|
|
As reported |
At H1 2018
exchange rates |
|
| |
H1 2019 |
Change |
H1 2019 |
Change |
H1 2018 |
| Continuing operations |
|
|
|
|
|
| Revenue (£m) |
139.3 |
+ 5% |
135.3 |
+ 2% |
133.1 |
| Underlying EBITDA*(£m) |
20.3 |
- 6% |
19.7 |
- 9% |
21.7 |
| Underlying operating profit* (£m) |
12.1 |
+ 4% |
11.6 |
0% |
11.6 |
| Underlying profit before tax* (£m) |
9.9 |
+ 19% |
9.6 |
+ 16% |
8.3 |
| Statutory profit/(loss) before tax (£m) |
4.3 |
|
|
|
(1.1) |
| Underlying earnings per share* (pence) |
2.8p |
+ 22% |
2.7p |
+ 17% |
2.3p |
| Interim dividend per share (pence) |
1.2p |
+ 9% |
|
|
1.1p |
| Net debt at 30 April (£m) |
84.0 |
- 1% |
80.9 |
- 4% |
84.6 |
Highlights
- 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 £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.”
Notes:
*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-underlying |
Statutory |
| EBITDA (£m) |
20.3 |
- |
20.3 |
| Operating profit (£m) |
12.1 |
(5.6) |
6.5 |
| Profit before taxation (£m) |
9.9 |
(5.6) |
4.3 |
| Tax charge (£m) |
(2.0) |
1.2 |
(0.8) |
| Profit after tax (£m) |
7.9 |
(4.4) |
3.5 |
| 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 (£m) |
1.0 |
(4.9) |
(3.9) |
| Segments – continuing operations: |
|
|
|
| Sensors & Information EBITDA (£m) |
11.7 |
- |
11.7 |
| Sensors & Information operating profit (£m) |
10.0 |
(3.1) |
6.9 |
| Countermeasures & Energetics EBITDA (£m) |
13.6 |
- |
13.6 |
| Countermeasures & Energetics operating profit (£m) |
7.1 |
(2.5) |
4.6 |
The adjustments to continuing operations comprise:
- amortisation of acquired intangibles of £5.6m (H1 2018: £5.7m, 2018: £11.6m)
- gain on the movement in the fair value of derivative financial instruments of £Nil (H1 2018: £0.1m loss, 2018: £0.4m loss)
- tax impact of adjustments of £1.2m credit (H1 2018: £16.1m charge, 2018: £13.1m charge)
Further details are provided in note 3.
The discontinued operations loss after tax comprises:
- operating loss of £2.0m (H1 2018: £6.5m profit, 2018: £8.0m profit)
- exceptional items of £3.1m loss (H1 2018: £1.1m loss, 2018: £72.0m loss)
- loss on disposal of a subsidiary of £1.8m (H1 2018: £Nil, 2018: £Nil)
- tax credit on the above of £3.0m (H1 2018: £1.2m charge, 2018: £1.0m charge)
Further details are provided in note 9.
EBITDA is defined as operating profit before interest, tax, depreciation and amortisation. Reference to constant currency relates to the re-translation of FY19 financial information at the FY18 exchange rates to reflect the movement excluding the impact of foreign exchange. The exchange rates applied are disclosed in note 14.
For further information:
| Rupert Pittman |
Group Director of Corporate Affairs, Chemring Group PLC |
+44 (0) 1794 833901 |
Andrew Jaques
Peter Hewer |
MHP Communications |
+44 (0) 20 3128 8100 |
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 2,500 people worldwide, and with production facilities in four countries, Chemring meets the needs of customers in more than fifty countries
- Chemring is now organised under two strategic product segments: Sensors & Information and Countermeasures & 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/investors/results-centre at 09.30 (UK time) on Wednesday 5 June 2019. The presentation can also be listened to at that time by dialling +44 (0)20 3936 2999 and using the participant access code: 06 14 27. 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.