,076      2,379 
 Accumulated losses                               (24,448)    (35,578)   (26,406) 
---------------------------------------  ----- 
 Total equity                                       47,889      32,729     42,204 
---------------------------------------  -----  ----------  ----------  --------- 
 
 
   Consolidated Cash Flow Statement 
                                                 Half year   Half year       Year 
                                                        to          to         to 
                                                 31 Mar 16   31 Mar 15     30 Sep 
                                                                               15 
                                          Note     GBP'000     GBP'000    GBP'000 
---------------------------------------  -----  ----------  ----------  --------- 
 Cash flows from operating activities 
---------------------------------------  -----  ----------  ----------  --------- 
 Cash generated from continuing 
  operating activities before the 
  impact of exceptional items                       14,712      11,828     24,053 
 Cash impact of exceptional items                    (357)       (694)    (1,192) 
---------------------------------------  -----  ----------  ----------  --------- 
 Cash generated from continuing 
  operations                                12      14,355      11,134     22,861 
  Cash used in discontinued operations                   -           -    (1,529) 
---------------------------------------  -----  ----------  ----------  --------- 
 Cash generated from operations                     14,355      11,134     21,332 
  Finance income received                                8           9         45 
 Finance costs paid                                  (162)        (51)      (192) 
 Retirement benefit deficit recovery 
  contributions                                      (325)       (275)      (800) 
 Tax received/(paid)                                 1,682     (1,232)    (3,270) 
 Net cash generated from operating 
  activities                                        15,558       9,585     17,115 
---------------------------------------  -----  ----------  ----------  --------- 
 
 Cash flows from investing activities 
 Proceeds from sale of property, 
  plant and equipment                                    -           -         21 
 Purchase of property, plant and 
  equipment                                        (1,962)     (1,411)    (3,222) 
 Capitalised development costs 
  and purchased software                           (1,788)     (1,733)    (2,961) 
 Acquisition of subsidiaries and 
  businesses                                       (3,500)        (25)   (21,249) 
 Net cash used in investing activities             (7,250)     (3,169)   (27,411) 
---------------------------------------  -----  ----------  ----------  --------- 
 
 Cash flows from financing activities 
 Net movements in loans                            (4,601)           -     10,605 
 Dividends paid to shareholders                    (1,473)     (1,127)    (1,859) 
 Purchase of own shares                            (1,812)     (1,152)    (1,152) 
 Net cash (used in)/generated 
  from financing activities                        (7,886)     (2,279)      7,594 
---------------------------------------  -----  ----------  ----------  --------- 
 
 Net increase/(decrease) in cash, 
  cash equivalents and bank overdrafts                 422       4,137    (2,702) 
 Cash, cash equivalents and bank 
  overdrafts at beginning of the 
  period                                               332       2,925      2,925 
  Cash, cash equivalents and bank 
  overdrafts acquired on acquisitions                    -           -         12 
 Effects of exchange rate changes                       69         211         97 
---------------------------------------  -----  ----------  ----------  --------- 
 Cash, cash equivalents and bank 
  overdrafts at end of the period           13         823       7,273        332 
---------------------------------------  -----  ----------  ----------  --------- 
 
 
 Consolidated Statement of Changes 
  in Equity 
 
                                          Share     Share      Other   Accumulated 
                                        capital   Premium   reserves        losses     Total 
                                        GBP'000   GBP'000    GBP'000       GBP'000   GBP'000 
-------------------------------------  --------  --------  ---------  ------------  -------- 
 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 

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 Actuarial gain recognised in 
  retirement benefit scheme                   -         -          -            22        22 
-------------------------------------  --------  --------  ---------  ------------  -------- 
 Total comprehensive income for 
  the period                                  -         -      3,008         6,752     9,760 
 Dividends paid                               -         -          -       (1,127)   (1,127) 
 Movement in shares held by the 
  employee benefit trust                      -         -          -         (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 
 Profit for the period                        -         -          -         6,936     6,936 
 Unrealised exchange differences 
  on overseas investments                     -         -        303             -       303 
 Actuarial loss recognised in 
  retirement benefit scheme                   -         -          -       (1,062)   (1,062) 
 Deferred tax relating to retirement 
  benefit scheme                              -         -          -         3,321     3,321 
-------------------------------------  --------  --------  ---------  ------------  -------- 
 Total comprehensive income for 
  the period                                  -         -        303         9,195     9,498 
 Dividends paid                               -         -          -         (732)     (732) 
 Movement in shares held by the 
  employee benefit trust                      -         -          -           (9)       (9) 
 Movement in respect of employee 
  share schemes                               -         -          -            43        43 
 Deferred tax relating to employee 
  share schemes                               -         -          -           675       675 
-------------------------------------  --------  --------  ---------  ------------  -------- 
 At 30 September 2015                    31,023    34,708      2,879      (26,406)    42,204 
 Profit for the period                        -         -          -         6,543     6,543 
 Unrealised exchange differences 
  on overseas investments                     -         -      3,727             -     3,727 
 Actuarial loss recognised in 
  retirement benefit scheme                   -         -          -       (1,824)   (1,824) 
 Deferred tax relating to retirement 
  benefit scheme                              -         -          -           425       425 
-------------------------------------  --------  --------  ---------  ------------  -------- 
 Total comprehensive income for 
  the period                                  -         -      3,727         5,144     8,871 
 Dividends paid                               -         -          -       (1,473)   (1,473) 
 Movement in shares held by the 
  employee benefit trust                      -         -          -       (1,698)   (1,698) 
 Movement in respect of employee 
  share schemes                               -         -          -            42        42 
 Deferred tax relating to employee 
  share schemes                               -         -          -          (57)      (57) 
-------------------------------------  --------  --------  ---------  ------------  -------- 
 At 31 March 2016                        31,023    34,708      6,606      (24,448)    47,889 
-------------------------------------  --------  --------  ---------  ------------  -------- 
 

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 4 May 2016.

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 2015 were approved by the Board of Directors on 17 November 2015 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 2016 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 2015, which have been prepared in accordance with IFRSs as adopted by the European Union.

Having considered the Group's funding position, budgets for 2016 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 2015, as described in those financial statements.

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 2016: 

No new standards or amendments have been adopted in preparing the condensed consolidated half-yearly financial information or will be required to be adopted for the year ending 30 September 2016.

b) Standards, amendments and interpretations to existing standards issued but not yet effective in 2016 and not adopted early:

   -           IFRS 9, 'Financial instruments' 
   -           IFRS 14, 'Regulatory Deferral Accounts' 
   -           IFRS 15, 'Revenue from Customer Contracts' 
   -           IFRS 16, 'Leases' 
   -           Amendments to IAS 1, 'Disclosure Initiative' 
   -           Amendments to IAS 7, '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 12, 'Recognition of Deferred Tax Assets for Unrealised Losses' 

- 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 Europe and the US. 
 
  Business segments 
 Half year to 31 March 2016 
 
                                                                Protection 
                                                                 & Defence     Dairy   Unallocated     Group 
                                                                   GBP'000   GBP'000       GBP'000   GBP'000 
--------------------------------------------------------  ----------------  --------  ------------  -------- 
 Revenue                                                            45,689    20,584             -    66,273 
-------------------------------------------------------- 
 
 Segment result before depreciation, 
  amortisation, exceptional 
  items and defined benefit 
  pension scheme costs                                               9,643     4,526         (960)    13,209 
 Depreciation of property, 
  plant and equipment                                              (1,915)     (897)          (20)   (2,832) 
 Amortisation of intangibles                                       (1,168)     (189)           (4)   (1,361) 
--------------------------------------------------------  ----------------  --------  ------------  -------- 
 Segment result before amortisation 
  of acquired intangibles, 
  exceptional items and defined 
  benefit pension scheme costs                                       6,560     3,440         (984)     9,016 
 Amortisation of acquired 
  intangibles                                                        (786)     (871)             -   (1,657) 
 Exceptional items                                                   (508)         -             -     (508) 
 Defined benefit pension scheme 
  costs                                                                  -         -         (210)     (210) 
--------------------------------------------------------  ----------------  --------  ------------  -------- 
 Segment result                                                      5,266     2,569       (1,194)     6,641 
 Finance income                                                                                  8         8 

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 Finance costs                                                                               (162)     (162) 
 Other finance expense                                                                       (393)     (393) 
--------------------------------------------------------  ----------------  --------  ------------  -------- 
 Profit before taxation                                              5,266     2,569       (1,741)     6,094 
 Taxation                                                                                      449       449 
-------------------------------------------------------- 
 Profit for the period                                               5,266     2,569       (1,292)     6,543 
--------------------------------------------------------  ----------------  --------  ------------  -------- 
 
 
 
 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 
-------------------------------------  -----------  --------  ------------  -------- 
 
 
 Year to 30 September 2015 
                                        Protection 
                                         & Defence     Dairy   Unallocated     Group 
                                           GBP'000   GBP'000       GBP'000   GBP'000 
-------------------------------------  -----------  --------  ------------  -------- 
 Revenue                                    98,843    35,475             -   134,318 
-------------------------------------  -----------  --------  ------------  -------- 
 
 Segment result before depreciation, 
  amortisation, exceptional 
  items, acquisition costs 
  and defined benefit pension 
  scheme credit                             21,632     7,707       (2,072)    27,267 
 Depreciation of property, 
  plant and equipment                      (3,513)   (1,121)          (50)   (4,684) 
 Amortisation of intangibles               (2,206)     (153)           (9)   (2,368) 
-------------------------------------  -----------  --------  ------------  -------- 
 Segment result before amortisation 
  of acquired intangibles, 
  exceptional items, acquisition 
  costs and defined benefit 
  pension scheme credit                     15,913     6,433       (2,131)    20,215 
 Amortisation of acquired 
  intangibles                                (384)     (659)             -   (1,043) 
  Exceptional items and acquisition 
   costs                                     (209)     (180)         (215)     (604) 
 Defined benefit pension scheme 
  credit                                         -         -           318       318 
-------------------------------------  -----------  --------  ------------  -------- 
 Segment result                             15,320     5,594       (2,028)    18,886 
 Finance income                                                         45        45 
 Finance costs                                                       (192)     (192) 
 Other finance expense                                               (901)     (901) 
-------------------------------------  -----------  --------  ------------  -------- 
 Profit before taxation                     15,320     5,594       (3,076)    17,838 
 Taxation                                                          (2,672)   (2,672) 
-------------------------------------  -----------  --------  ------------  -------- 
 Profit for the year from 
  continuing operations                     15,320     5,594       (5,748)    15,166 
 Discontinued operations - 
  loss for the year                                                (1,500)   (1,500) 
-------------------------------------  -----------  --------  ------------  -------- 
 Profit for the year                        15,320     5,594       (7,248)    13,666 
-------------------------------------  -----------  --------  ------------  -------- 
 
 
 Revenue by origin 
                                                                       Half year   Half year        Year 
                                                                              to          to          to 
                                                                          31 Mar      31 Mar      30 Sep 
                                                                              16          15          15 
                                                                         GBP'000     GBP'000     GBP'000 
----------------------------------------------------------------   -------------  ----------  ---------- 
 Europe                                                                   16,553      11,819      23,704 
 US                                                                       49,720      51,002     110,614 
                                                                          66,273      62,821     134,318 
 ----------------------------------------------------------------  -------------  ----------  ---------- 
 
 Segment assets in Europe and the US were GBP58.0m and GBP57.9m respectively 
  (30 September 2015: GBP52.8m and GBP55.8m, 31 March 2015: GBP17.3m 
  and GBP61.6m). 
 
   5. Adjustments and discontinued operations 
                                                                       Half year   Half year      Year 
                                                                              to          to        to 
                                                                          31 Mar      31 Mar    30 Sep 
                                                                              16          15        15 
                                                                         GBP'000     GBP'000   GBP'000 
----------------------------------------------------------------   -------------  ----------  -------- 
 Amortisation of acquired intangible 
  assets                                                                   1,657         130     1,043 
 Recruitment costs                                                             -           -       215 
  Integration costs                                                          508           -         - 
  Acquisition costs                                                            -           -       389 
 Defined benefit pension scheme administration 
  costs                                                                      210         175       350 
 Defined benefit pension scheme settlement 
  gain                                                                         -       (668)     (668) 
-----------------------------------------------------------------  -------------  ----------  -------- 
                                                                           2,375       (363)     1,329 
 ----------------------------------------------------------------  -------------  ----------  -------- 
 
 

The tax impact of the above is a GBP0.1m reduction in tax payable (31 March 2015: GBPnil, 30 September 2015: GBPnil). The deferred tax impact gives rise to a credit to the income statement of GBP0.45m (31 March 2015: GBPnil, 30 September 2015: GBP0.25m).

The recruitment costs in 2015 relate to the recruitment of main Board Directors.

The integration costs relate to the acquisition of the Argus thermal imaging camera business and the relocation of the manufacturing to our Melksham, UK site.

The acquisition costs in 2015 relate to legal and professional fees on the acquisition of Hudstar Systems Inc. and InterPuls S.p.A.

Defined benefit pension scheme costs relate to administrative expenses of the scheme which is closed to future accrual and the defined benefit pension scheme settlement gain arose following a trivial commutation exercise, both of which impact operating profit. GBP0.3m of other finance expense relating to the pension scheme is also treated as an adjustment (31 March 2015: GBP0.3m, 30 September 2015: GBP0.7m).

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The 2015 loss for the year from discontinued operations related to dilapidations costs of former leased premises of a business which was disposed of in 2006.

 
 6. Finance income and costs 
                                                                           Half year   Half year      Year 
                                                                                  to          to        to 
                                                                              31 Mar      31 Mar    30 Sep 
                                                                                  16          15        15 
                                                                             GBP'000     GBP'000   GBP'000 
------------------------------------------------------------------  ----  ----------  ----------  -------- 
 Interest payable on bank loans and overdrafts                                 (162)        (51)     (192) 
 Finance income                                                                    8           9        45 
                                                                               (154)        (42)     (147) 
 ----                                                                     ----------  ----------  -------- 
 
 
   Other finance expense 
                                                                           Half year   Half year      Year 
                                                                                  to          to        to 
                                                                              31 Mar      31 Mar    30 Sep 
                                                                                  16          15        15 
                                                                             GBP'000     GBP'000   GBP'000 
------------------------------------------------------------------  ----  ----------  ----------  -------- 
 Net interest cost: UK defined benefit 
  pension scheme                                                               (318)       (329)     (654) 
 Provisions: Unwinding of discount                                              (75)       (124)     (247) 
                                                                               (393)       (453)     (901) 
 ----                                                                     ----------  ----------  -------- 
 
 7. Taxation 
                                                                           Half year   Half year      Year 
                                                                                  to          to        to 
                                                                              31 Mar      31 Mar    30 Sep 
                                                                                  16          15        15 
                                                                             GBP'000     GBP'000   GBP'000 
-------------------------------------------------------------------  ---  ----------  ----------  -------- 
 United Kingdom                                                                    -           -         - 
 Overseas                                                                      (449)       1,683     2,672 
-------------------------------------------------------------------  ---  ----------  ----------  -------- 
                                                                               (449)       1,683     2,672 
 Effect of exceptional items                                                     550           -       253 
-------------------------------------------------------------------  ---  ----------  ----------  -------- 
 Adjusted tax charge                                                             101       1,683     2,925 
-------------------------------------------------------------------  ---  ----------  ----------  -------- 
 
 The statutory effective tax rate for the period is a credit of 7% 
  (31 March 2015: charge of 20%, 30 September 2015: charge of 15%). 
 
  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 costs 
  is 1% (31 March 2015: 20%, 30 September 2015: 15%). 
 
 8. Dividends 
 
 
 On 29 January 2016, the shareholders approved a final dividend of 
  4.86p per qualifying ordinary share in respect of the year ended 
  30 September 2015. This was paid on 18 March 2016, absorbing GBP1,473,000 
  of shareholders' funds. 
 
  The Board of Directors has declared an interim dividend of 3.16p 
  (2015: 2.43p) per qualifying ordinary share in respect of the year 
  ended 30 September 2016. This will be paid on 5 September 2016 to 
  shareholders on the register at the close of business on 8 August 
  2016. 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 
  2016 and is expected to absorb GBP958,000 (2015: GBP732,000) of shareholders' 
  funds. 
 9. Earnings per share 
 
 Basic earnings per share is based on a profit attributable to ordinary 
  shareholders of GBP6,543,000 (2015: GBP6,730,000) and 30,248,000 
  (2015: 30,077,000) 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 GBP8,686,000 (2015: GBP6,696,000) after 
  adding back amortisation of acquired intangible assets, exceptional 
  items and defined benefit pension scheme costs. 
 
 
 The Company has 587,000 (1.9%) (2015: 824,000 (2.7%)) potentially 
  dilutive ordinary shares in respect of the Performance Share Plan. 
 
  10. Provisions for liabilities and charges 
                                    Property obligations 
                                                 GBP'000 
  ------------------------------   --------------------- 
   Balance at 30 September 2015                    2,567 
   Receipts in the period                            349 
   Unwinding of discount                              75 
  -------------------------------  --------------------- 
   Balance at 31 March 2016                        2,991 
  -------------------------------  --------------------- 
 
 

Property obligations include an onerous lease provision and obligations relating to former premises of the Group which are subject to dilapidation risks. Property provisions are subject to uncertainty in respect of the utilisation, non-utilisation, or subletting of surplus leasehold property and the final negotiated settlement of any dilapidation claims with landlords.

 
 
   11. Share capital 
                                  Half year   Half year     Year 
                                         to          to       to 
                                     31 Mar      31 Mar   30 Sep 
                                         16          15       15 
------------------------------   ----------  ----------  ------- 
 
 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 175,000 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 GBP1,812,000 and 10,082 ordinary shares of GBP1 each were awarded in relation to the 2015 annual incentive plan.

 
 12. Cash generated from operations 
                                                                       Half year   Half year        Year 
                                                                              to          to          to 
                                                                          31 Mar      31 Mar      30 Sep 
                                                                              16          15          15 
                                                                         GBP'000     GBP'000     GBP'000 
---------------------------------------------------------  --------  -----------  ----------  ---------- 
 Continuing operations 
  Profit for the period                                                    6,543       6,730      15,166 
 Adjustments for: 
 Taxation                                                                  (449)       1,683       2,672 
 Depreciation                                                              2,832       2,283       4,684 
 Amortisation of intangible assets                                         3,018       1,471       3,411 
 Defined benefit pension scheme costs/(credit)                               210       (493)       (318) 
 Net finance expense                                                         154          42         147 
 Other finance expense                                                       393         453         901 
 Loss on disposal of intangible assets 
  and property, plant and equipment                                            -           -           7 
 Movements in working capital and 
  provisions                                                               1,612     (1,077)     (3,894) 
 Other movements                                                              42          42          85 
---------------------------------------------------------  --------  -----------  ----------  ---------- 
 Cash generated from continuing operations                                14,355      11,134      22,861 
-------------------------------------------------------------------  -----------  ----------  ---------- 
 
 Analysed as: 
  Cash generated from continuing operations 
   prior to the effect of exceptional 
   operating items                                                        14,712      11,828      24,053 
  Cash effect of exceptional operating 

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   items                                                                   (357)       (694)     (1,192) 
-------------------------------------------------------------------  -----------  ----------  ---------- 
 Discontinued operations - loss for 
  the year                                                                     -           -     (1,500) 
  Decrease in payables and provisions                                          -           -        (29) 
-------------------------------------------------------------------  -----------  ----------  ---------- 
 Cash used in discontinued operations                                          -           -     (1,529) 
-------------------------------------------------------------------  -----------  ----------  ---------- 
 Cash generated from operations                                           14,355      11,134      21,332 
-------------------------------------------------------------------  -----------  ----------  ---------- 
 
 
   13. Analysis of net debt 
                                                              As at                 Exchange       As at 
                                                             30 Sep    Cash flow   movements   31 Mar 16 
                                                                 15 
                                                            GBP'000      GBP'000     GBP'000     GBP'000 
----------------------------------------------  -------------------  -----------  ----------  ---------- 
 Cash at bank and in hand                                       332          422          69         823 
 Debt due in less than 1 year                               (2,350)        2,052       (140)       (438) 
 Debt due in more than 1 year                              (11,143)        2,549       (207)     (8,801) 
----------------------------------------------  -------------------  -----------  ----------  ---------- 
                                                           (13,161)        5,023       (278)     (8,416) 
----------------------------------------------  -------------------  -----------  ----------  ---------- 
 
 
   Borrowing facilities                                                    As at       As at       As at 
                                                                       31 Mar 16   31 Mar 15   30 Sep 15 
                                                                         GBP'000     GBP'000     GBP'000 
----------------------------------------------  -------------------  -----------  ----------  ---------- 
 Total undrawn committed facilities                                       21,113      26,521      15,194 
 Bank loans and overdrafts 
  utilised                                                                 8,557           -      13,007 
 Utilised in respect of guarantees                                           280         370         362 
 Total Group facilities                                                   29,950      26,891      28,563 
----------------------------------------------  -------------------  -----------  ----------  ---------- 
 
 
 
 
 All facilities are at floating interest rates. 
 
  On 9 June 2014 the Group agreed new bank facilities with Barclays 
  Bank and Comerica Bank. The combined facility comprises a revolving 
  credit facility of $40m and expires on 30 November 2018. This facility 
  is priced on the 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 2016 
  and 2015. 
 
  InterPuls S.p.A has a fixed term loan of EUR2.5m which expires in 
  August 2020. This facility is priced on EURIBOR plus margin of 0.9%. 
 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 2016    H1 2016   H1 2015      H1 2015     FY 2015     FY 2015 
------------------------  --------------------  ---------  --------  -----------  ----------  ---------- 
 US dollar                               1.460      1.431     1.539        1.488       1.542       1.517 
 Euro                                    1.330      1.252     1.309        1.370       1.351       1.359 
------------------------  --------------------  ---------  --------  -----------  ----------  ---------- 
 
 
 

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. Acquisition

On 8 October 2015 the Group acquired the trade and assets of the Argus thermal imaging business from e2v technologies plc for consideration of GBP3.5m. Based in Chelmsford UK, Argus is a leading designer and manufacturer of thermal imaging cameras for the first responder and fire markets and further strengthens the Group's product range and distribution capability in these markets.

The book value of the assets acquired was GBP1.2m and after accounting policy adjustments and provisional fair value adjustments of GBP1.8m, goodwill of GBP0.5m was recognised reflecting sales synergies from integration of distribution channels, access to new markets and the workforce of the acquired business.

 
                                                                 Total 
                                                               GBP'000 
 ------------------------------------------------------       -------- 
 Intangible assets recognised on acquisition                     2,277 
 Deferred tax associated with the initial recognition 
  of intangible assets                                           (455) 
 Other net assets                                                1,191 
 Goodwill                                                          487 
-------------------------------------------------------       -------- 
 Consideration                                                   3,500 
-------------------------------------------------------       -------- 
 

16. Principal risks and uncertainties

The principal risks and uncertainties impacting the Group are described on pages 28-31 of our Annual Report 2015 and remain unchanged at 31 March 2016.

They include: market threat, product development, talent management, business interruption - supply chain, acquisition integration, quality risks and product recall, customer dependency 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)

Chloe Ponsonby (Non-Executive Director)

Rob Rennie (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

Hampton Park West l Semington Road l Melksham l Wiltshire l SN12 6NB l England

   Tel:   +44 (0) 1225 896 800  l   Fax:  +44 (0) 1225 896 898  l  e-mail:  enquiries@avon-rubber.com 

This information is provided by RNS

The company news service from the London Stock Exchange

END

IR UOUNRNSAVRAR

(END) Dow Jones Newswires

May 04, 2016 02:00 ET (06:00 GMT)

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