“2019 has been another successful year. We have delivered a strong performance and have made good progress implementing our strategic objectives.”
Orders received of ￡129.8m (2018: ￡124.6m) supported an increase in revenue to ￡128.4m (2018: ￡115.7m). On a constant currency basis, revenue grew by 5.9% with Military revenue growing by 26.1%, more than offsetting a 27.1% decrease in Law Enforcement and 5.3% decline in Fire, reflecting the more challenging conditions in both markets.
Our adjusted EBITDA margin strengthened to 24.5% (2018: 23.0%), being an increase of 1.6% on a constant currency basis. This primarily reflected the benefits of the new higher margin products, with the first deliveries of M53A1 mask and powered air systems offsetting the reduced volumes of the lower margin M50 mask systems shipped in 2019 compared to last year. Adjusted EBITDA was ￡31.4m (2018: ￡26.6m); eliminating the currency movements, adjusted EBITDA grew by 13.4% at constant currency. Adjusted operating profit grew very strongly to ￡26.2m (2018: ￡21.5m), whilst operating profit was down to ￡17.0m (2018: ￡19.5m) due to the impact from the one-off exit costs of ￡5.4m from the fire SCBA market. Eliminating the benefit of currency movements, adjusted operating profit grew by 17.6% on a constant currency basis.
Military revenue grew significantly to ￡87.2m?(2018: ￡66.1m) and was up 26.1% on a?constant currency basis.?U.S. DOD revenue totalled ￡54.8m versus?￡52.7m in 2018, reflecting the first deliveries?of the new M69 aircrew mask and M53A1mask and powered air system products. This?was offset by the expected lower volumes of?the M50 mask system although there was an?increased volume of spares and accessories?reflecting the significant installed base of?M50 mask systems.?As expected, we delivered 96,000 M50 mask?systems and 166,000 filter pairs, compared?with 179,000 mask systems and 150,000?pairs of filter spares in 2018 with the new?programmes coming through to offset the?lower volumes of mask systems. U.S. DOD?spares and development costs revenue?increased to ￡12.2m (2018: ￡12.0m).
Revenue from our Rest of World Military?business totalled ￡32.4m (2018: ￡13.4m), a?significant 142.8% increase on the prior year,?on a constant currency basis. The growing Rest?of World pipeline of opportunity is reflected in?the $16.6m Rest of World mask system contract.?Together with other mask system and hoods?sales, the fulfilled orders for the MCM100?underwater rebreathers and sales of our?powered and supplied air range, this supported?significant revenue growth over 2019.?The award of the M69 and M53A1 mask?system contracts and the receipt and partial?fulfilment of the first orders during the year?has provided us with a strong opening order?book and excellent visibility for the outlook?of Military sales for 2020. Discussions with?the U.S. DOD for the replacement M50 mask?system sustainment contract are continuing?and we expect to receive a new contract?award in the first half of 2020.
Law Enforcement revenue reduced to ￡27.3m?(2018: ￡35.4m), a 27.1% decline on a constant?currency basis. This was significantly impacted?by both the extended U.S. Government partial?shutdown during the first half of the year,?which blocked the availability of Government?funds and created the permanent timing?impact of the delayed order intake from our?U.S. customers, and the strong comparator of?our 2018 performance. The permanent delay?in the timing of orders received resulted in the?anticipated 12.0% reduction in order intake on?a constant currency basis. The carry over of?orders into 2020 has resulted in an increased?opening order book of ￡4.3m (2018: ￡3.5m).?We expect a stronger performance in 2020 for?Law Enforcement due to the stronger opening?order book and other identified opportunities?for respirators, hoods and powered air systems.
Fire order intake grew on a constant currency?basis by 5.0% to ￡15.4m due to increased?sales in the Rest of World markets. The?scheduling of fulfilment for those orders?meant that Fire revenue dropped to ￡13.9m?(2018: ￡14.2m) a reduction of 5.3% on a?constant currency basis.?The decision to focus our SCBA portfolio on?our core growth markets of Military and Law?Enforcement customers, and exit from the?Fire market, means that our future Fire orders?and revenues will be from our leading thermal?image camera range together with fulfilling the?ongoing user requirements of our legacy SCBA?customers. In 2018 revenues from the sale of?original SCBA equipment to Fire customers was?￡6.3m, with exit costs in 2019 of ￡5.4m.?The strength of our opening order book of?￡3.0m (2018: ￡1.6m) from the ongoing Fire?product portfolio gives us confidence that?we will be able to continue to grow the non?SCBA portfolio.