| |
As reported |
At H1 2021 exchange rates |
|
| |
H1 2022 |
Change |
H1 2022 |
Change |
H1 2021 |
| |
|
|
|
|
|
| Revenue (£m) |
220.4 |
+11% |
214.1 |
+8% |
198.5 |
| Underlying EBITDA*(£m) |
42.8 |
+14% |
41.6 |
+11% |
37.6 |
| Underlying operating profit* (£m) |
33.5 |
+19% |
32.5 |
+16% |
28.1 |
| Underlying profit before tax* (£m) |
33.1 |
+22% |
32.1 |
+18% |
27.2 |
| Underlying basic earnings per share* (pence) |
10.8 |
+27% |
10.4 |
+22% |
8.5 |
| Statutory operating profit (£m) |
29.3 |
+16% |
28.4 |
+13% |
25.2 |
| Interim dividend per share (pence) |
1.9 |
+19% |
1.9 |
+19% |
1.6 |
| Net debt at 30 April (£m) |
18.5 |
-52% |
17.2 |
-56% |
38.7 |
Highlights
- H1 2022 performance was in line with the Board’s expectations with strong performance in both segments
- Roke continued the recent trend of double digit growth in orders, revenue and operating profit in a positive market
- Sensors & Information underlying operating margin increased from 20.6% to 21.5% driven by the growth in the higher margin Roke business
- Countermeasures & Energetics underlying operating margin increased from 15.6% to 16.4% due to improved operational execution across the segment
- Continued reduction in net debt with strong operating cash generation and cash conversion of 101% (H1 2021: 96%). Net debt to underlying EBITDA of 0.23 times (H1 2021: 0.5 times)
- Continued scheduled capital expenditure ahead of depreciation. Investment in the Group’s manufacturing infrastructure continues to be a key enabler to deliver improved safety and operational excellence. Total recordable injury frequency (“TRIF”) rate was up slightly at 0.76 (H1 2021: 0.66)
- Proposed interim dividend increased by 19% to 1.9p, as we progress towards our medium-term target of dividend cover of c.2.5 times underlying EPS
- The Board’s expectations for 2022 are unchanged. Approximately 85% (H1 2021: 92%) of expected H2 revenue is in the order book as at 30 April 2022 or has been delivered to date. Utility inflation, discretionary investment in Roke in H2 and adverse US order timing are expected to offset current FX tailwinds and an expected improved H1 weighting in 2022
Michael Ord, Chemring Group Chief Executive, commented:
“This has been a further period of strong operational and financial performance across the Group, with both sectors performing in line with our expectations. Our focus on building a stronger, higher quality and more resilient business has enabled us to negotiate numerous challenges including delays to customer procurement cycles, supply chain interruption, increased utility expenses and labour availability. Despite these challenges and the choice to invest in Roke in the second half ahead of the revenue curve, the Group remains on course to maintain its delivery of sustainable performance and growth. With strong order cover for the full year, the Board’s expectations remain unchanged.
“Current geo-political uncertainty, brought about by Russia’s invasion of Ukraine, has highlighted the need for increased defence expenditure, particularly amongst European members of NATO. More broadly it has highlighted the need for countries to re-equip and modernise their defence capabilities to meet the threat of peer on peer conflict. Against this background, and with market-leading innovative technologies and services that are critical to our customers, I am confident that Chemring will continue to deliver both organic and inorganic growth, balancing near-term performance with long-term value creation.”
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.
EBITDA is defined as operating profit before interest, tax, depreciation and amortisation. Reference to constant currency relates to the re-translation of H1 2022 financial information at the H1 2021 exchange rates to reflect the movement excluding the impact of foreign exchange. The exchange rates applied are disclosed in note 12.
A reconciliation of underlying measures to statutory measures is provided below:
Group: |
Underlying |
Non-underlying |
Statutory |
| EBITDA (£m) |
42.8 |
(2.1) |
40.7 |
| Operating profit (£m) |
33.5 |
(4.2) |
29.3 |
| Profit before tax (£m) |
33.1 |
(4.2) |
28.9 |
| Tax charge on profit (£m) |
(2.9) |
0.5 |
(2.4) |
| Profit after tax (£m) |
30.2 |
(3.7) |
26.5 |
| Basic earnings per share (pence) |
10.8 |
|
9.5 |
| Diluted earnings per share (pence) |
10.5 |
|
9.2 |
| Segments: |
|
|
|
| Sensors & Information EBITDA (£m) |
20.7 |
(0.5) |
20.2 |
| Sensors & Information operating profit (£m) |
19.4 |
(1.6) |
17.8 |
| Countermeasures & Energetics EBITDA (£m) |
29.3 |
- |
29.3 |
| Countermeasures & Energetics operating profit (£m) |
21.3 |
(1.0) |
20.3 |
The non-underlying adjustments comprise:
- amortisation of acquired intangibles of £2.1m (H1 2021: £3.7m, 2021: £6.2m)
- loss on the movement in the fair value of derivative financial instruments of £1.6m (H1 2021: £0.8m gain, 2021: £0.7m gain)
- acquisition expenses of £0.5m (H1 2021: £nil, 2021: £1.6m)
- tax impact of adjustments of £0.5m credit (H1 2021: £0.4m credit, 2021: £1.0m credit)
Further details are provided in note 3.
For further information:
Rupert Pittman |
Group Director of Corporate Affairs, Chemring Group PLC |
+44 (0) 1794 463401 |
Andrew Jaques |
MHP Communications |
+44 (0) 20 3128 8170 |
James Bavister |
|
|
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 2,300 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.com
Presentation
A video presentation and accompanying slides will be available at the Chemring Group results centre www.chemring.com/investors/results-centre at 07.00 (UK time) on Wednesday 8 June 2022.
Analyst meeting
An analyst meeting will take place at 08.30 (UK time) on Wednesday 8 June 2022 at the offices of Investec Bank plc, 30 Gresham St, London EC2V 7QP. To confirm attendance please contact MHP Communications: [email protected] / tel: +44 (0) 20 3128 8826.
Photography
Original high resolution photography is available to the media by contacting Catherine Chapman, MHP Communications: [email protected] / tel: +44 (0) 20 3128 8339.
View the full press release in PDF format.