Slide 1: Full Year Results 2023
FULL YEAR RESULTS 2023 PROTECTING LIVES
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 Jos Sclater, CEO 02 Financial Review Rich Cashin, CFO FULL YEAR RESULTS 2023 03 Lots done. Lots to do. Jos Sclater, CEO 3
Slide 4: Welcome
AVON PROTECTION PLC WELCOME JOS SCLATER, CEO S
Slide 5: Excellent strategic progress
Excellent strategic progress . . . STRENGTHEN Exited armour Stabilised the businesses, ready for transformation TRANSFORM Transformation programme expected to achieve mid -teens operating margins Focus on Head Protection ADVANCE On track to become the largest supplier of helmets to the U.S. DOD FULL
Slide 6: Results in-line with expectations
Results in-line with expectations . . . Adjusted Adjusted Operating Revenue Operating Profit Profit Margin $243.8m $21.2m 8.7% Cash Conversion Leverage Closing Order Book 7.0% 1.94x $135.8m FULL YEAR RESULTS 2023 . . . and order book to support growth in 2024 6
Slide 7: Financial Review
FINANCIAL REVIEW RICH CASHIN, CFO
Slide 8: Results in-line with expectations
Results in-line with expectations . . . FY23 FY22 Armour now moved to discontinued operations. Continuing operations 1 $m $m ▲ ▲2 Orders received 258.7 267.9 (3.4%) (2.9%) Strong order book growth, with increase in Head Closing order book 135.8 120.9 12.3% 10.9% Protection offsetting decrease in Res
Slide 9: Lower demand in Respiratory Protection
Lower demand in Respiratory Protection . . . FY23 FY22 Decrease in orders and revenue from softer Respiratory Protection $m $m ▲ demand environment and strong prior year with Orders received 132.6 164.2 (19.2%) NSPA and Ukraine support Closing order book 35.8 60.1 (40.4%) Improvement on already stro
Slide 10: Strong growth in Head Protection
Strong growth in Head Protection . . . FY23 FY22 Strong closing order book provides good coverage Head Protection $m $m ▲ for 2024 Orders received 126.1 103.7 21.6% Revenue growth from successful ramp-up of NG Closing order book 100.0 60.8 64.5% IHPS Revenue 86.9 70.5 23.3% Margin improvement from o
Slide 11: Lower Respiratory revenue and ramp-up scrap costs
Lower Respiratory revenue and ramp-up scrap costs . . . Reductions in central overheads and raw material purchasing efficiencies, partially offset by increased Head Protection SG&A to support future growth FULL YEAR RESULTS 2023 Largest movements from impact of revenue changes detailed on previous s
Slide 12: Increased net debt due to high receivables
Increased net debt due to high receivables . . . FY23 FY22 $m $m Working capital outflow includes $26m Adjusted EBITDA 35.7 38.8 receivables increase due to sales phasing Working capital and other adjustments (33.2) 19.9 in H2 Cash flows from continuing operations before exceptional items 2.5 58.7 R
Slide 13: Balance sheet stabilised
Balance sheet stabilised . . . FY23 HY23 FY22 $m $m $m Reduction due to impairment of goodwill Intangible assets 139.2 168.1 171.0 Property, plant and equipment 35.8 37.1 39.9 Net other non-current assets 32.7 21.6 16.3 Reduction due to Armour closure and Inventories 54.4 82.3 65.6 unwind of build f
Slide 14: Capital allocation focused on earnings recovery
Capital allocation focused on earnings recovery . . . Transformation initiatives and Deliver strong margin progression organic investment in R&D and revenue growth Increase balance sheet flexibility Focus on disciplined Reduce debt and minimise interest cost to capital allocation in allow compoundin
Slide 15: FY24 Outlook - Revenue growth and margin progression
FY24 Outlook - Revenue growth and margin progression . . . High-single-digit revenue growth for the Group Strong growth in Head Protection revenue – growing commercial helmet sales, full year of NG IHPS and H2 ramp in ACH GEN II deliveries, supported by strong orders Continued soft demand for respir
Slide 16: Lots done. Lots to do.
LOTS DONE. LOTS TO DO. JOS SCLATER, CEO
Slide 17: The implementation of the strategy
The implementation of the strategy . . . Strengthen the Improve fundamentals to efficiency and provide a stable working capital platform for turns transformation Leverage Organically grow FULL YEAR RESULTS 2023 innovation to the core and scale drive further up emerging growth opportunities 17 . . .
Slide 18: STAR is designed to deliver improved performance
STAR is designed to deliver improved performance . . . ESG: PROTECTING MORE LIVES, MID-TEENS REDUCING REVENUE OPERATING IMPROVED STRONG CASH SCRAP,WASTE AND GROWTH MARGINS ROIC CONVERSION CO2 STRENGTHEN TRANSFORM ADVANCE FULL YEAR RESULTS 2023 REVOLUTIONISE DOES NOT ADDRESS DIRECTLY ADDRESSES CHALLE
Slide 19: Strengthen: stabilise the platform
Strengthen: stabilise the platform . . . Progress so far Effective operating model Clear strategy with resources aligned to strategic initiatives Strong management team Initial right sizing complete High impact performance management implemented Successfully exited the Armour business FULL YEAR RESU
Slide 20: Strengthen: creating a culture of accountability
Strengthen: creating a culture of accountability . . . What we do Who we are Our mission is to provide unparalleled Our purpose is Protecting Lives. It’s something protection for those who protect us, giving everyone in this business cares passionately about. them the confidence to tackle challengin
Slide 21: Transform: ambitious transformation programme
Transform: ambitious transformation programme . . . Programme workstreams defined Chief Transformation Officer appointed Aligned incentives to the strategy Costs and benefits now defined Benefits in-line with our initial expectations FULL YEAR RESULTS 2023 21 . . . expected to deliver mid-teens oper
Slide 22: Transformation initiatives are progressing through our funnel
Transformation initiatives are progressing through our funnel . . . Appraise Plan Execute Footprint Optimisation Operational Excellence Commercial Optimisation Functional Excellence FULL YEAR RESULTS 2023 Programme Management Excellence Initiative identified and value Value validated Implementation
Slide 23: Transform: lots of opportunity
Transform: lots of opportunity . . . Progress so far Next steps Footprint optimisation Footprint optimisation • EPIC finishing and assembly moved to Cleveland • Further steps to improve gross margin • ACH GEN II capacity ramp to move to Cleveland, in addition to Salem Operational excellence • Implem
Slide 24: Transformation requires disciplined investment
Transformation requires disciplined investment . . . FY24 FY24 Project Transformation CapEx duration cost ($m) ($m) (months) Footprint Optimisation 5-6 1-2 30 Operational Excellence 1 24 Payback Commercial Optimisation 1 24 within 3 Functional Excellence 1 24 years FULL YEAR RESULTS 2023 Programme M
Slide 25: Respiratory Advance: re-building the sales pipeline
Respiratory Advance: re-building the sales pipeline . . . Progress so far Next steps Boots and Gloves Launch MiTR (Modular Integrated Tactical Respirator) • Won the NSPA contract and received first major order from • Use our Quick Launch process to launch revolutionary a NATO customer new respirator
Slide 26: Head Protection Advance: ramping up production
Head Protection Advance: ramping up production . . . Progress so far Next steps NG IHPS NG IHPS • Signed 5 year IDIQ with contract ceiling of $676m • Productivity and scrap improvements • FAT approval well ahead of competition ACH GEN II ACH GEN II • Ramp up production to meet customer demand • IDIQ
Slide 27: Revolutionise: securing our long-term future
Revolutionise: securing our long-term future . . . Progress so far Next steps Rebreathers Next Gen Helmet Technology • Secured MOD funding for new underwater masks • Funding to further advance ballistic protection and prevent • Secured MOD funding to develop shallow water rebreather traumatic brain
Slide 28: We are focused on mitigating our risks
We are focused on mitigating our risks . . . Opportunities Risks • Rebreather pipeline • UK GSR competitive tender • Increasing global demand for EPIC process • Rebreather timing • Growing demand for pads • Further process optimisation and scrap reduction FULL YEAR RESULTS 2023 28 . . . whilst makin
Slide 29: Avon is simpler and stronger
Avon is simpler and stronger . . . Strengthen phase of the STAR strategy largely complete. Platform for strategic progress in place. Transformation gaining momentum. Significant opportunity to optimise operational efficiency and footprint. Mid-teens operating profit margins in the medium-term. Deman
Slide 30: Questions
We look forward to welcoming you to our upcoming Capital Markets Day on 8th February 2024 QUESTIONS
Slide 31: Appendix
AVON PROTECTION PLC APPENDIX S CD
Slide 32: Technical Guidance FY24
Technical Guidance FY24 FY22 FY23 FY24 guidance Continuing operations1 $m $m $m Research and development expenditure 10.9 10.2 13-15 Of which customer funded 1.4 1.2 2-3 Group expenditure 9.5 9.0 11-13 Capitalised development costs 5.8 3.1 2-3 Expensed research & development costs 3.7 5.9 9-11 Other
Slide 33: Cash pension contributions forecast
Cash pension contributions forecast Pre-triennial valuation Post-triennial valuation Pension contributions £m £m 2024 3.95 6.95 2025 4.30 4.30 2026 4.70 4.70 2027 5.10 5.10 2028 5.55 5.55 2029 3.27 5.20 FULL YEAR RESULTS 2023 33
Slide 34: Reported to adjusted reconciliation
Reported to adjusted reconciliation FY23 FY22 Continuing operations1 $m $m Statutory operating (loss)/profit (12.6) 11.0 Amortisation of acquired intangibles 6.3 6.8 Impairment of goodwill and other non-current assets 24.6 4.0 Restructuring costs 1.4 1.6 Transition costs 1.5 - Adjusted operating pro
Slide 35: SBU revenue by market
SBU revenue by market Head Protection Respiratory Protection U.S. DOD U.S. DOD $86.9m Commercial Americas $156.9m Commercial Americas (FY22: $70.5m) (FY22: $193.0m) U.K. & International U.K. & International FULL YEAR RESULTS 2023 35
Slide 36: Abbreviations
Abbreviations Term Explanation Term Explanation 50 Series A range of masks based on the proven technology of the M50 mask system MiTR Modular Integrated Tactical Respirator ACH GEN II Second-generation Advanced Combat Helmet MOD Ministry of Defence AGM Annual General Meeting NATO North Atlantic Trea