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17 Dec 2020 07:00
17 December 2020
Avon Rubber p.l.c.
Contract delay and trading update
Avon Rubber p.l.c. ("Avon Rubber" or "the Group") today provides an update on the ballistic protection contracts within its Military business together with an update on Group trading for the financial year ending 30 September 2021 ("FY21").
Contract delay
Following the awards of contracts for the U.S. Defense Logistics Agency Enhanced Small Arms Protective Inserts ("DLA ESAPI") and U.S. Army Vital Torso Protection ("VTP") body armor plates, we have been engaged with these customers to complete the necessary product approval processes, which had been expected to conclude in the first half of FY21. Disappointingly, these approval processes have been delayed as a result of a failure encountered in First Article Testing. Whilst we remain confident of completing these processes and are working with our customers to expedite the approvals, this initial delay means that first deliveries under these contracts are now expected to commence in the first half of our 2022 financial year.
Separately, we have been notified that a protest has been made against the U.S. Army Next Generation Integrated Head Protection System sole source contract announced on 24 September 2020. Whilst the delay created by this protest is unwelcome, its outcome is not currently expected to have any material impact on Group expectations for FY21.
Trading update
Further to the update provided alongside the 2020 full year results on 2 December 2020, trading has continued as expected in the first quarter of FY21, with good order intake across our portfolio of life critical personal protection systems for the world's militaries and first responders.
Within the Military business, we have received the first orders under the NATO Support & Procurement Agency Contract totalling $33 million as separately announced today. Follow-on orders have also been received from the U.S. Department of Defense ("U.S. DOD") under the M53A1 mask and powered air system contract in addition to continued strong demand for spares and accessories from the U.S. DOD and Rest of World Military customers. We expect to receive further follow-on orders under our long-term U.S. DOD contracts during the first half of the 2021 financial year.
Team Wendy has performed well and in line with expectations in the first month of ownership, with strong order intake including follow-on ballistic helmet orders from the Australian Defence Force.
Within our First Responder business, we have continued to see strong COVID-19 related demand across our entire respiratory protection range. We have also continued to see encouraging progress in pipeline building and order intake for the Ceradyne ballistic helmet range following its launch in North America in July 2020.
Consequently, whilst the delay in first deliveries under the DLA ESAPI and VTP body armor contracts described above will reduce overall expectations for FY21, the Board remains confident in achieving its medium-term expectations given the momentum we are seeing across the business.
Commenting, Paul McDonald, Chief Executive Officer, said:
"We are working collaboratively with our customers to resolve the delays to product approval for the DLA ESAPI and VTP contracts as quickly as possible. These contracts remain an important part of the ballistic protection portfolio and will be a significant contributor to the Group over the medium term.
The business continues to perform strongly, and our 2021 financial year will see further significant progress as a result of continued growth as well as the contribution from the recent Team Wendy acquisition. We remain very confident in the Group's medium-term prospects which are built on a strong, growing and visible contract pipeline, together with a clear strategy."
For further enquiries, please contact:
Avon Rubber p.l.c. |
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Paul McDonald, Chief Executive Officer | 01225 896 848 |
Nick Keveth, Chief Financial Officer |
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Ryan Mahoney, Deputy Chief Financial Officer |
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MHP Communications |
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Andrew Jaques | 0203 128 8570 |
Charlie Barker | avonrubber@mhpc.com |
Pete Lambie |
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 Rubber is listed on the London Stock Exchange (LSE: AVON) and is a constituent of the FTSE 250 Index.
Avon Rubber is an innovative technology group, which designs and produces life critical personal protection systems to maximise the performance and capabilities of its customers, with leading positions in the respiratory and ballistic protection markets for the world's militaries and first responders.
For further information, please visit our website: www.avon-rubber.com.
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