Chemring Group (LSE: CHG).
Old Salisbury Lane
Tel : +44 (0)1794 833901
Email : firstname.lastname@example.org
Chemring is a market leading manufacturing business supplying high technology electronics and energetic products to over 60 countries around the world. Chemring operates in three market sectors:
* Countermeasures--protecting aircraft, ships and land platforms against guided missile threats
* Sensors and Electronics--equipment to detect, disable and defeat the threats posed by either concealed IEDs (improvised explosive devices) unexploded ordnance, electronic warfare, and chemical and biological threats
* Energetic Systems--military pyrotechnics and a range of high reliability energetic components for aircraft, missiles and space
Interim results for the six months to 30 April 2019
As reported At H1 2018 exchange rates H1 H1 Change H1 2019 Change 2019 2018 Continuing operations Revenue ([pounds sterling]m) 139.3 +5% 135.3 +2% 133.1 Underlying 20.3 -6% 19.7 -9% 21.7 EBITDA*([pounds sterling]m) Underlying operating 12.1 +4% 11.6 0% 11.6 profit*([pounds sterling]m) Underlying profit before 9.9 +19% 9.6 +16% 8.3 tax*([pounds sterling]m) Statutory profit/(loss) 4.3 (1.1) before tax ([pounds sterling]m) Underlying earnings per 2.8p +22% 2.7p +17% 2.3p share*(pence) Interim dividend per 1.2p +9% 1.1p share (pence) Net debt at 30 April 84.0 -1% 80.9 -4% 84.6 ([pounds sterling]m)
* Overall H1 performance in line with our expectations; strong Sensors & Information sector performance, Countermeasures & Energetics sector impacted by previously reported manufacturing issues and planned site recommissioning. Phased restart programme for the UK Countermeasures site remains on track. H1 results included [pounds sterling]13m of insurance recoveries, offsetting costs of remediation and site operating costs.
* Safety remains our key priority and together with enhancing operational stability and efficiency is driving investment in the Group's manufacturing infrastructure.
* Australian subsidiary, which has been off-line to enable the change-over to F-35 Lightning II countermeasure manufacturing, received two significant countermeasures contracts, as previously announced.
* Continued progress on various US Programs of Record. Further delivery orders received for the next phase of the HMDS IDIQ, valued at $27m, and a $9m order for the Enhanced Maritime Biological Detector ("EMBD") program.
* Sale of military trading business, Chemring Military Products and closure of Chemring Prime Contracts completed in period. The exit of remaining commoditised energetics businesses is ongoing.
* Board's full year expectations are unchanged, with a significant second-half weighting to revenue, underlying operating profit and cash. Approximately 95% of expected H2 revenue is in the order book or has been delivered to date.
Michael Ord, Chemring Group Chief Executive, commented:
"Significant changes have been implemented in the period to improve safety, strengthen leadership, corporate governance and embed continuous improvement across the Group. Despite the previously announced manufacturing issues that impacted first half financial performance, I have been heartened by the manner in which colleagues from across the entire Group have responded to the challenge of building a stronger and improved business.
The Countermeasures market continues to see growth and significant orders were received in the period; it is against this market strength and our drive to improve safety and operational performance that we will continue to invest to modernise and automate our manufacturing facilities. The phased restart of the UK Countermeasures site remains on track with the site scheduled to be at steady state manufacturing by the end of the current financial year.
Our Sensors & Information sector continues to perform strongly, with US Programs of Record progressing as deliveries on the HMDS IDIQ contract commenced. Elsewhere the sector continues to focus on growth and expanding its product, services and capability offerings.
With 95% of expected H2 revenue in the current order book or delivered to date, the Board's expectations for the current financial year are unchanged."
*All profit and earnings per share figures in this news release relate to underlying business performance (as defined below) unless otherwise stated.
The principal Alternative Performance Measures ("APMs") presented are the underlying measures of earnings which exclude discontinued operations, exceptional items, gain or loss on the movement on the fair value of derivative financial instruments, and the amortisation of acquired intangibles. The Directors believe that these APMs improve the comparability of information between reporting periods as well as reflect the key performance indicators used within the business to measure performance. The term underlying is not defined under IFRS and may not be comparable with similarly titled measures used by other companies.
A reconciliation of underlying measures to statutory measures is provided below:
Group--continuing operations: Underlying Non Statutory -underlying EBITDA ([pounds sterling]m) 20.3 - 20.3 Operating profit 12.1 (5.6) 6.5 ([pounds sterling]m) Profit before taxation 9.9 (5.6) 4.3 ([pounds sterling]m) Tax charge ([pounds sterling]m) (2.0) 1.2 (0.8) Profit after tax 7.9 (4.4) 3.5 ([pounds sterling]m) Basic earnings per share (pence) 2.8p (1.5p) 1.3p Diluted earnings per share (pence) 2.7p (1.5p) 1.2p Group--discontinued operations: Profit/(loss) after tax 1.0 (4.9) (3.9) ([pounds sterling]m) Segments--continuing operations: Sensors & Information EBITDA 11.7 - 11.7 ([pounds sterling]m) Sensors & Information operating 10.0 (3.1) 6.9 profit ([pounds sterling]m) Countermeasures & Energetics EBITDA 13.6 - 13.6 ([pounds sterling]m) Countermeasures & Energetics 7.1 (2.5) 4.6 operating profit ([pounds sterling]m)
The adjustments to continuing operations comprise:
* amortisation of acquired intangibles of [pounds sterling]5.6m (H1 2018: [pounds sterling]5.7m, 2018: [pounds sterling]11.6m)
* gain on the movement in the fair value of derivative financial instruments of [pounds sterling]Nil (H1 2018: [pounds sterling]0.1m loss, 2018: [pounds sterling]0.4m loss)
* tax impact of adjustments of [pounds sterling]1.2m credit (H1 2018: [pounds sterling]16.1m charge, 2018: [pounds sterling]13.1m charge)
Further details are provided in note 3.
The discontinued operations loss after tax comprises:
* operating loss of [pounds sterling]2.0m (H1 2018: [pounds sterling]6.5m profit, 2018: [pounds sterling]8.0m profit)
* exceptional items of [pounds sterling]3.1m loss (H1 2018: [pounds sterling]1.1m loss, 2018: [pounds sterling]72.0m loss)
* loss on disposal of a subsidiary of [pounds sterling]1.8m (H1 2018: [pounds sterling]Nil, 2018: [pounds sterling]Nil)
* tax credit on the above of [pounds sterling]3.0m (H1 2018: [pounds sterling]1.2m charge, 2018: [pounds sterling]1.0m charge)