|
|
As reported |
At H1 2019
exchange rates |
|
| |
H1 2020 |
Change |
H1 2020 |
Change |
H1 2019 |
| Continuing operations |
|
|
|
|
|
| Revenue (£m) |
191.0 |
+ 37% |
191.7 |
+ 38% |
139.3 |
| Underlying EBITDA*(£m)** |
35.2 |
+ 73% |
35.0 |
+ 72% |
20.3 |
| Underlying operating profit* (£m) |
25.6 |
+ 112% |
25.4 |
+ 110% |
12.1 |
| Underlying profit before tax* (£m) |
24.2 |
+ 144% |
24.0 |
+ 142% |
9.9 |
| Underlying earnings per share* (pence) |
7.1 |
+ 154% |
7.0 |
+ 150% |
2.8 |
| Statutory operating profit (£m) |
20.4 |
+ 214% |
|
|
6.5 |
| Interim dividend per share (pence) |
1.3 |
+ 8% |
|
|
1.2 |
| Net debt at 30 April (£m)** |
60.6 |
- 28% |
58.6 |
- 30% |
84.0 |
Highlights
- H1 performance was ahead of our expectations reflecting strong performance in both segments and some positive timing differences.
- All our businesses have remained open despite the challenges caused by COVID-19.
- Safety remains a core value and together with enhancing operational resilience and efficiency is driving investment in the Group’s manufacturing infrastructure.
- Continued progress on the US Programs of Record. Further orders received in the period for the next phase of HMDS delivery, valued at $32m, with the HMDS IDIQ increased by a further $200m post period end with an initial delivery order placed for $21m. In May, we were pleased that the customer approved and awarded the contract modification for Low Rate Initial Production for the EMBD program.
- Strong growth in orders and revenue for Roke including strategically important first Electronic Warfare order for Resolve into the US DoD.
- Good progress made on securing new business in the UK, US and Australia for the supply of global countermeasures, including Chemring Australia receiving a definitised contract of $107m in support of the F-35.
- Sale of Chemring Ordnance, Inc., completed on 7 May 2020, concluding our strategic exit from commoditised energetics.
- Significant reduction in net debt with strong operational cash generation partially offset by scheduled capital expenditure and the adoption of IFRS16.
- Group’s liquidity improved as a result of obtaining an additional short term facility for £100m, of which £50m has been drawn. Interest costs reduced with repayment of $83.6m of 5.68% private placement loan notes using the existing revolving credit facility.
- Board’s full year expectations are unchanged, despite the challenging environment. Approximately 95% of expected H2 revenue is in the order book or has been delivered to date.
Michael Ord, Chemring Group Chief Executive, commented:
“As a global team we are working to build a stronger and higher quality business, and the resilience the Group has demonstrated during the coronavirus pandemic shows we are making solid progress. Despite the changing and challenging environment in which we are currently working, we have delivered a strong performance in the first half of the year.
Our sites have remained open and we have made every effort to sustain operations in support of our customers and their essential defence and security missions.
Safety is our core value, with the health, safety and well-being of our colleagues, their families, our customers and the communities in which we operate being our priority throughout. The response of our people has been outstanding. They have risen to and exceeded the challenge, adapting working environments and practices to minimise the spread of the virus. I would like to thank all of my colleagues across the Group for their commitment, innovation and hard work.
Noting the challenges presented by the coronavirus pandemic, some positive timing differences which benefited the first half, and with approximately 95% of expected H2 revenue already in the order book or delivered to date, the Board’s expectations for the full 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 H1 2020 net debt balance reflects the initial recognition of a £6.5m finance lease liability and £0.9m of the increase in underlying EBITDA is as a result of applying IFRS 16 Leases (effective 1 November 2019). The H1 2019 net debt balance and underlying EBITDA have not been restated, in line with the modified retrospective approach taken.
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.
EBITDA is defined as operating profit before interest, tax, depreciation and amortisation. Reference to constant currency relates to the re-translation of HY20 financial information at the HY19 exchange rates to reflect the movement excluding the impact of foreign exchange. The exchange rates applied are disclosed in note 14.
A reconciliation of underlying measures to statutory measures is provided below:
| Group – continuing operations: |
Underlying |
Non-underlying |
Statutory |
| EBITDA (£m) |
35.2 |
- |
35.2 |
| Operating profit (£m) |
25.6 |
(5.2) |
20.4 |
| Profit before taxation (£m) |
24.2 |
(5.2) |
19.0 |
| Tax charge (£m) |
(4.3) |
1.6 |
(2.7) |
| Profit after tax (£m) |
19.9 |
(3.6) |
16.3 |
| Basic earnings per share (pence) |
7.1 |
(1.3) |
5.8 |
| Diluted earnings per share (pence) |
6.9 |
(1.2) |
5.7 |
| Group – discontinued operations: |
|
|
|
| Loss after tax (£m) |
(0.1) |
(0.1) |
(0.2) |
| Segments – continuing operations: |
|
|
|
| Sensors & Information EBITDA (£m) |
15.1 |
- |
15.1 |
| Sensors & Information operating profit (£m) |
13.3 |
(3.2) |
10.1 |
| Countermeasures & Energetics EBITDA (£m) |
25.4 |
- |
25.4 |
| Countermeasures & Energetics operating profit (£m) |
17.6 |
(1.2) |
16.4 |
The adjustments to continuing operations comprise:
- amortisation of acquired intangibles of £4.4m (H1 2019: £5.6m, 2019: £12.1m)
- loss on the movement in the fair value of derivative financial instruments of £0.8m (H1 2019: £nil, 2019: £0.6m loss)
- tax impact of adjustments of £1.6m credit (H1 2019: £1.2m credit, 2019: £4.3m credit)
Further details are provided in note 3.
The discontinued operations loss after tax comprises:
- operating loss of £0.1m (H1 2019: £2.0m loss, 2019: £3.5m loss)
- exceptional items of £0.1m loss (H1 2019: £3.1m loss, 2019: £1.0m loss)
- loss on disposal of a subsidiary of £nil (H1 2019: £1.8m loss, 2019: £2.8m loss)
- tax credit on the above of £nil (H1 2019: £3.0m credit, 2019: £6.1m credit)
Further details are provided in note 9.
For further information:
| Rupert Pittman |
Group Director of Corporate Affairs, Chemring Group PLC |
+44 (0) 1794 833901 |
Andrew Jaques
Oliver Hughes |
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 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
A video presentation and accompanying slides will be available at the Chemring Group results centre www.chemring.co.uk/investors/results-centre at 07.00 (UK time) on Wednesday 3 June 2020.
Photography
Original high resolution photography is available to the media by contacting Catherine Chapman, MHP Communications: [email protected] / tel: +44 (0) 20 3128 8100.
View the full press release in PDF format.