Avon Rubber Trading Update and Board Changes

The Avon Rubber M50 US military respirator contract negotiations delay until the second half of the year to effect financials as the Chief Executive changes hands.

The Avon Rubber company (“Avon”, the “Group” or the “Company”) is issuing the following update in respect of the half year ended on 31 March 2008.

In our AGM statement we noted that growth in our Protection and Defence business had been slower than we anticipated and that the Company was expecting confirmation of the multi-year contract for the new M50 US military respirator in the very near future. The regulatory and administrative processes undertaken by the US Government for contracts of this value and duration have taken much longer than previously projected. We are however now in final contract negotiations with the Department of Defense for this 5 year contract worth in excess of US$100million. A follow-on requirements option to cover significant additional demand over a period of up to 10 years will be executed at the same time. In the interim, government funding has already been committed for long lead items to allow us to commence production immediately under this programme.

The effect has been to delay sales on the main production contract into the second half of the year. This will mean that the Group will incur a loss for the half year. Once the multi-year contract is received however, it will provide the basis for increased turnover and a return to profitability in the second half of the year making a profit for the year as a whole. The 2009 financial year should reflect the full benefit of this new business.

At the same time, Terry Stead has decided to stand down as Chief Executive with immediate effect and will be succeeded by Peter Slabbert, Finance Director.

The Chairman, Sir Richard Needham, commented:
“Although the market and shareholders will be disappointed with our first half Protection results, the Board is confident that the Company is very close to receiving the multi-year order for the Joint Service General Purpose Mask from the US Government. It is not unusual for there to be teething problems with new and advanced programmes of this nature and we have experienced further unexpected delays. The order should deliver a long-term growing and profitable revenue stream for our Protection operation to complement the already successful Dairy business. To win the world’s largest contract for the world’s most advanced respirator represents an enormous achievement for the Company.”

“We have now reached the point of restructuring where Avon Rubber is a high value-added, defence and dairy focused company. Terry Stead has therefore stood down as CEO. His successor is Peter Slabbert our Finance Director. I am certain that his experience and expertise make him the ideal candidate to take the Company forward.”

Terry Stead said:
“Having completed the major reorganisation from a mainly automotive business, and with the imminence of the multi-year order for the Joint Services General Purpose Mask, I feel now is the right time for the Group to move forward under new leadership. I wish Peter and his team every success in delivering the benefits from these substantial opportunities.”

Commenting, Peter Slabbert said:
“I would like to pay tribute to Terry Stead’s contribution to the company over 10 years as Finance Director and then CEO. During that time he has overseen the repositioning of the company from a predominantly automotive business to one focused on international defence and dairy markets.”

Avon Rubber p.l.c. is an international polymer engineering group adding value through material, manufacturing and industry sector expertise.

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