|
As reported |
At H1 2017
exchange rates |
|
| |
H1 2018 |
Change |
H1 2018 |
Change |
H1 2017 |
| |
|
|
|
|
|
| Revenue (£m) |
229.3 |
- 8% |
244.8 |
- 2% |
249.6 |
| Underlying EBITDA*(£m) |
29.0 |
- 3% |
31.1 |
+ 4% |
30.0 |
| Underlying operating profit* (£m) |
18.1 |
+ 5% |
19.6 |
+ 14% |
17.2 |
| Underlying profit before tax* (£m) |
14.8 |
+ 31% |
16.1 |
+ 42% |
11.3 |
| Statutory profit/(loss) before tax (£m) |
4.3 |
|
|
|
(6.8) |
| Underlying earnings per share* (pence) |
4.1p |
+ 28% |
4.5p |
+ 41% |
3.2p |
| Underlying diluted earnings per share* (pence) |
4.0p |
+ 29% |
|
|
3.1p |
| Interim dividend per share (pence) |
1.1p |
+ 10% |
|
|
1.0p |
| Net debt at 30 April (£m) |
84.6 |
-24% |
87.7 |
- 21% |
111.7 |
Highlights
- Performance continues to progress positively, with improved first half revenue weighting delivering underlying operating profit of £18.1m, despite a currency headwind
- Net debt significantly down year on year
- Net working capital reduction and repayment of loan notes have resulted in finance costs being down 44%
- Impact of recent changes to US tax legislation reflected in the period, resulting in a non-underlying write down of deferred tax assets of £17.4m
- Safety performance continues to be strong
- Operational Excellence Programme delivering improved return on sales, 7.9% (H1 2017: 6.9%) and lower working capital, £129.8m (H1 2017: £135.6m)
- Key US Programs of Record progressing in line with expectations. Contract negotiations ongoing on HMDS, solicitations responded to on chemical and biological detection programmes and testing ongoing on the JBTDS biological programme
- Order intake in H1 of £208m (H1 2017: £218m). Order book at half year £442m (FY 2017: £478m), of which approximately £212m is currently expected to be delivered in H2 2018, representing cover of approximately 80% of expected H2 revenues
- Board declared interim dividend of 1.1p per share (H1 2017: 1.0p)
- Board’s expectations for FY 2018 remain unchanged
Michael Flowers, Chemring Group Chief Executive, commented:
“Market conditions and business performance in the first half of 2018 have continued to strengthen, with margins and earnings improving across the Group. We expect this trend to continue as the impact of significant increases to the US Defense budget start to flow through, with the Group maximising the impact of these improvements through improved delivery performance resulting from the Operational Excellence Programme.
Our Countermeasures segment continues to grow, with a strengthening order book and increased global market activity underpinning capital investments in all facilities, most notably our recently approved transformation programme at the Tennessee site. Improved operational performance, improved capability, and an improved market all point to strong future performance in the segment. With contract finalisation on the first phase of the Husky Mounted Detection System program expected shortly and customer decisions on the Next Generation Chemical Detector and Enhanced Maritime Biological Detection programs imminent, the second half is key to our long term growth in the US sensors market.
In light of strong order book cover and improved performance, the Board’s outlook for FY 2018 remains positive, with expectations unchanged. As previously highlighted, we expect a stronger contribution from Countermeasures and scheduled reductions in Energetics.”
Notes:
*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. The term underlying is not defined under IFRS and may not be comparable with similarly titled measures used by other companies.
All profit and earnings per share figures in this news release relate to underlying business performance (as defined above) unless otherwise stated.
A reconciliation of underlying measures to statutory measures is provided below:
| Group: |
Underlying |
Non-underlying |
Statutory |
| EBITDA (£m) |
29.0 |
(2.8) |
26.2 |
| Operating profit (£m) |
18.1 |
(10.5) |
7.6 |
| Profit before taxation (£m) |
14.8 |
(10.5) |
4.3 |
| Tax charge (£m) |
(3.3) |
(15.8) |
(19.1) |
| Profit/(loss) after tax (£m) |
11.5 |
(26.3) |
(14.8) |
| Basic earnings/(loss) per share (pence) |
4.1 |
(9.4) |
(5.3) |
| Diluted earnings/(loss) per share (pence) |
4.0 |
(9.3) |
(5.3) |
| Segments: |
|
|
|
| Countermeasures EBITDA (£m) |
12.6 |
(0.9) |
11.7 |
| Countermeasures operating profit (£m) |
7.3 |
(1.8) |
5.5 |
| Sensors EBITDA (£m) |
8.8 |
(0.5) |
8.3 |
| Sensors operating profit (£m) |
6.8 |
(3.8) |
3.0 |
| Energetics EBITDA (£m) |
11.3 |
0.2 |
11.5 |
| Energetics operating profit (£m) |
8.3 |
(3.3) |
5.0 |
The adjustments comprise:
- amortisation of acquired intangibles of £7.0m (H1 2017: £7.7m, 2017: £15.0m)
- exceptional items of £0.5m (H1 2017: £nil, 2017: £2.3m) relating to acquisition and disposal related costs
- exceptional items of £1.6m (H1 2017: £11.1m, 2017: £14.3m) relating to business restructuring costs
- exceptional items of £1.5m (H1 2017: £0.2m, 2017: £0.4m) relating to claim related costs
- exceptional items of £nil (H1 2017: £nil, 2017: £10.6m) relating to an impairment of a business
- gain on the movement in the fair value of derivative financial instruments of £0.1m (H1 2017: £0.9m, 2017: £1.7m)
- tax credit on adjustments of £1.6m (H1 2017: £5.8m, 2017: £7.2m)
- deferred tax write-off relating to the changes to US tax legislation of £17.4m (H1 2017: £nil, 2017: £nil)
- discontinued operations credits of £nil (H1 2017: £1.2m, 2017: £3.5m)
Further details are provided in note 3.
For further information:
| Rupert Pittman |
Group Director of Corporate Affairs, Chemring Group PLC |
+44 (0) 1794 833901 |
| Andrew Jaques |
MHP Communications |
+44 (0) 20 3128 8100 |
| James White |
|
|
Cautionary statement
This announcement contains forward-looking statements that are based on current expectations or beliefs, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as anticipate, target, expect, estimate, intend, plan, goal, believe, will, may, should, would, could, is confident, or other words of similar meaning. Undue reliance should not be placed on any such statements because they speak only as at the date of this document and, by their very nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and Chemring's plans and objectives, to differ materially from those expressed or implied in the forward-looking statements. There are a number of factors which could cause actual results to differ materially from those expressed or implied in forward-looking statements. Among the factors that could cause actual results to differ materially from those described in the forward-looking statements are: increased competition, the loss of or damage to one or more key customer relationships, changes to customer ordering patterns, delays in obtaining customer approvals for engineering or price level changes, the failure of one or more key suppliers, the outcome of business or industry restructuring, the outcome of any litigation, changes in economic conditions, currency fluctuations, changes in interest and tax rates, changes in raw material or energy market prices, changes in laws, regulations or regulatory policies, developments in legal or public policy doctrines, technological developments, the failure to retain key management, or the key timing and success of future acquisition opportunities or major investment projects. Chemring undertakes no obligation to revise or update any forward-looking statement contained within this announcement, regardless of whether those statements are affected as a result of new information, future events or otherwise, save as required by law and regulations.
Notes to editors
- Chemring is a global business that specialises in the manufacture of high technology products and the provision of services to the aerospace, defence and security markets
- Employing approximately 2,600 people worldwide, and with production facilities in four countries, Chemring meets the needs of customers in more than fifty countries
- Chemring is organised under three strategic product segments: Countermeasures, Sensors, and Energetics
- Chemring has a diverse portfolio of products that deliver high reliability solutions to protect people, platforms, missions and information against constantly changing threats
- Operating in niche markets and with strong investment in research and development (“R&D”), Chemring has the agility to rapidly react to urgent customer needs
www.chemring.co.uk
Presentation
The presentation slides and a live audio webcast of the presentation to analysts will be available at the Chemring Group results centre www.chemring.co.uk/resultscentre at 09.30 (UK time) on Thursday 21 June 2018. The presentation can also be listened to at that time by dialling +44 (0)20 3936 2999 and using the participant access code: 94 47 29. A recording of the audio webcast will be available later that day.
Photography
Original high resolution photography is available to the media by contacting Luke Briggs, MHP Communications: [email protected] / tel: +44 (0) 20 3128 8100.
View the full press release in PDF format.