28 January 2022

Avon Protection plc

Annual General Meeting - Trading Update

In advance of its Annual General Meeting being held at 10.30am today, Avon Protection provides the following trading update for its financial year ended 30 September 2022. 

Summary

Trading has continued as expected and in line with the trends described in the results announcement on 15 December 2021, with organic revenues in the first quarter ahead of the comparable prior year period. Supply chain disruptions, as communicated last year, continue but are now largely stable, with mitigating actions continuing to be taken. The Board therefore remains confident of achieving its expectations for the current financial year.

Customer demand continues to be robust, however given continued longer order lead times, we expect revenues to be weighted to the second half of the year. Overheads in the first half of the year are expected to be at a similar run rate to the second half of our 2021 financial year. Actions to reduce costs in light of the announced closure of the armor business have commenced, with the benefits of these first actions reducing the overhead run rate in the second half.

Respiratory protection

We continue to see further progress with the NATO Framework Contract. Additional orders have been received from the initial six customers, with Latvia becoming the seventh country to order under the framework and conversations with other nations with respect to joining the programme continuing.

We are also seeing success with our MCM100 underwater rebreather with an initial order from Belgium following a competitive tender, bringing the total number of countries purchasing this product to seven.  The outcome of the U.S. Navy underwater rebreather tender process is currently expected to be announced in the second quarter of this financial year.

We anticipate follow-on orders under our long-term U.S. DOD contracts during the first half of the 2022 financial year and have good visibility of a wider pipeline of opportunities in the U.S. and globally for both military and first responder customers.

Head protection

Delivery of the existing first-generation Integrated Head Protection System (IHPS) helmet continues and we are well advanced in our preparations to submit helmets for the first article testing for the next-generation IHPS during the second quarter of our 2022 financial year.

We continue to be pleased with the response from both military and first responder customers to our F90 mid-range helmet which was launched in the fourth quarter of our 2021 financial year after being developed in collaboration between Ceradyne and Team Wendy.  We are actively pursuing a strong pipeline of opportunities in both the military and first responder markets for the F90 and Team Wendy EXFIL range of helmets.  

Closure of the armor business

Following the announcement in December, detailed plans have been developed to complete the closure of the armor business during our 2023 financial year.  Discussions with customers to finalise their order requirements and plan the transition to other sources of supply are continuing productively and actions to reduce the cost base of the business ahead of closure have commenced. Progress has been made finalising the first article test approvals for the DLA ESAPI body armor product and we continue to expect the approvals to be finalised during this second quarter of our 2022 financial year.  

Share buy back

As separately announced today, following consultation with our shareholders, we are launching a share buy back of up to £18.5 million ($25 million).  As previously announced, the Board does not intend to initiate any major merger and acquisition activity in 2022 and given the strong financial position and expected cash generation, the purpose of this buy-back is to maximise the efficiency of the balance sheet for shareholders' benefit.

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Legal Entity Identifier: 213800JM1AN62REBWA71

Certain information contained in this announcement would have constituted inside information (as defined by Article 7 of Regulation (EU) No 596/2014) ("MAR") prior to its release as part of this announcement and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.

Note to editors:

Avon Protection designs and produces life critical personal protection solutions for the world's militaries and first responders. With a portfolio that includes Chemical, Biological, Radiological, Nuclear ("CBRN"), respiratory and head protection products, Avon Protection's mission is to relentlessly advance the future of protection enhancing the performance, efficiency and capability of their customers whilst providing ever increasing levels of protection. 

Avon Protection operates from 7 locations employing more than 1,000 people and is listed on the London Stock Exchange (LSE: AVON). 

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