Press releases

INTERIM RESULTS FOR THE SIX MONTHS TO 30 APRIL 2014

	2014	2013
Including discontinued operations
Revenue	£277.4m	£297.4m
Underlying operating profit1	£27.0m	£35.1m
Underlying operating margin1	9.7%	11.8%
Underlying profit before tax1	£18.0m	£25.2m
Net debt	£229.2m	£275.1m
Underlying earnings per share1	7.3p	10.0p
Dividend per share2	2.4p	3.4p
Total operating (loss)/profit	£(63.0)m	£0.7m
Loss before tax	£(72.0)m	£(9.2)m
Total loss per share	(37.5)p	(1.8)p
Continuing operations
Revenue	£208.8m	£225.4m
Underlying operating profit1	£22.4m	£28.7m
Underlying operating margin1	10.7%	12.7%
Underlying profit before tax1	£13.4m	£19.1m
Underlying earnings per share1	5.4p	7.4p
Total operating profit/(loss)	£14.1m	£(3.1)m
Profit/(loss) before tax	£5.1m	£(12.7)m
Total earnings/(loss) per share	2.4p	(3.6)p

¹ Underlying measures referred to in this announcement are stated before costs relating to acquisitions and disposals, business restructuring and incident costs, profit on disposal of businesses, items deemed to be of an exceptional nature, impairment of goodwill and acquired intangibles, impairment of other net assets held for sale, amortisation of acquired intangibles and gains/losses on the movement in the fair value of derivative financial instruments, as stated in the 2013 Annual Report and Accounts. Further details of underlying and total measures are shown in notes 2 and 5.
² The interim dividend of 2.4p per ordinary share will be paid on 15 August 2014 to shareholders on the register at 25 July 2014. The ex-dividend date is 23 July 2014.

Highlights

• Overall interim results in line with expectations. Full year outlook remains broadly unchanged before the effect of further foreign exchange headwind in the second half
• Strong margins in Sensors & Electronics and good operational progress in Energetic Sub-Systems mitigates ongoing issues in US Countermeasures business
• Significant reduction in net debt to £229.2 million at period end (2013: £275.1 million) before receipt of disposal proceeds, reflecting inherent cash generative nature of the business
• Completed small but significant acquisition of 3d-Radar, which consolidates Chemring’s leading international position in ground penetrating radar

Divestment of European Munitions Business

• Strategic disposal completed on 27 May 2014, £134.5 million (€165.3 million) proceeds received
• Chemring is now a focused defence technology business with well-established core competencies and world leading positions in Countermeasures, Sensors & Electronics and Energetic Systems
• Whilst dilutive to earnings, the divestment significantly strengthens Chemring’s balance sheet, creating greater flexibility to pursue growth opportunities in chosen markets
• Concludes the disposal process that resulted from the 2013 strategic review

Appointment of Group Chief Executive

• A separate announcement has been made today regarding the appointment of Michael Flowers as Group Chief Executive with immediate effect

Peter Hickson, Chairman of Chemring, commented:

“The Group has made important progress in the period, re-focusing its operations and strengthening the balance sheet to create greater flexibility to invest for growth. The divestment of the European munitions business was a key milestone for Chemring and concludes the disposal processes stemming from the 2013 strategic review.

As a result, we are now moving to a position where we can take advantage of the stronger platform that has been created. The appointment of Michael Flowers, with his proven track record, both within the international defence industry and within Chemring, places us in a strong position to build on our world leading technologies and market positions in Countermeasures, Sensors & Electronics and Energetic Systems.

While end markets remain challenging and customer behaviour difficult to predict, we will continue to drive operational efficiencies. We are also pursuing growth opportunities, particularly in non-NATO and commercial markets. Excluding the effects of further movements in exchange rates, the Board’s outlook for the full year remains broadly unchanged.”

For further information:

Peter Hickson	Chairman, Chemring Group PLC	01489 881880
Michael Flowers	Group Chief Executive, Chemring Group PLC	01489 881880
Steve Bowers	Group Finance Director, Chemring Group PLC	01489 881880
Rupert Pittman	Group Director of Communications and Investor Relations, Chemring Group PLC	01489 881880
Andrew Jaques John Olsen James White	MHP Communications	0203 128 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 manufacturing business with facilities in four countries, selling high-technology electronics and energetic products to over fifty countries worldwide.
• Chemring has a diverse portfolio of products protecting military people and platforms against constantly changing threats.
• Operating in niche markets with short product development timescales, Chemring has the agility to react rapidly to urgent customer needs.
• Strong research and development investment in new products and improvements in technology enable Chemring to expand its addressable markets.

Presentation
TThe 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/en/investors/results-centre at 09.30 (UK time) on Tuesday 24 June 2014. The presentation can also be listened to at that time by dialling +44 (0) 20 3059 8125 and using the participant password of Chemring. A recording of the audio webcast will be available later that day.

Photography
Original high resolution photography is available to the media by contacting Ben Griffiths, MHP Communications: [email protected] / tel: 0203 128 8100.

View the full press release in PDF format.