RNS Number:2961Q
Chemring Group PLC
22 January 2002
FOR IMMEDIATE RELEASE
22 JANUARY 2002
CHEMRING GROUP PLC
PRELIMINARY RESULTS
FOR THE YEAR ENDED
31 OCTOBER 2001
• Group profit before tax increased to £9.4 million from £7.1 million
• Turnover increased to £95.2 million from £67.2 million including
turnover from acquired operations of £15.3 million
• Basic earnings per ordinary share increased to 27.96p from 22.04p
• Recommended final dividend of 4.25p per ordinary share, making a
total dividend of 6.70p for the year, up 6.3% (2000: 6.30p)
Ken Scobie, Chemring Group Chairman, commented:
"In the year the Group generated excellent profit and earnings growth. The
current prospects for all our businesses indicate a continuation of this growth
pattern. The Board remains confident that the Group, particularly with the
exciting opportunities in the US, will deliver significant increases in
shareholder value."
Note
All comparisons are for the year ended 31 October 2000.
For further information:
Ken Scobie Chairman 0207 930 0777
David Evans Chief Executive 0207 930 0777
Paul Rayner Finance Director 0207 930 0777
Jonathan Rooper Cardew & Co. 0207 930 0777
STATEMENT BY THE CHAIRMAN
In previous reports I have stated my confidence for the future growth of your
Group. Despite a challenging year, considerable improvement in profitability
was achieved, with profit before tax rising to £9.4 million and earnings per
share rising to 27.96p, increases of 32% and 27% respectively on the previous
year.
The Group acquired Kilgore in February 2001 and the business made a significant
contribution to the results before the very unfortunate incident in April, which
I referred to in my statement at the half year. Clearly, without this incident,
growth would have been even better. Significant investment has been made in the
reconstruction of facilities at Kilgore but full production will not resume
until March of this year. The full implications of this are discussed later.
Results
2001 2000 %
£000 £000 increase
Operating profit 11,971 8,806 36
Profit before tax 9,399 7,127 32
Profit after tax 7,057 5,261 34
Earnings per share 27.96p 22.04p 27
The Group invested significant resources in research and development in the
year, particularly in the areas of countermeasures and marine safety.
Expenditure increased from £2.6 million to £5 million.
Business Activities
Our international, market leading countermeasures business, consisting of
Chemring Countermeasures, Alloy Surfaces and Kilgore, continued its exciting
growth, with turnover increasing by 80% despite the incident at Kilgore. Had
the incident at Kilgore not occurred, it is estimated that turnover would have
increased further by approximately £7.5 million. Countermeasures now makes up
more than 50% of the Group's activities, and the business has established a
leading position in the US defence market.
The incident at Kilgore necessitated the suspension of operations at the
facility. Production on non-decoy products recommenced in June and limited
decoy manufacture recommenced in August. The reconstruction of facilities to
enable full production of decoys is progressing well, with full facility
completion expected in March of this year. Our evaluation of the impact of the
incident showed a requirement for major new investment to rebuild the
manufacturing plant in order to remove operators from the more sensitive areas
of the operations, and to satisfy both the health and safety authorities and
ourselves that we had minimised any risk areas in the manufacturing process.
The Group was obviously covered by insurance, both for damage to the facilities
and for the loss of profits arising through business interruption. Initially
our insurers indicated a wish to have all issues resolved and the claim settled
by the end of September. Since 11 September, however, a significant change has
taken place in the attitude of our insurers, and unfortunately negotiations to
resolve our claim have not made the progress we initially anticipated. In
preparing these financial statements, the Board has been conservative in
recognising the level of compensation the Group is entitled to recover under its
business interruption policy. The full claim for insurance is higher than that
recognised in the accounts to date and the Board, with the support of its
professional advisers, will pursue this actively, having resort if necessary to
its legal options. Shareholders will recognise that, in such a delicate
situation, I would not wish to comment further on the details of our claim at
this stage.
Kilgore is an enormous opportunity for your Group. The Board has been very
impressed with the manner in which our new US management has tackled its
problems and retained the support of its customer base. With the consolidation
of the Martin Electronics flare business which was acquired during the year,
Kilgore now has an order book of $47 million with sales, profits and
opportunities significantly in excess of our initial projections twelve months
ago.
Alloy Surfaces had an excellent year and has fully recovered from the production
problems that it experienced towards the end of the last financial year. Planned
manufacturing improvements impacted on its sales in the first half but the
strong second half performance contributed to an annual sales increase of 19%.
Throughout the year Alloy has concentrated on planning and expanding its
capacity to meet its increasing order book and further opportunities for its
specialised products.
Chemring Countermeasures, the UK business, had a disappointing year, with
profits reduced from last year due to increased costs in meeting customer
requirements on naval decoy business manufactured for certain NATO forces. The
naval contracts were part of Chemring Countermeasures' drive to become an
equivalent force in naval countermeasures to that which it exerts in the arena
of airborne protection. With the research and development undertaken on these
contracts the business now feels well positioned to secure further orders for
NATO and other navies, and to assist Kilgore to break into the US naval market.
Chemring Countermeasures' air decoy business is performing well with several new
products entering service.
The unfortunate events of 11 September and the military action that followed
inevitably give rise to assumptions that such actions would be "good" for our
countermeasures business. To date, limited additional business has resulted,
although there are increasing signs that a reappraisal of military requirements
following 11 September, particularly in the United States, will be beneficial to
our future prospects.
PW Defence, the Group's military pyrotechnics business, had an excellent year,
with profits substantially up on the previous year. The consolidation of
activities in Derby has had an enormously beneficial impact. PW Defence
continues to work with other international manufacturers in a consolidating
industry, and is actively supporting the UK MoD on SMART procurement
initiatives.
The marine safety business had a tough year, with intense competition,
particularly on pricing, in our pyrotechnics business. Although the electronics
business grew by 9%, it was below our growth expectations.
Your Board is convinced that marine electronics will provide future growth,
supported by research and development programmes bringing several new products
to the market with one, our EPIRB GPS, having won the prestigious Marine Product
of the Year Award for 2001. Although progress was made during 2001, the
business is still searching for a more effective route to market in the US,
particularly to service the leisure industry.
Our acquisition of Pirotecnia Oroquieta during the year will assist in
recovering market share in pyrotechnics and will provide the benefits of lower
cost manufacturing. The Group's marine safety business is now by far the
largest in the legislated marine pyrotechnics market.
Kembrey Wiring Systems returned to profitability during the year, principally
because of satisfactory commercial relationships being established for all our
efforts on behalf of the Nimrod programme. The business has a sound order book
and should progress further this year.
Balance Sheet and Cash flow
At the year end the Group's indebtedness was higher than either anticipated or
desirable. The acquisition of Kilgore for $23 million, satisfied by the issue
of 1.2 million ordinary shares at a value of $5.2 million and $17.8 million
cash, obviously increased significantly our level of debt, but not beyond that
deemed prudent and easily serviceable from our expanding earnings. However,
during the year the interruption to business at Kilgore and the need to fund its
rebuild programme, combined with the delayed receipts on naval countermeasures
contracts, stretched our cash resources.
In October following increasing institutional demand for our equity and in
anticipation of improving liquidity in our shares, the Company issued 1,196,080
ordinary shares, raising £3,962,000 cash net of expenses.
During the year the Group ended its joint banking relationship with the Royal
Bank of Scotland and Bank of Scotland, and now banks primarily with the Bank of
Scotland. The Board is pleased with the partnership and understanding that the
Bank of Scotland is now providing.
The Board is very conscious that our borrowing is too high to be a permanent
feature of the Group's total funding requirements, particularly when
contemplating our growth projections. Resolution of the Kilgore insurance claim
and collection of receipts on the naval countermeasures contracts would greatly
assist in reducing debt.
Insurance
The Group experienced unprecedented increases in premiums on the annual renewal
of its insurance covers at the end of October 2001. The increases are directly
attributable to the severe hardening of the insurance market over the last year,
particularly following the events of 11 September, and many businesses are
facing similar increases. In order to contain costs as much as possible, the
Group's captive insurance company, CHG Insurance Limited, is currently being
utilised to self-insure an element of the Group's cover. If the market improves
we will place this cover with external insurers. The Group will obviously be
discussing the impact of the increased insurance costs with its major customers.
Dividends
An interim dividend of 2.45p (2000: 2.30p) was paid during the year. The
directors recommend a final dividend of 4.25p (2000: 4.00p), an increase of 6%
over the previous year. The directors, in making this recommendation, have
taken account of the Group's current indebtedness and funding requirements.
Employees
As promised in my last report, the Group has strengthened its management with
the appointment on 1 November 2001 of Tim Hayter as a main Board director and
Chief Operating Officer. His principal responsibilities will be the delivery of
the Group's operating profit and cashflow. Elsewhere in the Group we have
strengthened management, either to provide the strength required to match our
ambitions, or to close perceived gaps. This is a continuing process.
As always, I would like to thank all our employees for their hard work during
the year. This year I would like to convey particular thanks to our employees
at Kilgore. The response by all those in that business to the issues that faced
them this year has been commendable.
Prospects
In the year the Group generated excellent profit and earnings growth. The
current prospects for all our businesses indicate a continuation of this growth
pattern. The Board remains confident that the Group, particularly with the
exciting opportunities in the US, will deliver significant increases in
shareholder value.
K C Scobie
Chairman
22 January 2002
REVIEW BY THE CHIEF EXECUTIVE
The Group's activities are covered under the following headings:
Defence
Countermeasures: Chemring Countermeasures, Alloy Surfaces,
Kilgore, Pains Wessex Australia
Military Pyrotechnics: PW Defence, Pains Wessex Australia
Non-defence
Marine Safety: McMurdo Marine, Pains Wessex Safety Systems,
Oroquieta
Wiring Harnesses: Kembrey Wiring Systems
Chemical Coatings: Alloy Surfaces
Turnover by Business Area
for the year ended 31 October 2001
Countermeasures - 54%
Marine Safety - 20%
Military Pyrotechnics - 14%
Wiring Harnesses - 10%
Chemicals - 2%
Defence Businesses
It was a further year of good growth for our defence businesses, with turnover
increasing by 62% to £64.3 million, representing 68% of total Group turnover.
Turnover in the defence businesses has doubled over the last three years. The
year ended with a healthy order book of £71 million, up £33 million (87%) on
2000.
Our strategy of increasing our presence in the important US market along with
continuing investment in new products, has further strengthened our global
market leading position in our niche markets for expendable countermeasures and
military pyrotechnics.
Countermeasures
Turnover increased by 80% to £51.4 million for the year, and the order book more
than doubled over the year to £53 million.
The Group is recognised as an international market leader in the development and
manufacture of expendable countermeasures to protect valuable military
platforms, with production facilities in the US, the UK and Australia. Against
the background of increasing use of military aircraft in supporting
anti-terrorist activity, IR decoy flares play an important part in providing
self-protection against IR man-portable air defence systems. We continue to
develop new products to combat the emerging threats and explore new markets to
maintain our leading position.
During the year the US acquisitions of Kilgore and the Martin Electronics flare
business significantly enhanced the Group's position as the leading supplier of
IR expendable decoys in the US, which is the largest single market for these
products. 85% of the Group's countermeasures are now sold outside of the UK.
However, the UK MoD remains an important customer, particularly as it is
increasing its global peace keeping role.
Both US companies - Kilgore based in Toone, Tennessee and Alloy Surfaces based
in Chester Township, near Philadelphia, Pennsylvania - are well placed to
benefit from recent increases in US DoD budgets. They have strong order books
and their combined turnover is projected to account for almost 60% of the
Group's total defence turnover in 2002.
Kilgore is the largest producer of magnesium based flares in the world and
manufactures a wide range of flare products for current aircraft platforms.
Kilgore supports the development of IR decoys for future aircraft such as the
F22. The incident at Kilgore in April 2001 resulted in a review of all safety
aspects on site. Investment in replacement production facilities of $8m is being
made to automate flare production to provide a safe working environment in
support of future growth plans. Commissioning of the fully automated facilities
is expected to be completed in March 2002, following which Kilgore will be,
without doubt, the most advanced IR decoy manufacturing plant in the world.
Kilgore enters the new financial year with planned sales almost fully covered by
orders.
Demand continues to grow for Alloy Surfaces' proprietary special material
decoys, particularly in a pre-emptive operational mode. Alloy's unique IR
material features in several advanced IR expendable countermeasure programmes in
the US. These include the Advanced Strategic and Tactical Expendables (ASTE)
programme, where Alloy provides more than 50 of the flare variants. The US Army
Advanced Infrared Countermeasure Munition (AIRCMM) programme's XM211 has
achieved considerable test success protecting helicopter and C130 transports,
and will be fielded on several new platforms in the coming years. Alloy's
innovative BOL IR decoy is in service with the US Navy and the BOL dispenser has
now been qualified on the F15. The US Air Force Air Combat Command completed an
operational utility evaluation of the Raytheon/Alloy Surfaces COMET dispenser
and countermeasure in 2001 for application on the A10 "tank busters" to
demonstrate extended duration pre-emptive protection. A force development
evaluation is planned for 2002 on the A10 and the C130, which if successful
could lead to initial production orders in 2003.
Chemring Countermeasures ("CCM"), the UK business based in Salisbury, provides
decoys worldwide for most aircraft and helicopter platforms and their defensive
aids systems. CCM is also the developer of the chaff and flare decoys for the
European Fighter Aircraft 2000 (Typhoon).
The number of platforms utilising CCM's proprietary MEB (Modular Expendable
Block) is increasing and the UK MoD has placed its first production orders. The
MEB incorporates both flare and chaff materials to increase operational
effectiveness on both fixed wing aircraft and helicopters. As well as
significantly improving operational capabilities, the MEB also confers
significant savings in logistic costs to the user. A version of the IR MEB has
been purchased for the Swiss Cougar programme and for operational use on the
Italian Navy EH101 and SH3D helicopters. The RF MEB version has already entered
service in numerous NATO and non-NATO countries on C130, F16 and various
helicopters, including GKN Westland's WH64 Apache.
Over the last two years CCM has invested in developing a comprehensive range of
MK36 naval decoys. The MK36 decoy launcher is standard in most NATO navies. CCM
is the only company worldwide that can offer the full range of passive IR and RF
decoys for the MK36 system. Deliveries on the first contract for the proprietary
combined IR/RF Chimera decoy were completed in the year and the rounds performed
well in recent customer naval exercises. The UK MoD TALOS IR round has met the
required customer design performance and final deliveries will be made following
UK MoD in-service safety clearance.
During the year difficulties were experienced with one naval decoy production
contract, where there were problems with a safety and arming sub-assembly ("S&A
"). The round is a US DoD design for the Seagnat Steering Group comprising the
UK, Denmark and the US. The S&A was manufactured to the data pack but failed to
function reliably. A modification has been proposed to the customer to enable
final delivery of the contract in 2002.
This has been yet another good year for the Group's countermeasures business
with both orders and sales reaching record highs. There are significant
opportunities for further increases, particularly in the US. We have
established a countermeasures marketing and technology group to oversee
continuing investment across our countermeasures activities worldwide, and to
ensure the Group is best placed to maintain its market position and capitalise
on the increasing need to protect valuable military platforms.
Military Pyrotechnics
PW Defence is an international market leader for its range of specialist
pyrotechnic and explosive products used in training and other non-offensive
activities, and is a leading supplier to the UK MoD.
Turnover in the year increased by 16% to £13 million, of which 73% was exported.
At the year end the order book had increased by 36% to £17.6 million, which
provided a good opening start to 2002.
In the domestic market the UK MoD continues to be an important customer. PW
Defence is supporting the MoD with SMART procurement initiatives, which is
assisting the MoD with its aim of reducing logistics costs and providing PW
Defence with better visibility on long term requirements to assist future
manufacturing strategy.
PW Defence has maintained its international market share and we continue to
explore collaboration particularly in Europe, exploring closer working
relationships with our industry participants, to position us for possible
European-led defence procurement programmes. One such collaboration in 2001
involved Buck, (a Germany company, part of Rheinmetal), where co-operation
between PW Defence and Buck on 66mm vehicle discharge grenades led to a
significant order from the UK MoD and potential future export orders.
In 2001 manufacturing facilities at Draycott were updated to improve efficiency,
and in 2002 research and development investment is planned to increase to
enhance the company's product range.
The acquisition of Kilgore provides an opportunity to market PW Defence products
in the US and for PW Defence to market Kilgore's products overseas. This
relationship has existed on an arms length basis for a number of years and the
acquisition will enable the product range for both parties to grow.
Non-defence Businesses
Marine Safety
The Group is a global market leader in providing legislated marine safety
products to aid location and rescue, including pyrotechnics, electronic location
beacons, location lights and VHF radios.
Turnover increased by 9.6% to £19.4 million in the year, with electronic sales
providing the growth, supporting our strategy to expand the electronics range
against known legislation.
The business is primarily driven by global legislation set by the International
Maritime Organisation (IMO) under its Safety of Life at Sea (SOLAS) convention.
This mandates the carrying of pyrotechnic products and marine safety lights.
Electronic products in support of the legislated Global Maritime Distress and
Safety System (GMDSS) include 406 EPIRBs, SARTs and portable VHF radios.
New electronics products are driving the growth of our marine safety business.
Continuing development of 406MHz technology has provided a full year of sales
for the award winning EPIRB with integral Global Positioning Systems (GPS). A
Personal Locating Beacon (PLB) based on the same technology has just entered the
market, and received an honourable mention at METS exhibition awards in
Amsterdam. Demand for the PLB arises in both the marine and non-marine markets
to assist with locating individuals in distress. The PLB is the smallest, most
technically advanced GPS based safety beacon in the world and makes use of
combining two of the world's leading satellite systems to ensure that rescue
services can be alerted with an accurate location, typically to within 30 metres
in under three minutes. An electronic manoverboard product, worn as a watch,
for use on oilrigs and for general leisure and workboat applications, was also
successfully launched this year.
Additional 406MHz technology products currently in development, such as
Emergency Location Transmitters (ELTs) for aviation use, will provide access to
further new market areas as legislation is introduced. Sales are expected to
increase significantly in these areas following Cospas-Sarsat announcements that
satellite processing on 121.5 MHz and 243 MHz is to cease.
In support of new requirements for VHF radios incorporating Digital Selective
Calling (DSC), an integrated radio was successfully launched at the recent
London Boat show. Significant orders have already been received for this
product, and sales are expected to increase sharply in the coming years as
worldwide coastguard authorities cease their dedicated watch keeping services
from 2005 onwards and switch over to DSC distress monitoring.
We have entered into a collaboration with a systems company to produce a
Universal Automatic Identification System (UAIS) in support of legislation, both
internationally from the IMO and from within the European Union. The IMO has
introduced mandatory requirements for UAIS commencing in the summer of 2002 and
the first peak demand is expected in 2003.
Sales of pyrotechnics into Europe continued to be affected by the weakness of
the Euro in the first half. The acquisition in May 2001 of 51% of Pirotecnia
Oroquieta, a lower cost producer of marine pyrotechnics based in Spain, assisted
in the recovery of some market share in the second half. Further gains are
anticipated in 2002. We are holding our market share on marine lights, although
demand is not increasing.
With substantial investment in new premises and increased awareness of our world
leading brands, McMurdo and Pains Wessex, we are set to increase our penetration
of the expanding marine electronics market place.
Wiring Harnesses
Kembrey Wiring Systems ("Kembrey") is the largest UK manufacturer of high
specification cable harnesses for the aerospace industry. It has an excellent
reputation for supplying quality wiring systems to manufacturers of airframe and
aircraft engines.
Turnover increased by 26% to £9.6 million in the year. The closing order book
was up 53% to £13.6 million, providing good order cover for 2002 sales.
Kembrey has established "Strategic Partnership" status with its major customers,
including Rolls-Royce, BAE Systems and Hurel Hispano. These relationships help
secure the long term future of the business.
In October Kembrey completed the first set of 1,100 harnesses to enable BAE
Systems to meet its "power on" date for the first Nimrod aircraft. Both the UK
MoD and BAE Systems expressed their gratitude for Kembrey's efforts. A further
two Nimrod harness sets are well advanced and another four sets are required in
2002.
An important order was received from Rolls-Royce for engine harnesses for the
Tornado RB199 engine refit programme during the year.
GKN's restructuring of its manufacturing base has resulted in Kembrey entering
into a new strategic alliance with GKN for the supply of wiring harnesses.
Kembrey's civil engine business has been marginally affected by the downturn in
the aviation market. However, harnesses for military applications account for
more than 50% of the order book and this is supporting further growth.
Chemical Coatings
Alloy Surfaces has a niche market in supplying special chemicals to the
aerospace sector for use in diffusion coating of engine components and demand is
expected to continue at current levels.
D R Evans
Chief Executive
22 January 2002
REVIEW BY THE FINANCE DIRECTOR
Operating Results
Group turnover for continuing operations grew by 19% to £79,989,000. Including
the turnover from acquired operations of £15,256,000, total turnover was
£95,245,000 (2000: £67,169,000).
There was increased spend on research and development across the Group during
the year. This, together with the impact of the high material content on naval
countermeasures contracts, reduced gross profit margins for the continuing
operations to 24% (2000: 28%).
The gross profit for the acquired operations of £5,457,000 includes a credit to
cost of sales for business interruption insurance proceeds. The accounting for
business interruption is such that credits are taken to cost of sales rather
than turnover, hence the gross profit margins are higher than would normally be
expected at 36%. On a proforma basis gross profit margins would have been in
the region of 24%, on additional turnover of approximately £7.5 million.
Total overheads, representing 13% of turnover (2000: 15%), were well controlled,
with increases principally due to the acquired businesses.
Net operating margin was 13% (2000: 13%).
Research and Development
During the year research and development expenditure of £5,038,000 (2000:
£2,622,000) was incurred, of which £1,373,000 (2000: £1,180,000) was funded by
customers and £2,238,000 (2000: £585,000) was capitalised.
Profit on Disposal
A £369,000 profit on disposal of one of the Group's freehold properties was made
in the year.
Interest
The interest charge for the year was £2,984,000 (2000: £1,709,000). Interest
cover on operating profits was 4 times (2000: 5.2 times). Interest was higher
than anticipated due to increased working capital and delays in the receipt of
insurance proceeds following the incident at Kilgore.
Taxation
The tax charge of £2,342,000 (2000: £1,866,000) is based on an effective rate of
25% (2000: 26%). The underlying tax rate is arrived at as follows:
Profit Tax Tax rate
£000 £000 %
Profit before tax and gain on disposal 9,030 2,342 26
Gain on disposal 369 0 0
Profit before tax 9,399 2,342 25
The gain on disposal is free of tax due to the utilisation of brought forward
capital losses. The tax on the profit before the gain on disposal has also been
reduced by brought forward losses. It is anticipated the tax rate will increase
to around 30% next year.
Shareholder Returns
Earnings per ordinary share were 27.96p (2000: 22.04p), an increase of 27%.
Earnings per ordinary share before profit on disposal increased by 20% to 26.49p
(2000: 22.04p).
The dividend per ordinary share of 6.70p (2000: 6.30p) is covered 3.85 times
(2000: 3.48 times).
Post tax return on capital employed was 15.2% (2000: 15.8%).
Shareholders' funds at the year end were £46,403,000 (2000: £33,304,000).
Goodwill
Goodwill arising on the acquisitions made in the year is as follows:
£000
Kilgore Flares Company LLC 5,477
Martin Electronics flare business 478
Pirotecnia Oroquieta S.L 588
Total additions 6,543
The Board has carried out an annual impairment test on the Group's total
goodwill of £24,789,000 that has demonstrated that no amortisation is necessary
on the constituent parts of the goodwill balance.
Cash Flow and Gearing
Operating cash flow was £4,134,000 (2000: £7,937,000). Working capital balances
have risen during the year in support of our naval countermeasures programmes,
and at the year end £5.6 million of contract receivables were outstanding. The
naval countermeasures are undergoing final acceptance testing. Additionally,
outstanding insurance receipts compounded the increase in working capital.
Total capital expenditure in the year was as follows:
2001 2000
£000 £000
Fixed assets additions 7,457 2,687
Development costs additions 2,238 585
Proceeds from asset sales (1,647) (142)
Trade investment purchase 10 -
8,058 3,130
Of the total spend on fixed assets, £3.2 million was incurred by Kilgore as part
of the investment in its facilities. Further capital spend of £2.2 million has
been invested by Kilgore in the first quarter of the current financial year to
complete the overall reconstruction. The development costs have been
capitalised by our countermeasures and marine safety businesses. The proceeds
on sale relate to the disposal of one of the Group's freehold properties.
On 26 October 2001, the Group placed 1,196,080 ordinary shares, equivalent to
4.65% of the share capital of the Company at that time, raising £3,962,000 net
of expenses. These funds are being used to provide additional resources to the
Group.
Net debt stood at £40,942,000 at the year end (2000: £20,118,000). Gearing was
88% (2000: 60%).
Facilities
The Group has agreed total facilities of £51m with the Bank of Scotland to
provide funding and working capital for the UK businesses and Kilgore. In
addition, facilities of $11 million are in place with Wilmington Trust and
Pennsylvania Industrial Development Authority to provide funding for Alloy
Surfaces, and facilities of A$1.4 million in Australia provide funding for Pains
Wessex Australia.
The Board has reviewed the latest guidance on going concern and considers the
above facilities provide the Group with sufficient resources.
Pensions
In accordance with FRS17 - Accounting for Pension Costs, the Group has disclosed
the additional information required in Note 7 to the accounts, but in accordance
with the FRS, no provision has been made. Under FRS17, the calculated deficit
on the Group's two defined benefit pension schemes was £6,396,000 at 31 October
2001. This compares with the combined deficit on the two schemes of around
£500,000 at the dates of their last formal actuarial valuations.
The apparent deterioration of the funding position on the two schemes, as
suggested by the FRS17 valuation, is attributable to the fall in equity markets
last year and the lower average discount rate applied to scheme liabilities
under FRS17 compared to that used in normal actuarial valuations.
P A Rayner
Finance Director
22 January 2002
SUMMARY FINANCIAL INFORMATION
Audited Audited Audited
Year Year Year
ended ended ended
31 Oct 2001 31 Oct 2000 31 Oct 1999
£000 £000 £000
Turnover
Defence
Countermeasures - continuing operations 37,027 28,538 25,180
- acquired operations 14,325 - -
51,352 28,538 25,180
Military pyrotechnics 12,991 11,169 10,616
64,343 39,707 35,796
Non-defence
Marine safety - continuing operations 18,425 17,700 16,765
- acquired operations 931 - -
19,356 17,700 16,765
Wiring harnesses 9,594 7,608 7,197
Chemical coatings 1,952 2,154 2,324
30,902 27,462 26,286
Continuing operations 79,989 67,169 62,082
Acquired operations 15,256 - -
Discontinued operations - - 3,316
95,245 67,169 65,398
Operating profit/(loss)
Continuing operations 8,526 8,806 7,766
Acquired operations 3,445 - -
Discontinued operations - - (1,551)
11,971 8,806 6,215
Profit before tax 9,399 7,127 4,306
Dividend per ordinary share 6.70p 6.30p 5.50p
Basic earnings per ordinary share 27.96p 22.04p 14.49p
Earnings per ordinary share before
profit on disposal 26.49p 22.04p 14.49p
Shareholders' funds 46,403 33,304 28,849
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 31 October 2001
Year Year
ended ended
31 Oct 2001 31 Oct 2000
Continuing Acquired Total Total
operations operations operations operations
£000 £000 £000 £000
Turnover 79,989 15,256 95,245 67,169
Cost of sales (61,004) (9,799) (70,803) (48,164)
Gross profit 18,985 5,457 24,442 19,005
Distribution costs (2,798) (410) (3,208) (2,693)
Administrative expenses (7,661) (1,602) (9,263) (7,506)
Operating profit 8,526 3,445 11,971 8,806
Profit on disposal 369 -
Associated undertaking 43 30
Profit on ordinary activities before interest 12,383 8,836
Interest payable (2,984) (1,709)
Profit on ordinary activities before taxation 9,399 7,127
Tax on profit on ordinary activities (2,342) (1,866)
Profit on ordinary activities after taxation 7,057 5,261
Equity minority interest (25) -
Profit for the financial year 7,032 5,261
Dividends (1,831) (1,511)
Retained profit 5,201 3,750
Basic earnings per ordinary share 27.96p 22.04p
Earnings per ordinary share before profit on 26.49p 22.04p
disposal
Diluted earnings per ordinary share 27.85p 21.19p
ADDITIONAL FINANCIAL PERFORMANCE STATEMENTS
For the year ended 31 October 2001
Year Year
ended ended
31 Oct 2001 31 Oct 2000
£000 £000
Statement of total recognised gains and losses
Profit on ordinary activities after taxation 7,057 5,261
Currency translation differences on foreign
currency net investments (469) 388
Total recognised gains and losses 6,588 5,649
Reconciliation of movements in shareholders'
funds
Profit on ordinary activities after taxation 7,057 5,261
Equity minority interest (25) -
Dividends (1,831) (1,511)
Retained profit 5,201 3,750
Other recognised (losses)/profits (469) 388
Ordinary shares issued 151 11
Share premium arising 8,216 306
Net addition to shareholders' funds 13,099 4,455
Opening shareholders' funds 33,304 28,849
Closing shareholders' funds 46,403 33,304
CONSOLIDATED BALANCE SHEET
As at 31 October 2001
As at As at
31 Oct 2001 31 Oct 2000
£000 £000 £000 £000
Fixed assets
Intangible assets
Development costs 2,690 1,002
Goodwill 24,789 18,246
27,479 19,248
Tangible assets 33,901 19,199
Investments 924 883
62,304 39,330
Current assets
Stock 18,231 14,235
Debtors 30,494 20,794
Cash at bank and in hand 2,418 2,062
51,143 37,091
Creditors due within one year (33,910) (25,760)
Net current assets 17,233 11,331
Total assets less current liabilities 79,537 50,661
Creditors due after more than one year (32,097) (17,089)
Provisions for liabilities and charges (706) (268)
Equity minority interest (331) -
46,403 33,304
Capital and reserves
Called-up share capital 1,409 1,258
Reserves
Share premium account 19,335 11,119
Special capital reserve 12,939 12,939
Revaluation reserve 2,518 2,554
Revenue reserves 10,202 5,434
44,994 32,046
Shareholders' funds 46,403 33,304
Attributable to equity shareholders 46,341 33,242
Attributable to non-equity shareholders 62 62
46,403 33,304
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 October 2001
As at As at
31 Oct 2001 31 Oct 2000
£000 £000 £000 £000
Net cash inflow from operating 4,134 7,937
activities
Returns on investments and servicing (3,077) (1,694)
of finance
Taxation (1,522) (881)
Capital expenditure (8,058) (3,130)
Acquisitions (15,401) -
Equity dividends paid (1,640) (1,380)
Cash (outflow)/inflow before use of
liquid resources and financing (25,564) 852
Financing - issue of shares 4,833 317
- increase/(decrease)in debt 16,896 (884)
21,729 (567)
(Decrease)/increase in cash (3,835) 285
Reconciliation of net cash flow to
movement in net debt
(Decrease)/increase in cash (3,835) 285
Cash (inflow)/outflow from the
increase/(decrease) in debt and lease
financing (16,896) 884
Change in net debt resulting from cash (20,731) 1,169
flows
New finance leases (115) (259)
Translation difference 22 (347)
Movement in net debt (20,824) 563
Opening net debt (20,118) (20,681)
Closing net debt (40,942) (20,118)
Notes
1. The financial information set out above does not constitute the
Company's statutory accounts for the year ended 31 October 2001 or 31 October
2000 but is derived from those accounts. Statutory accounts for 2000 have been
delivered to the Registrar of Companies, and those for 2001 will be delivered
following the Company's Annual General Meeting. The auditors have reported on
those accounts; their reports were unqualified and did not contain statements
under section 237(2) or (3) of the Companies Act 1985.
The financial information has been prepared in accordance with the accounting
policies adopted for the 2000 accounts.
2. The financial statements for the year ended 31 October 2001 will be
posted to shareholders on 4 February 2002 and will also be available from that
date at the registered office, 1645 Parkway, Whiteley, Fareham, Hampshire PO15
7AH.
3. Subject to shareholder approval, the final dividend of 4.25p per
ordinary share will be paid on 10 April 2002 to all shareholders registered at
the close of business on 15 March 2002.
Chemring (LSE:CHG)
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Chemring (LSE:CHG)
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부터 7월(7) 2023 으로 7월(7) 2024
