Interim Management Statement


 

TIDMCHG 
 
RNS Number : 0217P 
Chemring Group PLC 
18 March 2009 
 

FOR IMMEDIATE RELEASE                                                         18 
MARCH 2009 
 
 
CHEMRING GROUP PLC 
 
 
INTERIM MANAGEMENT STATEMENT 
 
 
Chemring Group PLC ("Chemring" or "the Group") today issues its Interim 
Management Statement covering the period from 1 November 2008 to date, as 
required by Rule 4.3 of the Disclosure and Transparency Rules of the UK Listing 
Authority. 
Current Trading 
Trading in both the Energetics and Countermeasures divisions for the four month 
period to the end of February 2009 continued to be strong, with Group revenues 
and operating profits in excess of 50% higher than for the same period in 2008. 
This increase in revenue includes 21% growth from acquisitions made in the last 
twelve months and confirms the strong levels of organic growth reported in the 
last full year results. The Group's order book currently stands at GBP558 
million, which is 39% higher than at this time last year. The Board is confident 
that the outlook for 2009 remains in line with its expectations. 
 
 
Energetics 
The Energetics division continues to expand rapidly and contributed 60% to Group 
revenue in the four month period to the end of February 2009. Simmel had an 
excellent start to the year, with higher than expected sales of 81mm 
illumination mortar rounds to BAE Systems plc and 120mm tank ammunition to 
another NATO country. With high levels of order intake and many emerging 
opportunities, it is expected that Simmel will continue to perform strongly 
during the rest of 2009. 
 
 
Demand for the Group's signal, screening and illumination products continues to 
grow across a wide range of customers. Trading at Chemring Defence is 
significantly ahead of the previous year with strong demand from the UK Ministry 
of Defence and our NATO allies. Demand is also growing for disrupter and remote 
initiation systems from Chemring EOD, which has recently secured several 
important orders from the US Army for disarming improvised explosive devices 
(IEDs) or road-side bombs from stand-off distances. 
 
 
The US Army has recently announced the award of two major contracts to the 
Group's newly-acquired business, NIITEK, with a total value of $51 million, for 
the supply and support of thirty Husky Mine Detection Systems (HMDS) for high 
reliability route clearance of buried mines in support of US peacekeeping 
operations around the world. The first three systems have been delivered to the 
customer and will be deployed shortly. 
 
 
Countermeasures 
The Countermeasures division has performed well with our UK countermeasures 
business continuing to operate at very high levels of production. Demand for 
flares for the Typhoon aircraft continues to grow and we have just secured our 
first major export production contract. Chemring Countermeasures plans to invest 
GBP18.5 million over the next eighteen months in the construction of a new 
world-class manufacturing facility in Salisbury, and initial work on the 
building foundations has now started. 
 
 
During the period, Alloy Surfaces was awarded a five year IDIQ (Indefinite 
Delivery, Indefinite Quantity) contract from the US Air Force for the MJU-51 
special material decoys, which are used for the covert protection of transport 
aircraft. The first two contract awards were for $27 million for delivery in 
2009. More recently, Alloy Surfaces has received the second year option, worth 
$11 million, for the supply of M211 special material decoys, which are used to 
protect US Army helicopters from the latest infra-red guided missiles. Further 
long-term contracts from both the US Air Force and the US Navy are still under 
negotiation and are expected to be implemented over the next six months. 
 
 
Kilgore Flares also continues to grow strongly, although its performance has 
been constrained by continuing delays in the placement of contracts by the US 
Air Force. A $23 million contract for the supply of M206 and MJU-7 decoys for 
the protection of F-16 and A-10 combat aircraft was recently awarded, and 
additional contracts for the F-22 flares suite and the C-17 transport aircraft 
are expected shortly. 
In November 2008, Chemring Australia was awarded a long-term contract for the 
supply of countermeasures and pyrotechnics to the Commonwealth of Australia. The 
contract is worth A$160 million over an initial ten year period and, as part of 
the arrangement, Chemring Australia will invest A$17 million over the next two 
years in the establishment of a new, state-of-the-art manufacturing facility 
near Melbourne, as well as creating a research and development centre for the 
design of future products. 
Acquisitions 
The Group successfully completed the acquisition of NIITEK during the period. 
NIITEK, based in Virginia, USA, is a leading developer of robot and 
vehicle-mounted mine detection systems incorporating its advanced Ground 
Penetrating Radar (GPR) and metal detection technologies. The acquisition of 
NIITEK extends Chemring's detection capability in the GBP2.9 billion Explosive 
Ordnance Disposal (EOD) market. Initial consideration of $30 million was paid on 
completion of the acquisition, and additional deferred consideration of $8.5 
million was paid on receipt of the HMDS production contract. The acquisition was 
funded utilising existing bank facilities, which contributed to an increase in 
the Group's gearing, on a short-term basis, to 75% at the end of February 2009. 
 
 
 
 
 
 
For further information: 
Ken Scobie         Chairman, Chemring Group PLC         01489 881880 
Dr David Price    Chief Executive, Chemring Group PLC    01489 881880 
Rupert Pittman       Cardew Group                           0207 930 0777 
 
 
 
 
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. 
 
 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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