Avon Technologies PLC

Good morning, everybody, and thank you for all of you that have come in person. In the first half, we delivered strong growth in revenue, profit and margin and achieved our financial targets 18 months ahead of schedule. That progress reflects the benefits of transformation and our growth strategy coming through across the businesses. With transformation now coming to an end, we're increasingly able to focus on the next phase of driving sustainable growth. We have a supportive market, lots of opportunities for organic growth, and a balance sheet that provides further options for acceleration. We see lots more potential in the group and are looking forward to the next chapter. I'll now hand over to Rich, and he'll take you through the numbers.

Thank you, Josh, and good morning, everyone. So as Josh mentioned, we have had a strong start to the year with strategic and operational progress leading through to strong financial performance. The headlines are closing order book down a bit as we work through some of the Team Wendy military backlog, revenue up 7%, operating profit up 39%, and EPS up 45%, all compared to the same period last year on a constant currency basis. As most of you know, my preferred measure of performance is ROIC. and we have seen excellent progress here, up a further 450 basis points to 20.8%. This puts us comfortably ahead of our 2026 goal of growing above 17%. Cash conversion at the end of the first half was not particularly good at 38%, but $18 million of cash related to a late flurry of orders of product deliveries in March was received in early April, which would have resulted in conversion of around 100%. Even without this, Net debt to EBITDA at the end of the first half was 0.9 times, so the balance sheet's in great shape. So, strong first half, we're growing fast, and we're generating excellent returns on capital. So starting with the profit and loss account, and as usual, comparators will be on a constant currency basis, order intake of $117.9 million was down on a very strong first half last year, with book to build below one. I'll talk about drivers for this over the next couple of slides, but in summary, I am not concerned. and there are already signs of improvement. The very robust $220 million order book gives us confidence in delivering further growth for the balance of this year and beyond. Revenue of $160.8 million is 6.8% up on last year, with exceptional growth in Avon Protection more than compensating for a slow start in Team Wendy's. This has dropped through nicely to adjusted operating profit of 24.4 million, giving margin of 15.2%, over 300 basis points higher than last year and comfortably within our target range for the year. Finance costs reduced, reflecting the lower average net debt, with an effective tax rate of 24%, as previously guided, which gives an adjusted EPS figure of 56.4 cents per share, up over 45%. The dividend is up 6.6% to 8.1 cents per share, consistent with the increase at the full year results. Avon Protection's order intake dipped a bit in the first half compared to a very strong H125, but as a reminder, last first half benefited from about $30 million of one-off or unicorn orders, including support for Ukraine. Stripping these out, we continue to see strong US commercial and military momentum and, as today's announcement of our $14 million filter award from the US Department of War demonstrates, this year is continuing into the second half. The order book of $112 million is particularly healthy for this business, which has historically had a fairly short winter ship cycle, giving confidence in future growth. Revenue growth of 23% to $92.9 million reflects excellent underlying trading, notably in support of NSPA awards and continued execution of rebreather deliveries. further buoyed by the fulfilment of all outstanding Ukraine demand. The outlook for the year remained robust, with modest sequential growth expected in the second half. Adjusted operating profit of $20.7 million, 44.8% higher than last year, gives a margin of over 22% for the half. This has been achieved through strong operational execution, strong operational gearing, a helpful product mixed tailwind, and the rate of top line expansion outstripping increased investment in future growth. I would therefore expect profit margin to normalize at a lower level over time as some of these factors unwind. Team Wendy has made strong progress in the last six months, although quite a bit of this is not yet visible in the numbers. Order intake declined in the half, driven by two key factors. Firstly, our US Department of War order cover remains strong, so we wouldn't expect further orders on the two helmet programs to come through until later this calendar year. Secondly, commercial orders in the first half have been soft, driven in part by grant funding delays to law enforcement customers as a result of government shutdowns. There are now clear signs that this factor is easing, and our strong pipeline suggests a recovery in the second half. Revenue in the first half was held back by delays in Department of War shipments, caused by a slower than expected production ramp, with the commercial market weakness also being unhelpful. However, based on current output rates and strong indications of commercial demand recovery, I do expect to return to good growth in the second half and for the year as a whole. The improvements made over the last 18 months are, however, starting to feed through to profitability, with 100 basis points of margin improvement despite the strong growth in ACH production, which remains diluted to gross margin. These production rates will drive meaningful improvement to operating margin in the second half. So as usual, this bridge sets out the key moving parts in the reported adjusted operating profit from last H1 to this. The effect of volume growth, which is essentially H1 revenue growth at last year's gross margin, was $6.2 million. We also benefited from a helpful product mixed tailwind in avian protection with strong commercial mask sales offsetting lower Department of War and filter deliveries. And then, going the other way, the dilutive effect on gross margin from increased ACH shipments was $1.7 million in the half. There will be a further modest impact in the second half as the full run rate, which we reached in the second quarter, lapsed lower deliveries in H2. The positive $2.4 million Team Wendy site optimization bar is the benefit of our transformation journey starting to come through, with increased productivity and lower cost of doing business following the move from California to Cleveland. External impacts are called out separately, having represented a $1.5 million headwind. This comprises the effect of tariffs, the increased employers' national insurance contributions, and an increase in U.S. health care costs. These largely represent the annualisation of numbers called out in the full year results in November. There remains some debate on whether we will be able to recoup some or all of those tariff costs. As ever, the other bar is a collection of things but sums to a small number this time around. Moving on to cash flow, net debt increased by $3.1 million compared to the same period last year. $5.9 million of EBITDA growth was offset by a $21.1 million increase in working capital. with inventory ticking up at a slower rate than sales growth, more prompt payments to suppliers, and an increase in receivables relating to product shipments in March. As I said, the cash for these shipments has now been received. This gives us cash conversion of 38%, which is clearly below the full year guidance of 80% to 100%. However, if we adjust for the cash receipts in the first week of April, relating to March deliveries, conversion would have been 100%. Cash costs of transformation activities in the first half halved to $3.2 million, and the benefits of the transformation investments over the last couple of years are now starting to come through. Beyond cash flow from operations, pension contributions of $3.3 million were in line with our communicated deficit recovery plan, and the step-down in lease costs reflect the exit from our Californian facility last year. As usual, guidance on these and a number of other items is provided in the appendix. So, turning to the balance sheet, and our financial position continues to strengthen. Average inventory terms held steady at three times, which is a good achievement given the production delays and the effects of the government shutdown. We would expect to see some improvement in the second half. The reduction in lease liabilities reflects capital repayments, and the accounting pension deficit benefited from the recent increases in bond yields. This deficit has now come down from almost $100 million in the last five years. Post-period end, we made an additional £3 million contribution to the pension scheme to lock in the benefit of these heightened yields, further de-risking the balance sheet. The wider tri-annual pension review process is due to be finalised shortly, with an updated schedule of expected cash contributions provided in the technical guidance. Average working capital terms saw further improvement year on year, but the pace of improvement was held back by the acceleration in production in Team Wendy in the first half. If we can hold production rates at their current levels, I would expect further improvement through the remainder of the year. And finally, on the balance sheet, I can confirm that our revolving credit facility has been extended by a further year to 2029. Overall, the balance sheet is in great shape, giving us optionality to explore future growth opportunities. The outlook for the year remains robust. Our strong order book and pipeline visibility into the second half and beyond give us confidence that we're on track to deliver high single-digit revenue growth for the year. At an operating margin level, while I wouldn't expect the 22% margin in pavement protection to be sustained for the full year, the potential for improvement in Team Wendy during the second half, as the benefits of transformation come through on higher output volumes, is meaningful. I would therefore expect adjusted operating profit margin to be towards the upper end of our 14% to 16% range. Classification of investment in transformation as an exceptional cost will come to an end in FY26 as previously guided. The investment in manufacturing ramp up in Cleveland is now nearly complete and the project to improve our IT capability is progressing well. Based on the run rate of spend to date, our total $7 million cost will remain in line with guidance but with a higher weighting towards OPEX than originally expected, and I remain very confident in the payback that this investment will deliver. Finally, we remain confident in achieving cash conversion of above 80% for the full year. Given the changes we're seeing in the world around us, it's kind of helpful to step back and look at both the long-term growth opportunities in our markets alongside the near-term outlook that I've already covered. The global geopolitical environment has shifted materially over the last few years, with active conflict at the highest level since World War II. That shift is driving higher defence investment, particularly as Europe moves into a rearmament cycle and as the US adjusts its positioning within NATO. In the near term, demand has been reinforced by the conflicts in Ukraine and the Middle East, which have highlighted both the continued use of conventional warfare and the increased threat from chemical weapons. We're also seeing heightened focus on readiness and stock replenishment across our installed base. For Avon Protection specifically, this backdrop is translating into increased emphasis on CBRN capability. The UK Strategic Defence Review last year explicitly identified CBRN risk as a priority area for future investment. And customers are also increasingly focused on better integration of CBRN and on upgrading mask fleets, shifting from survive to fight mindset to survive and fight. In Team Wendy, improved ballistic protection remains a key theme with increasing numbers of military and first responder personnel and increasing gun crime in the US driving upgrade cycles. And on the right hand side of the slide, you can see that the trends in all of our key market growth drivers are moving in the right direction. I'll now hand back to Joss to run through our progress on staff.

Thank you very much, Rich.