Slide 1: Half Year Results 2023
HALF YEAR RESULTS 2023
Slide 2: Cautionary statement
Avon Protection plc (the ‘Group’) is providing the following cautionary statement: This document contains certain statements that are or may be forward-looking with respect to the financial condition, results or operations and business of the Group. These statements are sometimes, but not always, id
Slide 3: Agenda
AGENDA 01 WELCOME 02 H1 RESULTS 03 REALISING OUR POTENTIAL Jos Sclater, CEO Rich Cashin, CFO Jos Sclater, CEO
Slide 4: Welcome
O1 WELCOME JOS SCLATER, CEO PROTECTION
Slide 5: H1 Results
02 H1 RESULTS RICH CASHIN, CFO
Slide 6: Good progress improving margins
Good progress improving margins . . . Group Excluding armour HY23 HY22 HY23 HY22 $m $m ▲* $m $m ▲* Record order book Orders received 125.6 113.9 11.9% 125.4 113.6 12.1% Closing order book 160.7 135.1 20.1% 144.7 110.7 32.4% Revenue 116.2 121.9 (3.9%) 101.6 119.4 (14.2%) Revenue weakness, with helmet
Slide 7: Slow start to the year on revenue
Slow start to the year on revenue . . . HY23 HY22 Constant currency change Order growth in DOD and UK&I segments. Orders received $m Resp Head Total* Resp Head Total* Resp Head Total* Notable growth in Head Protection U.S. DOD 23.7 18.3 42.0 21.8 12.2 34.0 8.5% 49.7% 23.3% Commercial Americas 14.0 1
Slide 8: Lower revenue, strengthening fundamentals
Lower revenue, strengthening fundamentals . . . Volume decrease predominantly driven by reduced NSPA sales within Respiratory Mix – favourable movements in Respiratory from reduced low margin NSPA sales, HALF YEAR RESULTS 2023 offsetting slight adverse movements in Head Protection from reduced sales
Slide 9: Increase in net debt due to inventory build
Increase in net debt due to inventory build . . . HY23 HY22 Working capital outflow supports $m $m Adjusted EBITDA 11.2 6.2 H2 NG IHPS and armour deliveries, Working capital and other adjustments (22.2) (1.0) and reflects delay from H1 of a Cash flows from continuing operations before exceptional it
Slide 10: Leverage position increased
Leverage position increased . . . HY23 FY22 HY22 $m $m $m Intangible assets 168.1 171.0 175.9 Property, plant and equipment 37.1 39.9 43.7 Net other non-current assets 21.6 16.3 21.2 HALF YEAR RESULTS 2023 Inventories 82.3 65.6 73.0 Inventory build ahead of H2 Other current assets 36.0 35.0 44.5 Cur
Slide 11: FY23 Outlook
FY23 Outlook Good year on year growth in Head Protection expected in FY23 and beyond, supported by strong order intake in H1 Softer demand for mask systems seen in H1 has led to a more cautious view on H2 Respiratory revenue, which is now anticipated to be lower than initially expected for FY23 HALF
Slide 12: Realising Our Potential
03 REALISING OUR POTENTIAL JOS SCLATER, CEO
Slide 13: Avon Protection has extraordinary potential
Avon Protection has extraordinary potential . . . High quality, focused business after armour exit Large and growing addressable markets HALF YEAR RESULTS 2023 Quality, technology-led products Excellent people New product launches underpin future growth Strong competitive moat Diversified customer b
Slide 14: Our Respiratory Protection business
Our Respiratory Protection business . . . Global leading market position HALF YEAR RESULTS 2023 Sole-source supplier of air purifying respirators to U.S. DOD, SOCOM, U.K. MOD & NATO Reliable repeat business in filters, spares and accessories (over 40% of sales) Leading self-contained breathing appar
Slide 15: Head Protection has leading technology
Head Protection has leading technology . . . Team Wendy performing well HALF YEAR RESULTS 2023 Excellent opportunity for margin expansion across Head Protection Well positioned in the fast-growing DOD market for helmets Only FAT approved supplier on NG IHPS with 5 year IDIQ on ACH GEN II Large untap
Slide 16: We have identified opportunities to improve
We have identified opportunities to improve . . . STRATEGY EXECUTION GROWTH • Strategic clarity • Organisation • Sustainment levels of HALF YEAR RESULTS 2023 • Buy in to direction • P&L ownership DOD mask orders • Tracking • M&A integration • Customer focus • Prioritisation • Continuous • Innovation
Slide 17: Financial performance has been disappointing
Financial performance has been disappointing . . . REVENUE OPERATING PROFIT MARGIN ROIC HALF YEAR RESULTS 2023 2020 2021 2022 LTM 2020 2021 2022 LTM 2020 2021 2022 LTM 17 . . . but we can accelerate from here
Slide 18: We have engaged our team to develop the STAR strategy
We have engaged our team . . . . STRENGTHEN THE IMPROVE FUNDAMENTALS TO EFFICIENCY AND QUICKLY IMPROVE WORKING HALF YEAR RESULTS 2023 EXECUTION CAPITAL TURNS LEVERAGE ORGANICALLY GROW INNOVATION TO THE CORE AND DRIVE FURTHER SCALE UP EMERGING GROWTH OPPORTUNITIES 18 . . . to develop the STAR strateg
Slide 19: STAR is a five year plan
STAR is a five year plan . . . HALF YEAR RESULTS 2023 REVOLUTIONISE 19 . . . with a near term focus on quick wins
Slide 20: We have strengthened our leadership team
We have strengthened our leadership team . . . NEW TO ROLE JOINED: JOINED: JOINED: THIS YEAR 2023 2022 2007 HALF YEAR RESULTS 2023 JOS SCLATER RICH CASHIN MILES INGREY-COUNTER Chief Executive Officer Chief Financial Officer General Counsel and Head of HR JOINED: JOINED: JOINED: 2021 2003 2023 STEVE
Slide 21: We have developed an execution framework
We have developed an execution framework . . . PRIORITIES & INITIATIVES CASCADED WITH COMMON FUNNEL TO TRACK PROGRESS ACCOUNTABILITY HALF YEAR RESULTS 2023 SBU LED DELIVERY GOVERNANCE SBU management owns strategic initiatives and targets Detailed definition of each strategic priority SBU specific im
Slide 22: Strengthen: focus on quick wins
Strengthen: focus on quick wins . . . New operating model Clear strategy HALF YEAR RESULTS 2023 Address key capability gaps Stabilise Salem and Irvine operations Quarterly kaizens (change for the better) at all factories Stronger performance management 22 . . . to stabilise and gain early momentum
Slide 23: Transform: improve efficiency and inventory turns
Transform: improve efficiency and inventory turns . . . Footprint optimisation Operational excellence HALF YEAR RESULTS 2023 Programme management excellence Supply chain optimisation Innovation process improvement Sales and marketing focus Finance excellence 23 . . . with increased pace and focus
Slide 24: Advance: grow the core organically
Advance: grow the core organically . . . RESPIRATORY PROTECTION Exploit market for SCBA with NIOSH & NFPA certified product Drive increased mask sales with new product launches HALF YEAR RESULTS 2023 Leverage installed mask base to sell filters and accessories Use leading rebreather technology to ca
Slide 25: Revolutionise: leverage our core capabilities
Revolutionise: leverage our core capabilities . . . RESPIRATORY PROTECTION Launch game changing Modular Integrated Tactical Respirator (MiTR) Improve filters market share with funded new capability filter technology HALF YEAR RESULTS 2023 Leverage rebreather technology to expand into adjacent market
Slide 26: STAR is designed to deliver improved performance
STAR is designed to deliver improved performance . . . HALF YEAR RESULTS 2023 REVOLUTIONISE 26 . . . with more specific medium-term guidance to follow
Slide 27: We have already made significant progress
We have already made significant progress . . . STRENGTHEN STRENGTHEN TRANSFORM TRANSFORM ADVANCE ADVANCE REVOLUTIONISE Kaizens Footprint optimisation Fulfil DOD demand Tactical respirator Kaizen education and improvement In-sourced EXFIL SL at Team Wendy Completed first lot of NG IHPS Positive cust
Slide 28: The new strategy means some changes to capital allocation
The new strategy means some changes to capital allocation . . . Net debt to EBITDA between 1 and 2 times HALF YEAR RESULTS 2023 No further buyback envisaged Investing for sustainable organic growth Little appetite for M&A until we have proved our Strengthen and Transform initiatives work Dividend po
Slide 29: Creating a world-class business
Creating a world-class business . . . Increased urgency New strategy and leadership team HALF YEAR RESULTS 2023 We are underway and moving fast STAR focused on short term wins, medium term efficiency and growth, and building a pipeline for further growth beyond 2027 Significant opportunity to grow t
Slide 30: Questions
30 HALF YEAR RESULTS 2023 QUESTIONS
Slide 31: Appendix
31 HALF YEAR RESULTS 2023 APPENDIX
Slide 32: Technical Guidance FY23
Technical Guidance FY23 2021 2022 2023 guidance $m $m $m Research and development expenditure 19.1 10.9 11-13 Of which customer funded 2.3 1.4 2 Group expenditure 16.8 9.5 9-11 HALF YEAR RESULTS 2023 Capitalised development costs 15.0 5.8 5-6 Expensed development costs 1.8 3.7 4-5 Other capital expe
Slide 33: Income statement by line of business
Income statement by line of business Armour Excluding Armour Total HY23 $m $m $m Orders received 0.2 125.4 125.6 Closing order book 16.0 144.7 106.7 Revenue 14.6 101.6 116.2 HALF YEAR RESULTS 2023 Adjusted EBITDA (4.7) 15.9 11.2 Adjusted EBITDA margin (32.2%) 15.6% 9.6% Adjusting operation profit/(l
Slide 34: Reported to adjusted reconciliation
Reported to adjusted reconciliation HY23 HY22 $m $m Statutory operating loss (1.6) (10.7) Amortisation of acquired intangibles 3.1 3.5 Impairment of non-current assets - 3.8 Restructuring costs 2.3 1.4 HALF YEAR RESULTS 2023 Transaction costs 0.4 0.8 Adjusted operating profit 4.2 (1.2) 34
Slide 35: Abbreviations
Abbreviations Term Explanation Term Explanation 50 Series A range of masks based on the proven technology of the M50 mask system JSGPM Joint service general protection mask ADF Australian Defence Force KPIs Key Performance Indicators AGM Annual General Meeting LTIP Long Term Incentive Plan APAC Asia