Avon Technologies - Interim Results

                                                 

 

For Immediate Release                                                                                                                         21 May 2025

 

 

AVON TECHNOLOGIES PLC

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

INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2025

 

GROWING FAST AND IMPROVING EVERY DAY

 

	31 March 2025 4	30 March 2024 4	Change (constant currency)3
Group
Orders received	$170.5m	$190.3m	(10.1%)
Closing order book	$247.0m	$199.0m	24.0%
Revenue	$148.7m	$127.1m	16.8%
Adjusted1 operating profit	$17.5m	$11.9m	48.3%
Adjusted1 profit before tax	$14.8m	$8.8m	70.1%
Adjusted1 basic earnings per share	38.8c	22.3c	76.4%
Interim dividend per share	7.6c	7.2c	5.6%
Net debt excluding lease liabilities	$54.9m	$57.3m	(4.2%)
Statutory results
Operating profit2	$6.2m	$2.6m
Profit/(loss) before tax	$3.1m	$(1.5)m
Basic earnings/(losses) per share	8.1c	(3.7c)
Net debt	$74.7m	$76.5m

 

Excellent year-on-year growth

·    Excellent growth in order book, revenue, operating profit and earnings per share

·    Adjusted operating margin >200bps higher, at 11.8% (H124: 9.4%) with ROIC at 16.3% (H124: 9.7%)

·    Leverage down 0.7x at 0.99x (H124: 1.69x)

 

Cultural change and capability accelerating

·    New 'Strengthen System' designed to build Continuous Improvement capability and accelerate improvement action

·    Good scrap reduction in Avon Protection helping drive margins

·    Good progress building capability in Team Wendy with the focus during H1 on the site move and meeting increased customer demand

 

Focused on operational execution

·    Successful closure of California facility and production readiness approval received in Cleveland

·    Plant improvement projects at all plants progressing well

·    Transformation investments still on track to largely complete by FY2026

 

Order book providing future confidence

·    69% increase in order book in Avon Protection:

o  Four NATO nations funding orders to be sent to Ukraine

o  Three new NSPA (NATO Support & Procurement Agency) FM50 respirator customers

o  Long-term contract renewal with Thales for a critical UK defence programme

·     $10m increase in order book in Team Wendy:

o  $74m Next Generation Integrated Head Protection System orders from the US Army

o  US DOD orders totalling $59m for ACH (Advanced Combat Helmet) GEN II

 

On track to deliver target adjusted operating margin within 14-16% range in FY 2026

·    Expected to deliver double digit revenue growth in FY25 with improved returns in H2 as we generate further benefits from our operational improvement programmes

·    Strong progress made on our operational goals, expect to reach our medium-term financial targets a year early in FY2026

·    Do not expect US tariffs or DOGE to impact our ability to meet our medium-term target margin range

Jos Sclater, Chief Executive Officer, commented:

"Our strategy is delivering and we remain confident that our approach to improving businesses creates value. This is illustrated by our strong order book and our revenue and profit growth in the first half. We remain resolute in pursuing our strategy and improving our businesses, notwithstanding an increasingly uncertain macro-economic and geopolitical environment.

 

The pace of change in Avon Technologies is accelerating and we continue to build our people's capability to enable this to happen. I am grateful to all our colleagues for supporting the changes we are all making to enable Avon Technologies to thrive.

 

The next six months are important to us. While we still have a lot to do, we are optimistic that we will achieve our margin target a year early in 2026."

 

For further enquiries, please contact:

Avon Technologies plc

Jos Sclater, Chief Executive Officer                                                                   +44 1225 896 848

Rich Cashin, Chief Financial Officer                                          

Gabby Colley, Corporate Affairs Director                                                          +44 7891 206 239

Sodali & Co

Pete Lambie                                                                                                        avontechnologies@sodali.com

James White                                                                                                       +44 7855 432 699

 

Analyst and investor webcast & retail investor presentation

Jos Sclater, Chief Executive Officer, and Rich Cashin, Chief Financial Officer, will host a presentation for analysts and Institutional investors at 9.00am this morning, at Sodali & Co, 13^th Floor, 122 Leadenhall St, City of London, EC3V 4AB.

The presentation will also be broadcast live at: https://brrmedia.news/AVON_HY_25. To attend in person please contact: avontechnologies@sodali.com avontechnologies@sodali.com

A presentation for retail investors will be held 15.30pm today. Registration is available on the following link: https://www.investormeetcompany.com/avon-technologies-plc/register-investor

 

 

Notes

¹ The Directors believe that adjusted measures provide a useful comparison of business trends and performance. Adjusted results exclude adjusting items and discontinued operations. The term adjusted is not defined under IFRS and may not be comparable with similarly titled measures used by other companies.

² Reported HY25 operating profit includes $2.9m amortisation of acquired intangibles and transformation costs of $8.4m. See adjusted performance section 2.1 for full breakdown of adjustments and comparatives.

³ Constant currency measures are provided in note 2.1.

⁴ The interim financial period presents the 6 months ended 31 March 2025 (prior interim financial period 26 weeks ended 30 March 2024).

About Avon Technologies plc:

We are a world leader in protective equipment, trusted to protect the world's militaries and first responders, with a reputation for innovative design, high quality and specialist materials expertise.

Our two businesses, Avon Protection and Team Wendy, supply our respiratory and head protection portfolio to customers across the globe from our manufacturing sites in the UK and North America.

With over 900 talented people, our shared purpose and core beliefs are to be #FIERCE about Protecting Lives. It's why we come to work - and it's what motivates us, every day, to do the best work we can.

For further information, please visit our website www.avon-technologiesplc.com

 

Legal Entity Identifier: 213800JM1AN62REBWA71

 

CEO REVIEW

 

FINANCIAL SUMMARY

 

We had a strong start to FY2025 with another record closing order book of $247m, a 24% increase vs H1 last year. (HY24: $199m). This growth was predominantly driven by Avon Protection's 69% growth in order book from Ukraine related NATO orders and continued strong UK & International demand. In Team Wendy, there is continued consistent demand from the US DOD for our NG IHPS and ACH GEN II helmets.

 

Heightened global instability continues to drive defence and security spending across the world. Russia is increasingly using drones to drop chemical gas weapons on the Ukrainian troops. These tactics are likely to drive home the need for all militaries to have excellent CBRN protection for many years to come. As a result, we have seen substantial growth in orders from NATO countries looking to increase and improve their respiratory protection equipment. Within the United States we are seeing a pivot in sentiment to investment in border and homeland security that is increasing demand for our respirator and helmet products in commercial North American markets.

 

Group revenue at constant currency increased 16.8% to $148.7m (HY24: $127.1m) reflecting Australian Military sales of our FM54 respirators, delivery of rebreathers to the German Navy and ramp up of ACH GEN II helmets.

 

Adjusted operating profit increased by 48.3% at constant currency, resulting in an adjusted operating profit margin of 11.8% (HY24: 9.4%). Avon Protection saw excellent adjusted operating margin growth in the period to 18.9% (HY24: 16.5%) driven by revenue growth, a favourable product mix, commercial optimisation and our continuous improvement efforts reducing scrap levels. Team Wendy delivered an increase in adjusted operating profit margins to 4.4% (HY24: 1.3%), with further improvement expected as we execute the facility move and continue to ramp up manufacturing rates in Cleveland.

 

Adjusted basic EPS increased by 76.4% on a constant currency basis to 38.8 cents per share (HY24: 22.3 cents per share), which reflects the growth in adjusted operating profit and a reduction in finance charges year-on-year. Net debt excluding lease liabilities reduced to $54.9m, from $57.3m in the comparative period, with a bank leverage ratio of 0.99 times net debt: EBITDA (HY24: 1.69 times).

 

Cash conversion reduced to 56% this half, from 155% in H1 2024. The H1 2025 result reflects planned inventory build to support the Team Wendy site consolidation programme. We expect to see an improvement in H2 as this inventory build starts to unwind. H1 2024 benefited from the unwind of a high FY23 closing receivables balance.

 

Return on Invested Capital increased to 16.3% (HY24: 9.7%), close to our medium-term target of 17%, reflecting the increase in operating profit. Again, we expect further improvement as the inventory build in Team Wendy starts to unwind.

 

 

OPERATIONAL SUMMARY

 

Our STAR strategy was launched in 2023 with medium-term financial goals of at least 5% revenue CAGR, adjusted operating profit margins of 14-16%, ROIC of more than 17% and cash conversion of 80-100%. Our STAR Strategy comprises four focus areas:

o  STRENGTHEN THROUGH CONTINUOUS IMPROVEMENT to always deliver quality products on time while using capital efficiently and improving productivity.

o  TRANSFORM the cost base to increase margins through a programmatic approach to transformation

o  ADVANCE organically by growing the core and scaling up emerging opportunities

o  REVOLUTIONISE by developing the next generation of products to drive long-term growth

We continue to focus on executing this STAR strategy. Every six months we review and refresh the underlying strategic initiatives to reflect what we have learnt and any changes we see in the broader market. But the big picture is that the strategy has stood the test of time. It's delivering profitable growth and increasingly strong returns on capital but there is much more we can do. We are staying on course.

 

1.   Strengthen through Continuous Improvement

We have developed our "Strengthen System to build continuous improvement capability and to drive improvement in Safety, Quality, Delivery, Inventory turns and Productivity across the organisation.

The pillars of the Strengthen System are to implement just in time manufacturing by introducing flow into our factories, develop a culture and capability to drive improvement actions and to ensure we do not make defective product. The foundations are to level load the factories as far as possible and to relentlessly remove waste from our processes, on and off the shop floor.

We want to move away from traditional batch manufacturing. We want to manufacture to the beat of our customer's demand, with the materials flowing where possible or, where flow is not possible, pulling from the upstream process using a pull system. We believe this will result in reduced scrap, shorter lead times and improved customer delivery, much lower inventory levels, happier employees and wealth creation.

Operational KPIs:

Overall, we are making good progress and are on track to achieve our group operational targets of a 35% increase in productivity, >60% scrap reduction and >5x Inventory Turns. Since H1 2023, when we set these targets:

·    Productivity has increased 26%

·    Scrap has reduced 55%

·    Group Inventory Turns increased 33%

During the last six months, we have been very focused on building the foundations in our two remaining Team Wendy factories and supporting the major production ramp up. Over the past year, versus H1 2024:

·    Productivity has increased 2.3%

·    Scrap has reduced 5%

·    Inventory turns have fallen by 3% due to buffer stock required to support the Irvine site move.

Our primary objective in H2 is to deliver high quality product from our Cleveland facility at a rate that meets customer demand. Once we have done that, we will focus more on improving productivity, reducing scrap and rework rates and driving inventory turns. We expect to see improvements in our metrics start to accelerate again during the next six months.

 

2.  Transform: Focused on Operational Execution

Our transformation programmes are all tracking to plan with expected total operational investment in FY25 unchanged at around $13m. We expect capital expenditure to be c.$1m lower than originally guided for the year. During the half we invested $8.4m into Footprint Optimisation and Operational Excellence, the majority as cash costs related to our site consolidation programme in Team Wendy. Costs related to our Functional Excellence and Commercial Optimisation programmes are now in our 'business-as-usual' investments.

 

Workstream	Goals	Progress in H1
Footprint Optimisation	50% improvement in revenue/sq ft 10ppts improvement in Team Wendy gross margin	We have now stopped manufacturing in Irvine California. Salem is increasing production of NG IHPS helmet shells. The DOD has approved production readiness in Cleveland for both the NG IHPS and ACH lines and Cleveland is now focused on successfully ramping up production. We expect this project to save us c.$10m per year with the cost reduction increasingly dropping through to the bottom line in FY 2026.
Operational Excellence	25% productivity improvement 60% scrap improvement Inventory turns >5	We have made good progress improving both of our Avon Protection plants. In our UK facility we have achieved more than 60% of our ambitious space utilisation target while also meeting increased customer demand and reducing overall scrap levels. We are also working to improve our Team Wendy Salem and Cleveland plants, which start from a lower level of maturity. Building the capability and processes we need is going to take some time, but both are making good progress. The more we look at our processes, the more opportunity we see. We know how to improve our businesses but can only give them as much food as they can digest. As capability improves, we will be able to go even faster.
Functional Excellence	Roll out of SBU functions	Finance excellence - We are planning the removal of the SAP ERP system from the one plant it is still currently used in FY26, which is anticipated to save us over $1m a year. The team have also embraced Kaizen to improve back-office processes with streamlined internal financial reporting and a 71% reduction in monthly close timing vs FY2024. Sales excellence - We have made good progress strengthening the front end of the business, with key hires in sales, marketing, product development and aftermarket support.
Commercial Optimisation	Accelerating commercial and international sales	We remain of the view that we can accelerate commercial sales both in North America and internationally. We have therefore increased investment into our sales, business development and marketing teams. We continue to strengthen our commercial e-commerce platforms. We will launch the Avon Protection online shop outside of North America this quarter and are gaining market share in Team Wendy by reducing lead times with their new online shop to be launched this financial year.

 

3.  Advance: Order book providing future confidence

The Advance part of our STAR strategy aims to deliver organic growth through investment in short and medium-term growth opportunities.

 

Avon Protection:

Order book - We continue to see very strong demand for our respiratory products and have delivered a 69% year on year increase in orderbook with more in our pipeline to support the second half and beyond:

·    Three new NATO countries were signed in the first half under our FM50 NSPA supplier agreement and two more under our boots & gloves agreement. This brings us to 13 nations now supplied under this contract. These are in addition to the Ukraine related awards, funded by European and International NATO countries, which we announced in March.

·    We were pleased to sign a long-term contract with Thales to supply parts worth around $10m over six years in support of a long-term defence programme. This, in addition to orders under the GSR UK MoD contract and continued demand for rebreathers, helps underpin our UK manufacturing facility.

·    The FM54 programme to equip the Australian military is progressing well. We delivered around $6m of FM54 masks in the first half.

·    The order book does not currently include expected mask and filter orders from the US DOD, , although we have seen good spares & accessories orders from the DOD continuing.

·    We built on the significant underwater rebreather wins for Germany and New Zealand with contracts from two additional European NATO navies in the first half. Avon has also recently entered a partnership with the Royal Canadian Navy for the supply of deep water MCM rebreathers.

 

MITR (Modular Integrated Tactical Respirator) - In non-CBRN respiratory protection we have made exceptional progress having launched our MITR half mask product in January. MITR is a modular respiratory and ocular protection system which fills a capability gap for those who need to operate in lower-threat environments and where existing high-end protective equipment can be cumbersome and impact on their mission effectiveness. We are already seeing early market success having secured initial supply contracts with several special force users across the five eyes community.

Integrated CBRN (Chemical, Biological, Radiological and Nuclear) protection - We are securing greater market share having launched our EXOSKIN boots, gloves and suits range. We now have eight NATO nations signed up to the boots and gloves framework and are in advanced state discussions with several other NATO nations to join the framework over the next 12 months. As a result, our medium-term pipeline in this space is increasing.

MCM100 deep sea rebreather - We continue to see a very strong pipeline of demand with additional upcoming tenders across NATO and five-eyes nations, alongside some wider export opportunities where there is an increasing need for modernisation of deep sea and special forces naval operations. Our production lines are increasing their output to meet this ramp up in demand.

 

Team Wendy:

Order book - Team Wendy's order book of $153m is up $10m over the last six months, reflecting good order intake on both ACH and NG IHPS, as well as pads and bump helmets:

·    On the NG IHPS programme we announced two new US DOD orders for $17.6m and $18m. We currently have $74m of orders from the US Army in our orderbook, up from $58m at the end of FY2024

·    For our ACH Gen II Helmets, our order book has remained steady at $59m.

·    We are also making progress with continued demand for our bump helmets from the US Navy with a new $2m order received in the period

·    We continue to see good demand from the DOD for our pad systems with a $7m orderbook at the end of H1

·    In commercial helmets, we continue to pursue market share both in the US and internationally with our leading technology. Shorter lead times have helped build our order book to $8m.

 

RIFLETECH - During H1 we launched our new RIFLETECH helmet into the international military and police markets. This helmet can stop common rounds from weapons such as AK47. This helmet is the lightest of its kind and has been well received by customers.  We have a good pipeline of opportunities and requests for quotes and hope to start seeing orders during H2.

 

We also have exciting plans to expand our helmet accessories range and launch a new generation of our popular EXFIL SL commercial helmet.

 

4.  Revolutionise: Innovating for the next stage of growth

Revolutionise includes our longer-term projects. In H2 2025 we expect to increase R&D spend as we build our leading technology base and develop protection equipment of the future. In the first half we invested a total of $6.2m in R&D, including capitalised, expensed and customer funded spend (HY24: $5.2m). This represented 4.2% of revenue for the period (HY24: 4.1%).

 

Avon Protection:

Non-CBRN Respiratory - Our MITR system is currently in trials with US and European SWAT teams. Most notably, we are now able to announce we have secured a new Programme of Record with the US DOD called ENBD which  will collaboratively develop an innovative personal protective respirator solution, based on our MITR architecture, which improves user's comfort and reduces the overall physiological burden when operating in lower-threat environments. We are in the early stages of this programme but plan to move over the coming years to a production ready system that can be fielded across the US military personnel base.

Integrated CBRN - We were successfully selected by the US DoD for the ' Hood Mask Interface program' which is three new Programmes of Record with the US Government. These put Avon at the heart of the integration challenge for CBRN protective systems.

 

Team Wendy:

Pads - We are now starting to deploy new 3D printed lattice structures within our pad systems, beginning with our RIFLETECH helmet. The lattice pads have an open structure that promotes a high level of airflow, decreasing heat buildup while maintaining the comfortable fit and exceptional protection that Team Wendy is known for.

Traumatic Brain Injury (TBI) mitigation - We've also made good progress on R&D contracts under the PANTHER research programme to advance our ability to predict brain tissue strains and other key brain injury metrics. This will serve as a basis for designing future products that improve protection against ballistic, blunt impact, and blast threats. This work is due to be presented at both US defence and international ballistics conferences later this year.

 

RISKS & OPPORTUNITIES

 

Operational execution - The speed of the ramp up of helmet manufacturing in our Cleveland and Salem factories is unusual and therefore inherently challenging. We are very focused on mitigating this risk and have made several changes to strengthen operational leadership and  our recruitment, training and onboarding processes in Team Wendy. We made good progress retiring some operational risks during H1. We redesigned our ACH production line to resolve scrap issues and the DOD approved both our IHPS and ACH production lines in Cleveland.

US tariffs and government efficiency (DOGE) - President Trump's approach to both tariffs and government efficiency is challenging and changes frequently. So far, we see both risks and opportunities:

·    If the 10% tariff on the UK subsists, then we will have to pay some $800k of tariffs on components we make in the UK and ship to our US factory. There is potential to localise production in the US over time but we will not make this decision until there is more certainty. In the meantime, we will look to mitigate the relatively limited impact through pricing.

·    If NATO or Five Eye countries were to implement reciprocal tariffs, this could also impact us because we make helmets and most respiratory filters in the US. Again, we do have options to move production out of the US but will not act until there is more clarity.

·    The tariffs also represent an opportunity because a number of our competitors in the US market make their products in Europe and will now be subject to tariffs.

·    We have seen some development programmes impacted by DOGE but our key funded development programmes look to be continuing as expected.

International helmet growth - Looking at opportunities, we have some interesting international leads for our helmets. We know from experience that decision timeframes can be hard to predict but we hope to have something to announce later this year.

 

SUMMARY & OUTLOOK - On track to deliver target adjusted operating margin range of 14-16% in FY 2026.

 

We are improving our businesses fast. We do this through our Strengthen System, which is probably a year ahead of where we thought it would be, our transformation programme and by aligning the organisation to a strategy that it has created and owns.

 

Our markets remain attractive, with European defence spending increasing in the face of Russian aggression. In Avon Protection we are winning new countries with the deployment of masks to Ukraine, Australia and across 13 NATO countries. In Team Wendy, we see emerging opportunities outside the US and are growing market share in the US commercial market. We continue to deploy the ACH and NG IHPS helmets to the US DOD.

 

As the leading supplier of both air purifying respirators and helmets to the US and many other countries we have a large installed base that drives recurring revenue, on top of which we now have a large order book which helps us level load our factories and drive efficiency.

 

We have a strong competitive moat, with long term dual or sole source contracts and leading technology.

We remain of the view that we can reach our medium-term targets in 2026, a year earlier than originally guided to at our capital markets day in 2024.

FINANCIAL REVIEW

We have seen excellent year-on-year growth, with order intake ahead of sales and another record closing order book of $247.0m (HY24 $199.0m). Revenue has increased by 16.8% on a constant currency basis to $148.7m (HY24: $127.1m), reflecting ramp up of ACH Gen II volumes in Team Wendy and growth in demand across Europe for our respiratory portfolio in Avon Protection. Adjusted operating profit margin rose to 11.8% (HY24: 9.4%) reflecting increased profitability in both Team Wendy and Avon Protection compared to H1 last year.

Period ended:	31 March 2025	30 March 2024	Change	Change (constant currency)2
Orders received	$170.5m	$190.3m	(10.4%)	(10.1%)
Closing order book	$247.0m	$199.0m	24.1%	24.0%
Revenue	$148.7m	$127.1m	17.0%	16.8%
Adjusted1 operating profit	$17.5m	$11.9m	47.1%	48.3%
Adjusted1 operating profit margin	11.8%	9.4%	240bps	250bps
Adjusted1 net finance costs	$(2.7)m	$(3.1)m	(12.9%)
Adjusted1 profit before tax	$14.8m	$8.8m	68.2%	70.1%
Adjusted1 taxation	$(3.3)m	$(2.1)m
Adjusted1 profit after tax	$11.5m	$6.7m	71.6%	74.2%
Adjusted1 basic earnings per share	38.8c	22.3c	74.0%	76.4%
Interim dividend per share	7.6c	7.2c	5.6%
Net debt excluding lease liabilities	$54.9m	$57.3m	(4.2%)
Cash conversion1	56%	155%
Return on invested capital1	16.3%	9.7%
Statutory results
Operating profit	$6.2m	$2.6m
Net finance costs	$(3.1)m	$(4.1)m
Profit/(loss) before tax	$3.1m	$(1.5)m
Taxation	$(0.7)m	$0.4m
Profit/(loss) for the period	$2.4m	$(1.1)m
Basic earnings/(losses) per share	8.1c	(3.7c)
Net debt	$74.7m	$76.5m

1 The Directors believe that adjusted measures provide a useful comparison of business trends and performance. Adjusted results exclude adjusting items and discontinued operations. The term adjusted is not defined under IFRS and may not be comparable with similarly titled measures used by other companies.

2 Constant currency measures are provided in the Adjusted Performance Measures section.

Order intake for the Group was $170.5m (HY24: $190.3m). Team Wendy order intake of $73.3m was down 29% on the prior period, predominantly due to the phasing of U.S. DOD NG IHPS and ACH Gen II orders. Avon Protection order intake was up 11.7% to an exceptional $97.2m, with notable mask and filter orders for Ukraine, and a long-term contract renewal with Thales for a critical UK defence programme.

The closing order book of $247.0m reflects an increase of 24.1% (24.0% constant currency) compared to HY24. Team Wendy closed the half with $153.3m in the order book, an increase of 6.8%, which includes $74m of orders for NG IHPS and $59m for ACH Gen II. The Avon Protection closing order book of $93.7m is an increase of 68.8% and includes the previously mentioned orders in support of Ukraine which are scheduled for delivery in the second half of the year.

Revenue for the Group totalled $148.7m, an increase of 17.0% (16.8% constant currency) compared to the prior period of $127.1m, reflecting growth in both Team Wendy and Avon Protection.

Team Wendy revenue totalled $73.2m, an increase of 22.4% over the first half of 2024. This is a result of ACH Gen II helmet ramp up and deliveries of EXFIL LTP bump helmets to US Naval Air Systems Command (NAVAIR). Overall U.S. DOD revenue increased by 36.2% to $49.7m (HY24: $36.5m). Commercial Americas revenue was up 38.8% half on half reflecting stronger domestic sales of our EPIC and EXFIL helmets, whilst U.K. & International revenue declined by $4.5m reflecting timing of deliveries to our larger international customers.

Avon Protection delivered revenue of $75.5m in the first half, an increase of 12.2% compared to HY24 revenue of $67.3m. We saw a 50.8% increase in sales to the U.S. DOD to $19.6m, primarily as the result of increased accessory demand. Sales within the U.K. & International market increased 16.9% to $41.5m, reflecting shipments of FM54 respirators to the Australian Defence Force and increasing volumes of underwater rebreather systems. Commercial Americas revenue fell by $4.4m. We have recently appointed a new global sales leader to drive future growth in commercial markets.

Adjusted operating profit of $17.5m (HY24: $11.9 million) increased by 47.1%, resulting in an adjusted operating profit margin of 11.8% (HY24: 9.4%), up 240bps (250 bps constant currency). This was the result of operational gearing effects from increased revenue in both sides of the business, and further benefits from our continuous improvement efforts, although these were tempered in Team Wendy as we ramp up production in Cleveland.

Statutory operating profit from continuing operations of $6.2m (HY24: $2.6m) reflected adjusting items in the period which are summarised below.

The Adjusted Performance Measures section contains a full breakdown and explanation of adjustments.

 

Statutory operating profit	HY25 $m 6.2	HY24 $m 2.6
Amortisation of acquired intangibles	2.9	3.1
Transformational costs	8.4	6.2
Adjusted operating profit	17.5	11.9

After adjusted net finance costs of $2.7m (HY24: $3.1m) and an adjusted tax charge of $3.3m (HY24: $2.1m), the Group recorded an adjusted profit for the period after tax of $11.5m (HY24: $6.7m). Adjusted basic earnings per share grew to 38.8 cents (HY24: 22.3 cents).

 

Return on invested capital, calculated on a rolling 12-month basis, was 16.3% (HY24: 9.7%), reflecting the increase in operating profit. We expect further improvement as inventory built to de-risk Team Wendy site optimisation starts to unwind.

 

Statutory net finance costs of $3.1m (HY24: $4.1m) include $0.4m (HY24: $1.0m) net interest expense on the U.K. defined benefit pension scheme liability.

Statutory profit before tax was $3.1m (HY24: loss of $1.5m) and, after a tax charge of $0.7m (HY24: credit of $0.4m), the profit for the period was $2.4m (HY24: loss of $1.1m).

 

Transformation costs

	HY25 $m	HY24 $m
Footprint optimisation 1	7.5	4.8
Operational excellence	0.9	0.4
Functional Excellence	-	0.8
Programme management excellence	-	0.2
Total transformation costs	8.4	6.2

¹ Including $1.3m for acceleration of amortisation related to legacy ERP systems (HY24: $0.8m), and $1.1m acceleration of deprecation for assets held in Irvine that will no longer be used (HY24: nil).

Investment in the transformation initiatives have been in line with expectations and guidance set out with the FY24 results. The majority of spend in H1 related to Team Wendy footprint optimisation. We have ceased manufacturing in Irvine and are now focused on ramp up of ACH and NG IHPS lines in Cleveland, as well as NG IHPS shell production in Salem. We expect to see previously communicated cost reductions of $10m drop through towards the end of the financial year.

 

Segmental performance

 

	HY25			HY24
$m	Avon Protection	Team Wendy	Total	Avon Protection	Team Wendy	Total
Orders received	97.2	73.3	170.5	87.0	103.3	190.3
Closing order book	93.7	153.3	247.0	55.5	143.5	199.0
Revenue	75.5	73.2	148.7	67.3	59.8	127.1
Adjusted operating profit	14.3	3.2	17.5	11.1	0.8	11.9
Adjusted operating profit margin	18.9%	4.4%	11.8%	16.5%	1.3%	9.4%

 

Avon Protection continues to deliver strong operating profit margins, up 240 bps to 18.9% compared to HY24. Margins benefited from the operational gearing effect of the increase in revenue, favourable mix towards our higher specification products, commercial optimisation and continuous improvement programmes reducing scrap.

Team Wendy margins were 4.4%, an increase of 310bps compared to HY24, but slightly down on the 6.0% achieved in H2 last year. Margin growth was impacted by site consolidation, particularly increased labour costs in Cleveland to ensure successful ramp up of the new manufacturing lines.

Research and development expenditure

Total investment in research and development (capitalised, expensed and customer funded) was $6.2m (HY24: $5.2m), broadly in line with the prior period as a percentage of revenue.

	HY25 $m	HY24 $m
Total expenditure	6.2	5.2
Less customer funded	(0.7)	(0.7)
Group expenditure	5.5	4.5
Capitalised	(0.7)	(0.3)
Income statement impact	4.8	4.2
Amortisation of development expenditure	1.7	1.6
Total income statement impact	6.5	5.8
Revenue	148.7	127.1
Total R&D expenditure as a % of revenue	4.2%	4.1%

 

Avon Protection expenditure has primarily focused on completing the development of MITR, whilst Team Wendy expenditure related to RIFLETECH helmet development.

 

Net debt and cash flow

	HY25 $m	HY24 $m
Adjusted continuing EBITDA	23.4	17.7
Share-based payments and defined benefit pension scheme costs	3.3	1.5
Working capital	(13.7)	8.3
Cash flows from continuing operations before adjusting items	13.0	27.5
Transformational costs paid	(6.5)	(4.1)
Cash flows from continuing operations	6.5	23.4
Cash flows from discontinued operations	-	4.9
Cash flow from operations	6.5	28.3
Payments to pension plan	(3.0)	(6.3)
Net finance costs	(2.3)	(2.7)
Net repayment of leases	(1.7)	(1.7)
Tax paid	-	(0.1)
Capital expenditure	(3.4)	(5.7)
Purchase of own shares - Long Term Incentive Plan	(2.5)	-
Dividends to shareholders	(4.9)	(4.6)
Foreign exchange on cash	(0.1)	-
Change in net debt	(11.4)	7.2
Opening net debt, excluding lease liabilities	(43.5)	(64.5)
Closing net debt, excluding lease liabilities	(54.9)	(57.3)

Cash flows from continuing operations before adjusting items were $13.0m (HY24: $27.5m) with the movement largely due to working capital outflows of $13.7m, compared to inflows of $8.3m in the prior period. This was driven principally by sales phasing and a planned inventory build related to the Team Wendy site consolidation project.

Net debt was $74.7m (HY24: net debt $76.5m), which includes lease liabilities of $19.8m (HY24: $19.2m). Excluding lease liabilities, net debt was $54.9m (HY24: net debt $57.3m).

Defined benefit pension scheme

The Group operated a contributory defined benefits plan to provide pension and death benefits for the employees of Avon Technologies plc and its Group undertakings in the U.K. employed prior to 31 January 2003. The plan was closed to future accrual of benefit on 1 October 2009 and has a weighted average maturity of approximately eleven years. The net pension liability for the scheme amounted to $8.5m as at 31 March 2025 (FY24: $17.2m). The decrease was mainly due to deficit contributions of $3.0m, and a $5.7m favourable actuarial gain

In accordance with the deficit recovery plan agreed following the 31 March 2022 actuarial valuation, the Group will make payments in H2 FY25 of £2.2m, FY26 of £4.7m and FY27 of £5.1m. The next triennial valuation at 31 March 2025 is now underway, with the outcome of the process expected mid-FY26.

Foreign exchange risk management

The Group is exposed to translational foreign exchange risk arising when the results of sterling denominated companies are consolidated into the Group presentational currency, U.S. dollars. Group policy is not to hedge translational foreign exchange risk. Due to the translational effect, a 1 cent increase in the value of the U.S. dollar against sterling decreases annual revenue by approximately $0.2m and increases annual operating profit by approximately $0.2m. 

Financing and interest rate risk management

 

The Group has a $137m revolving credit facility (RCF), together with a $50m accordion. The RCF is held with a syndicate of four lenders and is available until May 2028, having recently been extended by one-year. The RCF has a further one-year extension option to May 2029 subject to lender approval.

 

RCF borrowings are floating rate priced using the U.S. Secured Overnight Financing Rate (SOFR). The Group hedges interest rate exposure using swaps to fix a portion of SOFR floating rate interest. The notional value of active interest rate swaps at 31 March 2025 was $30.0m (FY24: $30.0m), expiring on 8 September 2025. The Group also has additional interest rate swaps in place with a notional value of $20.0m starting on 8 September 2025 and expiring on 8 September 2026 (FY24: $20.0m). The financial value of interest rate swaps at 31 March 2025 was $0.1m (FY24: $0.4m).

Dividends

The Board has proposed an interim dividend of 7.6 cents per share (HY24: 7.2 cents). This interim dividend will be paid on 5 September 2025 to shareholders on the register at 8 August 2025. The interim dividend will be converted into pounds sterling for payment at the prevailing exchange rate which will be announced prior to payment.

 

Jos Sclater Chief Executive Officer 21 May 2025	Rich Cashin Chief Financial Officer 21 May 2025

 

RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE HALF-YEARLY FINANCIAL REPORT

The Directors confirm that to the best of our knowledge:

·    the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted for use in the UK; 

·    the interim management report includes a true and fair review of the information required by:

- DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

- DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

 

Zoe Holland

Company Secretary

21 May 2025

 

FORWARD-LOOKING STATEMENTS

Certain statements in this half year report are forward‐looking. Although the Group believes that the expectations reflected in these forward‐looking statements are reasonable, we can give no assurance that these expectations will prove to have been correct. Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward‐looking statements.

We undertake no obligation to update any forward‐looking statements whether as a result of new information, future events or otherwise.

 

COMPANY WEBSITE

The half year report is available on the Company's website at www.avon-technologiesplc.com. The maintenance and integrity of the website is the responsibility of the Directors. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

 

INDEPENDENT REVIEW REPORT TO AVON TECHNOLOGIES PLC

Conclusion

We have been engaged by Avon Technologies plc ("the Company") to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2025 which comprises Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated Cash Flow Statement, Consolidated Statement of Changes in Equity and the related explanatory notes.

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2025 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted for use in the UK and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").  

 

Basis for conclusion

We conducted our review in accordance with International Standard on Review Engagements (UK) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity ("ISRE (UK) 2410") issued for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. We read the other information contained in the half-yearly financial report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

 

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. 

 

Conclusions relating to going concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention that causes us to believe that the directors have inappropriately adopted the going concern basis of accounting, or that the directors have identified material uncertainties relating to going concern that have not been appropriately disclosed.

This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410. However, future events or conditions may cause the Group to cease to continue as a going concern, and the above conclusions are not a guarantee that the Group will continue in operation.

 

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with UK-adopted international accounting standards.

The directors are responsible for preparing the condensed set of financial statements included in the half-yearly financial report in accordance with IAS 34 as adopted for use in the UK.

In preparing the condensed set of financial statements, the directors are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

 

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. Our conclusion, including our conclusions relating to going concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for conclusion section of this report.

 

The purpose of our review work and to whom we owe our responsibilities

This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.

Huw Brown

for and on behalf of KPMG LLP

Chartered Accountants

66 Queen Square

Bristol

BS1 4BE

21 May 2025

 

Consolidated Statement of Comprehensive Income for the 6 months ended 31 March 2025

				6 months ended 31 March 2025			26 weeks to 30 March 2024
				Adjusted	Adjustments	Total	Adjusted	Adjustments	Total
				$m	$m	$m	$m	$m	$m
	Note				(Note 2.1)			(Note 2.1)
Revenue			2.2	148.7	-	148.7	127.1	-	127.1
Cost of sales				(89.9)	(1.0)	(90.9)	(80.9)	-	(80.9)
Gross profit				58.8	(1.0)	57.8	46.2	-	46.2
Sales and marketing expenses				(9.1)	-	(9.1)	(6.0)	-	(6.0)
Research and development costs				(4.8)	(1.7)	(6.5)	(5.8)	-	(5.8)
General and administrative expenses				(27.4)	(8.6)	(36.0)	(22.5)	(9.3)	(31.8)
Operating profit/(loss)				17.5	(11.3)	6.2	11.9	(9.3)	2.6
Net finance costs			4.3	(2.7)	(0.4)	(3.1)	(3.1)	(1.0)	(4.1)
Profit/(loss) before taxation				14.8	(11.7)	3.1	8.8	(10.3)	(1.5)
Taxation			2.4	(3.3)	2.6	(0.7)	(2.1)	2.5	0.4
Profit/(loss) for the period				11.5	(9.1)	2.4	6.7	(7.8)	(1.1)

 

 

Consolidated Statement of Comprehensive Income for the 6 months ended 31 March 2025 (Continued)

			Note	6 months ended 31 March  2025 $m	26 weeks to 30 March 2024 $m
Profit/loss for the period				2.4	(1.1)
Other comprehensive income/(expense)
Items that are not subsequently reclassified to the income statement
Remeasurement loss recognised on retirement benefit scheme			5.2	5.7	(13.5)
Deferred tax relating to retirement benefit scheme				(2.0)	2.3
Items that may be subsequently reclassified to the income statement
Cash flow hedges				-	(0.4)
Net exchange differences offset in reserves				0.7	(0.5)
Other comprehensive income/(expense) for the period				4.4	(12.1)
Total comprehensive income/(expense) for the period				6.8	(13.2)
Earnings per share (cents)
Basic				8.1c	(3.7c)
Diluted				7.7c	(3.7c)

 

Consolidated Balance Sheet

		Note	As at 31 March 2025 $m	As at 30 Sept 2024 $m
Assets
Non-current assets
Intangible assets		3.1	120.8	126.4
Property, plant and equipment		3.2	41.5	43.7
Finance leases		3.3	4.9	5.4
Deferred tax assets			28.9	31.1
			196.1	206.6
Current assets
Inventories			58.7	54.9
Trade and other receivables			47.2	36.9
Derivative financial instruments			0.1	0.2
Current tax receivables			-	0.3
Cash and cash equivalents			9.6	14.0
			115.6	106.3
Liabilities
Current liabilities
Borrowings		4.1	3.2	3.9
Current tax payables			0.4	-
Trade and other payables			36.9	36.4
Provisions for liabilities and charges		5.1	7.7	6.6
			48.2	46.9
Net current assets			67.4	59.4
Non-current liabilities
Borrowings		4.1	81.1	75.5
Derivative financial instruments			-	0.2
Retirement benefit obligations		5.2	8.5	17.2
Provisions for liabilities and charges		5.1	5.5	6.6
			95.1	99.5
Net assets			168.4	166.5
Shareholders' equity
Ordinary shares		4.4	50.3	50.3
Share premium account		4.4	54.3	54.3
Other reserves			(15.0)	(15.7)
Retained earnings			78.8	77.6
Total equity			168.4	166.5

 Consolidated Cash Flow Statement

		6 months ended 31 March  2025	26 weeks to 30 March  2024
	Note	$m	$m
Cash flow from operating activities
Cash flow from continuing operations	5.3	6.5	23.4
Cash flow from discontinued operations	5.3	-	4.9
Cash flow from operations		6.5	28.3
Retirement benefit deficit recovery contributions	5.2	(3.0)	(6.3)
Tax payments		-	(0.1)
Net cash flow from operating activities		3.5	21.9
Cash flow used in investing activities
Purchase of property, plant and equipment	3.2	(2.8)	(5.1)
Capitalised development costs and computer software	3.1	(0.7)	(0.6)
Bank interest income	4.3	0.1	0.3
Finance lease interest		0.3	0.2
Finance lease capital receipts		0.5	0.5
Net cash used in investing activities		(2.6)	(4.7)
Cash flow used in financing activities
Proceeds from loan drawdowns	4.2	17.5	17.5
Loan repayments	4.2	(10.5)	(26.7)
Finance costs paid in respect of bank loans and overdrafts	4.3	(2.1)	(2.9)
Finance costs paid in respect of leases	4.3	(0.5)	(0.3)
Repayment of lease liability		(2.2)	(2.2)
Purchase of own shares - Long-Term Incentive Plan		(2.5)	-
Dividends paid to shareholders	4.5	(4.9)	(4.6)
Net cash used in financing activities		(5.2)	(19.2)
Net decrease in cash and cash equivalents		(4.3)	(2.0)
Cash and cash equivalents at beginning of the period		14.0	13.2
Effects of exchange rate changes		(0.1)	-
Cash and cash equivalents at end of the period		9.6	11.2

 

Consolidated Statement of Changes in Equity

 

		Share capital	Share premium	Hedging reserve	Other reserves	Retained earnings	Total equity
	Note	$m	$m	$m	$m	$m	$m
At 30 September 2023		50.3	54.3	0.8	(13.9)	67.9	159.4
Loss for the period		-	-	-	-	(1.1)	(1.1)
Net exchange differences offset in reserves		-	-	-	(0.5)	-	(0.5)
Actuarial loss on retirement benefit scheme		-	-	-	-	(13.5)	(13.5)
Deferred tax on retirement benefit scheme		-	-	-	-	2.3	2.3
Interest rate swaps - cash flow hedge		-	-	(0.4)	-	-	(0.4)
Total comprehensive income for the period		-	-	(0.4)	(0.5)	(12.3)	(13.2)
Dividends paid	4.5	-	-	-	-	(4.6)	(4.6)
Fair value of share-based payments		-	-	-	-	0.9	0.9
At 30 March 2024		50.3	54.3	0.4	(14.4)	51.9	142.5
Profit for the period		-	-	-	-	4.1	4.1
Net exchange differences offset in reserves		-	-	-	(1.3)	-	(1.3)
Actuarial gain on retirement benefit scheme		-	-	-	-	33.1	33.1
Deferred tax on other temporary differences		-	-	-	-	0.3	0.3
Deferred tax on retirement benefit scheme		-	-	-	-	(7.3)	(7.3)
Interest rate swaps - cash flow hedge		-	-	(0.4)	-	-	(0.4)
Total comprehensive income for the period		-	-	(0.4)	(1.3)	30.2	28.5
Dividends paid	4.5	-	-	-	-	(2.2)	(2.2)
Own share acquired		-	-	-	-	(5.0)	(5.0)
Fair value of share-based payments		-	-	-	-	2.4	2.4
Deferred tax on employee share schemes		-	-	-	-	0.3	0.3
At 30 September 2024		50.3	54.3	-	(15.7)	77.6	166.5
Profit for the period		-	-	-	-	2.4	2.4
Net exchange differences offset in reserves		-	-	-	0.7	-	0.7
Actuarial gain on retirement benefit scheme		-	-	-	-	5.7	5.7
Deferred tax on retirement benefit scheme		-	-	-	-	(2.0)	(2.0)
Total comprehensive income for the period		-	-	-	0.7	6.1	6.8
Dividends paid	4.5	-	-	-	-	(4.9)	(4.9)
Own share acquired		-	-	-		(2.5)	(3.0)
Fair value of share-based payments		-	-	-	-	2.5	3.0
At 31 March 2025		50.3	54.3	-	(15.0)	78.8	168.4

 

Other reserves consist of the capital redemption reserve of $0.6m (30 March 2024: $0.6m, 30 September 2024: $0.6m) and the translation reserve of ($15.6m) (30 March 2024: ($15.0m), 30 September 2024: ($16.3m)).

NOTES TO THE FINANCIAL STATEMENTS

Section 1: General Information and Basis of Preparation

The Company is a public limited Company incorporated in England and Wales and domiciled in England with its ordinary shares being traded on the London Stock Exchange. The address of its registered office is Hampton Park West, Semington Road, Melksham, Wiltshire, SN12 6NB.

This unaudited condensed consolidated interim financial information was approved for issue on 21 May 2025.

The interim financial period presents the 6 months ended 31 March 2025 (prior interim financial period 26 weeks ended 30 March 2024, prior annual financial year ended 30 September 2024). The Company has adopted a calendar based interim reporting period, aligning with the calendar based financial year adopted in the second half of FY24. 

The financial information set out in this document does not constitute the Group's statutory accounts for the period or the full year. Statutory accounts for the previous financial year were approved by the Board of Directors on 19 November 2024 and delivered to the Registrar of Companies.

The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498 of the Companies Act 2006.

This condensed consolidated interim financial information for the 6 months ended 31 March 2025 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and with IAS 34, 'Interim financial reporting' as adopted by the United Kingdom. These interim financial results should be read in conjunction with the annual financial statements for the period ended 30 September 2024, which have been prepared in accordance with UK-adopted International accounting standards.

The financial information presented in this Interim Report has been prepared in accordance with the accounting policies expected to be used in preparing the 2024 Annual Report and Accounts which do not differ significantly from those used in the preparation of the 2024 Annual Report and Accounts.

The Directors have prepared a going concern assessment covering the 12 month period from the date of approval of these interim financial statements. The assessment indicates that the Group will have sufficient funds to meet its liabilities as they fall due for that period. 

The Group has committed RCF facilities of $137m to May 2028. Related loan covenants include a limit of 3.0 times for the ratio of net debt, excluding lease liabilities, to bank-determined adjusted EBITDA (leverage). As part of the going concern assessment, the Directors considered sensitivity of financial covenants and liquidity headroom to a reverse stress test to determine the deterioration against the base case forecast required to challenge covenant levels. This demonstrated significant headroom, with the downside movement required not considered plausible given the secured order book and mitigating actions available to reduce future cash outflows or expenses within managements control.

On this basis, the Directors are confident that the Group will have sufficient funds to continue to meet its liabilities as they fall due for at least 12 months from the approval of these interim financial statements. Accordingly, the Group continues to adopt the going concern basis in preparing its interim financial statements. 

Section 2: Results for the Period

 

2.1 Adjusted performance measures

 

The Directors assess the operating performance of the Group based on adjusted measures of operating profit, net finance costs, taxation and earnings per share, as well as other measures not defined under IFRS including orders received, closing order book, operating profit margin, return on invested capital, cash conversion, net debt excluding lease liabilities, average working capital turns, and constant currency equivalents for relevant metrics. These measures are collectively described as Adjusted Performance Measures (APMs).

The Directors believe that the APMs provide a useful comparison of business trends and performance. The APMs exclude adjusting items considered unrelated to the underlying trading performance of the Group. The term adjusted is not defined under IFRS and may not be comparable with similarly titled measures used by other companies.

Adjustments to operating profit

	6 months ended 31 March 2025	26 weeks to 30 March 2024
	$m	$m
Operating profit	6.2	2.6
Amortisation of acquired intangibles	2.9	3.1
Transformational costs	6.0	5.4
Acceleration of Irvine depreciation - transformational	1.1	-
Acceleration of software amortisation - transformational	1.3	0.8
Adjusted operating profit	17.5	11.9
Depreciation	3.8	3.6
Other amortisation charges	2.1	2.2
Adjusted EBITDA	23.4	17.7

 

Amortisation charges for acquired intangible assets of $2.9m (HY24: $3.1m) are excluded from adjusted measures as they do not change each period based on underlying business trading and performance.

Transformational costs excluding depreciation and amortisation were $6.0m (HY24: $5.4m). These include $5.1m related to planned footprint optimisation through closure of the Irvine California facility (HY24: $3.6m), and $0.9m related to other transformational programmes (HY24: $1.8m).

Transformational accelerated depreciation and amortisation charges were $2.4m (HY24: $0.8m). These include $1.3m related to one of the Group's legacy ERP systems (HY24: $0.8m), and $1.1m for assets held in Irvine that will not be used following operational closure (HY24: nil).

Transformational costs are considered an adjusting item as they related to specific programmes which do not form part of the underlying business trading and performance.

 

Adjustments to finance costs	6 months ended 31 March 2025	26 weeks to 30 March 2024
	$m	$m
Net finance costs	(3.1)	(4.1)
U.K. defined benefit pension scheme net interest expense	0.4	1.0
Adjusted net finance costs	(2.7)	(3.1)

 

$0.4m (HY24: $1.0m) net interest expense on the U.K. defined benefit pension scheme liability is treated as an adjusting item given the scheme relates to employees employed prior to 31 January 2003 and was closed to future accrual of benefits on 1 October 2009 (note 5.2).

Adjustments to taxation

Adjustments to taxation represent the tax effects of the adjustments to operating profit and finance costs. Adjusting items do not have significantly different tax rates, with the overall effective rate of 22% (HY24: 24%) approximating statutory rates applicable in the U.S. and U.K.

Constant currency reporting

Constant currency measures remove the impact of changes in exchange rates. Constant currency measures are calculated by translating the prior period at current period exchange rates.

 

	26 weeks to 30 March 2024 constant currency $m	26 weeks to 30 March 2024 reported $m
Orders received	189.6	190.3
Closing order book	199.2	199.0
Revenue	127.3	127.1
Adjusted operating profit	11.8	11.9
Adjusted profit before tax	8.7	8.8
Adjusted basic earnings per share	22.0c	22.3c

 

 

Inventory Turns	6 months ended 31 March 2025	26 weeks to 30 March 2024
	$m	$m
Inventory	58.7	56.4
Last 12 months adjusted cost of sales	177.3	175.3
Group inventory turns	3.0	3.1

 

Inventory turns measure how many times inventory was turned over in the period by dividing adjusted cost of sales over the last 12 months, by the inventory value.

 

 

Productivity	6 months ended 31 March 2025	26 weeks to 30 March 2024
Direct headcount	598	556
Last 12 months revenue	$296.6m	$269.3m
Group productivity	$496k	$484k

 

Productivity measures how much revenue was generated per direct employee by dividing the revenue over the last 12 months, by the total number of direct heads.

Scrap (% of revenue)	6 months ended 31 March 2025	26 weeks to 30 March 2024
	$m	$m
Last 6 months scrap	2.0	2.1
Last 6 months revenue	148.7	127.1
Group scrap (% of revenue)	1.4%	1.7%

 

Scrap (% of revenue) is calculated by dividing the total value of scrap produced in the period, by the revenue generated in the period.

Return on invested capital (ROIC)

	6 months ended 31 March 2025   $m	26 weeks to 30 March 2024   $m
Net assets	168.4	142.5
Net debt excluding lease liabilities	54.9	57.3
Lease liabilities	19.8	19.2
Retirement benefit obligations	8.5	50.7
Derivatives	(0.1)	(0.6)
Net tax	(28.5)	(36.4)
Total invested capital	223.0	232.7
Average invested capital	227.9	250.3
Adjusted operating profit (preceding 12 months)	37.2	24.2
ROIC	16.3%	9.7%

 

Cash conversion

Cash conversion excludes the impact of adjusting items from operating cash flow and EBITDA.

	6 months ended 31 March 2025 $m	26 weeks to 30 March 2024 $m
Cash flow from continuing operations before adjusting items	13.0	27.5
Adjusted EBITDA	23.4	17.7
Cash conversion	56%	155%

2.2 Operating segments

The Group Executive team is responsible for allocating resources and assessing performance of its operating segments. Operating segments are therefore reported in a manner consistent with the internal reporting provided to the Group Executive team.

The Group has two different operating and reportable segments: Avon Protection and Team Wendy.

6 months ended 31 March 2025	Avon Protection	Team Wendy	Adjusted Total	Adjustments & discontinued (Notes 2.1)	Total
	$m	$m	$m	$m	$m
Revenue	75.5	73.2	148.7	-	148.7
Adjusted operating profit/(loss)	14.3	3.2	17.5	(11.3)	6.2
Net finance costs			(2.7)	(0.4)	(3.1)
Profit/(loss) before taxation			14.8	(11.7)	3.1
Taxation			(3.3)	2.6	(0.7)
Profit/(loss) for the period			11.5	(9.1)	2.4
Basic earnings per share (cents)			38.8c	(30.7c)	8.1c
Diluted earnings per share (cents)			37.2c	(29.5c)	7.7c

 

 

26 weeks to 30 March 2024	Avon Protection	Team Wendy	Adjusted Total	Adjustments & discontinued (Notes 2.1)	Total
	$m	$m	$m	$m	$m
Revenue	67.3	59.8	127.1	-	127.1
Adjusted operating profit/(loss)	11.1	0.8	11.9	(9.3)	2.6
Net finance costs			(3.1)	(1.0)	(4.1)
Profit/(loss) before taxation			8.8	(10.3)	(1.5)
Taxation			(2.1)	2.5	0.4
Profit/(loss) for the period			6.7	(7.8)	(1.1)
Basic earnings per share (cents)			22.3c	(26.0c)	(3.7c)
Diluted earnings per share (cents)			22.3c	(26.0c)	(3.7c)

 

 

Revenue analysed by line of business

	6 months ended 31 March 2025			26 weeks to 30 March 2024
	Avon Protection $m	Team Wendy  $m	Total $m	Avon Protection $m	Team Wendy  $m	Total $m
U.S. DOD	19.6	49.7	69.3	13.0	36.5	49.5
Commercial Americas	14.4	16.8	31.2	18.8	12.1	30.9
U.K. & International	41.5	6.7	48.2	35.5	11.2	46.7
Total	75.5	73.2	148.7	67.3	59.8	127.1

 

Revenue analysed by geographic region by origin

	6 months ended 31 March 2025	26 weeks to 30 March 2024
	$m	$m
U.K.	25.6	21.0
U.S.	123.1	106.1
Total	148.7	127.1

2.3 Earnings Per Share

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the period, excluding those held as treasury shares (note 4.4). The company has dilutive potential ordinary shares in respect of the Performance Share Plan. Reconciliations of the earnings and weighted average number of shares used in calculations of earnings per share are set out below:

 

Weighted average number of shares

	6 months ended 31 March 2025	26 weeks to 30 March 2024
Weighted average number of ordinary shares in issue used in basic calculations (thousands)	29,638	29,996
Potentially dilutive shares (weighted average) (thousands)	1,259	970
Fully diluted number of ordinary shares (weighted average) (thousands)	30,897	30,966

 

2.4 Taxation

Tax charged within the 6 months ended 31 March 2025 has been calculated using a 22% estimated annual effective rate of tax which is expected to apply to the Group for the financial year (HY24: 24%). The estimated effective rate of tax was calculated by aggregating separate estimates for UK and US tax jurisdictions.

 

Section 3: Non-current assets

3.1 Intangible assets

 

	Goodwill	Acquired intangibles	Development expenditure	Computer software	Total
Net book amounts	$m	$m	$m	$m	$m
At 30 September 2024	65.4	39.6	15.7	5.7	126.4
Additions	-	-	0.7	-	0.7
Amortisation	-	(2.9)	(1.7)	(1.7)	(6.3)
At 31 March 2025	65.4	36.7	14.7	4.0	120.8

 

Assessments of potential impairment indicators for the Avon Protection and Team Wendy CGUs that include associated goodwill, acquired intangible assets and property, plant and equipment, and attributable working capital were conducted at the interim reporting date. No indicators were noted.

 

Development assets are grouped into the smallest identifiable group of assets generating future cash flows largely independent from other assets, known as cash-generating units (CGU). Included in CGUs are development expenditure, tangible assets and inventory related to the product group. CGUs are tested for impairment annually and whenever there is an indication of impairment. At the interim reporting date an assessment of development asset CGUs was performed with no impairments noted.

 

3.2 Property, plant and equipment

 

Net book amounts	Freeholds $m	Right of use assets $m	Plant and machinery $m	Leasehold improvements $m	Total $m
At 30 September 2024	1.4	10.9	27.1	4.3	43.7
Additions	-	-	2.8	-	2.8
Depreciation	(0.1)	(1.4)	(3.1)	(0.3)	(4.9)
Exchange differences	-	(0.1)	-	-	(0.1)
At 31 March 2025	1.3	9.4	26.8	4.0	41.5

 

 

3.3 Finance leases

					Finance leases $m
At 30 September 2024					5.4
Interest Income					0.3
Payments received					(0.8)
At 31 March 2025					4.9

 

The Group sub-leases legacy commercial premises where they are no longer required for operations, resulting in lease assets being held on the balance sheet. Payments received include $0.3m interest and $0.5m capital receipts.

Section 4: Funding

 

4.1 Borrowings

	As at 31 March  2025 $m	As at 30 Sept 2024 $m
Current
Lease liabilities	3.2	3.9
Non-Current
Bank Loans	64.5	57.5
Lease liabilities	16.6	18.0
	81.1	75.5
Total Group borrowings	84.3	79.4

 

The Group had the following committed facilities at the balance sheet date:

 

	As at 31 March 2025 $m	As at 30 Sept 2024 $m
Total undrawn committed borrowing facilities	75.5	82.5
Bank loans and overdrafts utilised	64.5	57.5
Total Group committed facilities	140.0	140.0
Comprising:
Revolving credit facility	137.0	137.0
Bank overdraft	3.0	3.0

 

At 30 March 2024 the Group had a revolving credit facility (RCF) with a total commitment of $200m.

 

On 14 May 2024, the Group signed a new $137m RCF, together with a $50m accordion replacing the previous facility. The new RCF was agreed with a syndicate of four lenders and is available until May 2028, having recently been extended by one-year (previously until May 2027). The RCF has a further one-year extension option to May 2029 subject to lender approval.

 

The previous and new RCF are subject to financial covenants measured on a bi-annual basis. These include a limit of 3.0 times for the ratio of net debt, excluding lease liabilities, to bank-defined adjusted EBITDA (leverage). The Group was in compliance with all financial covenants during the current and prior period.

 

The Group has provided the lenders with a negative pledge in respect of certain shares in Group companies.

 

4.2 Analysis of net debt

	As at 30 Sept 2024 $m	Cash flow $m	Non-cash movements $m	Exchange movements $m	As at 31 March 2025 $m
Cash at bank and in hand	14.0	(4.3)	-	(0.1)	9.6
Bank loans	(57.5)	(7.0)	-	-	(64.5)
Net debt excluding lease liabilities	(43.5)	(11.3)	-	(0.1)	(54.9)
Lease liabilities	(21.9)	2.7	(0.5)	(0.1)	(19.8)
Net debt	(65.4)	(8.6)	(0.5)	(0.2)	(74.7)

 

Cash flow relating to bank loans consisted of $17.5m proceeds from drawdowns, less $10.5m repayments.

 

4.3 Net finance costs

	6 months ended 31 March 2025 $m	26 weeks to 30 March 2024 $m
Interest payable on bank loans and overdrafts	(2.3)	(2.9)
Interest payable in respect of leases	(0.5)	(0.3)
Amortisation of finance fees	(0.3)	(0.4)
U.K. defined benefit pension scheme net interest expense	(0.4)	(1.0)
Bank interest income	0.1	0.3
Finance lease interest	0.3	0.2
Net finance costs	(3.1)	(4.1)

 

 

4.4 Equity

 

Share Capital

	No. of shares	Ordinary shares	Share premium	No. of shares	Ordinary shares	Share premium
	as at 31 March 2025	as at 31 March 2025	as at 31 March 2025	as at 30 Sept 2024	as at 30 Sept 2024	as at 30 Sept 2024
		$m	$m		$m	$m
Called up, allotted and fully paid ordinary shares of £1 each
At the beginning of the period	31,023,292	50.3	54.3	31,023,292	50.3	54.3
At the end of the period	31,023,292	50.3	54.3	31,023,292	50.3	54.3

 

Ordinary shareholders are entitled to receive dividends and to vote at meetings of the Company.

         

 

 

Own shares held - Share Buyback Programme

	6 months ended 31 March 2025 No. of shares	Year ended  30 Sept 2024 No. of shares
Opening balance	765,098	765,098
Acquired in the period	-	-
Closing balance	765,098	765,098

 

In 2022 the Group completed a £9.25m ($12.4m) Share Buyback Programme, purchasing 765,098 ordinary shares. Dividends on these shares have been waived. Purchased shares under the programme are held at cost as treasury shares and deducted from shareholders' equity.

Own shares held - Long-Term Incentive Plan

	6 months ended 31 March 2025 No. of shares	Year ended  30 Sept 2024 No. of shares
Opening balance	555,205	261,714
Acquired in the period	142,403	301,947
Disposed on exercise of options	(77,692)	(8,456)
Closing balance	619,916	555,205

 

These shares are held in trust in respect of awards made under the Avon Protection Long-Term Incentive Plan (LTIP). Dividends on the shares have been waived. The market value of shares held in trust at 31 March 2025 was $11.6m (30 September 2024: $9.1m). The shares are held at cost as treasury shares and deducted from shareholders' equity.

During the period the trust acquired 142,403 (FY24: 301,947) shares at a cost of $2.5m (FY24: $5.0m). FY24 purchases were completed in the second half of financial year.

4.5 Dividends

On 31 January 2025, the shareholders approved a final dividend of 16.1c per qualifying ordinary share in respect of the year ended 30 September 2024. This was paid on 7 March 2025 utilising $4.9m of shareholders' funds.

The Board of Directors has declared an interim dividend of 7.6c (2024: 7.2c) per qualifying ordinary share in respect of the year ending 30 September 2025. This interim dividend will be paid on 5 September 2025 to shareholders on the register at 8 August 2025 with an ex-dividend date of 7 August 2025.

In accordance with accounting standards, this dividend has not been provided for. It will be recognised in shareholders' funds in H2 FY25 and is expected to utilise $2.2m of shareholders' funds.

 

Section 5: Other

5.1 Provisions for liabilities and charges

 

	Warranty	Property Obligations	Restructuring	Offset	Other	Total
	$m	$m	$m	$m	$m	$m
Balance at 30 September 2024	4.0	5.1	1.4	1.0	1.7	13.2
Provision created	0.7	0.4	0.5	-	0.2	1.8
Payments in the period	(0.3)	(0.1)	(0.8)	-	(0.5)	(1.7)
Foreign exchange movements	-	(0.1)	-	-	-	(0.1)
Balance at 31 March 2025	4.4	5.3	1.1	1.0	1.4	13.2

 

	As at 31 March 2025	As at  30 Sept  2024
Analysis of total provisions	$m	$m
Current	7.7	6.6
Non-current	5.5	6.6
Total provisions	13.2	13.2

 

Warranty provisions cover expected costs under guarantees provided with certain products. Property obligations relate to leased premises of the Group which are subject to dilapidation risks. Offset provisions relate to the Group's estimated obligations under programmes to generate economic value for specific countries. Restructuring provisions relate to costs associated with the closure of the Irvine California facility.

 

5.2 Defined benefit pension scheme

	As at 31 March 2025 $m	As at 30 Sept 2024 $m
Net pension liability	8.5	17.2

 

Defined benefit pension scheme

The Group operated a contributory defined benefit plan to provide pension and death benefits for the employees of Avon Protection plc and its Group undertakings in the U.K. employed prior to 31 January 2003. The plan was closed to future accrual of benefit on 1 October 2009 and has a weighted average maturity of approximately 11 years. The assets of the plan are held in separate trustee administered funds and are invested by professional investment managers. The Trustee is Avon Rubber Pension Trust Limited, the Directors of which are members of the plan. Three of the Directors are appointed by the Company and two are elected by the members. The defined benefit plan exposes the Group to actuarial risks such as longevity risk, inflation risk and investment risk. An updated actuarial valuation for IAS 19 purposes was carried out by an independent actuary at 31 March 2025 using the projected unit method.

The funding of the plan is based on regular actuarial valuations. The most recent finalised actuarial valuation of the plan was carried out at 31 March 2022 when the market value of the plan's assets was £337.5 million. The fair value of those assets represented 91% of the value of the benefits which had accrued to members, after allowing for future increase in pensions. The next triennial valuation at 31 March 2025 is now underway, with the outcome of the process expected mid-FY26.

During the period the Group made payments to the fund of $3.0m (HY24: $6.3m) in respect of scheme expenses and deficit recovery plan payments. In accordance with the plan agreed following the 31 March 2022 actuarial valuation, the Group will make payments in H2 FY25 of £2.2m, FY26 of £4.7m and FY27 of £5.1m.

The Directors have confirmed no additional liability is required to be recognised as a consequence of minimum funding requirements. The trustees have no rights to wind up the scheme or improve benefits without Company consent.

Movement in net defined benefit liability

	Defined benefit obligation		Defined benefit asset		Net defined benefit  liability
	31 March 2025 $m	30 Sept 2024 $m	31 March 2025 $m	30 Sept 2024 $m	31 March 2025 $m	30 Sept 2024 $m
At 30 September	(329.3)	(321.7)	312.1	281.5	(17.2)	(40.2)
Included in profit or loss
Administrative expenses	-	-	(0.3)	(1.1)	(0.3)	(1.1)
Net interest cost	(7.8)	(17.7)	7.4	15.6	(0.4)	(2.1)
	(7.8)	(17.7)	7.1	14.5	(0.7)	(3.2)
Included in other comprehensive income
Remeasurement gain:
- Actuarial gain/(loss) arising from:
- Demographic assumptions	2.1	7.3	-	-	2.1	7.3
- Financial assumptions	24.0	(11.6)	-	-	24.0	(11.6)
- Experience adjustment	-	21.1	-	-	-	21.1
- Return on plan assets excluding interest income	-	-	(20.4)	2.8	(20.4)	2.8
	26.1	16.8	(20.4)	2.8	5.7	19.6
Other
Contributions by the employer	-	-	3.0	9.1	3.0	9.1
Net benefits paid out	10.9	22.0	(10.9)	(22.0)	-	-
FX gain/(loss)	10.8	(28.7)	(10.1)	26.2	0.7	(2.5)
At 31 March/30 September	(289.3)	(329.3)	280.8	312.1	(8.5)	(17.2)

 

Actuarial assumptions

The main financial assumptions used by the independent qualified actuaries to calculate the liabilities under IAS 19 are set out below:

 

	31 March 2025 % p.a.	30 Sept  2024 % p.a.
Inflation (RPI)	3.05	3.10
Inflation (CPI)	2.65	2.70
Pension increases post August 2005	2.10	2.15
Pension increases pre August 2005	2.85	2.90
Discount rate for scheme liabilities	5.75	5.05

Plan assets

 

	31 March 2025 $m	30 Sept 2024 $m
Equities and other securities	112.8	96.2
Liability Driven Investment	115.8	138.2
Infrastructure fund	46.5	46.9
Other receivable	-	26.1
Cash	5.7	4.7
Fair value of assets	280.8	312.1

 

Equity securities are valued using quoted prices in active markets where available.

Liability Driven Investments (LDI) comprises an investment in a level 2 pooled investment vehicle which combines a series of variable interest-earning cash deposits combined with contracts to hedge interest rate and inflation risk. The LDI is valued using a net asset value.

$93.4m (FY24: $114.2m) of the remaining investments are classified as level 3 within the fair value hierarchy. Holdings unquoted securities are valued at fair value which is typically the Net Asset Value provided by the fund administrator at the most recent quarter end. Holdings in the infrastructure fund are valued by an independent valuer using a model-based valuation such as a discounted cash flow approach.

The significant assumptions used in the valuation are the discount rate and the expected cash flow, both of which are subject to estimation uncertainty. Changes in assumptions relating to these variables could positively or negatively impact the reported fair value of these instruments.

 

5.3 Cash flow from operations

	6 months ended 31 March 2025	26 weeks to 30 March 2024 m
	$m	$m
Continuing operations
Profit/(loss) for the period	2.4	(1.1)
Adjustments for:
Taxation	0.7	(0.4)
Depreciation	4.9	3.6
Amortisation of intangible assets	6.3	6.1
Defined benefit pension scheme cost	0.3	0.6
Net finance costs	3.1	4.1
Fair value of share-based payments	3.0	0.9
Transformational costs expensed1	6.0	5.4
Increase in inventories	(3.8)	(2.0)
(Increase)/decrease in receivables	(10.4)	8.3
Increase in payables and provisions	0.5	2.0
Cash flow from continuing operations before adjusting items	13.0	27.5
Transformational costs paid	(6.5)	(4.1)
Cash flow from continuing operations	6.5	23.4
Discontinued operations
Loss for the period	-	-
Adjustments for:
Taxation	-	-
Decrease in receivables	-	5.1
Decrease in payables and provisions	-	(0.2)
Cash flow from discontinued operations	-	4.9
Cash flow from operations	6.5	28.3

 

Cash flows from discontinued operations relate to final working capital receipts and payments for the Armour business which closed in FY23.

¹Transformational costs expensed exclude amortisation and depreciation (note 2.1).

5.4 Exchange rates

The following significant exchange rates applied during the period.

 

	Average rate	Closing rate	Average rate	Closing rate	Closing rate
	31 March 2025	31 March 2025	30 March 2024	30 March 2024	30 Sept 2024
USD/GBP	0.7866	0.7721	0.7976	0.7910	0.7469

 

5.5 Principal risks and uncertainties

The nature of the principal risks and uncertainties impacting the Group are described on pages 70-75 of our 2024 Annual Report. Successful ramp up of volumes in Team Wendy remains a risk following the end of manufacturing operations in Irvine. Further information, with an assessment of political and economic risk including tariffs, is provided in the risks and opportunities section of this announcement.

 

5.6 Related party transactions

There were no related party transactions during the period or outstanding at the end of the period (2024: nil) other than internal transactions between Group companies, and compensation of key management personnel which will be disclosed as required in the Group's Annual Report for the period ending 30 September 2025.