TIDMAVON
RNS Number : 9980P
Avon Protection PLC
13 October 2023
13 October 2023
Avon Protection plc
("Avon Protection" or "the Group")
Full Year Trading Update and Restatement of Prior Year Financial
Results to Reflect New Segmentation
"Full year performance in line with expectations, with a
stronger H2 reflecting good strategic progress"
Avon Protection announces a trading update for the financial
year ended 30 September 2023 ("FY 2023") ahead of the publication
of its Year End Results on 21 November 2023.
Full year trading in line with the Board's expectations
As expected, trading in the second half of 2023 was stronger
than in the first half, with order book growth and higher
underlying earnings.
The order book as at 30 September 2023 showed growth of over 10%
compared to the prior year, with strong demand for helmets
offsetting expected softness in Respiratory demand. We now have
$59m of outstanding orders for Next Generation Integrated Head
Protection System ("NG IHPS") helmets and have recently received a
further delivery order valued at over $7m for the Advanced Combat
Helmet GEN II ("ACH GEN II"), bringing total outstanding orders for
this helmet to over $20m.
As expected, revenue excluding armour in the second half was
significantly above the first half, driven by the successful ramp
up of the NG IHPS programme, encouraging sales of the new EPIC
range of helmets and shipment of a previously announced large mask
order.
H2 adjusted operating profit margin is broadly flat versus H1,
with some early benefits from the strengthen and transform
initiatives within our STAR strategy offsetting the mix effect of
strong growth in the lower margin Head Protection business.
Net debt:EBITDA on a covenant basis at the end of FY 2023 is
expected to have reduced to around 2.0 times, compared to 2.6 times
at the end of H1 2023. This improvement is the result of our
successful exit from the Armour business and the improved
profitability in the second half of the year.
The year end net debt position on a covenant basis is now
expected to be approximately $65m, as a result of the timing of
cash receipts from the shipment of several large orders in the last
month of the financial year. We expect the receivables associated
with these orders to be paid during the first quarter of the 2024
financial year, which will further reduce net debt by up to
$20m.
Good strategic and operational progress with our STAR
strategy
The Group has continued to make good progress with the STAR
strategy set out at the time of the Half Year Results. In
particular, significant progress has been made in the detailed
planning of the STAR strategic initiatives, which has confirmed
that there is an excellent opportunity to grow the top line,
improve margins and deliver strong cash generation and attractive
returns on capital.
More broadly, there are several key proof points that have been
achieved during the second half which speak to the Group's
strategic progress and operational improvement.
-- All outstanding armour products have now been delivered to
our customers, and we therefore expect the Armour business to be
classified as discontinued for FY 2023. This means that we now have
a more profitable and focused business and a stronger platform for
future growth.
-- We have delivered over 10,000 NG IHPS helmets to the customer
in line with our plan for H2 2023, with our initiatives to
strengthen the Irvine and Salem plants resulting in significantly
more reliable operational performance.
-- We have received a further delivery order for the ACH GEN II
helmet valued at over $7m, illustrating the DOD's confidence in our
ability to deliver that programme.
-- Following the launch of the EPIC helmet for the commercial
market in H2 2023, we have received orders for over 5,500 helmets
and have shipped 3,200 with good levels of productivity.
Jos Sclater, CEO of Avon Protection, commented:
"We are now seeing more reliable financial performance as a
result of our actions to strengthen the business by increasing
accountability and improving operations and programme management.
In particular, we have demonstrated our ability to deliver helmets
to the DOD, which is reflected by a stronger order book. Our focus
is now turning to our multi-year plan to improve margins through
the transform pillar of our STAR strategy. I am delighted to see
the Avon team rising to the challenge of realising our full
potential and remain excited by the significant opportunity to
expand cash-backed margins, accelerate growth and improve return on
capital."
Prior year comparators
At the Half Year Results, we announced a new operating model for
the Group, with the creation of two Strategic Business Units
(SBUs): Respiratory Protection and Head Protection. The
implementation of this structure is now complete, with both SBUs
fully resourced and internal performance management and reporting
structures in place.
Our FY 2023 financial results will reflect the new
organisational design, and prior year comparators are therefore
provided below demonstrating FY 2022 financial results under the
new segmental structure.
FY 2022 and H1 2023 Group and segmental performance
FY 2022 H1 2023
Respiratory Head Adjusted Respiratory Head Adjusted
$m Protection Protection total* Protection Protection total*
Revenue 193.0 70.5 263.5 68.5 33.1 101.6
Adjusted EBITDA 42.4 (3.6) 38.8 17.5 (1.6) 15.9
Adjusted
depreciation,
amortisation
and impairment (8.9) (6.5) (15.4) (3.9) (3.1) (7.0)
Adjusted
operating
profit/(loss) 33.5 (10.1) 23.4 13.6 (4.7) 8.9
*Adjusted total excluding Armour as previously disclosed in note
2.1, page 136 of the Group's 2022 Annual Report and Accounts.
For further enquiries, please contact:
Avon Protection plc
Jos Sclater, Chief Executive Officer +44 1225 896 848
Rich Cashin, Chief Financial Officer
Rory Wiltshire, Investor Relations Manager
MHP
Tim Rowntree +44 7817 458804
Ollie Hoare avonprotection@mhpgroup.com
Legal Entity Identifier: 213800JM1AN62REBWA71
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation ("MAR") EU no.596/2014. Upon the
publication of this announcement via Regulatory Information Service
("RIS"), this inside information is now considered to be in the
public domain.
About Avon Protection:
Avon Protection make products that are trusted to protect the
world's militaries and first responders.
Our dedicated teams achieve this by developing mission-critical
solutions that enhance our customers' performance, efficiency and
capability, whilst providing ever-increasing levels of
protection.
With a portfolio that includes respiratory and head protection
systems, we are renowned for our innovative thinking and our
steadfast approach to manufacturing unrivalled products.
For further information, please visit our website www.avon-protection-plc.com
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