Avon Protection has seen a further underpinning of its FY21 revenue expectations following the award of a dual-source framework supply contract from the US Army for the supply of next generation body armour plates as part of its Soldier Protection System. It is the first major award since the acquisition of the new Helmets & Armor operation in January 2020. The award was anticipated in guidance and there is no change to our expectations but it clearly adds to sales cover for our FY21 estimates. Avon is trading on a FY21e P/E of 23.8x, reflecting its continuing positive momentum.
The new contract is dual source and runs for four years with a maximum value of $265m. The contract is for the supply to the US Army of next generation Virtual Torso Protection X-Side Ballistic Insert (VTP XSBI) body armour plates. Each order under the framework will be awarded on a competitive basis Deliveries are expected to commence in FY21 following product approvals. It adds to a similar existing $704m four-year contract split between three suppliers for enhanced small arms protection systems. Experience on that programme suggests that supply contract awards for body armour under the two framework contracts should be fairly evenly split, which could contribute c $30m of revenue per annum for Avon Protection from FY21.