Avon Technologies PLC

Good morning, ladies and gentlemen, and welcome to our 2021 half year results.

For our presentation this morning, I will start with the key highlights. Nick will present the 2021 half year financials and outlook, following which I will provide an overview of our medium term outlook and future opportunities before closing with the key takeaways and questions to finish. Before we start, I'd just like to point your attention to the picture, where you'll see our combined offering featuring the C50 respirator and Team Wendy helmet, which has been a fantastic addition to the group and demonstrates how the business continues to evolve. Following the transformative year in 2020, we've made a strong start to 2021, delivering growth in both orders and revenues, whilst making further progress against our strategic objectives. We've seen significant growth in respiratory protection from both military and first responder customers. Team Wendy has performed well following the acquisition in November and we completed the integration of the ballistic protection business acquired from 3M. We're making good progress to resolve the delays in product approval for our body armour programmes and remain on track to commence shipments in the first half of our 2022 financial year. Given the $157 million order book and strong pipeline of opportunities, we're confident of delivering full year expectations and remain excited by the medium term prospects. Having transformed the group into a focus provider of personal protection systems, we plan to change our name to Avon Protection Plc, which better reflects the shape and direction of the group. The new name will be followed by the Performance Evolved strap line, which reflects the expectation of the customers, the products, and the group. And I'll share some further insights on this later in the presentation. With that, I'd like to hand over to Nick for the financial review.

Thanks, Paul, and good morning, everybody. So now turning to our half-year financials and outlook for the rest of the year. Let's start with a quick look at our progress against our investor proposition KPIs. which we have consistently used to measure our performance over recent years. Revenue excluding the benefit of the Team Wendy acquisition is up 17.6% well ahead of our 3% plus guidance driven by a strong underlying momentum in our respiratory portfolio offsetting a softer ballistic performance due to the previously reported contract delays. The adjusted EBITDA margin of 19.7% is down 120 basis points on last year, reflecting the expected weighting of revenues to the second half and an even spread of overheads across the year. We expect this to reverse in the second half as the revenues come through. Cash conversion of 58.5% was impacted by increased inventory holdings ahead of second half shipments and to manage longer material lead times due to COVID supply chain disruptions. We expect cash conversion for the full year to be in line with our 90% plus guidance as the inventory build unwinds and revenue is turned into cash. Reflecting our confidence in full year delivery, we have once again increased our interim dividend by 30% in line with our dividend policy. As you can see on the slide, we have delivered a positive start to the year benefiting from strong momentum in our respiratory portfolio and the first-time contribution from Team Wendy. We saw strong order intake across the whole business with orders up 46.5% or 30.5% excluding Team Wendy. Our military orders grew by 31.3% as a result of initial orders of $38 million under the new NATO respirator contract follow-on orders for the M69 and M53A1 MAF systems and the $19 million IHPS helmet order following extension of the existing low-rate initial production contract. We also saw strong continuing demand from first responders for both respiratory and ballistic products with orders up 28.3%. The strong-ordered momentum and first-time contribution from Team Wendy supported revenue growth of 41%, and that's 17.6% excluding Team Wendy. I'll cover our revenue performance in more detail on the next slide. Moving further down this slide, you'll see that adjusted operating profit is up 25% and adjusted EPS up 28%. Operating profit excluding Team Wendy of $11.4 million was lower than last year due to the weighting of open protection revenues to the second half and the even spread of overheads across the year. Following the completion of the Team Wendy acquisition, net debt excluding finance leases was $12.9 million, representing leverage of less than 0.2 times consensus EBITDA for the full year.