Harry Hickling, Managing Director.

APV Exporting for Growth

July 27th, 2017

Our Journey to becoming a dominate player in the Nth American Military Market

APV operates Australia’s most advanced R&D Test Lab of its type and

is an OEM of specialist restraint systems.

• Produced over 37,000 Military Harnesses in the past five yrs. • Exporting circa 120,000 units p.a. to the USA. and 160,000 units p.a. internationally. • Producing 110,000 Seatbelts p.a. for the ANZ markets. • The Australian commercial point of expertise in Safety and Survivability Testing.

• APV supplying OEM specialist restraints to many of Nth America’s next generation Amphibious and Land Military Vehicle platforms.

Establishing APV as a Market Leader in Military Harnesses with a

proven track record of export into the Nth American Markets.

Transformation Change

“Autoliv crash test centre saved.

Smashing result: Autoliv's

crash test centre has found a

new owner in parts-maker APV.

Aussie parts company APV steps in to buy

Autoliv’s crash test facility in Victoria”

Source: 20 May 2011, Go Auto.

2008.

Revenue: $36m p.a.

Veh. Prodn 400,000 p.a

APV 2011 – Headline News

Revenue: $27m p.a.

Veh. Prodn: 220,000 p.a

2011 Establishing the APV

Brand

A Fundament Change in Business

Direction Required

❖ Markets and Geography.

❖ US Bus. Dev. Mgr.

❖ Navistar Win.

❖ Afghanistan Conflict.

❖ Surged to 3000 restraints per

mth.

❖ Growth has to come from

new markets and export.

‘Export or Die’

Post War England

Strategic Business Plan.

APV 2017

67%

18%

12% 2% 0% 1%

FY17

AUSTRALIA

NZ

USA

EUROPE

OTHER

INTERNATIONAL

Mission Statement

“To provide Advanced Testing Services to Australian Industry and engineering services to APV Safety Products.”

Mission Statement

“To provide a dedicated focus on Defence and Aviation as an OEM of Military and Aviation Harnesses.”

Mission Statement

“To be a globally recognised designer and manufacturer of safety harnesses and seat belts.”

56%

20%

16%

5% 3%

FY17 by sector

AUTO

BUS AND COACH

INDUSTRIAL

MILITARY

OTHER

Our Unique Selling Proposition

Proven Track Record. APV Price and Quality Advantage.

Engineering Strength and working relationship.

The point of excellence in Australia for Safety and Survivability Testing.

Survivability – APV is about protecting the Soldier.

APV Preferred Supplier Status 1) Prior track record 2) Excelled in Dash Ambulance Contract 3) Speed of New Product Development, Quality,

Delivery AND Relationship.

First to introduce Automotive Solution for Blast Attenuating Seating for Navistar.

Leveraging off track record with Bushmaster.

Are you export ready? Pre-requisites for making the cut!

KPI's for Export Readiness:

❖ 100% DIFOT by Market and Region, Nil Quality Non-Conformances, Value for Money (i.e. $).

BAE – A rolling 3 month quality score of less than 90% is deemed unacceptable by BAE and requires a written Corrective Action Report.

3 Non Conformances within 12 months and you will be re-evaluated as a Supplier.

OE (Engine Plants / GM Elizabeth) - Poor Quality Performance or Late Delivery destroys value and relationships. Generally places you on a watch list and supplier management.

❖ APV is Price Competitive.

❖ Client List, Credentials and Track Record.

❖ Know the Market.

❖ Risk of Change. Customers have strong allegiances to their strategic suppliers and will not consider change easily, some not at all.

❖ Export Controls, TCP, Accreditations must be in place – YOU MUST WALK THE TALK!

❖ Do business on the customer's terms.

❖ Logistics & Cost Optimisation. Known Consigner and Export Controls.

❖ You have to Manage FX – Not the Customer.

Supply Chain Alignment (Speed to Market, Visibility, Agility and Alignment)

Performance Benchmark.

Overall Supplier A is more aligned with the APV DNA and End Customer Requirement.

APV’s promise – we can do it better, faster and at midpoint pricing in the market.

Can our Supplier Chain Match This Promise? Dynamic Alignment Across the Supply Chain

APV Plastics Suppliers (4 Suppliers $750,000 p.a)

Supplier A - China B - Strategic C - Long Term Auto D - Diversified E - Non Auto

F - New French JV In China

Lead Times: Quote Response Time 24 hrs 4 Days 4 - 13 Days Non Responsive 12 Days

Prototype Parts 1 Week

Off Tool 5 weeks 7 Weeks

Production 7 Weeks Still Waiting - ETA 4 mths

Quality & Delivery

PPM

DIFOT

Accreditations

Costs (Rank) Tooling 1 400% 500% 500% 400% 1

Piece Price 2 3 5 5 4 1

% Cost: Benchmark @ 0% 17% 68% 151% 52% -17%

Terms (Working Capital): 5mths 3mths 3mths 4mths 4mths 5mths

Leadership, Communication:

Supplier Risk:

How we got there.

❖ 2011 Navistar - APV Chosen based on Innovation and Bushmaster Track Record.

❖ 2012 AMCHAM Trade Mission.

❖ 2014 Selected by Shockride for Dash Ambulance. Had never used an OS Supplier.

❖ 2015 June - Trade Mission.

Outcome:

❖ 2015 Oct - TDA AUSA Trade Mission and GAP.

Outcomes:

❖ 2015/16 US Customer Audit of APV Facilities, SAM Registration, TCP, Defence Export

Ctls.....

❖ 2016 Qtr 1 - APV Down Selected by Nth American Customer and now part of their

Global Supply Chain on multiple US and Aust platforms.

❖2016 AUSA.

❖2017 Dislodged Asian Competitor from US Customer (60,000 units p.a. 34,000 Qtr 1).

❖2017 AUSA.

Key Lesson’s Learnt. ❖Assess your export readiness by market and geography.

❖Use a sniper rifle not a shot gun for opportunity assessment.

❖Participate in the Trade Missions and Leverage off the GAP program.

❖Go to the customer and don’t rely on Aust representation.

❖Must have a compelling Value Proposition with a truly unique selling proposition.

This requires detailed insight into the incumbents and competitors.

❖The Nth American Market is very price sensitive and contracts will require long

term pricing models.

❖Deliver on your promises and don’t over commit.

❖You must excel in communication and be predictable with strong relationships.

- Don’t forget about the home market.

Finally - quality spills will rapidly unwind any value proposition with your customer.

Q&A

And thankyou to our customers who have supported our success in this Market and

established us as the Market Leader for military restraints for MRAP vehicles the Australian and

Nth American Market.

APV - Keeping you safe in industrial

environments