Avon Protection, turning the corner.

In November of 2021, back in the very early days of Philoinvestor, I wrote about a little-known London-listed military and defence sector company — which was faced with a problem, or a few.

Avon Protection (AVON.L) had an FAT failure. An FAT, or first-article testing, is what an equipment manufacturer has to go through successfully before gaining final approval to start selling the product. It’s called “first-article” because it’s the first batch of production that gets tested by the buyer.

“Now, the VTP ESAPI (the new generation one, the DLA ESAPI being the outgoing Body Armour) also failed First Article Testing last December.

The company had prepared for almost a year to pass this testing and did their own internal tests which had passed. They were shocked to find out it failed again, and the company has no insight as to what might have caused this.

They did mention in the first half 2021 earnings call that they made upgrades to both ESAPI products and were positive in terms of the second testing. The VTP ESAPI testing has failed though and they are faced with a serious glitch.

Avon might decide to close down this business and take the loss, or it may decide to allocate more resources to get it to pass testing in the next quarters.”

Excerpt from 👇

I subsequently updated subscribers on Avon Protection in Megapost Part #1.

“I wrote about this defence equipment manufacturer after it bombed 50% when management was forced to call a strategic review of its body armour line. In short, the company carried out extensive testing of its body armour products before sending it to US DoD facilities for FAT (First-Article Testing).

But the plate had a clear failure and management decided to wind down the body armour segment and focus on respiratory and helmets. There is a back story to this, as the DoD had asked for some changes to this specific product, and the failure occurred after the changes were made.”

The Body Armour segment was soon wound down by Avon, as previous management decided the time and capital wasn’t worth the risk of going through the process and risk not getting approval, once again. Management believed that was a serious risk because ultimately no one could figure out what the issue was.

The business is now much more simplified…