Avon Technologies Stock

Good afternoon, ladies and gentlemen, and welcome to the Avon Technologies Plc Interim Results Investor Presentation.[Operator Instructions] Before we begin, we would like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from Avon Technologies Plc. Josh, good afternoon, sir.

Good afternoon and afternoon, everyone. Thank you for joining us. I'm Josh Sclater, I'm the CEO. And on my right is Rich Cashin, the CFO; and on my left is Steve Elwell, who runs our Avon business. And we'll take you through the slides. They are the slides that we gave at the results, but we will try and go through the narrative maybe a bit quicker than we do with the results. It was a very good first half for us. We delivered very strong revenue growth, strong profit growth and excellent margin progression. We actually moved our margin into the target range that we originally set for 2027. So we delivered it 18 months earlier than originally planned. We are now getting to the end of our transformation program. It was always expected to be a 3-year program.

It will end as anticipated at the end of this year. It has involved a lot of heavy lifting for the team that you see in front of you. As that comes to an end, it does free us up a bit more to really focus on organic growth and potentially, if we found a value-accretive idea, we would look at buying and improving other companies in our space. We do have a strong balance sheet. It continues to get stronger, and we anticipate it will get stronger still as we go through to the end of this financial year. This does give us some latitude either to look at acquisitions or if we couldn't find anything to return capital to shareholders.

So with that, I'll hand over to Rich, and I'll take you through the financials.

Thanks, Jos, and thanks, everyone, for joining. So as Jos said, we've had a strong start to the year. We've made some good strategic and operational progress, and that's starting to feed through into a pretty strong financial performance.

Headlines are order book is down a bit as we work through the military backlog, and we'll talk about a bit more about that in a moment. But revenue is up 7%, operating profit is up 39% and EPS is up 45% compared to the same period last year. The standout number for me though, given that my preferred measure of performance is ROIC is that our return on invested capital is up 450 basis points to over 20%. This puts us comfortably ahead of that 2026 goal of ROIC of over 17%. Cash conversion wasn't particularly great at 38% but we did have a late flurry of deliveries in March, which pushed the receivables balance over the balance sheet date. We actually received $18 million of cash very early in April. Had that been captured, cash conversion would have been 100%. Notwithstanding all of that, net debt to EBITDA at the end of the half was still around 0.9. So the balance sheet is in great shape.

So looking at the P&L, as usual, comparatives on a constant currency basis, but order intake of GBP 118 million was down on a very strong first half last year. We have got a very robust order book of GBP 220 million, which covers us well into 2027 and beyond. Revenue growth of 7% up to $161 million with particularly strong growth in Avon Protection more than compensating for a bit of a slow start in Team Wendy. That's dropped through very nicely to operating profit, as Josh said, within the 14% to 16% guidance range of 15.2% or $24.5 million. Finance costs came down again, reflecting the lower average net debt. So that gives us adjusted EPS of $0.564 up over 45%.

The dividend is going to move up about 6.5%, which is broadly in line with the increase of the full year to $0.081 per share. Within Avon Protection, order intake dipped a bit, but that compares to a very strong first half in 2025, where we benefited from about $30 million worth of what we would class as one-off or unicorn orders, including some support for Ukraine. If we strip those out, you can see that actually the underlying momentum is continuing to progress strongly. And in fact, we announced an additional order on Wednesday with the half year results for a $14 million filter contract from the U.S. Department of War, and that will be for delivery over the next 12 months.

Order book is continuing to grow at $112 million. And that's quite significant because historically, this business has had a very low order book. It's a fairly fast in and ship business. So we've got enormous confidence in the second half and beyond in this business. Revenue growth of 23% reflects excellent underlying trading, particularly in relation to our European contract, the NSPA contract, where we acquired an additional 2 nations. And the drop-through to adjusted operating profit gives margin of over 22% for the half. That is exceptionally strong. We benefited from some product mix. And we also -- the margin was flattered to an extent by -- whilst we have a desire to continue to grow investment in growth around R&D and new product introduction, it's very hard to grow that investment at the same rate as revenue growth when revenue is growing over 20%.

So I do expect those factors to normalize over time, but a very strong first half. Team Wendy has actually made a lot of strategic progress in the first half, but not all of that has flowed through to the numbers yet. Order intake did decline and we're burning through the order book. We do see that as a bit of a positive actually because whilst we have very strong order cover on the DOW contracts well out into the middle of 2027, the Department of War is not motivated to give us any more orders until we start delivering the ones we've got.

So the quicker we can deliver that backlog, the sooner we will get new work. And I'm sure Josh will talk about that later. Revenue, therefore, was held back. We did have that slower ramp-up than planned in the first quarter, and we saw some commercial softness as the grant funding in the U.S. was held back by government shutdowns. We are seeing recovery in all of the above, and we are now up to full production rate on both ACH and IHPS. So I do expect to return to growth in the second half and for the year as a whole in Team Wendy -- what I will say though is that the improvements we've been making over the last 18 months are now starting to feed through to operating profit, which is up 100 basis points to 5.4% in the half.

And then just before I hand back to Josh, it's worth stepping back given some of the changes in the world we're seeing around us and looking at some of the longer-term growth opportunities in our markets alongside the sort of near-term stuff that I've just been talking about. The geopolitical environment has certainly shifted materially over the last few years.

We're seeing more conflict now than we have since World War II. This is clearly driving higher investment, particularly in Europe as Europe moves to a reinvestment cycle and the U.S. adjusts its positioning within NATO. In the near term, demand has been reinforced by the conflicts in Ukraine and the Middle East, both of which have highlighted the continued use of conventional warfare and the increased threat from chemical weapons -- so what we're seeing is defense budgets are going up and the amount of money in those defense budgets that's being diverted towards CBRN equipment is also going up. On -- so that certainly helps Avon protection specifically.

In Team Wendy, improved ballistic protection remains a key theme with increasing numbers of military and first responder people and increasing gun crime, particularly in the U.S. driving upgrade cycles. And then on the right-hand side of that chart, very high-level view, but you can see that the trends in all of our key market growth drivers are moving in the right direction and at a stronger pace than they were last time we did this analysis 2 years ago.

I'll now hand back to Jos to run through an update on our strategy.

Thank you very much, Rich. So just a reminder of our high-level strategy. The first part of the top left is that we continuously strengthen our businesses through our strengthen system, which is -- it's our own proprietary version of continuous improvement. We are still running 2 projects on transformation. One of them is to increase production reliability in our Cleveland farm, and I'll talk a little bit more about that in a second. And the second is improving our IT function whilst simultaneously reducing the cost of it, which sounds counterintuitive that we can do both.

But in fact, what we found is that it was less efficient than it could be and less effective than it could have been, and we're addressing both of those. It will lead to a run rate saving of $1.5 million or so once we've completed that project. It is going extremely well so far. Advance is all about building sales capability and developing products that deliver medium-term growth. And revolutionize is all about investing into long-term projects. And by that, we really mean projects that are unlikely to result in revenue growth for at least 5 years.

So we're looking really in the 5 to 10 year period there. We'd like to keep an eye on that to make sure that we are investing into developing products that drive growth in the long term for us. This slide just shows how we see continuous improvement. I think people sometimes assume that the benefits of continuous improvement are linear. We actually see the benefits of continuous improvement as exponential because each improvement adds to previous improvement. So it does compound over time.

We've seen that in Avon Protection, which is entering Phase 4 now that it's some way up the curve and has had extremely good results and its margin now is up to over 22% operating profit margin. Team Wendy is earlier in its maturity. It took a bit longer for us to embed the culture, but we do now see it starting to improve every single week, and we're very happy with the capability we've got there.

So we do expect to see further improvements coming through with increasing pace in the future. This just shows how we've delivered opposite the nonfinancial metrics that we set out 3 years ago now. We originally wanted to increase productivity by 35%, and we have delivered a 44% improvement in productivity so far, and it's perhaps worth bearing in mind that originally that target was for next year rather than this year. We do believe that productivity ultimately equals wealth, both for our internal people and most importantly, for our shareholders. Scrap rates have come down 62%, again, exceeding our target 18 months early. They have actually crept up a bit recently, although not really through our fault one of our -- we were forced to change a supplier, critical supplier actually because they stopped making the product that we needed and the quality of the new supply is not yet where we want it to be, but we are working on improving that, and I'm sure it will come down in the second half. And then on inventory turns, as you can see, they have steadily increased.

At the moment, we're actually more focused on improving production rates in Team Wendy. But over the medium term, we're aiming for a target of 5%, and we are still aiming for that target and we'll look to make more progress next year. Production rates are important to us in our Team Wendy business. The higher the production rates, the better margins it makes. And also in the first half, we had a situation where we recruited people in the first quarter in order to increase production rates in the second quarter, which did mean that productivity temporarily dipped in the first quarter and margins were there.

IHPS has been steady. We're already making at the rate of the customer demand. We have, however, achieved the rate we need on 1 shift, whereas formerly it used to be on 2. And on ACH, we've actually doubled production over the last 6 months, and we are now hitting the rate that the customer wants and actually, it's the rate that we've contracted to demonstrate that we can deliver as well. We were contracted to deliver at 9,000 a month. And in March, we actually delivered 9,800 a month.

So we've exceeded what the customer wants us to do. We are the only supplier, I think, to hit the contractually required rate at the moment. Just a quick summary of what's driving growth across the business. As Rich mentioned, the threat environment is increasing. I actually see it, there is a question on the change in government affect demand. The answer to that is not really. Demand for a business like ours is really driven by the perception of conflict.

At the moment, Russian aggression, Iranian intransigence, and the potential for Chinese aggression most notably against Taiwan. All of that increases the threat environment and then governments respond by increasing spend on defense. And then in addition, we do sell into the police market.

The threat of civil unrest in the U.S. and increasing gun crime also provides demand for us. We continue to drive competitive advantage through continuous improvement. We see continuous improvement as strategic because we believe that by improving every week, we create enduring competitive advantage versus our competitors, and it enables us to win more business by ensuring that we are cost competitive.

We continue to expand our portfolio. Steve will talk more about that in the context of Protection, and I'll talk about it in the context of Team Wendy. We have invested a lot into the sales team recently, most notably the international sales team. And when we say international, we mean outside of North America, and we are diversifying our business into adjacencies and Steve will touch on that in a second.

Okay. Thanks, Jos. So as you've already heard, quite pleasingly, Protection continued its growth journey. Revenue was 23% up, order book increased 19% pipeline ahead of us is at record levels. Just a few examples on this slide. Demand across NATO remains really strong, and we now have 16 nations purchasing the FM50 respirator under that NSPA contract. Earlier in the year, we announced a $30 million order in the Middle East. It was a new customer for our filter products. We're very, very pleased to have won 100% of the latest Department award for filters that was worth $14 million. This was the one that we announced post close of the half year period. So you can't see that reflected in our results. This program is particularly exciting as it's the first time we've secured full filter program for what is normally a dual source award.

Later this year, we will launch our new digital voice protection unit, which improves speech clarity in the demanding operating environments our users operate in. You can see the pipeline on the screen. It's very strong and units are already in quite advanced trial stages with military users around the world. And then lastly, the pipeline for our next-generation power and supplied air systems looks great.

We expect to receive independent European certification for our latest supplied air system fairly soon, and that will open up a broader market in the European defense market. Part of our growth strategy as well as the core I just talked about is expanding protection into the adjacent markets.

In non-Chem/bio, we were delighted to secure a multiyear Canadian Armed Forces contract for MITR, which we announced this week, and we've now started to receive orders under that contract. That's the first Five Eyes nation to adopt our half mask capability, and we expect some other Five Eyes countries to do so the same fairly soon. The MITR Half Mask also achieved independent U.S. and European certification in the first half of this year, and that opens much broader law enforcement and first responder markets where that certification is required. MITR remains the only half mask that is both independently NIOSH certified and is purpose-built as a military system, which reinforces the market-leading position of this company.

In integrated CBRN, we expanded the suits range and been successfully then selected to take part in competitive evaluation trials with the U.S. Department of War. So we've now got several hundred suits that have been ordered to support those trials, and we're in the process of delivering those now. That's a significant potential opportunity for us in the next fiscal year, and we're building the support of the supply chain to support any potential future ramp-up there.

On boots and gloves across NATO, the contract ceiling for our NSPA contract with that product line has been increased by 50% to meet the European real demand and demonstrates the demand we have across Europe that order book for that product now runs well through until the end of 2027. Underwater, disappointingly, France did cancel their Rebreather tender with some budgetary challenges, and we expect that to recompete later in the year. However, we are working on opportunities with the Australian Navy, the U.S. Navy, the U.S. Marines and the U.K.'s Royal Navy as well as being extremely busy delivering the backlog for this product.

So this slide tries to demonstrate some of the major programs we have in place, and we can see in the future. Across the top there, M50 and M53A1 are expected to remain in service with the U.S. military at scale for the foreseeable future. And we're working with the customer to simplify contracting and bring those 2 programs together.

In parallel to that, we are engaged on Mid-Life Upgrades to the masks, and those are designed to materially reduce the burden on the soldier and improve their combat effectiveness -- this will create a fairly compelling upgrade path for that U.S. customer from what is now an aging M50 installed base to more modern M53-like systems. Longer term, that will position us well also for the next-generation respirator program and gives us continuity and volume visibility whilst that transition takes place. Alongside masks, we've got a number of long-term opportunities across filters, suits and as a new NATO systems program that provides an upgrade path for that growing FM50 installed base in Europe to more modern 53 and 54 masks as we go forward. And then finally for me, revolutionize is sort of longer term.

We're now starting to move beyond some of those stand-alone products and really transition to be a true end-to-end CBRN ensemble provider. The Department of mask upgrade is a compelling performance enhancement, improving their combat effectiveness and will create export opportunities on the back of that program. Alongside that, our lightweight EXOSKIN suit is reducing thermal burden, improving mobility and allowing operators to stay effective for longer in the demanding combat operations that they're in.

This is the type of user innovation that our customers want. And worth saying for the past 2 years, the user community has voted our suit the #1 most wanted CBRN capability during their experimentation events.

We're single source on the U.S. Hood Mask Interface program, and that builds our Ensemble integration capability. And actually this week, we won the CBRN Innovation Prototype Award for that HMI solution from the Department of War. So altogether, the pipeline is building real depth across our Ensemble, and we're doing this in direct collaboration with our customers. The business has got proven execution, deep customer relationships and a very, very clear pipeline means it's well positioned to outperform the market and deliver sustainable medium-term growth.

I'll hand you back to Jos.

Thank you very much, Steve. So we just go back a slide actually. It's worth touching on this slide. This shows the Artemis 2 astronauts and rescuers and all of them are wearing our bump helmets and search and rescue helmets. That is obviously absolutely excellent for our credibility and very good publicity for us. One of the things that we don't maybe talk about as much as we should is we actually sell more bump helmets and search and rescue helmets into the Navy and search and rescue teams than we do ballistic helmets. And as we'll see in a minute, we're actually upgrading our portfolio.

In our core ballistic and bump portfolio, demand for IHPS we see continuing in its current format for several years to come. We're expecting more orders as we go through the back end of this year. ACH demand remains very strong. We see at least the next 6 years with the continuing requirement from the U.S. Department of Defense, and we do expect more orders during this calendar year. And the pads that go into our helmets and other people's helmets, we continue to see strong demand there as well.

In the commercial area, the new RIFLETECH helmet continues to get a lot of interest. And the Australian contract is performing strongly. We expect more orders under that framework contract this year. And actually, we expect a new framework contract to be signed last year in the next 5 years. And the [indiscernible] in the Middle East is driving some demand for us. We've actually had an order for our brand-new Endurance helmet where Middle Eastern customers already ordered 400 of those, and we haven't even launched it yet. So that's a good sign of things to come. This is our new recon helmet. Unfortunately, you can't actually see how cool it is in this slide as well as you can in real life. It's actually a hybrid construction of carbon fiber and polycarbonate that makes it light and also enables it to have very high impact protection. It's the first helmet we think of its type that is able to meet the blunt impact protection standards under 3 different certification requirements under combat mountaineering and White water. And that means that offices like the one on the right of this photo will no longer have to carry 2 helmets when they go on mission.

In this case, you've got our bump helmet, which is combat rated and he's got someone else's helmet for climbing up a clip once he land up with helicopter, that obviously doesn't make a lot of sense and our new helmet is designed to solve that problem and will, in turn, extend our addressable market size. This is our new Endurance helmet. Also, [indiscernible] you can't see it in real life, you have to take my word for it that it looks great.

This is a lightweight ballistic helmet. It's the type of helmet that SWOT teams would use. It has sold well historically, but it did not have our new and proprietary No through hole system , which means that the rails that you can see in both photos actually, on everyone else's helmet, those rails are attached by bolts that go through the helmet. That creates a weak point in the helmet, and we have demonstrated with competitors helmets that if you shoot the helmet near to those holes, the bullet can go through. We also know from extensive real-world scenarios that if a bullet goes through the shell, it is extremely bad for the user.

So -- we design our helmets where we have bosses that the rails screw onto and we don't create a weakness in the ballistic properties of the shell, and we've upgraded this helmet to that technology. We do expect it to sell well going forward. We will launch it later this year, although as I mentioned, we've actually already got an order of it prelaunch. This is our contract portfolio on the helmet side. IHPS, we expect to run through to the end of 2028 in its current form and then for sustainment to continue after that.

We are already working on the third generation of helmets with the Department of War, and they have ordered 100 of them of our RIFLETECH helmet, which is our commercial rifle-rated helmet. They've ordered that so they can do trials in the desert to see whether that might be suitable for the third generation. And then beyond that, we are actually working on an even higher rated helmet that can stop some of the newer ballistic threats that we're seeing in Ukraine. And we are ordering a very large press to start running trials on that. We are also working with the U.S. Department of War funded by them actually on integrating data, night vision and power onto the helmet to make a complete helmet system.

That may one day involve making integrating respiratory protection with a bulletproof mask as well. The U.S. Air Force continues to buy EXFIL. We may see them moving to IHPS in the future. We continue to supply pads, and we are expecting -- we have been told, in fact, that the Australian contract will be extended all the way through to 2030 and beyond.

We are interested in applying our proven skills in improving businesses to other businesses. We would be looking at things in our area. We sort of see it in 2 ways. We would like companies that help us accelerate our strategy. For example, if we can accelerate our suit development program through smaller bolt-on acquisitions, we'd be interested. And we'd also be interested in other companies in a similar space for us that we believe we could apply our recipe for improving businesses to improve them.

If we could deliver the same kind of margin improvement that we've seen in our existing businesses over the last 3 years, we would be confident in creating shareholder value. That said, we don't like overpaying, -- we'll be selective if we can't find something that we think we can improve and find shareholder value, then there is a capital allocation policy in our results deck that shows that if there is spare capital, we'll return it to shareholders.

This just shows our performance over the duration of our strategy, including the last 12 months. You can see that over the last 12 months, we've actually delivered our revenue growth targets, our margin targets, our ROIC targets and very nearly delivered our cash conversion target as well, and we've delivered -- in fact, we're actually better than our leverage target. That does mean that we've delivered all of our targets apart from missing cash conversion by a fraction, 18 months earlier than originally planned.

So in summary, we're doing what we said we would do. In fact, we're doing it faster than we originally said we would do 18 months earlier than expected. We're in the final year of transformation, -- that does mean that cash flow is set to improve next year as the transformation programs cease. We're increasingly confident in production rates in Cleveland and margin expansion in Team Wendy. Our strengthened system goes from strength to strength and is delivering in all of our factories, and we are increasingly focused on investing into growth for the future. So with that, we'll hand over to questions.

If i may just jump back in there and thank you once again to all of you for updating investors this afternoon. [Operator Instructions ] We have received a number of questions, and thank you to all of those on the call for taking the time to submit their questions. But if I may just hand back to you to read out those questions and give your responses where it's appropriate to do so. And if I pick up from you at the end, that would be great. Thank you.

Okay. I'll read out the questions. So in the current market climate, are all defense stocks too expensive? Or are there potential acquisition opportunities that enhancing the current growth?

I don't think we see all defense stocks is too expensive Actually, we don't see our own stock is too expensive. I think it's going to depend a bit on the sale process. We do see private equity driving the prices of some companies up to high levels. I think if something was very dilutive or not accretive to us because it's rated higher than us, then we would clearly think very carefully about that.

And related to that, what particular characteristics are you looking for in M&A?

Well, I think our baseline is that we want the return on capital to be higher than our cost of capital within 3 years. We do believe that in many cases, our improvement system would enable that to happen. People can see how much we've improved return on capital in the businesses that we took control of 3 years ago. And we would -- as mentioned previously really, we would be looking either at bolt-ons to accelerate our existing strategy or businesses that are close to our existing space.

As Team Wendy scales, how far margins realistically progress and steady state?

That's a good question. I mean Team Wendy margins in the first half of 5.4%. That doesn't really give the full story of what was going on in the first half. As we were ramping up production in the first quarter, we were taking on all the employees we needed to hit the higher production rates, but we weren't hitting the higher production rates. And so actually, Team Wendy was loss-making in the first quarter, but was materially more profitable in the second quarter.

Team Wendy is quite sensitive to output rates. And actually, as we went through February and March, the level of profitability in Team Wendy was significantly closer to the group average than you might expect. I wouldn't necessarily encourage you also to model it staying at 15% for the rest of the year. But I think the consensus has us at around 10% for the full year for Team Wendy, and I think that's appropriate.

Can you describe the share register, U.K. versus U.S. percentage? Is there a shift to U.S. investors?

You can answer that one...

So there's around 20% U.S. investors on the register at the moment. We do also have a large shareholder that's actually based in Spain. And predominantly, most of our register is based with U.K. small mid-cap as you would expect. And as we've moved into the FTSE 250 last year, we had a higher number of index funds that are buying FTSE 250 stocks as well.

It's worth saying actually on that question that we are very relevant to U.S. investors. 70% of our business is in the U.S. 70% of our revenue is generated in the U.S. one way or another. And actually, when we get the opportunity, we go and speak to U.S. investors, and we always fill the slots available. So there is certainly interest on that side of the [indiscernible] .

It's really a U.S. business listed in the U.K. for historic reasons.

Yes. And as we get larger, we're starting to get more relevant. liquidity is always a problem with U.K. small mid-cap companies and U.S. investors. So as we get bigger, that will start to -- another question, brilliant progress. Thank you.

To what extent does the erratic nature of the U.S. administration and Congress affect your ability to achieve stock turns and cash conversion you see now your improvement program nearing completion?

Good question. Yes, it's been thankful in the first half, particularly in Team Wendy because the way our contracts work is we produce a lot of, say, 1,300 helmets. And then the government comes in, inspect a lot and then they randomly choose helmets that get sent to a government lab. That government lab was shut, which meant that we couldn't ship any lots during the government shutdown. And that does definitely slow down inventory tons because it lengthens the time between completing the lot and sale of the lot to the U.S. government.

We hope it's in the back of U.S. government shutdowns, although nothing seems to surprise us. However, in the second shutdown, the lab was actually deemed essential, which meant that it didn't shut down in the second government shutdown. So I think there is hope that if there are further government shutdowns, the lab that we rely on, the Department will relies on will stay open, and that would increase the velocity as we would look at it from lock completion to payment.

I mean it's actually an excellent question because what we really care about, as I was explaining on the cash conversion point earlier, we never try and land the balance sheet on a 6 months at the end of the reporting period. That's not a particularly effective or efficient use of our time. But what we do care about is average working capital.

And as Jos said, clearly, if you're making helmets, but you're inhibited from being able to deliver them, that impacts your average working capital, which is where value can be destroyed if we're not careful. So it is an issue that we're keeping a close eye on. Hopefully, we're through it for now, but that's this space.

And [indiscernible], I might need more information on your next question. The question I've got here is non-U.S. production getting closer. I'm not sure if that's related to tariffs.

I think we can have a go. I mean we already manufacture masks and rebreathers in the U.K. and boots and gloves. In helmets, we only manufacture in the U.S. We do get good operational gearing by making everything in our Cleveland factory. So if we could get higher volumes and make them in Cleveland, then we would love that.

However, there are customers, particularly in Europe that are interested in local production. We don't want to build a factory that doesn't have any work. But on the other hand, if we could win a program in Europe and it required European production, then we would certainly look at moving some production or a bit of our production to Europe. There is a scenario where we can mold shells in Cleveland where all the expensive capital equipment is and finish them in Europe, what we call [indiscernible] .

Perfect, guys. If I may just jump back in there. Thank you very much indeed for addressing all of those questions that came in from investors this afternoon. And of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended for you to review.

But Jos, perhaps before really now just looking to redirect those on the call to provide you their feedback, which I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments just to wrap up with, that would be great.

Well, I wasn't expecting closing comments. I mean I think -- I mean, 3 years ago, we set out to radically improve this business. The team you see in front of you and gas is behind the camera. We have developed a strategy to improve the business, and we delivered on the strategy to improve the business, and we've actually done it faster than we thought. We now think the business is very well positioned to grow organically going forward, and we're going to focus on investing into new product development and driving growth as fast as we can.

Perfect, Josh. That's great. And thank you once again to all of you for updating investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can better understand your views and expectations. On behalf of the management team of Avon Technologies Plc, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.

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, Jos, and good morning, everyone. So, as Jos mentioned, we have had a strong start to the year with strategic and operational progress feeding 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 ROIC 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 0.9x. So the balance sheet is in great shape. So a 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-bill below 1. 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. This has dropped through nicely to adjusted operating profit of $24.4 million, giving a 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 $0.564 per share, up over 45%. The dividend is up 6.6% to $0.081 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 H1 '25. 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 U.S. commercial and military momentum. And as today's announcement of our $14 million filter award from the U.S. Department of War demonstrates, this 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 win to 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 fulfillment of all outstanding Ukraine demand.

The outlook for the year remains 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 mix 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 6 months, although quite a bit of this is not yet visible in the numbers. Order intake declined in the half, driven by 2 key factors. Firstly, our U.S. Department of War order cover remains strong, so we wouldn't expect further orders on the 2 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 dilutive 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 mix tailwind in Avon 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, laps 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 annualization of numbers called out in the full year results in November. There remains some debate on whether we can -- whether we will be able to recoup some or all of those tariff costs. As ever, the other bar is a collection of things that 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 turns held steady at 3x, which is a good achievement given the production delays and the effect 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 5 years. Post period end, we made an additional GBP 3 million contribution to the pension scheme to lock in the benefit of these heightened yields, further derisking the balance sheet. The wider triennial pension review process is due to be finalized shortly with an updated schedule of expected cash contributions provided in the technical guidance.

Average working capital turns 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 Avon 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 FY '26, 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 defense investment, particularly as Europe moves into a rearmament cycle and as the U.S. 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 U.K. Strategic Defense 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 U.S. 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 Jos to run through our progress on STAR.

Thank you very much, Rich. Our overall strategy continues, but we continuously refine the activity set that delivers it. The strength in the system delivers operational excellence and competitive advantage. In transformation, we're down to 2 final projects. One is focused on increasing output reliability in our Cleveland factory. I'll talk more about that in a moment. The other is building a much higher impact and lower cost IT function. IT is now able to support the pace of change that we want. And we're increasing the use of AI to amplify software development, support material science innovation and reduce repetitive activity. In advance, we're building our medium-term pipeline. And in revolutionize, we're investing in long-term research and capability building. We believe that our strengthened system creates enduring competitive advantage.

Our competitors can try to catch up, but it will be hard for them because every day, we get better. We do not consider the benefits of our strengthened system to be linear. As leadership, culture and capability strengthen, improvements build on each other and the rate of progress accelerates.

This chart shows how we see our businesses progress through the 4 phases of our strengthened system from building the base through improving to acceleration. We see Team Wendy now entering Phase 3 with a lot more to come. And we see Avon Protection now entering Phase 4. Our strengthened system is about people as well as process. As is often the case, we do things differently here in Avon. The content of these courses has been designed by our senior leadership team, not by external consultants or HR. We want to teach our people how to solve problems instead of solving problems for them. Our people development program support our broader business improvement strategy, helping us develop and execute action.

Since we launched our operational targets exactly 3 years ago, group average labor productivity is up 44%, well ahead of our 35% target. H1 productivity could well have been even better, but was adversely impacted by the U.S. government shutdown and recruitment ahead of higher production rates. This is now improving in the second quarter. We've reduced scrap as a percentage of revenue by over 60%. Scrap rates crept up in both businesses in H1, but we're running our problem-solving methodologies to reduce them back down again.

Average inventory turns are now at 3x, up 6% on H1 2023. Avon Protection is at 4 turns. We have more to do in Team Wendy, but a focus on higher production rates and reduced supply chain risk for now. Higher turns will certainly be one of our objectives for next year. Moving to transformation. We've built an entirely new factory in Cleveland over the last 2 years using our philosophy of product continuously flowing. This strategy is now starting to pay off. As these charts show, production rates have increased significantly since we last reported to the market. We're delivering both IHPS and ACH at or above the contractually agreed rates. Importantly, by demonstrating our operational capability on both our Department of War programs, we're well positioned to win further orders.

Now that we've achieved our production rates, we're shifting our focus to production consistency. We're driving improvement across shop floor engagement, production and supply chain planning, machine reliability and quality. We have also made some leadership changes in Cleveland, which has resulted in better prioritization, more focus and increased speed. Just to give you a sense of what we're doing as part of our machine reliability work stream. The chart on the right shows how the reliability of our computer-controlled cutting machines has improved over the last 2 months. We believe this project alone could save us over $400,000 a year in reduced CO2 usage and less line downtime.

We have consistently grown well ahead of our core markets since we launched our STAR strategy 3 years ago. We expect this momentum to continue for the following reasons. The external environment is supportive, and we've made good progress creating the sales team that can capitalize on it. Our strengthened system is improving execution, creating capacity and generating cash to reinvest in growth. We're investing more in innovation and building a strong differentiated pipeline of new products, coupled with world-class sales and marketing functions.

And finally, our balance sheet gives us the ability to accelerate growth further through M&A if we can find suitable opportunities. Taken together, this explains why we're outperforming our markets today and why we are confident that this momentum will continue. I'll now hand over to Steve to take you through the Avon Protection strategy.

Thanks, Jos. Good morning, all. So before I begin, I wanted to really highlight the picture that's on the screen here. So this was taken recently at what's called the Best Ranger Competition, an event that takes place annually at Fort Benning in Georgia. And the event really aims to test the physical, mental endurance of the U.S. Army's very best soldiers. One of the tests is combat breaching, and we were delighted that our MITR mask was used, demonstrating how it protects the war fighter from metal toxicity and other hazards. You can also see in the image how well the MITR system integrates with the U.S. Army's ACH helmet as supplied by my colleagues in Team Wendy. Feedback on MITR from the event has been overwhelmingly positive. So as you've heard, Avon Protection continued its growth journey, revenue up 23% order book up 19% and a record high pipeline ahead of us. Demand across NATO remains strong with the nations now purchasing our FM50 respirator under the NSPA framework increased to 16.

As announced, we secured a $13 million filter order in the Middle East, and we're seeing increased pull from U.S. law enforcement ahead of their preparations for heightened operational demand later this year. We're very pleased to have won 100% of the latest DoW order for filters worth $14 million. This was secured post close of the half year period, and so is not reflected in our results. This is a particularly exciting program as it's the first time we've secured the full filter program on what is normally a dual-sourced award. Later this year, we'll launch a new digital voice projection unit, which improves speech clarity in demanding operating environments. Interest is strong globally and units are already in advanced stage trials with multiple military users around the world.

The pipeline for our next-generation CS PAPR continues to build, and we expect independent European certification for our latest SCBA system soon, opening up a broader opportunity space in the European defense market. A key part of our growth strategy is expanding Avon Protection into adjacent markets. In non-CBRN, we were delighted to secure the multiyear Canadian Armed Forces contract for MITR and have now started to receive orders under this contract. This is the first Five Eyes nation to fully adopt the capability, and we expect other Five Eyes nations to do so very soon. The MITR half mask also achieved independent U.S. and European certification in H1, opening broader law enforcement and first responder markets where certification is required. MITR is the only half mask that is both independently NIOSH certified and purpose-built as a military system, reinforcing our market-leading position.

In integrated CBRN, we expanded our suits range and we were successfully down selected to take part in competitive evaluation trials with the U.S. DoW. Several hundred of our suits have been ordered to support these trials, and we're delivering those now. This represents a significant potential opportunity for us in the next fiscal year, and we're strengthening our supply chain to support any future ramp-up. Across NATO, the contract ceiling for our NSPA boots and gloves contract has been increased by 50% to meet the European rearmament demand and our order book for this product range now runs well into FY '27.

Underwater, France canceled its rebreather tender, and we expect to recompete in the coming year. We are, however, working on opportunities with the Australian Navy, the U.S. Navy, U.S. Marines and the U.K.'s Royal Navy. We're also extremely busy delivering our backlog for this product and building the support infrastructure that these users require. So this slide shows some of our major programs. M50 and M53A1 are expected to remain in U.S. service at scale for the foreseeable future. And we're working with the customer to simplify contracting by bringing the 2 programs together. In parallel, we are engaged on mid-life upgrades to the mask that materially reduce soldier burden and improve combat effectiveness. This creates a compelling upgrade path for the U.S. customer from an aging M50 installed base to more modern M53-like systems.

Longer term, it positions us well for the next-generation respirator program and provides continuity and volume visibility through that transition. Alongside masks, we have several significant long-term opportunities in progress, including filters, next-generation suits and a new NATO systems program that provides an upgrade path for our large European base of FM50 users to more modern 53 and 54 masks.

This is only part of the picture, but the mix of replenishment, fleet upgrades and new contract opportunities gives us strong near-term visibility and attractive growth. Overall, our competitive remains strong.

Turning to our revolutionized projects, which are positioning us to grow in new and adjacent markets. We're moving beyond stand-alone products to become a true end-to-end CBRN ensemble provider, integrating across the whole system. The DoW mask upgrade is a compelling performance enhancement that improves combat effectiveness and it will create new export opportunities. Alongside that, our lightweight EXOSKIN reduces thermal burden, improves mobility and allows operators to stay effective for longer in highly demanding combat environments. This is exactly the user-driven innovation that our customers want. And for the past 2 years, the U.S. user community has voted our suit the #1 most wanted future CBRN capability during their experimentation events. Being selected as the single-source partner on the U.S. HMI program strengthens our ensemble integration capability and positions us at the center of the system. I'm delighted that today, our HMI solution has been awarded the CBRN Innovation Prototype Award from the U.S. DoW.

And finally, our next-generation filter development work keeps pace with the changing threat landscape and ensures protection evolves whilst reducing soldiers physical load. Taken together, this development pipeline builds real depth across the ensemble in direct collaboration with the customers who use our kit today. It underpins sustainable growth, increases program value and cements our position as the leading full ensemble CBRN protection provider. Although not on the slide here, we're also moving ahead with our shallow water combat rebreather. This brings the market-leading and proprietary technology from our deep sea rebreathers while expanding our addressable market. You can see several of the innovations here today, and you are very welcome to try the kit on if you so feel the need.

So in summary, our strategy is delivering demonstrable value. It's protecting and growing the core while expanding selectively into adjacent markets. We're defending and growing our installed base, extending aftermarket support and driving repeat revenue through upgrades, enhancements and accessories. Beyond the core, we're investing in new technology in growing adjacent markets, and we're capturing market share. MITR is addressing the growing awareness of respiratory impacts in modern combat and policing.

We've secured early contract wins and customer-funded development, demonstrating there's a real need in this space. Customers increasingly recognize their CBRN protection is only as strong as the weakest part of the system, and that shift in thinking is opening attractive growth opportunities where we're very well placed to win. And our deep sea rebreathers remain the most capable system on the market today, well positioned for several upcoming programs. Through proven execution, deep customer relationships and a clear pipeline, we're well positioned to outperform the market and deliver sustainable medium-term growth. I'll now hand you back over to Jos.

Thank you very much, Steve. Certainly, lots going on. Before I get into the core of this section, it's worth just touching on the photo on this slide. It shows the Artemis II astronauts and their rescuers wearing our bump helmets. That sort of PR is hard to buy. We see a very strong pipeline for Team Wendy. Demand for both IHPS and ACH remains strong with order cover well into 2027. We're also seeing ongoing demand for helmet pads and liner systems from the U.S. Army and Marine Corps.

During the first half, orders from U.S. police and agencies were adversely impacted by delays to grant funding following U.S. government shutdowns. We expect grant funding to start flowing as the One Big Beautiful Bill Act starts to take effect. Recent media reports suggest the U.S. Department of Justice may release up to $3.5 billion in law enforcement grant funding. Internationally, momentum in EXFIL continues to build. We're expecting further orders from the Australian Defense Force, and we received an order for our new EXFIL Endurance helmet from a Middle Eastern customer.

Overall, we're seeing growing interest across European and Middle Eastern militaries. We have recently launched a completely new helmet called the RECON. You can see one of the launch videos playing on this slide. We have brought a helmet with us here today, a RECON helmet. It's on the side over there. Again, you're welcome to try it on later to go with your CBRN suits. When designing this helmet, we listen carefully to our customers and design something that we think has a big addressable market. We see opportunities for this helmet with the U.S. Navy, Coast Guard, search and rescue and NATO militaries around the world. This helmet is designed to achieve a triple rating against combat, mountaineering and white water standards. We believe it's the first helmet to do that.

This means that search and rescue officers, like the officer on the right-hand side of this slide, will no longer need to carry separate helmets for different missions. This helmet is also extremely comfortable containing our new pad system. We've also developed a new ballistic helmet called the EXFIL Endurance. The one we have here on the side is unpainted, so you can see the carbon fiber construction, which keeps it very light. It also has clear rails on this one, so you can see our unique no through hole attachment system. This increases ballistic protection by eliminating holes through the helmet. We've also introduced our latest cooling pad technology to support extended wear and change to a reverse dovetail rail design, which allows a broader range of accessories and a larger addressable market.

The result is a helmet that offers greater protection, flexibility and better comfort. It is a good example of how we continue to evolve the commercial portfolio by responding directly to real operational requirements. This slide shows the depth, durability and momentum of our U.S. Department of War programs. Demand for IHPS is expected to continue strongly through 2028. Beyond that, the programs will move into sustainment. There is also the potential for additional sales of a third-generation IHPS, which we are actively working on with the DoW now. That development work alongside our delivery track record strengthens an already well-established Department of war relationship and potentially expands the program well into the next decade.

We're expecting further ACH orders to take us through to spring 2028. And after that, we expect another 5-year IDIQ to be let, which will give us an opportunity to move our price in line with the market. Importantly, our contractual performance on quality, delivery and reliability positions us well for those near-term orders and for the follow-on ACH contract. Alongside the U.S. programs, the Australian EXFIL contract extension is progressing well, adding further visibility to the portfolio.

Turning to Revolutionise. We're working with the Department of War on several exciting projects. They're assessing our RIFLETECH helmet and accessories as part of their ongoing research into the third-generation IHPS and have ordered 100 for evaluation. We're also developing solutions to increase threat protection and to integrate power, data, night vision and hearing protection into the helmet. We're increasingly confident in Team Wendy's ability to grow in the long term. For the Department of War, we win through excellent products, reliable delivery and competitive pricing. That allows us to push further into the Navy and other U.S. forces supported by continued investment in new technology upgrades. In the North American first responder market, we've grown market share. We strengthened the sales force. We're demonstrating how good our products are by allowing our customers to shoot them at our well-established Headstrong events, and we're expanding the portfolio.

Internationally, we've made targeted sales investment, optimized dealer networks and are introducing products specifically tailored to meet European requirements. Team Wendy has the technology. It has the brand, the channels and the people to grow faster than the core market and to gain share. Now moving from Team Wendy for our vision for the group as a whole. Our long-term vision is to compound value by acquiring other companies and improving them. Our business improvement system is a powerful tool for improving any business. We have a recipe for success and are keen to take our learning and apply it to create further value for shareholders by buying and improving other businesses. If we buy another business, we will immediately start building a culture of experimentation and continuous improvement and move from batch to flow manufacturing. And in parallel, we will drive transformation where required. We know this approach works.

We're looking for businesses that are in our area and which we believe we can improve pretty fast. But we're not in a hurry to buy something and note the high multiples for some assets at the moment. We will remain disciplined and are happy to keep our powder dry until the right opportunity arises. Turning to risks and opportunities. Supply chain risk is lower than 6 months ago, but parts of our supply chain are still adjusting to higher production rates. Many of our raw materials are oil derived. Raw materials and freight are likely to increase in costs, which we will seek to mitigate where we can through pricing. In opportunities, earlier-than-expected pipeline conversion in both businesses could exceed our current forecast.

We're increasing capacity through continuous improvement and investing in some inventory to ensure we can respond if needed. There's also an opportunity for additional margin expansion as we sustain and improve execution in Cleveland and through operational gearing in Avon Protection. Early in my time in Avon, we set financial targets, and they felt ambitious at the time. Those targets are shown at the bottom of this slide and were originally set for 2027. In the last 12 months, we achieved the growth, margin, ROIC and leverage targets, all 18 months ahead of our original time scale.

In conclusion, we've delivered ahead of plan with strong progress in growth, margin and returns. Our transformation is delivering. Our operational performance is improving and confidence in Cleveland continues to build. That gives us a stronger platform, greater capacity and more cash to invest in growth. With supportive markets, a strengthening product pipeline, a recipe for success and balance sheet flexibility, we are well positioned for the next phase of value creation. We look forward to providing you with midterm targets later this year. Those targets will reflect the increasing scale of our ambition. Thank you for your time this morning. We'll now open it up to questions. And I'll invite my colleagues to come and sit in the dragon's den at the front.

It's Henry Carver from Singer. Just one -- a little bit more detail around Cleveland, if possible. So if I understand it right, you've got production rates up, but there's still an issue with consistency. Just sort of any more kind of color around that? And does that affect just the ACH or also RECON and EXFIL as well? Although I suppose rates are not quite as high as some of the other...

So production reliability has been an issue in the last 3 months. We're hitting the rate, and we're hitting the customer contractual numbers. In fact, we overdelivered in March, I think we delivered well, I know how much we delivered, but maybe I won't share it, but we delivered more than the customer requires from us. So that puts us in a very good position with the customer. However, we do still see more machine unreliability than we would like. We've launched a big program on preventative maintenance. We've actually created our own version of the Toyota preventative maintenance program, and we've launched it now well into a month on that. I think that is going exceptionally well, and I think it will reduce the machine downtime and that will improve reliability.

And then the other area really is around people where we have had some unreliability in people coming in, especially on Fridays. At the moment, we're actually overstaffing and that's got around the problem, but that does cost us a bit of money. So I think in time, we will whittle down the most reliable employees, and that will solve that problem. We will get on top of it. And then the last thing is because our production rates have increased so fast, so significantly, we are outstripping our supply chain's ability to deliver to us. And we are still a bit hand to mouth on some raw materials. And actually, some weeks, it is still slowing production a bit.

I'm very confident we're going to get through that in the next month. We've recruited a new head of procurement. The forecasting into the supply chain is much better, and the suppliers are just getting used to the rates we're delivering at. So I think all in all, I feel we're making excellent progress. I'm super happy with the team we've got there. I think we need another month or 2 until it is really, really reliable every week. But even with the unreliable, we're smashing our targets.

You did ask about commercial as well, though. Commercial is a totally different story. Commercial demand was not very strong in H1. So we had no problems making what was ordered. The interesting thing about commercial is we see a wave of demand coming in H2. So what we're trying to do there is get ready for that wave of demand to hit us. It's not always clear exactly when it's going to arrive, but it's either going to be sort of second half of the fourth quarter or it could possibly be next year, it could be very significant. We think we may end up doubling production in commercial, which is why we're investing in people and inventory in that area to kind of get ahead of the curve and make sure we can deliver when the orders drop. And we think what's going to happen is all this grant funding is going to wash through into the place and they're all going to suddenly order, and they may want it all delivered by the end of the financial year. So it's frustrating.

Will that be similar machinery with the similar reliability issues being sort of suddenly having to kick in or...

It's mostly the same. We use CNC machines for DoW and we use a laser for commercial, but that's probably in the weeds yet. But the CNC machines have been a pain for us, now fixed.

It's Andy from Jefferies. I guess 2.5 questions. The CBRN suit opportunities are probably for Steve or Jos. Can you just give us an update on that in terms of from a competition perspective, from a timing perspective, from a reach perspective, has anything changed? Or is this just getting stuff through the DoW from your side? Or is there more to it than maybe you talk?

Yes, I can talk to that for sure. So the program is still competitive. It's less competitive than it was. So we've been through a few hurdles, and we've seen that sort of start to whittle down. It's moving faster than we originally predicted. And that's driven by the existing suit not really delivering the capability that the users need. So there is a near-term push to get the program to run at pace. Timing-wise, there's a little bit of opacity around quite when it will reach the end, but we'll certainly be nearing that over the next 12 months, I would have thought. So we should have a lot more to share at that point. But yes, the program is running at pace and the suits we have, as we've talked about before, do have a differentiated edge to them compared to what's on the market. So we feel good about it, but it is a competitive program.

And the Voice Projection Unit, that you talked about the $100 million,excuse my ignorance, is that a unique product in the market? Or are you guys catching up with other people who are maybe different?

No. So we really have a Voice Projection Unit, which is out there. We sell a lot of those. This is a modernized version, more digitized version. It gives better speech clarity. One of the big differences between the current systems and the new one. At the moment, if you're a M50 user, you have to have a 50 Series VPU. If you're a M53 or FM54 user, you have to have a M53 or FM54 VPU. The new digital VPU that we're launching will -- it basically automatically detect. So when you put it onto a mask, it will decide I know I'm on a M50, or I'm on a M53, I'm on FM54, and then it will digitally tune itself such that it amplifies the speech in an optimal way.

So that's the big upgrade opportunity for the customer. I think also One of the things that holds customers back, and we talked a little bit about moving particularly U.S. and European customers from the M50 platform to M53 and FM54. Once you're on to a M50 with a 50 Series VPU, if you want to upgrade to a M53, you've got to buy both again. Actually, what this now starts to give you is the ability to have a common Voice Projection Unit and then start to upgrade your mass fleet alongside that without having to repurchase VPUs.

So the differentiation for the customer is pretty big. Our systems also are certified. So they're what's called intrinsically safe. So that gives you a degree of independent certification and validation that you're going to be able to have speech clarity. A lot of VPUs in the market are quite crackly. They don't necessarily give the users guarantee of what they're going to get in terms of speech amplification.

And then last one for Jos, which is a bit of, I guess, a big picture question. If we think about revolutionize and you can talk about M&A if you want, -- if you take a step back and think 3 years ago what you thought the outlook for Avon is in terms of what you want to do with the business, let's say, 2030 and beyond in terms of building manufacturing plants across the globe, whatever it may be, where do you sit now compared to maybe a couple of years back as to what you think Avon in 3 to 5 years looks like? Because it feels to me like you could do M&A here and there, you could go manufacturing sites globally. But I don't know whether that's actually the optimal plan for you guys. So just any thoughts there on what that looks like and what's maybe changed over the last few years?

I think we'll probably talk more about that at the end of the year. At the moment, we've still got quite a lot to do with our existing businesses. There is more to go in those businesses. That said, though, I think we are ambitious for the group. And as we get our heads out of running factories, which I have done quite a lot of this year, we will focus increasingly on whether we can really accelerate growth inorganically as well. But so far, we're actually not spending a lot of time thinking about it. So I'm going to duck your question for now.

Rob Byde, from Zeus Capital. In Avon Protection, you talked about a normalizing of margins. Can you talk a bit more about the drivers? Is it price or cost? And should we expect those margins to dip below 20%? Is that what you're in the round saying?

I'll take that. I think -- well, the drivers, I tried to set them out, but the first half certainly benefited from a little bit of a mix tailwind mix comes and goes. So can I categorically say that's going to unwind next time around? No. That's a little bit dependent on what orders come in and when they come in. But the mix tailwind that we saw was around sort of particularly commercial sales outstripping military and filter sales. And we already know that filter orders are now strong. So that's a bit of a leading indicator. But the other driver for outperformance was top line growth of 20-odd percent. That's always going to drop through quite quickly unless you can reinvest at an accelerated rate.

And whilst we grew investment in capital, we grew investment in R&D and we grew investment in new products, we didn't grow them as fast as revenue grew. So that sort of disproportionate growth is going to drop through in the short term. I would expect that to unwind. In fact, I quite like it to unwind because I want growth investment to continue to increase. Is it going to dip back below 20%? I'm not going to give explicit guidance for the second half. We've long said that protection trades in the sort of high teens to 20% margin range. I still think that that's reasonably appropriate over the medium term. Is it going to drop all the way back in the second half? Probably not.

Just to answer a question you didn't ask. We may not have emphasized enough just how astonishingly successful Steve and his team have been on filters. So we won $13 million from a Middle Eastern customer from a competitor. So it's a new customer. Hopefully, it will repeat. And for the first time ever, we're the sole source supplier to the DoW on the latest filters order. That's another $14 million. So for the first time in our time here, our filter lines, both filter lines and Cadillac are running absolutely full out, and we've had to add people. So historically, gross margin has been a bit lower on filters than the rest of the business, but we are going to see good operational gearing in filters running through the second half. So it will be interesting to see what happens on the mix. It will be dilutive, but maybe not as dilutive as it used to be.

Dilutive at the gross margin level, not at the OP level.

Just a quick sort of technical follow-up. On scrap, where does that cost go to? Does it go to R&D or specifically D?

No, it's all in gross margin.

Yes. And the scrap is irritating for us because we work so hard and so successfully on it. But one of our suppliers stopped providing the chemical that we make the visors from. We had to switch supplier. The new chemical has proved to be tricky.

It's a learning curve. So scrap rates have actually gone up after we spent several years successfully getting it down. It's annoying, but we will get it down again.

Andrew Humphrey at Peel Hunt. I've got a couple on commercial, which are slightly woolly, so apologies for that. And then on protection. On commercial, I wanted to ask a couple of things. Firstly, around the contracting environment. Clearly, the protection performance in commercial was strong, and there's a lot of demand coming through there. Team Wendy less so and you've highlighted kind of DHS funding as being the bottleneck there. Is it the contracting environment that's driving those variable performances between the 2 parts of the business?

It's different funding lines. So you are correct that Avon's commercial sales in the U.S. to police forces is actually up about $5 million. It was up because it's using emergency funding lines, people like ICE buying mask, whereas the helmet, it's dependent on grant funding and the grant funding has been snarled up since the end of 2025. So we expect -- well, we do expect to see a wave of funding arriving. We're actually starting to see it a little bit now. The big question for us is how quickly does it flow. We are doing something quite interesting. We are going to help the police forces and the agencies write their grants because there's going to be quite a short window to get the applications in. So we're basically grant writing for police forces.

And I think that's sort of part answering my second question around that, which is not asking for any predictions, but there are midterms later this year, you'll be used to kind of dealing with the divided government if the polls manifest as they're currently kind of looking. Is there other stuff you can do to sort of derisk the business? I mean DHS is obviously the part of it that you call out that has become kind of quite heavily politicized are there steps you can take within the business on contracting to derisk that?

I don't know. I think we're sort of subject to macro trends there. I'm not sure there's much we can do. So for diversify out of U.S. police. But actually, U.S. police and agency market is a very attractive market for us, notwithstanding some of the craziness around how the grants flow because it is an enormous market. It's interesting on Team Wendy, we've increased market share from 14% to 20% in the last year. So when the grants start flowing, we actually have a bigger share of the market than we used to. Steve is 90% or North of 90% North of -- but there are opportunities to upsell filters, the latest generation of mask VPUs, SCBA. So I think we like the U.S. commercial market, notwithstanding the fact that it does have a little bit of sort of year-to-year or in-year cyclicality.

I think it's probably worth pointing out that we're not chasing after massive market growth that we're contingent on funding for here. The 2 things that we are looking at are, number one, the regular replacement cycle. So helmets get replaced every 5 years or so. So we're just looking for the replenishment cycle and then there's a little bit of market share growth that Jos was talking about. So those are the 2 drivers. The actual contracting and availability of funds is a timing issue. The demand hasn't changed.

I'll answer that if I may as well. I mean the other side we've done is we've kept that sales team together. So they dual sell effectively, that team. And of course, with the moat that we have on the respirator side of the business, it does allow us to leverage that across to help support sales of helmets as well. And of course, you'd expect Team Wendy helmet and Avon Protection masks to work well together. They do. They work better than any other combination in the marketplace. So we do try and leverage that market share we have on protection.

That's great. And then maybe kind of following up on the protection side. Clearly seen some very strong growth there. Part of that's been Ukraine related as you called out. The question I want to ask is a broader one around kind of increased throughput you've had through that business over the last couple of years now, the performance improvements that you've made in it. clearly, there's an element of demand that is sort of related to those unicorn orders that you called out. You have increased capacity in that business now. So I wonder, is there a sort of virtuous circle there with the customer where there's a pull and you can fulfill an order. And I wonder sort of where you are or where you think you are in that cycle?

So for sure, I'd say we've seen demand spike initially through Ukraine. I think Ukraine, I guess, forced the European market to learn a bit of a lesson. So you've carried across perhaps now what was a CBRN threat that was perhaps people are a little bit complacent around. We've seen that spike in Ukraine. So I think we've got a double sort of growth drivers at the moment in European markets. You've got increased defense spending, but also an increased awareness around CBRN. So those 2 things coupled together, as we touched in the U.S., you touched on protection position, whether that be the NATO contract, we have boots and gloves and our masks, whether that's the U.K. MoD contract. We have very strong barriers to entry against the competition there. So we are seeing that increased demand. So I think there is sustainment beyond Ukraine. And our lead times, I would still like our lead times to be shorter than what they are. So you're right, we have increased capacity, but I think demand continues to increase for the business. So we do feel very well positioned in that market.

It's Afonso from Barclays. I have a few last questions from you, please. First one is a quick one on cash flow. If you could talk about the bridge from the 38% conversion you've done in the first half to the 80% plus you're guiding for the full year. I know there are some timing effects from some prepayments, but can you talk about that one by one...

Yes, yes, let's go one by one because I'll forget them. So the -- I mean, the conversion, the 38% conversion, frankly, was largely self-inflicted in the first half. We were aiming for a nice steady increase in production rates through the first half. Actually, that growth period got compressed to the last couple of months. And so February and March were very, very busy months for us. And a large amount of product was delivered in March, which was ultimately paid for in April. That's an $18 million swing in cash, which is enough to move the 38% to 100%, depending on how you -- when you draw the line as to when to measure it. Also in the first half, we saw inventory build on an average basis. We do look at average inventory turns rather than period end because it's more meaningful. And that's unsurprising given the increase in production rates I've just described. So when you get to a steady state, as we now believe we are at, you're no longer building inventory. quite the opposite, you can start to unwind it. And so you've got a couple of drivers there for the second half, which will provide a fairly straightforward bridge.

The second one is on M&A. Apologies for coming back to this, but I appreciate you're not in a rush at the moment given the multiples we have in the industry. But is that going to be bolt-ons? Is it going to be supply chain vertical integration? Is it going to be Europe, U.S.? How do you think about that in terms of timings and then in terms of -- secondly, in terms of the contribution that it's going to have for long-term growth?

We're actually interested in both. So we're interested in bolt-ons that can accelerate the strategy. Suits might be an example or rebreathers or some of the power and data around the helmets. There are bolt-ons that would be interesting for us. Let's call that strategy acceleration acquisitions. But I think we are more ambitious than that. We believe we can improve any industrial business. I'm not saying we would buy any industrial business, but we believe our skill set could improve any industrial business, and we would be interested in buying and improving other businesses that have enough scale that it makes a difference for shareholders.

And last one is on the supply chain. I have one slide on that in your deck. It's normal as you achieve these high production rates. So can you specify what are the key bottlenecks you're currently seeing? And what are you currently doing to mitigate those risks in the short term?

Well, we've actually had -- we've had shortages of quite a number of things actually. Maybe it gives you some color to go through them, the plastic skins for the helmets, the retentions for the helmets, the rails for the helmets, glue, paint, all sorts of things. it's sort of hard to get across in the slides how much the production rates on particularly ACH have increased over the last 6 months. It would be fair to say they've doubled. I think last month, we made. Can you remember how many helmets...

9,800.

That's just one line. I mean, overall, it was like 17,000 helmets or something in a month. It's the highest production rate Team Wendy has ever achieved. And as that rate increases, it's basically surprised the supply chain, even though we gave them forecast, I don't think they really believed it. And then we're running right up to the wire on some of those materials. I mean sometimes they're coming in the day we need them, which is more just in time than we would actually like. As I mentioned earlier, though, I think we would be a bit depressed about this if it weren't for the fact that a month ago, we replaced the Head of Procurement and the new Head of Procurement is absolutely killing it.

A month is too short for him to fix all the issues, but he's definitely making a big difference, and I think we'll get on top of it in the next month or 2. And forecasting internally is getting better, forecasting into the supply chain is getting better. Our ordering consistency is getting better. And the lines are getting more consistent, which helps the supply chain as well. But it is fair to say running out of stuff has been a frustration over the next -- over the last 3 months.

So we have a question from Richard Paige at Deutsche Numis. May I ask on your first U.S. 100% filter contract win, great news. Was this due to customer contracting change or performance or a change of competitors?

Do you want to take that?

Yes, happy to. I thought that would happen. So why did we get 100% of the filters? I think we've worked closely with the customer on this, and we've really shown them a way as to how they can do that. So it also was supported by what we just touched on. We've managed to ramp up manufacturing rates. We've managed to make sure deliveries are on time. We've got a very, very strong track record of delivering to the DoW. So all of those things combined basically meant the customer was happy to award us 100% of the contract.

And next question is also from Richard Paige from Deutsche Numis, which is what is your H2 visibility and the likely pipeline timing for the full year?

So visibility in the order backlog for H2 is very strong, unusually strong, actually this year. So we always have a little bit of win and deliver as we go through the year, particularly in Steve's business. It's a much shorter win and ship cycle, but the coverage for the full year is stronger than it normally is. When that feeds through to revenue, I'm not going to sort of get staked out in the sun on giving Q3 and Q4 guidance now, but we're pretty confident that FY '26 will be a good outturn.

I think one anecdote that's interesting is that Team Wendy commercial sales pipeline is up 90% over the last 6 months. Now when exactly they drop is always the question, and you can get disappointed by timing. But overall, when we look at the pipeline, it is up significantly.

And the final question is from Rob Manning at TrinityBridge. -- is any guidance on forecast leverage? Is there an update on your capital allocation policy, returns less acquisition opportunities and how you think about these trade-offs strategically?

So on leverage, the expectation is it will come down. And I think consensus has a net debt, excluding leases of around $31 million, $32 million. I think that's not a ridiculous assumption, but we don't give explicit guidance. What was the other one? Capital allocation, yes. So there's no updates to the capital allocation policy currently. The slide is in the back of the deck. So it's still there, but we will give you an update on capital allocation later in the year.

Very good. Thank you very much for coming, everybody.

Good afternoon, and welcome to the Avon Technologies Plc 2025 for your Results Investor Presentation. [Operator Instructions]. Before we begin, I would like to submit the following poll. I would now like to hand you over to CEO, Jos Sclater. Good afternoon to you.

Hello, and good afternoon, everybody. We're just going to go through a cutdown version of our results back and then what we really like is questions, so please save your questions for later.

Our results actually are video and the whole script and video is available on the website. If anyone wants more information that we can give in the time we've got available on this call. So last year was a good year from a financial perspective. Revenue and profit both grew very well. Revenue is actually probably a bit above expectations and actually we ended up the year overall a bit above expectations.

Our strengthened system, which is our version of the Toyota production system that tailored for our own needs, continues to deliver sustainable competitive advantage for us. That's helped us drive improvement in productivity, reduced scrap rates and improved inventory turns or less cash tied up in inventory.

We are also nearly through our transformation program, which we set out in 2023. We've got a bit more to do this work -- this year with a couple of projects. But the main heavy lifting has now been completed. We have closed the factory in California and built a new factory in Cleveland and have ramped up production nearly to where we need in Cleveland with a bit more to do this year.

We have increased our investment into R&D during the last financial year, which has led to some exciting new products and new markets opening up to us, which we'll talk more about later. And we have, over the last 3 years, developed a business improvement system, which we believe can be used to improve not only our own businesses, but any industrial business. And therefore, we are starting to get our head up and think about how we can augment our organic growth with M&A opportunities as well. That is not an immediate pivot.

We just want to signal that over the next 5 to 10 years. We see this as a company that will continue to grow organically as well as through small bolt-on acquisitions over time. Overall, we have actually exceeded all of the targets that we originally set a 2027 apart from margin and margin, we expect to achieve those targets this financial year. So with that, I'll hand over to Rich, and he will take you through the numbers.

Thanks, Jos. As you can see, the headlines demonstrate [indiscernible] pretty solid progress. The order book, up 16% at a record $263 million leaves us pretty well covered going through FY '26 on both elements and respirators. So that's a great move in the right direction. Revenue growth of 14% was as Jos alluded, slightly slower than people expected. And that dropped through to operating profit, which was up 31% in the year to $40.3 million. And the third area of focus is return on invested capital. That came in at 18.6%.

Our very strong progress was made reducing the average working capital [indiscernible] in the business. I [indiscernible] probably come back and talk about that a bit more later. Cash conversion 90% is another good year even after a pretty [indiscernible] burst in deliveries in Q4 let us find a bit of a receivables over going into the new year. That receivables overhead has now evaporated. We haven't paid for all of those procedures. So that's good progress again.

And net debt average is in a very strong position despite actually quite considerable investment into the business through the year. So revenue growing cash conversion and leverage are now all better than our medium-term targets, which were originally slated to be achieved by 2027. And actually, operating margin is well on its way, and we'll [indiscernible].

Moving on to P&L. As you can see, order intake in the year was very healthy at $352 million, book-to-bill 1.12x. Orders were slightly lower -- slightly lower year-on-year in [indiscernible], reflecting very high pull-offs against U.S. Department of [indiscernible] programs in 2024. So coming off a very high base. But you can see that the book is still very well covered going into '26.

Actually, those [indiscernible] will be reasonably lumpy. It's just an [indiscernible]. The record closing order book of $263 million is so strong, particularly [indiscernible], where actually the U.K. and international orders were incredibly strong.

Revenue of 14% revenue growth reflect very strong performance across the board with [ AM Protection ] up 16% at [indiscernible], up 12% year-on-year. Operating profit, as I said, of $40.3 million is over 30% higher than the prior year, resulting in a margin of 12.8%, which is 130 basis points higher than 2024, and it is a very helpful step on the road to achieving our medium-term target of 14% to 16%.

Net finance costs reduced by 16% to $5.4 million, largely driven by lower average net debt and the tax charge of $8 million represents an effective tax rate of 23%, which is where we think it will stay over the next few years, absent any further changes to the tax regime.

All of that are up to adjusted basic EPS of $0.92 per share, 35% up year-on-year despite the step-up in tax rate from last year's 17% where we benefited from some more one-off divestments. Quick [indiscernible] through the divisions. [indiscernible] has actually had an [ autumn ] year. Order intake up 18%, order book up 63%, revenue up 16%, operating profit margin of 160 basis points of almost 20%. This does show the ability of the business to lead into a strong demand environment to drive cost growth.

The growth in orders and in order and backlog has been not only driven by strength in international markets, as I said, offsetting a slightly softer year in commercial Americas, which actually saw a very strong year in 2024. Ukraine related demand now accounts for just $13 million in that order book. And we've always seen Ukraine-related demand as something of a [ unicorn ]. It won't be around forever.

But what is interesting is that partly even after stripping that out, order book is growing very nicely. And actually, where we are seeing strong demand, which one could argue is Ukraine related is countries that are peripheral to Ukraine and Russia, where clearly governments are concerned the Russia's ambitions might not just stop in Ukraine.

Revenue growth in the year was driven largely by Australian FM 54 deliveries, strong demand for [ CBRN ] boosting glass format customers and I say some prior with another good year for rebreathers. The excellent [indiscernible] margin was helped by operational gearing, improved productivity and sales mix. And actually, given the strength of the order book, over protection is exceptionally well positioned to drive further growth in 2026.

As I said, order intake in team [indiscernible] was a little bit softer year-on-year, but the backlog remains robust and the strengthened product portfolio is driving an excellent pipeline of opportunities as we enter the new year. Revenue growth of 12% was driven by further growth in military ECH2 deliveries moved towards full rate production and actually we saw further strong demand for [indiscernible] and for a number of customers, but particularly the U.S. Air Force and Navy.

Operating profit margin nudged 4 to 4.6% from 3.9% the year before, which is a good improvement, but it's still somewhat of [indiscernible] internal ambitions. But we are confident to further progress in '26 as we demonstrate the sustainability of the production rate increases that we saw in the last quarter of '25. And as the benefit of cost reduction largely through the transition from California to Ohio comes through to the bottom line.

As a reminder [ ACH2 ] will grow further in 2026 as we step up the production rate again. And whilst it is profitable, it will remain dilutive at the margin level. But notwithstanding this, we do expect further progress on margin as we go through the new year.

So just moving quickly on to the outlook for the year before I hand back to Jos. We do expect further good growth in helmet deliveries, as I said, as we finish the [ CH2 ] ramp-up. And we also expect good growth in Avon Protection underpinned by the very strong order book in the business. These factors combined will equate to what we expect to be a high single-digit revenue growth at the group level.

We do expect the financial benefits of the transformation program to drop through this year with a modest weight into the second half. And even after the additional dilution from the growth in lower margin ACH sales, we are confident that we can deliver our operating margin within our target range of 14% to 16%.

As highlighted, given the call on Wednesday, we do expect transformation investments to drop to around $6 million in 2026, and we expect return on invested capital will progress nicely as well. And just addressing 1 of the questions that was pre-submitted, it was pointed out that we have made $20 million of adjustments to operating profit around $15 million of which relates to the transformation.

The question was when can we expect these translation adjustments to come to an end, and the [indiscernible] is 2026. '26 represents the last year for transformation adjustments coming below the line. And finally, we expect cash conversion to remain above 80% despite further increases in investment in the business to drive future organic growth. So I think '26 show have to be quite a positive one.

Yes, absolutely. Thank you, Rich. So we continue with our Star strategy, which was set up written in 2023. Though it's not a static thing. Every year, we set new initiatives for the year ahead, and we've already done that for 2026. But the big picture remains the same. We have our strengthened system that we use to continually improve the business, that will continue forever, and we still see plenty of opportunities to improve our businesses and therefore, drive cash flow and free our resources to invest in the business.

Our transformation program is nearing its end. And this year, as Richard said, is the last year. In advance, we are investing more into R&D. Most of that we expense, so it does impact our profit in the year we spend it. We think that means that we have good discipline around spending our money wisely. And in revolutionized, we continue to work on new products, which will support growth in the long term, and we are starting to look at opportunities to acquire other companies to accelerate that growth and that is a slight refinement of our revolutionized [indiscernible].

This slide shows our business improvement system, starting with strategy. We are unusual in many ways. One of them is the way we do strategy. We actually teach and coach our businesses on how to set strategy but we want them to set their own strategies because our view is that they're much more likely to actually execute on their strategies, and we build where most strategies fall down is that they go and actually get done and translated into action.

We translate our strategy into action through an objective and key results setting process where we cascade the objectives all the way through the organization to align every single employee to our strategy. We have our own proprietary STAR Academy to build capability in our people A lot of that is actually focused around how you continually improve business and the tools that enable you to do that.

And this year, we sold 30 people to Japan, to Milan from people like Toyota that have been doing it for 50 or 60 years. And actually, next week, we're sending another 20 people to Japan. We feel it's a worthwhile investment in people development. And then our strengthened system continues to deliver results, and we continue to improve.

We build out the system of staff. These are our key operating metrics. Our view is that if we improve these metrics, the profit will follow. Since we originally launched the strengthened system, we've improved productivity 28% obviously more than offsetting inflation. We've reduced scrap by 62%, and we've improved inventory turns by 46% and we see more to come on inventory terms, bring up more cash to invest in the business.

Over the summer, we needed to increase production in our Cleveland factory to meet customer demand. We have considerable demand for helmets, actually from all around the world, but particularly the Department of War in the U.S. It's a [ micro ] to have to have too much customer demand, but those also cause challenges. I was actually increased them for 2 months myself, and we ran 14 improvement projects over 2 months with a view to increasing production. And over that time, we actually tripled production on our 2 main Department of War lines as this chart show.

Avon Protection also had a great year on using our strengthened system to improve its business. We could have used any number of examples, but there's just a few on this page. In [indiscernible], improved productivity by nearly 80%. We reduced scrap by over 50% and in boots and gloves which, it's not a product line we talk about very much, but it's actually been wildly successful. We've got enormous demand for our chemically resistant boots and gloves, so much demand. We've actually got 2 years order backlog on that.

So we also needed to increase production there. We managed to increase production rates 47% in the year without really adding a lot of presses, we are now adding 4 extra presses to increase production even more, although we managed to get those secondhand from a company that's scaling back their rubber production.

If you actually look at our results as a area of the transformation of our U.K. site, -- it's actually the only 1 we did a time lapse of which is shame because the other side would have shown something similar. But as well as the [ watch ] for those who are interested, the point we're trying to make is that our factories have changed almost every single week as we move them from batch manufacturing to flow.

One of the reasons we are very happy to talk about our strengthened system and I think a copy of our book on the strength in system is available on our website because it is one thing to know how to improve the factory. It is quite another thing to actually do it. And the point we're trying to get across is how much is involved in actually moving a factory from batch supply.

This year, it is a pivotal year in the sense that we are moving from the fixed stage of our strategy to both are entirely on growth. We have very good markets. They provide a tailwind. We certainly think it's better to be seeing with the current and against it. Defense spending is going up. The threat of chemical attack is going up considerably.

We were told by someone from the Ukrainian front line only last week actually, the Russians have had 5,000 gas attacks over the last year against the Ukrainian trips, all those trips need gas mask and everybody proximate to Russia. So many of the other countries on the fringes of the Russian border are also stocking up on gas mask for the same reason. And numbers of military personnel are increasing, and they all need resistance against chemical weapons and gun crime in the U.S. continues its long-running trend of increasing, unfortunately.

We're increasing investment into innovation. We do that by using our strength and system to free up cash and resources, some of which we then put back into the business in the form of investment in engineering. And we now have an ability because of our rock solid balance sheet to accelerate through inorganic growth as well or acquiring as a company.

Last year, Avon Protection saw a 63% increase in its order book. It's pipeline of opportunities beyond that was also losses out demand is for masked from the U.S. Military and Australia, which is a new military that we won a year ago, was it? We continue to sell mask under our NATO framework contracts and are now up to how many countries? 16 countries buying boots and gloves and masks and filters under the NATO framework contract.

We won 3 new navies last year for rebreathers. We bid for 2 more and hope that we will win one of those or both of those this year. And looking a bit further out, we're still working with the Department of War on filters, although our filters line actually are maxed out at the moment on one shift, but we could add another shift if we can win more work from the Department of War and we are expecting to win more from them this year.

Our new [indiscernible] mask and goggles, we are actively working with 4 out of 5 of the special forces groups across the 5 stations and typically general purpose trips tend to follow special forces. And then ensemble, we have interest from the Middle East, Europe and America on our chemically resistant suits.

We developed the [indiscernible] using our own money. But interestingly, we've now won 2 programs of record from the Department of War to take the [indiscernible] system forward and add functionality to it, like hot swapping filters, filters that mold closer to your face so that you can get a better achieved on rifles, new client communications system and increased protection generally.

The important thing is that they are actively trialing our products, giving us feedback on it and paying for the development of that system to meet their needs, which increases the likelihood that they will then take it up and purchase it once we finish the development stage.

And [indiscernible] one, there's a couple of pieces of good news. The first is that our strategy of selling complete systems involving chemical-resistant boots and gloves and suits and masks and Power & Air Systems has paying off. We have won orders with Turkey for that system. And we are working actively at the moment with the U.S. Department of War on 2 suit programs, well, 1 suit program, but they're looking at 2 of our suits as potentials to sell into the U.S. military and they're actually funding a testing program with us at the moment, which will run through this year, we hope could possibly result in the sale of around 700 suits this year. It could be less depending on how we get on in the first phase of that project.

We did lean forward and spend more on R&D during the year. We've spent $14 million on R&D, up a couple of million dollars. With that money, we developed a new generation of our [ CS paper ] system, which is multimode. When you don't -- when there's oxygen in the environment, it will pump air through our filters into the mass where that enables users to breathe more freely and exhale -- they're able to exhale more than they would be briefing through normal gas mask. But in addition to that, they suddenly find themselves in an area with no oxygen, they can switch to supply our systems and carry on our activities.

We've also developed a new communication system for our market. It actually goes across all of our masks and enables users to project their voice out to an audience very useful, for example, for riot police. It also connects to their communication systems so that they can talk to other people wearing our systems. In [indiscernible], we are working on a shallow water [indiscernible].

We're also working with various militaries to try and get some more funding for that development and we are working on a novel new filter, which actually replaces 3 existing filters with 1, considerably reducing the logistics burden for people using our mask.

In Team Wendy, we've got plenty of demand for the [ IHPSalmer ] for our general purpose summit for the U.S. military and for [indiscernible] from the Australian forces. One of the other things we probably haven't talked enough about is we sell a very large amount of bump permits to the U.S. Navy, which they deploy across the fleet to users. In fact, if you do -- if you see an aerial view of an aircraft carry out U.S. Navy, you'll see each team has different colored [indiscernible], and we make those helmets. We actually sold 25,000 of them last year to the U.S. Navy. And looking forward, we've got good demand for our [ Epic ] helmets, from militaries internationally and from police and first responders in the U.S.

We launched a brand new helmet last year called [ Rifle tech], and we're seeing good demand from that. From foreign military is, when we say foreign, we mean non U.S. but also interestingly from [ fee sources ] in America, which is a bit of a surprise to us because it's reassuring the expenses on that. And we are gaining market share in the U.S. [indiscernible] market.

Last year, we were up 15% in that market, and the market was probably up 4% or 5%. This is a new [indiscernible]. It's innovative in many ways. It can stop an AK-47 bullet muzzle velocity. It also has an innovative path system, which makes it cooler to wear and also more comfortable. It's so comfortable that when we were testing it, some deep have got to take it off at the end of their shift and went home with it on their head. It also looks great, which is very important, one of the first rules of being in the military is the look cool and the second role is not to get lost. And the third rule is if you do get lost to make sure you look cool. So [indiscernible] will say does meet on those requirements. Well, I'm not sure how people not get lost, but the other [indiscernible].

We continue to invest in helmets much of the future. We are being funded to carry out research on how you minimize traumatic brain injury, including from glass, for example, from improvise bonds. What does all that add up to? So in 2023, we set up targets originally actually for 2027 where we certainly thought we could grow the business on the top line by more than 5%. We said we thought we could get margin to 14% to 16%. So we get ROIC or return on invested capital above 17%, we thought we could deliver about 80% to 100% cash conversion over that period and we thought we could get leverage below or within a range of 1 to 2x of profit.

We've actually ticked all of those 2 years early, apart from the margin one, while we've got a little way to go. In fact, if we were to look at the exit rate for the last quarter, we would have been pretty well there but we think we'll get there for the full year in 2026. So we will have delivered every target at least the year early most than 2 years.

So in risk, well, yes, we're unusual. I think possibly still unique. I'm still hoping someone might copy us, but they haven't yet as far as I know. But we are quite front and center of our risks and opportunities. We think that every business has risks and opportunities. In our case, the thing we're still worrying about most is how do we successfully increased production yet again in Cleveland.

That means we've got to swap the assets there, we've got to run the lines faster. We need to avoid having to rewire gaming products. We need to make sure that quality is 100% baba. We have struggled to recruit the people we need. We've recruited 300 people in the last year. Many of them are amazing. Some of them perhaps are not what we want. So there will be some selective increases in capability as we go through this year.

So I think that's probably our biggest risk. The other reps are a bit more minor. We are seeing a new entrant potentially into the IEP program and irritating in us actually nothing to do with us. Our competitor failed to pass first half the testing first time round and the Department of War was very keen to have 2 suppliers, so they actually funded another supplier to get them into the program. That hasn't yet, first test [indiscernible] they are in testing. So we'll see if they get that. We don't expect it to have a big impact on our volumes over the next couple of years.

On the opportunity side, we still see plenty of opportunities to expand our homeless internationally, and we do see opportunity to [ for ] further margin expansion. If the strengthen system continues to deliver as well as it has been we could see some upside there. Similarly, volumes were a bit higher than we expected, we guess and drop through and that would help on margins.

So with that, well, over to you guys -- oh, no not with that. There's a summary. And the summary, we are coming to the end of the transformation stage of our strategy. We have fantastic world-beating products and we are investing in technology to deepen the competitive moat around the business, and we continue to invest in patents. We are increasing market share and we have supportive growing markets and we have a business improvement system, which we think is a recipe for success both in our own businesses and if we were able to acquire in our business. So with that, I hand over to you, guys.

[Operator Instructions]. I would like to remind you that a quarter of this presentation, along with a copy of the slides and the published G&A can be accessed via your investor dashboard. And Jos, Rich, as you can see, we have received several questions throughout this presentation. And if I may now hand back to you and kindly ask you to read out the questions, were appropriate to do so, and I'll pick up for you both at the end.

Well, the first question in front of us is how do we balance product development between meeting known program requirements and pursuing disruptive innovation. I think in general, we try to deeply understand the needs of our customers. The U.S. Department of War is particularly helpful in that they run events that they invite us to where we can show our prototypes to the users, and they will actually trial them sometimes for 2 or 3 days, and we get feedback on them that enables them to improve them. We don't have always develop stuff in response to programs of record. But we generally do develop things in response to a customer need.

Good examples of that of [indiscernible] actually originally a program that the Department of War never actually went forward with, but we thought the idea was good, and we thought the need was real, so we developed that with our own money. That's been interesting to us because once they've seen the product we've developed, they now have funding for its development to go further.

Similarly, chemically resistant suits. We knew there was a program in America. We weren't on it but we thought we could make a better suit. We understood the customer need very deeply. We developed the suits with our own money but now the Department of War has invited us to submit that suit in response to bids because they can see the technology we've got.

So I think overall, to spend money wisely, we'd like to make sure we're very close to the customer, but we will leave forward ahead of the program record.

The next question is how much of the current backlog benefit from contractual inflation pass-through? Well, I mean there'll be a bit of inflation about 3%, I guess. Not much.

Not much is a short answer.

Yes. How much competition do we have for our various products? It very much depends on the products. In masks, there isn't a lot of competition for masks as high-end as ours. In filters that the bin was theoretically to suppliers, although the other supplier at [ 3M ] appears to [indiscernible], that's built a line. We're not too sure whether they're going to compete with us going forward. There are 2 Chinese filters and probably from other countries as well. However, they're not built for military applications are not as robust as our filters, so I wouldn't advise anyone to buy them.

In [indiscernible] is one of the 2 competitors, although none of them have our technology, and we have a pan moat around our [ rebreather ] that makes it pretty hard perhaps impossible for anyone else to catch up with us. In Helmet, there's a lot more competition, especially at the lower end of the market, lots of people can make [indiscernible]. Quite a few people can make polyethylene helmets, which is what we make, how the [indiscernible]. There's only one manufacturer that can make a rightful resistant helmets and that's a company called [ Gentex ] who we respect a lot. They're very good, although we would say that [indiscernible] helmet isn't as good and doesn't look as cool. What else that --

Yes, that's [indiscernible]. And the next question is linked. I mean, what are your current market shares and what do you think are realistic market share targets over the next few years?

I mean if you just split the business in 2 and look at respiratory on gas masks. We have a pretty strong market share currently. Our market share in North America is probably around 91%, 92%. And in Europe, it's pretty high between 60% and 70%. And the reason why it isn't higher is because a number of nations choose to buy domestically sourced product, which is entirely understandable. I'm not going to put the market share target for [indiscernible], but I can guarantee that it's unlikely to go much above 100%. So if we're looking to grow respiratory, we need to not just grow market share but also grow wallet share, which we are seeking to do and Jos touched on a few of the innovations that we've come out with around boots and gloves, suits, powered and supplied our products, so that's how we're continuing to grow that business.

On rebreathers, we -- our market share, I don't actually know the answer to that question, but it probably isn't that high. [ Rebreathers ] getting installed into the market and then they last quite a long time. We're a relatively new entrant to that market, probably having sold our first rebreather in about 2018, 2019.

But what I will say is that all of the business that we have entered in the last 5 years. We've only lost one and it was quite small. So that market share is growing very, very nicely. And then in helmets, just looking at the U.S., our market share is probably 25% or thereabouts within the U.S. military, it's growing from around that level to 50% over the next few years based on contracts we are already supplying under.

We have seen market share growth in U.S. commercial, as Jos alluded to. But our [indiscernible] business is largely U.S.-centric. And so market share outside the U.S. is minimal. But we do think that there's huge opportunities to grow that over time. So we've been investing in sales and marketing activities, quite heavily in 2025, we will continue to do so in '26. And hopefully, we'll be able to report back with some market traction outside North America when we talk to you next year, of course.

Thank you, Rich. Next question is there a [ show slide for the permits]. The answer is yes. Well, they're warranted for a period, it depends a bit on the home actually. Sometime it's warranted for 5 years, some for 10, [indiscernible] actually wanted to [ turn]. In America, especially, they won't use the helmet beyond the warranty period because they're worried about liability.

However, some countries will refurbish helmets. Australia is a good example. They have a very good refurbishment program for our [ xFi ] helmet that we sell them. That's also good for us. So they're bringing them in after 5 years. They sound [indiscernible], they've repaid them and they've got new pass in them, maybe new retentions, and we make parts and retention. So we got after market on them.

And actually, we are expanding that into, masks as well. We've got -- we've just done a deal actually with UK Police Force where after 5 years, they're selling the mask back to us and we refurbish them, make them as good as new and sell it to them again.

Next question is when the Department of War funds development, do they only IP? The answer to that is a benefit on the contract. Sometimes, they will own the IP that they have paid for, but they never own the IP that we've already developed, what we call background IP. [ Mike ] is a good example of the [indiscernible]. So we develop [indiscernible] on our own dime. If they pay us to develop a new communication system or something that might be at least shared with them, but they can't make the mask, but as we already developed that before we started working with them.

Let's move on to -- thank you, [ Pete, Alan about wearables]. [indiscernible] question is as industry veterans, can you talk us through your thinking on M&A? There was a recent Barenberg. Now, they actually initiated investment -- sorry, investor, they initiated coverage on us. They call us industry [indiscernible] and then the more recent at times also call mid industry [indiscernible], which I'm a bit sore about.

We're very bitter.

[indiscernible] to say anyway. We have been around defense and industrial is a long, long time. I've been in industrial or my whole career. Our thinking on M&A is that we -- firstly, we're not an [ RE ] to do anything. But we do see some areas of our supply chain that we could usefully derisk if we acquire companies that's particularly -- there's a bit of that in rebreathers actually. It is particularly true in suits where we have quite a complicated consortium of partners.

We may be able to increase supply chain reliability by buying some of those. There are also areas where we would like to control the IP a bit more, and that may lead to acquisitions. So I would look at those as small acquisitions to bolster supply chain resilient and get more control of the technology. And then we also -- we would also be interested in bolt-on acquisitions that expand market share, most likely in helmets because we already have very high market share in the respiratory products.

And the final piece to that, I think, is we do have very strong distribution channels that we've built over 20 years of supplying into the U.S. If we can find opportunities to push more through those distribution channels. That feels potentially very synergistic if it's aligned to our core areas of business.

We're probably answered about the [ IL ] acquisition I mean I could probably embellish the answer. We believe that most companies in the industrial space still manufacture and batches and that includes Avon when we came in.

Interestingly, when we first arrived in Avon, I was told categorically by the factory manager in the U.K. that there was no further room for improvement because they've already been doing continuous improvement for the last 20 years. And yes, we have managed to improve and we single operating metric in that factory. We have relaid out absolutely everything. There's no piece of equipment that is in the same place as 3 years ago.

Just to give you a real example. 3 years ago, they scrapped 40% of every filter they made for the U.K. MoD as of last week. They scrap 0.5% of what they make, which obviously considerably enhances our profitability. We think there are lots and lots of companies out there that are similar to how we found a 1, 3 years ago, running batch manufacturing at high levels of scrap or quality and high inventory.

If we could find a company that had some good contracts and some good contracts but was manufacturing inefficiently and have high levels of inventory we would for sure be interested in that because we'd be very confident we can improve them.

That's great. Fantastic, Jos, Rich, if I may just jump back in the investors today. [indiscernible] before we direct investors to provide you with a feedback, which is particular importance to the company. Can I please ask you for a few closing comments?

We've got 1 more question actually. Given the Department of War and Trump localizing reduction, do you see Avon being a U.S. target?

Not really. It's not something we worry about. Our job is to keep improving the revenue and the profit, the share price will follow. If we're price right, we shouldn't be particularly attractive to other people.

And just to be clear, I mean, the localization of supply for the U.S. is not new. -- we make in the U.S. for the U.S., and we always have to see to all intents and purposes when the U.S. Department of Wars acquired -- made their acquired from a U.S. country.

Yes. Not too sure how [indiscernible] question, how many of these loss and not companies can you and your colleagues cope with?

I mean, in terms of acquisitions, that's going to -- we'll build the capability over time. Obviously, Rich and I, maybe you know history from -- as industry veterans. We've both got mergers and acquisitions background. We're very familiar with it. I actually started life as the mergers and acquisitions lawyer, although that was quite a long time ago.

But yes, we excitedly feel we have the capability, but we wouldn't be looking at more than 1 or 2 acquisitions a year, certainly not [indiscernible].

When can you expect the adjustments of profit? I answered this question earlier, but when can we expect the adjustments to profit for the reorganization to [indiscernible] the answer is 2026. So investment in transformation in '24 was 13 million in '25, it was 15 million. In '26 6, it will be 6 million as set out in the results, and it will be 0 from the [indiscernible].

Very good. Well, thank you, everyone, for your questions. We appreciate them a lot. Very interesting to talk to all of you guys. We think 2026 will be another year of progress for this company. We think we see moving forward on all metrics actually, and we have probably the biggest pipeline of opportunities that we've ever had partly helped by the market and partly helped by the investment we made into research and development. So we look forward to moving our transformation and focusing on growing the company.

That's great, Jos, Rich. Thank you for the questions. And thank you once again for updating investors today. Can I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order other that the Board can better understand your views and expectations. This will only take a few moments to complete and I'm sure will be greatly valued by the company.

On behalf of the management team of Avon Technologies plc. We'd like to thank you for attending today's presentation, and good afternoon to you.

Good morning, everybody. Thank you very much for those of you that have come in person, and welcome to those on the phones. I thought I'd start by thanking our employees. The speed of change across Avon has been challenging at times but people love being part of a team that is up to something exciting. We've grown the company and EPS has doubled since 2023. We now have an exciting pipeline of new products, a solid balance sheet and more strategic options. We could only do all this with such a great team.

We made excellent progress in 2025. Revenue and profitability grew rapidly. We've transformed every factory using our strengthened system. We reduced costs by closing our Californian factory. In 2025, we invested $14 million in R&D, most of it expensed, fueling a pipeline of innovative products and generating excitement amongst our customers. The order book and pipeline are both stronger than ever. We have a scalable platform facing into growing markets and we're firmly on track to exceed our revenue targets and reach our margin target range in 2026.

I'll now hand over to Rich and he'll talk you through the numbers.

Thank you, Jos. Good morning, everyone. So as you can see then, the headlines demonstrate another year of strong progress. As usual, all of the comparators will be on a constant currency basis. The order book at the end of 2025 has hit another record at $263 million, 16% higher than the prior year. This leaves us very well covered for FY '26 across both helmets and respirators. Revenue growth of 14% dropped through to strong adjusted operating profit, up 31% at $40.3 million. And my preferred area of focus, return on invested capital came in at 18.6% after significant progress was made reducing the average level of working capital tied up in the business.

Cash conversion of 90% represents another good year even after a late burst in Q4 resulted in a high receivables balance as we crossed into FY '26. And the combination of all of these factors saw the balance sheet strengthen further with net debt leverage of below 0.9x despite considerable investment into the business during the year. Revenue growth, ROIC, cash conversion and leverage are now all better than our medium-term targets and operating margin is well on its way.

Moving on to the P&L. Order intake in the year was very healthy at $352 million, giving a book-to-bill of 1.12. Orders were slightly lower year-on-year, reflecting very high call-offs against the U.S. Department of War helmet programs in '24 and a slightly lower share of IHPS awards in '25. The phasing of these call-offs will always be fairly lumpy in nature but the record closing order book of $263 million benefited from strong growth in Avon Protection, more than offsetting a modest decline in Team Wendy, largely reflecting the increased Department of War deliveries and the phasing of orders already mentioned.

Revenue growth of 13.8% reflects a strong performance across the board with 16% growth in Avon Protection and 12% growth in Team Wendy. Operating profit of $40.3 million, over 30% above prior year levels, results in margin of 12.8%, an improvement of 130 basis points year-on-year and a helpful step on the road to achieving our medium-term objective of 14% to 16%. I will walk through an operating profit bridge shortly to pick out the key moving parts. Net finance costs reduced 16% to $5.4 million, driven by lower average net debt and the tax charge of $8 million represents an effective tax rate of 23%, which is roughly where we would expect it to stay absent further changes to the tax regime.

This all adds up to adjusted basic EPS of $0.912 per share, an increase of 35% despite the step-up in tax from last year's 17%, which benefited from some one-off adjusting items.

Avon Protection has had a tremendous year. Order intake up 18%, order book up 63%, revenue up 16% and operating profit margin up 160 basis points at almost 20%. This shows the ability of the business to lean into a strong demand environment and deliver profitable growth. The growth in orders and backlog has been largely driven by strength in international markets, offsetting a softer year in Commercial Americas following a particularly strong 2024. Ukraine-related demand now accounts for just $13 million in the backlog for delivery in FY '26. This may not repeat, but even after stripping this out, you can see that the order book has grown very well. Revenue growth was driven by Australian FM54 deliveries, strong demand for CBRN boots and gloves to NATO customers and some Ukraine support, coupled with another good year for rebreather deliveries.

The excellent drop-through margin was helped by operational gearing, improving productivity and sales mix. Given the strength of the order book, Avon Protection is exceptionally well positioned to deliver further profitable growth in FY '26. Order intake in Team Wendy came in a little softer year-on-year, largely owing to lower receipts from the Department of War following very strong intake in '24. The backlog remains robust at around 1x sales with the strengthened product portfolio driving an excellent pipeline of opportunities as we enter FY '26. Revenue growth of 12% was driven by further growth in ACH II deliveries as we move towards full rate production, further aided by strong demand for bump helmets from a number of end customers, including the U.S. Air Force and Navy.

Operating profit margin nudged forward from 4.6% -- to 4.6%, excuse me, from 3.9% in the prior year, which is a good improvement, but still some way off our medium-term ambitions. We are confident in further progress in 2026 as we demonstrate the sustainability of the production rate increases in Q4 and as the benefits of cost reduction following the Irvine site closure start to wash through. As a reminder, ACH II shipments, although driving top line growth, will remain dilutive at the gross margin level. We expect financial performance to accelerate through the year as we improve quality and productivity, which will skew Team Wendy operating margins towards the second half.

Now as we move on to the usual operating profit walk for the year, starting with the $30.8 million jumping off point for last year after adjusting for FX. The first positive bar of $15.4 million shows the effect of the 14% revenue growth seen in the year, split roughly 2/3, 1/3 in favor of Avon Protection. Then you can see a further $7.6 million benefit through the combination of operational gearing, product mix and CI activities that have improved efficiency and reduced scrap costs.

Note that as previously guided, there was a dilution effect of $2 million from growth in sales of the lower-margin ACH II helmet. There is a $7.1 million headwind from the step-up in investment in future growth, which includes increased sales and marketing, commissions, training and the increased net R&D charge to the P&L. There's a further $2.6 million headwind for increased comp, including share scheme costs. And I've also pulled out the $1 million drag on earnings from tariff costs and increased national insurance in the U.K.

And then finally, the other bar of $2.8 million inevitably covers a multitude of things, but the big ones are increased travel, additional investment in IT and costs incurred in tidying up some of our back-office processes. Moving on to the cash flow statement. You can see that net debt ticked up by $6.6 million in the year. The big driver was the $12 million outflow in working capital as production rates in Team Wendy ramped up, culminating in very strong product deliveries in Q4. This resulted in a high receivables balance at the end of September, all of which has now unwound. The pension contribution of $6 million was as expected. And as usual, guidance on future contributions and other financial matters is provided in the appendix to the slides.

Purchase of shares to fund discretionary comp schemes increased by $4 million to $9 million during FY '25, reflecting the increase in share price and the strengthening outlook. This prevents future dilution. It's worth pointing out that cash tax will remain lower than P&L tax for the next couple of years as we burn off historical tax losses. The big items to highlight on the balance sheet include inventory remaining broadly flat despite the 14% growth in revenue, resulting in improved inventory turns and the high receivables balance at the end of the year impacting the other current assets line. As already mentioned, this has now normalized following strong cash receipts in the first quarter.

Despite the modest increase in net debt, the leverage ratio continued to improve, driven by the increased profitability of the business. Overall, average working capital returns, which is a measure I like as it eliminates the impact of period-end ROIC improved by 15%. The other item worth drawing to your attention is the further increase in the pension deficit or decrease, I think, in the pension deficit to $13.8 million, down from $17.2 million last year. This is due to our $6 million contributions, offset by modest asset underperformance. I've included the capital allocation slide in the deck again this time, reflecting a further reduction in the year-end net debt-to-EBITDA ratio, which is now comfortably below our target level of 1 to 2x.

As Jos will cover shortly, we are expanding the revolutionize point of our STAR strategy to incorporate acquisitions as one explicit avenue to future growth, which, if executed thoughtfully, will present opportunities to deliver compounding shareholder returns. While we're still at the very early stages of developing this muscle, we felt it worthwhile to call out. And beyond that, the chart is essentially unchanged, highlighting the prioritization of organic growth and the progressive nature of the dividend.

Moving on to transformation. It's worth highlighting that transformation costs came in a little higher than expected in FY '25, reflecting a crescendo in effort in second half activity as we aggressively ramped up production rates in Cleveland. As flagged when we launched the transformation project back in 2023, expenditure will fall significantly in FY '26 with the expected outlay of approximately $6 million linked to two specific projects. The first and already communicated is the completion of transition away from SAP in our Salem facility, which we expect to save us over $1 million per year. This is progressing well and will be complete by the end of the first half.

The second and new project is a continuation of the functional excellence work stream with the focus on the way we deploy IT services across the group. We expect to invest up to $4 million of OpEx plus a little bit of CapEx in the design and execution of a new target operating model for IT, which we believe will deliver significant returns in a very short time scale. The investment will be completed in FY '26 and the overall project will have a payback of less than 24 months. This project reflects the end of transformation-related costs taken below adjusted operating profit.

So finally, moving on to our expectations for the full year. We expect further good growth in helmet deliveries as we finish the ACH II ramp-up with additional growth coming from commercial and international markets. We also expect good growth in Avon Protection, underpinned by the robust order book in this business. These factors combined equate to high single-digit revenue growth at the group level. We expect the financial benefits of the transformation program to drop through this year with a modest weighting to the second half.

Even after the additional dilution from the growth in low-margin ACH sales, we are confident that we can deliver our operating margin within our 14% to 16% target range. As highlighted on the previous slide, we expect transformation investment in FY '26 to drop to around $6 million and return on invested capital will continue to progress nicely. And finally, we expect cash conversion to remain above 80% with continued improvements in operating efficiency being partially offset by further investment in future growth.

And with that, I'll now hand back to Jos to update you on the operational and strategic progress and focus for the coming year.

Thank you very much, Rich. We continue to focus on delivering our STAR strategy, refining it each year with new initiatives. Our strengthened system has become a powerful engine for continuous improvement, and we still see lots of opportunity ahead. Much of our transformation program is complete with two newer projects running into 2026. The transformation program will finish in 2026 but the strengthened system will continue. Kaizen is forever, as we say internally.

In advance, we're increasing investment into R&D, sales, marketing and people. 2026 will see our most ambitious new product development program yet. In revolutionize, we've been very successful in securing customer-funded development programs. This year, we're expanding revolutionize to include acquisitions. Our long-term vision is to compound shareholder value by complementing our organic growth with targeted acquisitions. We have the team, the capability and the business improvement system to extract value from acquired assets. That said, our immediate focus remains on organic growth. While acquisitions are part of our long-term strategy, we're not in a rush. We will wait until we find the right opportunities at the right price.

As a reminder, this is our scalable business improvement system. The STAR strategy and objective setting process keeps our people focused on action. Our STAR Academy builds the capability of our people and the strengthened system enables us to continuously improve our processes, creating cash to invest into the front end of the business. During the year, we trained every employee on our strengthened system, developed 20 proprietary courses in our STAR Academy and took 30 of our senior employees to Japan for intense continuous improvement training. Another 20 people are going next week.

We believe that improving our operating metrics ultimately drives growth and profit versus 2023, when we originally set out our ambitions, productivity has improved 28%, scrap has reduced 62% and inventory turns have improved 46%. But this is just the start. There is more to come. At the midyear, we highlighted the operational risk in Team Wendy associated with production ramp-up and the move from batch to flow manufacturing. This turned out to be prescient. The speed of the ramp-up was difficult. Yet as these graphs show, we are making progress.

Over the summer, we tripled production on our Department of War lines as we implemented flow manufacturing. This demonstrates the potential of our new lines. We now need to increase production rates again on the ACH lines by another 50%, and we need to ensure we can deliver consistently every week. We are not out of the woods yet. We learned a lot over the summer and have used this to improve our strength and system. We learned that teams can go much faster than they think. We ran 14 improvement projects over 8 weeks. Leadership from the front is critical. We need to show people rather than just tell them.

A line that flows can only run as fast as its slowest operation. The fastest way to speed up a line is to deeply understand each process and tackle the biggest bottleneck one at a time. Lines cannot be improved by sitting in an office. Change needs employee buy-in. We spent a lot of time explaining what we expected of our operators and training them on the strength of the system. From a strategic perspective, our aim is to make the most advanced and best looking helmets with the lowest lead times and cost of production.

Avon Protection also made excellent progress as this slide illustrates. In the electronics value stream, which includes rebreathers, productivity increased 79% and scrap halved. In boots and gloves, production increased 47%, improving return on capital and helping us deliver on high customer demand. Both divisions have transformed every production line from batch to flow manufacturing. We've moved almost every single piece of equipment across the entire group, often more than once. You can see the scale of the change in this time lapse video of our U.K. site over the past year. One of the reasons that we're happy to share our strengthened system is that it's not about knowing what to do. It's about actually doing it. Real progress comes from making tangible change every week. That's what delivers sustainable benefits.

Moving on to transformation. As you can see, most of our initiatives are nearly complete. We expect to see benefits this year and beyond. Just to pick out a few points. In footprint optimization, we closed a factory in California and built a new one in Cleveland. In operational excellence, we've transformed all four of our factories. In functional excellence, we've reduced costs and improved quality in the finance function and we have a plan to make IT more efficient. In commercial optimization, Stacy Stern, our new VP of Sales, has developed a strategy to improve our sales capability and we have more bid activity than ever before. We will also hold more marketing events where we arrange for our customers to shoot our helmets so they can see how good they are for themselves.

2026 marks an important milestone. The transformation phase we started in 2023 will end in 2026 as planned. During this phase, we've fixed a lot and have done much to improve the business. There's more to do this year but we are starting to get our heads up and look to the future as we move from the fixed phase to growth. Our markets are supportive. Defense spending is up, CBRN threats are growing and user numbers are increasing. We are investing more in innovation and are building a strong pipeline of new products, and we're not just reacting to demand, we're shaping it. We have a repeatable and scalable business improvement system that creates the platform for future growth, supported by a strong balance sheet and the potential for acquisitions. In Avon Protection, the order book is -- the order book of $117 million is up 63%.

As you can see, both revenue and the order book are well diversified across customers and product lines. This year, we reached a milestone of $100 million of total orders under our NATO framework contracts to 16 countries for restorators, boots and gloves. Each country we win creates recurring revenue for the future. Beyond the order book, our pipeline of opportunities is bigger than ever. We have large potential filter orders from the U.S. Department of War and from the Middle East. Our MITR lightweight Half Mask and powered goggles were launched this year. We have opportunities for MITR sales with the special forces of 4 out of 5 of the 5 I's. This is important because regular forces tend to follow the lead of the special forces.

In rebreathers, we won orders with Canada and 2 European Navies and have bid for 2 additional new navies. In addition, we're actively engaged with the U.S. Navy, U.S. SOCOM and the U.S. Marines on rebreather opportunities and expect to receive invitations to tender this year. In Ensemble, we have opportunities for our lightweight chemically resistant suit in the Middle East with NATO and the United States. Overall, our pipeline of opportunities is up considerably and we are going for some big pieces of business. We will not win everything. But with a weighted pipeline up more than 80%, we should continue to grow. We mentioned at our interims that we are working with the U.S. Marines to develop MITR further on a program called ENBD.

Since then, we've been awarded another development program by the Department of War as part of their push to combat irregular warfare. The aim of this program is to develop a scalable tactical assault respirator, which they call STAR. I suppose I should be flattered that they've chosen to copy our acronym. STAR builds on the MITR platform and adds functionality and equipment. The exciting thing about STAR is that it has a very wide range of interested user groups, including the U.S. Special Forces, the Air Force, LAPD and the FBI. These programs will enhance the capability of MITR and develop it into a complete system that will create an entirely new market for us.

In addition, we've achieved CE and NIOSH approval of the MITR Half Mask and particulate filter, which opens the U.S. Federal market to us. Interest in our EXOSKIN suit increased during the second half. We're optimistic that our lightweight, low-burden suit is what the users want. Two different versions of our EXOSKIN suits have been chosen by the U.S. Department of War for trials, which could lead to the sale of 700 suits. There is potential for a larger program beyond that but competition will no doubt be fierce. We've also won a key order with the Turkish MoD for a full ensemble system, including suits, boots, gloves, masks and CS-PAPR systems. This shows that our strategy to sell full ensemble packages meets the needs of our customers.

So far, we're working with technology partners in this area, but there is potential for selective technology acquisitions to help us accelerate. We continue to launch new products to drive growth. This year, we'll launch the next-generation CS-PAPR. This has been trialed at several end-user events, and they love the way it helps enable them to escape from sudden high-threat situations by seamlessly switching to supplied air. We've also developed a new voice protection unit for our 50 series of masks, which we plan to start delivering in the first half. The new unit offers users improved functionality and less complexity. Looking further out, we're working on a new shallow water rebreather and expect to bid for funding to help us accelerate this program. We're also looking to exploit our new multilayer filter bed technology, which provides a far broader spectrum of protection than existing carbon filters.

Team Wendy's order book of $146 million largely consists of next-generation IHPs, ACH and EXFIL for the Australian Defense Force. We saw good growth in the U.S. police and first responder market, which was up 15%. And we had another year of very strong demand for combat helm pads and liner systems. Our support for Navy for EXFIL bump helmets has also been a key driver of growth with over 25,000 helmets shipped to the U.S. Navy in 2025. These helmets offer enhanced impact and work with hearing protection, addressing long-standing gaps in legacy systems. The pipeline in Team Wendy is also promising.

The EPIC helmet range has taken our leading military technology into commercial helmets. This has helped us win market share. Internationally, we're working with two militaries on new opportunities that look hopeful. We launched RIFLETECH in the first half and have seen encouraging early demand. It delivers elite ballistic protection and all-day comfort in a lightweight mission-ready design. The new pad system is so comfortable that during testing, one user forgot to take the helmet off at the end of their shift.

Furthermore, I'm told that the first rule of being in the military is to look cool, and RIFLETECH certainly delivers on that. We've now shipped Rifle Tech to an international military, made our first e-commerce sales and sold units to U.S. police forces. This demonstrates that there is demand for a very high-end helmet in the market. In 2026, we'll launch our most ambitious development program yet with two new ballistic helmets built around our latest technology and our no through-hole attachment system. These will upgrade our range with higher protection at lower weight. We also plan to launch a new generation of bump helmets, offering leading protection and multi-certification to cover a broader range of user requirements.

Together, these launches will increase our range into new markets and further differentiate Team Wendy from its competitors. We'll share more at the midyear. Meanwhile, demand for Integrated Head Protection continues to grow. In 2025, we secured a new Department of War funded program to develop a helmet that can withstand an even higher ballistic threat with integrated eye and hearing protection and night vision compatibility. This is important because it positions us well for the next generation of Department of war helmets.

As you can see from this slide, we have achieved most of our goals that were originally set for 2027. The only exception is margin where our aim is to achieve our target this year. With regard to risk, we still need to increase production rates on ACH Gen II. We know how to do this, but there is a lot to do. Recruiting good people at the speed we need remains challenging. There is a risk of increased competition on the NextGen IHPS program with a new supplier potentially entering the market. This would take the number of suppliers from 2 to 3 with demand continuing to look strong.

The government shutdown currently prevents the delivery of helmets to the DOW but does not slow production. We expect to see a temporary impact on working capital in the first half but no long-term impact. Looking at opportunities, we are bidding for several major U.S. and international programs, which are not currently in our forecast as timing is uncertain. There may be upside here but it's too early to tell for now. The strength of the system does have the potential to deliver higher margins than guided but we remain of the view that it's rare for everything to go right.

To wrap up, nearly 2 years ago, we set out to transform the group through our business improvement system. The original transformation projects are largely complete. We've launched world-leading products and technologies and partnered on a record number of development programs, further strengthening our competitive moat. Our markets remain highly attractive with rising defense spending and a record order book backed by a robust pipeline of new opportunities. We have a scalable business improvement system, which is a powerful tool for improving businesses and generating shareholder value. In summary, we see opportunities ahead and believe that we have the people and the processes to realize those opportunities. Thank you very much for listening, and thanks to the guys in the room.

We'll now open up for questions.

It's Andrew Douglas from Jefferies. I've got a few questions. I'll maybe go into two spots and come back later. On the IHPS, can you explain to us why there's new competition to the market? You've got two people who are doing a good job. Is the DOW wanting a third one? And if a third entrant does come to the market, is it not going to take them a while to get fully up to speed with FAT approval, ramp-up approval, et cetera, et cetera?

Yes, it's a very good question. We asked the same thing. The answer is that Gentex was slow getting FAT. In fact, I think it failed that first time around. And as a result, the Department of War reached out to another company and asked them whether they have been interested for applying for FAT. Somewhat irritating that Gentex then did pass FAT but the other party was some way down the road of working how to build the helmet itself. So they are now in FAT. We don't yet know whether they're going to pass or not. It is a difficult technical challenge that helmet. And even if they do get FAT, one thing to get FAT is another thing to work out how to make it as we've discovered ourselves, it's quite tricky. But I think there is a possibility that we'll get a third player in the market, annoyingly nothing to do with us because we pass FAT first time around.

Second -- just I've got some for Jos, some for Rich. On the M&A side, where are we in terms of the pipeline? I mean it sounds to me like we're now thinking about it. Do we have a pipeline of -- I don't know how many companies you need in the pipeline, but do we have one and then you're trying to work your way through to figure out what's the best? Or do you know what you want to buy? It's a question of when it comes up and at the right price?

I think it's early days. We are focused this year very much on organic growth and getting the margin into our range. We want to deliver on our promises before focusing on other things. I think this is the year where we'll start to get our heads up and look a bit more externally and go and visit more companies. But with M&A, you have to kiss a lot of frogs to find a princess. And it's going to take us a while to build up a pipeline of opportunities. I think the only potential exception to that is I think we've got a good set of partnerships for suits but there are some options there where acquisition might help us accelerate better than partnerships, but they'd probably be very small.

And then just a few quick ones for Rich. On the receivables, how much was it? And is that just a question of you delivering lots in the fourth quarter and get paid in the first quarter? Or is there something else going on?

No, it was exactly that. So the overhang, $25 million to $26 million was $17 million, all owed by one customer and now all paid by set customer.

And then on one of the slides, you talked about a GBP 10 million benefit in '26 from transform basically finishing. Is that all in '26? Or is that an annualized number that we should think about by '26?

It is an annualized number, but most of it will come from...

It's Richard Paige from Deutsche Numis. Three from me as well, please. Given what you've said on Q4, it sounds like there was not -- for want of a better word, not a scramble but quite a surge towards the end of the period. Could you just talk through a bit more what happened, please? I think you're on the ground lately.

I don't know if you're set up for that. Yes. I mean the summer was pretty intense. I was actually in Cleveland for 2 months solidly on the factory floor for the entire 2 months. I actually spent the first 3 weeks in the paint booth trying to get that to working, which we did eventually do. We have an automated paint line, but it was not painting in an automated way to start with. After that, we just started debottlenecking the lines and knocking down problems one at a time. I think it was very intense. It was very tiring for people. There were a lot of 12-hour days. I'd say it was also very rewarding though because every week, we could see the production rates coming up and more helmets getting approved by the DoD.

So -- but yes, it was a hard push for sure. Not for the faint-hearted and actually, you've given me the opportunity to thank all the team in Cleveland. I mean it was really hard work. It's not -- I mean, they probably don't -- I think they did love having the CEO there for 2 months, but probably in the first week, they say, "Oh my God." But we ended up creating a really strong team, and they work really, really hard. So I'm very grateful to them.

You've alluded to second half weighting for the year ahead. Could you just give us a little bit more flavor around that, please? Yes.

I think we're trying to get the numbers. So we can come back to that. But the drivers for the weighting are twofold. So firstly, demonstrating ability to hit rate was the important thing for Q4 '25, which we did. In the first half of '26, two things need to happen. So firstly, we need to demonstrate to ourselves that, that rate we have hit is sustainable. And then secondly, as Jos mentioned in his slides, we've got to increase it again by another 50% on one of the helmet types. So there is still a lot to do. And of course we operate [indiscernible] margin level, it is helpful from an operational gearing perspective. So that clearly weights margin a little bit on in the first month, then great. But I don't think we will. I think it will take us the half. So maybe instead of 48%, 52%, think 46%, 54%.

My last one is a little bit selfish. I think of my Christmas stocking list, you've moved all of your facilities to flow manufacturing. In your own words, you moved almost every bit of equipment in the firm. What are you writing a book about, Jos?

I'm not writing. We are going to -- I think we're going to do a second edition of the strength of the system just to put in some of the learning. So I think we should continuously improve it as we learn ourselves. It's one reason -- I've actually got a longer deck of what we learned over the summer in Cleveland that we've started training our people internally on you've just got one slide from it in this deck. But I actually do have a new mission. I don't think we're very good at helping our people transition from being technical specialists to leading teams. So I want to write a training program around that to help them kind of make that important career move from technical specialists to leader of bigger teams. We have had a number of people where I think we probably could have helped them more than we have done. So that's my next mission.

[indiscernible] Very grateful for having something to do to keep him busy in the afternoon.

Toby Thorrington from Equity Development. Question is all for Rich, I think. So good improvement in gross margin in the period. Scrap looked like a decent size. Scrap reduction looked like a decent sized contributor to that. If I read the chart correctly, scrap rates not much more than 1% now. Is there much more to come from that? And what's the gross margin outlook generally?

That's 2 questions, that's cheating. I finished yet. On scrap, yes, there's plenty more to go. I mean, interestingly, I remember standing up here 2 years ago pointing out that we were scrapping $1 million a month in one of our factories. That $1 million has now gone down to $0.25 million, which is obviously great, but that's still $0.25 million a month that we're scrapping in that factory, and we've got 4 factories. So there's still plenty to go at on scrap. Gross margin improvements, we do expect that they will continue to come through. We've got the annualized effect of closing Irvine that we expect will come through in 2026 and a lot of that will come through in gross margin. The cost of doing business on an operating level in California is somewhat different to Ohio. So that will come through in gross margin. Going the other way, of course, as we increase ACH deliveries by another 50%, that will be dilutive to gross margin. But I expect to see good solid progression in '26.

Okay. And relatedly, but further down the P&L, I think SG&A increased more than revenue in the period but it's sort of consistently so first half, second half. Just what's behind that and the outlook again for that, please?

Yes, that was the $7.3 million bar that I picked out in the operating profit walk. And I picked out because it's healthy SG&A, that's kind of investment in future growth. So you've got R&D in there. And don't forget, we capital -- we expense almost all of our R&D costs now. So every dollar we spend is an effective headwind in the year. But it's also sales and marketing. Jos called out the new appointee to head the sales team. The activity of taking helmets out to customers and shooting them or allowing customers to shoot them, that doesn't come for nothing. But it's an incredibly high-quality investment in our product. It allows customers to pick it up, play with it, see it, see what it's capable of and then buy it. So pretty good quality investment in SG&A. Actually, run rate SG&A, which is all the stuff that we've always done, came down year-on-year despite a 14% revenue growth.

Yes. We have -- it's a good piece of analysis that we have a view that many companies are not thoughtful enough about reallocating resource. And what we've done is we've taken a lot out of what you might call the back office and operations. And then we've invested into the front end of the business, sales, marketing, bids. We've stepped our bids because we've got a lot more bids, so we had to recruit some people to support that and R&D. And that was always our intention 3 years ago to invest more into that area.

Sure. Okay. And final one, just on cash, I'm not sure whether transformation costs and cash out were aligned in FY '25. But is that -- will that be the case in FY '26, $6 million all in cash out?

Yes. So '25, no, it wasn't aligned because $3 million of the transformation was accelerated depreciation, which is obviously noncash. We've now done with accelerated depreciation. So basically, all of '26, this $6 million will be cash.

Andrew Humphrey at Peel Hunt. Just a couple. Just building on that question about investing for future growth. Clearly, the year ahead guidance includes a fairly meaningful step-up in self-funded R&D and CapEx. Sort of -- and that kind of seems to match up with the pretty kind of full list of bids and opportunities that you've outlined in the statement. Maybe can you tie those two things together? Does that kind of step-up in the money you're investing in the business kind of tie up to conversion of 50%, 75%, 90% of those opportunities? How should we be thinking about how that kind of gets toggled next year? I've got one more.

Do you want to start on that?

I think you go for that.

I mean talking about the jump from '25 to '26 is actually quite hard because it's contingent on a lot of things happening that we don't yet know will happen. So it might be easier if we look at '24 to '25. The sort of things that we were investing heavily in, in 2024 included finalizing development of the Half Mask, sort of getting beyond 50% through the development of the goggle that go with the MITR system and essentially starting and finishing development of RIFLETECH. And all of those things have started to contribute to revenue in '25. So if you think about that linkage, that's quite important. The other thing I would think about is Avon Protection is an international business and has been for 20 years. So very significant sales outside of the U.K. and U.S.

Team Wendy is not in that same situation yet. 90-something percent of everything that Team Wendy sells is inside the Continental U.S. with the balance really being the Australian Defense Force. If Team Wendy is to grow in the way that we think it is capable of growing, it needs to push its boundary into the Rest of the World, which requires investment. And so we've talked about investing in sales. We've talked about investing in marketing. A large part of that push has been building a sales team that's capable of addressing international opportunities. And that is a team that is qualified to talk to international customers in a language that they understand. U.S. Department of War customers have a very specific language. U.S. police forces have a very specific language. That doesn't always translate into international customers.

I don't know whether this is answering your question, but there's obviously a bit of a -- there's a period where you have to develop a new product, which takes time, probably quicker on helmets than MITR, MITR took us about 18 months. Then there's a period where we have to seed the market, build the marketing materials, they have to assess it. That probably all takes you a year. We're starting to see RIFLETECH sales. We're starting to see a lot of interest in MITR but actually it's this year that the sales should step up on those. The new helmets we launched, I think they'll probably benefit us maybe the back end of this year, but probably the real sales are going to come next year, 2027 on those.

Suits, we actually developed the suits maybe 2 to 3 years ago. We probably carried on refining them. They're probably the best. We would say they're the best chemical resistant suits in the world. They're way lighter than anyone else's. They're more breathable but it's taken us a long time to get the market to buy into the fact that they are an improvement over what's out there at the moment. And now suddenly, we're seeing customers super interested in them, but the sales at the moment are very small suits. So it's kind of all upside for us. And then the new -- the bid team we've got, again, we're bidding for a lot more of it, it's going to take us a while to see it.

And the new international sales team in helmets, we're bidding for more there as well, but it's going to take a little while to come through. So this could be a year where we start seeing all the bidding activity from '25 coming through in 2026. You also asked about CapEx. I don't think we need a lot of CapEx this year. And the guys, we have a phrase internally of used wisdom before money. The area where we're absolutely stacked at the moment in addition to helmets is boots and gloves. We've got a very long order backlog. We bought 4 secondhand presses from another company that's sort of shrinking in the U.K. We're refurbing those. They cost us like $15,000 each. They're $250,000 new. So we've got basically no depreciation on them, so that should let us be very competitive.

Okay. And maybe one more on U.S. government shutdown that you called out as a risk factor and particularly around the working capital impact. Like clearly, we're through a phase of that now and one would hope that kind of in the next few months, things will normalize. But have you sort of put that down as a risk with sort of half an eye on what may happen again in January? Or is that just that it kind of -- it all takes time to work through the system?

Before the latest movement in the shutdown ending. But I would say actually, our program office was very helpful. We have a plan with them that we could actually carry on shipping ACH and carry on being paid for it even in government shutdown. So it was only IHPS where we were making but not shipping. Could we get another shutdown in January, perhaps, but we would expect that still to apply. So it would only be IHPS affected.

The other thing that was quite interesting about the shutdown is our program offices did not shut down because they're essential. And perhaps more interestingly for us, the suits program with the U.S. DoD, they were furloughed, but then they came back and they issued the contracts and then they went back on furlough. So I guess what I'm saying is it's so important to the U.S. government that they actually took people off furlough to issue the contracts.

Going back to the rebreather in the U.S., we had a deal a couple of years back in those big numbers. We've now got 3 customers would appear. Now it might be one customer in 3 ways. I don't know what 3 different customers -- so is the opportunity there as we kind of previously thought? And does that include the shallow water thing is that a non-U.S.?

They're still refining their requirements. Some of them seem to want everything, something that does deepwater and shallow water. I think we're going to end up developing a shallow water variant. But the numbers are the same for the Navy and then Marines and Special Forces are on top of the original numbers but they are smaller. But you certainly look at 700 or 800 units, but we may not win. I think we're working with them closely and I've had a number of meetings with them so as the team. I'm sure our competitors are doing the same.

Still down to 1 or 2 competitors?

Still seems to be the same number of competitors. touch wood, we still haven't lost a bid but that could happen at some point. Unfortunately, it's a capitalist world, and we have competitors.

Thank you for coming.