Avon Protection (LON:AVON) issued an RNS on November 12th, 2021 advising the market of a First Article Test failure of one of its body armour components and further delays in the approval of another. As a result it has initiated a strategic review of its entire body armour business and delayed release of its FY21 results.

Most profit warnings are ugly but this one wiped over 50% off the beaten down share price that was already some 60% or so down on its previous peak at the end of 2020. Taken together, that’s about an 80% fall. Falls of this kind are not unprecedented but it’s unusual for an established manufacturing company with a Q score consistently in the high 80’s or above - more typically it’s found in the Oil & Gas or Resource sector where a prospector hits a duster or where there has been fraud/ severe malpractice. (Possibly Indivior (LON:INDV) in the pharma manufacturing sector is the only recent comparable that springs to mind).

Quite a lot of insightful comment in yesterday’s SCVR which I thought I would pull into a single location before it gets lost to posterity and provide a dedicated thread to follow how the situation develops over time. Whether the company recovers its former glory or sinks without trace (who’s Trace? - getting ready for panto season) it should prove to be an interesting case study.

The devil, as always, being in the detail, here is the full text of the RNS.

Body armor update

Following the contract awards for the U.S. Defense Logistics Agency (“DLA”) Enhanced Small Arms Protective Inserts ("ESAPI") and U.S. Army Vital Torso Protection (“VTP”) ESAPI body armor plates, we have been engaged with our customers to complete the necessary product approval processes. Disappointingly, the VTP ESAPI plates have encountered a failure in First Article Testing which will significantly delay the likely approval timetable for this product.

Separately, we have experienced further delays in obtaining final product approvals for the DLA ESAPI body armor plates, with approvals for this product now expected in the second quarter of our financial year ending 30 September 2022 (“FY22”).

Strategic review of body armor business

In light of these challenges, the Board has initiated a strategic review of our body armor business.

Our FY22 revenue guidance included approximately $40 million of body…

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