TIDMCHG
RNS Number : 0458W
Chemring Group PLC
24 January 2012
FOR IMMEDIATE RELEASE 24 January 2012
CHEMRING GROUP PLC
PRELIMINARY RESULTS
FOR THE YEAR ENDED 31 OCTOBER 2011
-- Revenue up 25% to GBP745.3 million (2010: GBP597.1 million)
-- Organic revenue growth() of 9% in difficult market
-- Non-NATO revenues up 81% to 29% of total Group revenue (2010:
20%)
-- Year end order book up 9% at GBP878.3 million (2010: GBP803.3
million)
-- Order book today at GBP980 million, up 9% on January 2011
-- Underlying profit before tax* up 6% to GBP125.6 million (2010:
GBP118.7 million(#) )
-- Underlying earnings per share* up 5% at 52.1p (2010: 49.8p(#)
)
-- Profit before tax GBP90.8 million (2010: GBP89.1 million)
-- Basic earnings per share 39.8p (2010: 37.8p(#) )
-- Dividend per ordinary share up 25% at 14.8p (2010: 11.8p(#)
)
-- Underlying operating cash flow* GBP124.6 million (2010: GBP128.0
million(#) )
-- Net debt of GBP262.7 million (2010: GBP307.5 million)
Divisional PERFORMANCE
Counter-IED
-- NIITEK increased revenue by 24% to GBP126.9 million, with
77 HMDS units delivered to the US Army
-- Chemring Ordnance awarded multi-year contract, worth up to
$150 million, to supply the Mk7 Anti-Personnel Obstacle Breaching
System (APOBS) to the US Army and US Marine Corps
-- Chemring Detection Systems acquired in July and performed
in line with expectations
Countermeasures
-- Full year contribution from Roke
-- Expendable countermeasures revenues declined as expected
-- Kilgore restarted production and revenue reached new record
Pyrotechnics
-- Reduced revenues for illuminating products in both UK and
US markets
-- M992 pyrotechnic 40mm round named by US Army as one of top
ten inventions
-- Margin maintained in line with last year
Munitions
-- Revenue more than doubled to GBP237 million
-- Demand for 90mm and 40mm grenade ammunition almost triples
-- Revenue from naval ammunition grows by 122%
Peter Hickson, Chemring Group Chairman, commented:
"Chemring produced another year of growth in profits and
earnings, with revenue up 25% to GBP745.3 million and underlying
profit before tax* up 6% to GBP125.6 million.
The Board has considered its long term dividend policy as part
of a balance sheet review. For many years, the Group has adopted a
policy of maintaining dividend cover at around four times. With our
strong annual cash generation, we believe it would be appropriate
to bring the cover down to three times over the next year. As part
of this move, the proposed total dividend of 14.8p for 2011 will be
covered 3.5 times by underlying after tax earnings*, compared with
4.2 times last year. We have also concluded that we should consider
returning surplus capital to shareholders whilst maintaining the
strength of the balance sheet. Accordingly, we will seek approval
at the forthcoming Annual General Meeting to renew our authority to
buy back shares, when it is considered appropriate, over the course
of the next year. We would only expect to exercise this authority
for a buyback of up to GBP50 million of shares.
During the last year, many governments have struggled with
increasing deficits and lower economic growth. This has affected
defence procurement, leading to volume reductions and delays. The
continuing problems of the Eurozone and the impact of possible
sequestration in the US indicate that our traditional markets will
not be any easier this year. We continue to pursue our policy of
reducing our dependence on these markets, and are actively seeking
more business from elsewhere. Our order book has risen by 12% since
the year end and currently stands at GBP980 million. It is
encouraging to note that 44% of today's order book emanates from
non-NATO markets, and this compares with 33% at the same time last
year. We see further good growth prospects in these markets and
will pursue the opportunities they offer. I am confident that we
have the products, the management and technological skills to
achieve our objectives and provide the foundation for steady
growth."
For further information:
Chief Executive, Chemring Group
Dr David Price PLC 0207 930 0777
Finance Director, Chemring Group
Paul Rayner PLC 0207 930 0777
Director of Communications and
Investor Relations, Chemring
Rupert Pittman Group PLC 0207 930 0777
Anthony Cardew/
Emma Crawshaw Cardew Group 0207 930 0777
* Before acquisition related costs, restructuring and incident
costs, provision release, (gain)/loss on fair value movements on
derivatives and intangible amortisation arising from business
combinations (see Note 3)
(#) Restated figures for prior year to reflect the subdivision
of shares (see Note 5), as well as the reclassification of certain
items from underlying costs to non-underlying costs (see Note
3)
() Organic growth at constant US dollar excludes growth from
contracts and customers acquired with Roke, Mecar and Chemring
Detection Systems
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 eight
countries selling high technology electronics and energetic
products to over eighty countries worldwide.
-- The Company has a diverse portfolio of products protecting
military people and platforms against a constantly changing
threat.
-- Operating in high margin, niche markets with short product
development timescales, Chemring has the agility to rapidly react
to urgent customer needs.
-- Chemring adopts a balanced strategy of organic growth and
small bolt-on acquisitions, and maintains balanced geographic and
market profiles, with a growing presence in non-NATO countries.
-- Strong R&D investment for new products and improvements
in technology continually allows Chemring to expand its addressable
markets.
www.chemring.co.uk
Presentation
The 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/resultscentre at 09.30 (UK time)
on Tuesday 24 January 2012. A recording of the audio webcast will
be available later that day.
Photography
Original high-resolution photography is available to the media
by contacting Emma Crawshaw, Cardew Group.
emma.crawshaw@cardewgroup.com / Tel: 020 7930 0777
RESULTS
Chemring produced another year of growth in profits and
earnings, although both were affected in the last month by a
slippage of deliveries into the current financial year.
Total revenue was GBP745.3 million (2010: GBP597.1 million), an
increase of 25%. Revenue arising from the acquisition of Chemring
Detection Systems in 2011 was GBP14.6 million, 2% of the increase.
Organic revenue growth() was 9%. Roke and Mecar, which were
acquired in September 2010, contributed 17% of the Group revenue
increase. During the year, the US dollar depreciated against
sterling, which reduced the reported sterling revenues of US
subsidiaries by GBP15.1 million, equivalent to 3%.
An analysis of the underlying results is set out below:
2011 2010
GBPm GBPm
Total revenue 745.3 597.1
Divisional operating profit 151.8 147.9
Unallocated corporate costs (10.0) (10.4)
Underlying operating profit 141.8 137.5
Share of post-tax results
of associate 0.1 0.1
Finance income 0.1 0.5
Finance expense (16.4) (19.4)
Underlying profit before tax 125.6 118.7
Tax on underlying profit before
tax (28.8) (30.7)
Underlying profit after tax 96.8 88.0
An analysis of revenue and divisional operating profit by
segment* is set out below:
2011 2010
Underlying Underlying Underlying Underlying
operating operating operating operating
Revenue profit* margin Revenue profit*(#) margin
GBPm GBPm GBPm GBPm
Counter-IED 167.6 31.9 19% 114.9 28.1 25%
Countermeasures 200.8 46.7 23% 196.3 58.8 30%
Pyrotechnics 139.9 32.4 23% 170.0 40.1 24%
Munitions 237.0 40.8 17% 115.9 20.9 18%
Divisional results 745.3 151.8 20% 597.1 147.9 25%
Counter-IED revenue increased 46% to GBP167.6 million, due to
increased revenue at NIITEK for HMDS spares and support, together
with a GBP14.6 million contribution from Chemring Detection
Systems. Operating margins reduced to 19%, largely due to pricing
pressure on NIITEK's products. Chemring Detection Systems' 15%
margin also diluted the overall margin for this segment.
Countermeasures revenue grew by 3% but underlying operating
profit* reduced 21%, largely due to lower demand for decoys at
Alloy Surfaces, which was only partially offset by revenue from
Roke at a lower margin of 10%.
Pyrotechnics revenue decreased 18% to GBP139.9 million and
underlying operating profit* decreased 19% to GBP32.4 million,
principally due to lower demand for 81mm illumination products.
Munitions grew the most, with revenue increasing 104% to
GBP237.0 million following a strong second half performance from
Mecar. Mecar's margin grew to 10% in the second half from a
negative margin at the half year.
Unallocated corporate costs were GBP10.0 million, slightly down
on 2010. In 2010, two non-recurring cost items, which netted out at
GBP1.9 million (GBP4.3 million charge, GBP2.4 million credit) were
included in unallocated corporate costs but with the reformatting
of the Income Statement this year these items have now been
reclassified as non-underlying items in order to be consistent
year-on-year. The impact of this reclassification is an increase in
underlying operating profit* for 2010 to GBP137.5 million from
GBP135.6 million, although divisional operating profits are
unchanged.
Total underlying operating profit* was GBP141.8 million (2010:
GBP137.5 million), an increase of 3%. Underlying operating profit*
generated by Chemring Detection Systems was GBP2.2 million. Roke
and Mecar contributed GBP9.0 million. The impact of the
depreciation of the US dollar against sterling reduced the US
subsidiaries' reported sterling profits in 2011 by GBP3.6 million.
Without this depreciation, growth in total underlying operating
profit* in 2011 would have been 6%.
Total underlying operation margin* reduced to 19% from 23% last
year. Approximately half this reduction is attributable to lower
margins at Alloy Surfaces and NIITEK, with the other half
reflecting the impact of acquired businesses with lower margins
than the Group average.
Finance income in the year was GBP0.1 million (2010: GBP0.5
million). Finance expense for the year was GBP16.4 million (2010:
GBP19.4 million), a decrease of 15%. Included within finance
expense is GBP0.7 million (2010: GBP1.2 million) for retirement
benefit obligations. Net finance expense was covered 8.7 times
(2010: 7.3 times) by underlying operating profits.
Underlying profit before tax* was GBP125.6 million (2010:
GBP118.7 million(#) ), an increase of 6%.
Tax on underlying profit before tax* was GBP28.8 million (2010:
GBP30.7 million), representing an underlying rate of 23% (2010:
26%). The reduction in the tax rate arises from the utilisation of
R&D tax credits across the Group, particularly at Roke,
together with the partial utilisation of tax losses within our
European businesses which had not previously been recognised.
Underlying profit after tax* was GBP96.8 million (2010: GBP88.0
million(#) ), an increase of 10%.
The order intake for the Group was GBP819 million, which was
slightly lower than last year. We saw strong order book growth in
our Counter-IED and Munitions businesses, which was offset by a
downturn in orders received in the Countermeasures and Pyrotechnics
divisions. These two divisions suffered from reduced customer
demand, which was driven, in the main, by government fiscal and
budgetary controls. The closing order book reached GBP878 million,
which was 9% above last year.
analysis of non-underlying items
The Board monitors underlying operating profit and underlying
profit before tax for reporting purposes so as to not distort
year-on-year comparisons, hence certain items are classed as
non-underlying as set out below:
2011 2010(#)
GBPm GBPm
Acquisition related costs 5.7 6.7
Restructuring and incident costs 7.2 4.3
Provision release - (2.4)
(Gain)/loss on fair value movements on
derivatives (2.4) 4.0
Intangible amortisation arising from business
combinations 24.3 17.0
Total non-underlying items 34.8 29.6
Acquisition related costs include the external costs incurred in
acquiring businesses in 2010 and 2011, together with costs
associated with an aborted bid and the establishment of joint
ventures.
In 2011, the restructuring and incident costs related to the
closure of Plant 3 at Alloy Surfaces (GBP1.1 million) and the
start-up of production at Mecar following the incident that
occurred in September 2010 (GBP2.3 million). At the end of October
2011, the Board decided to exit some loss-making munitions product
lines in the US, and in addition to minor losses, a provision has
also been made for excess inventory and fixed assets (GBP3.8
million).
In 2010, the restructuring and incident costs included the
restructuring of the Group's UK Counter-IED business at a cost of
GBP1.5 million. As a result, one of the two sites out of which it
operated was closed. Also, there were two separate incidents that
stopped production at the Kilgore Flares facility in Tennessee and
Mecar in Belgium. As a result of these incidents, GBP2.8 million of
non-recurring costs were incurred in respect of the write-off of
damaged stock and destroyed assets.
During 2010, part of the provision held in respect of the
environmental liabilities associated with the Chemring Energetic
Devices site in Illinois was released, following a third party
assessment of the provision. This resulted in a GBP2.4 million
non-recurring credit to the Income Statement.
A gain on derivatives of GBP2.4 million arose this year, due
largely to the movement in the sterling/ dollar exchange rate
during the year.
Intangible amortisation arising from business combinations
increased in the year, with a full year amortisation of assets
acquired with the Mecar and Roke acquisitions, and four months'
amortisation arising from the acquisition of Chemring Detection
Systems.
Counter-ied
-- Orders: GBP207 million
-- Revenue: GBP168 million
-- Operating profit: GBP32
million
-- Operating margin: 19%
Our Counter-IED division had another excellent year, achieving a
46% increase in revenue to a record level of GBP167.6 million,
reflecting strong growth in various detection and disable
sub-segments of the markets. NIITEK had an outstanding year,
increasing its revenue by 24% to GBP126.9 million, driven by high
level of demand for spares and support for the 200+ HMDS systems in
service with the US and Canadian Armies on peacekeeping operations.
Chemring Ordnance also had a successful breakthrough into the
"defeat" part of the US counter-IED market by winning the
multi-year competition for the manufacture of the APOBS for the US
Army and Marine Corps. This system is designed to safely clear a
footpath through anti-personnel mines and multi-strand wire
obstacles. Production under the contract, which is worth up to $150
million over the next four years, will start in the second half of
2012.
Our HMDS ground penetrating radar continues to operate
successfully during counter-IED operations in Afghanistan and has
saved the lives of many US and coalition soldiers. During 2011,
NIITEK delivered 77 HMDS systems to the US Army taking the number
of systems supplied to over 240. Negotiations with the US Army for
a multi-year sustainment contract, covering systems, spares and
support and potentially worth in excess of $500 million, has been
underway for many months, and the contract is expected to be
received by the end of the second quarter. This will support the
operation of the HMDS fleet until withdrawal from Afghanistan in
2015.
Good progress has also been made in developing the export market
for HMDS. Agreement has been reached with MBDA Italy to provide the
Italian Army with a modified ground penetrating radar system to go
on the Calife pushed trailer and the IVECO VTMM multi-role tactical
vehicle. Full development will be completed in 2012 and production
is expected in 2012 and 2013. The Australian Defence Force has also
selected HMDS for its counter-IED operations, and is looking to
procure systems through the US Foreign Military Sales channels.
The US Army's acquisition of a next-generation IED detection
system, involving more advanced multi-sensor technology and data
fusion, will probably take place in 2013, and they have confirmed
that they expect to purchase in excess of 500 systems over a five
year period.
In 2012, the US Army will take the Milestone C decision to start
full rate production of the nuclear, biological and chemical
reconnaissance vehicle - Stryker Suite. An additional 100 vehicles
will be built in 2012 and a further 50 in 2013. This will boost
demand for both the biological (JBPDS) and chemical detection
systems (JSLSCAD) supplied by our new subsidiary, Chemring
Detection Systems, and will generate good growth over the next few
years.
The Group has also continued work on a customer-funded
development programme for stand-off explosives detection. Three
systems were manufactured and delivered for early user testing
during 2011. Additional work is expected in 2012 to continue early
user testing, to complete a production readiness phase of the
current generation system, and to work on a next generation system
for vehicle-mounted applications with on-the-move capability.
The qualification of our range of insensitive demolition stores
is making good progress, and considerable export interest has been
generated, both within and outside NATO, by our SABREX flexible
linear cutting charge. The global market for products used to
"defeat" the threat remains steady at GBP300 million, and
represents an important area for future growth. The award of the
multi-year APOBS contract to Chemring Ordnance by the US Army was a
strong endorsement of the investment in technology and facilities.
Technology transfer of our next generation demolition stores to the
US should help capture a sizable share of the global market.
The order book for our Counter-IED division was GBP127 million
at the end of the year, 28% higher than the previous year. The
growth has been driven by the APOBS contract. The HMDS multi-year
sustainment contract has taken many months to negotiate, and the
delay is reflected in the reducing order book. The delayed timing
of the new contract will impact revenues at NIITEK in 2012.
However, revenue from Chemring Detection Systems will offset this
reduction, and overall, the Board expects good growth from this
segment in 2012.
Countermeasures
-- Orders: GBP155 million
-- Revenue: GBP201 million
-- Operating profit: GBP47 million
-- Operating margin: 23%
Our Countermeasures division delivered a steady performance,
achieving a 3% increase in revenue to GBP200.8 million, including
the full year contribution from Roke, which was acquired in 2010.
The expendable countermeasures revenues, however, dropped by 17%,
with a 29% reduction in demand from our principal customers for
decoys used to protect helicopter and transport aircraft, in
anticipation of the planned withdrawal from Afghanistan in 2014.
Two upgraded naval countermeasure rounds completed their
development and qualification programmes during the year and
production deliveries are expected to contribute to growth from
2012 onwards.
In Afghanistan, the total NATO deployment is still 130,000
troops. However, coalition forces have announced their intention to
withdraw their troops by 2015, starting with a reduction of nearly
40,000 by the end of 2012. In anticipation of this withdrawal and,
under pressure from budget constraints, most of our customers have
cut back significantly on the purchase of flares and decoys needed
for the protection of helicopters and transport aircraft. A
combination of reductions in the volumes ordered and delays in
order placement is quickly reducing the current stock piles.
Further reductions are anticipated in 2012, which will take
production on some decoys down to a minimum sustainable level.
The major growth in expendable countermeasures over the next
five years will, however, be associated with the supply of flares
and countermeasures to protect fast jets. These are principally
used in operations against sophisticated opponents, where war
stocks need to be in place for high volume usage during intense
battle conditions. Two aircraft, Typhoon and the F-35 Joint Strike
Fighter (JSF), will dominate the market over the next ten to
fifteen year period. A technical problem with the dispenser,
manufactured by a third party, has delayed volume production of the
Typhoon units, and we are still in low rate initial production with
the JSF flare set. With the approval of the US government, Chemring
Australia has been identified as a second source supplier for JSF
countermeasures and, after the US Department of Defense qualifies
production in Australia, will compete with Kilgore for a share of
the long-term production.
Another major area of growth over the next few years is naval
countermeasures. These are designed to protect ships against
incoming missiles, particularly in circumstances when rapid-fire
gun systems cannot be used, such as in shallow water next to other
friendly vessels. During 2011, the Group completed development of a
range of new payloads to meet the changing threat and is now
starting to manufacture these next generation products. The Group
has also purchased, from Lockheed -Martin, the manufacturing assets
and intellectual property for certain legacy US naval rounds. Our
new designs and the detailed knowledge of current US in-service
rounds will position us strongly for a new US Navy procurement
programme which will run from 2013 onwards.
The Group has also made good progress in the development of its
new trainable launcher system, Centurion. A series of land-based
firing demonstrations were successfully undertaken last year, and a
fully operational prototype is now in manufacture. Discussions with
the Royal Navy on sea trials are underway, and the Italian Navy has
recently expressed strong interest in undertaking an extended sea
trial of the system on one of their San Antonio Landing Platform
Dock vessels. Considerable interest has been shown by a number of
US, Middle East, Far East and South American customers.
The order book for our Countermeasures division decreased by 12%
to GBP234 million during 2011. Although this is normally a reliable
lead indicator of trends over the next twelve months, it does not
take into account the high level of backlog at Kilgore or the
delays in order placement caused by the US government's Continuing
Resolution funding. Strong growth in deliveries of decoys for
combat aircraft programmes are, therefore, expected to compensate
for the reduction in demand for those used on helicopters and
transport aircraft, and a stable level of revenue can be expected
for this segment.
Pyrotechnics
-- Orders: GBP107 million
-- Revenue: GBP140 million
-- Operating profit: GBP32 million
-- Operating margin: 23%
Our Pyrotechnics division generated revenue of GBP139.9 million,
18% lower than last year, with a large number of annual orders
placed at reduced volumes, or deferred completely, as European and
US governments reduced expenditure as part of their deficit control
programmes. However, we did successfully capture the competitive,
multi-year contracts for the improved submarine distress signals
for both the UK and US Navy customers. These will put us in a
strong position to address the global market, where the demand for
diesel submarines continues to grow.
There continues to be strong interest in illuminating payloads
for use in peacekeeping operations. We have developed a family of
"white light" and "black light" payloads for the full range of
mortar calibres, large calibre ammunition and for low signature,
hand-held rockets that can be used by individual soldiers. These
are all expected to enter into volume manufacture during 2012 and
2013.
We have also completed the initial development of a payload for
the replacement of white phosphorous in smoke/screening payloads. A
120mm spotting round has completed development and will be
qualified by the US Army in 2012 for sale to Middle East customers
under the Foreign Military Sales programme.
The overall order book for the Pyrotechnics division reduced by
16% to GBP145 million, with large reductions in the
smoke/illumination and training parts of the market. However, the
Pyrotechnics order book has a much shorter coverage, and the
opening order book does not adequately characterise the scale of
in-for-out orders that make up the full year performance.
Lower demand for training and aircraft safety products is
expected in 2012 but further growth in revenues for smoke,
illumination and space products means that revenues approaching
2010 levels can be expected.
Munitions
-- Orders: GBP349 million
-- Revenue: GBP237 million
-- Operating profit: GBP41 million
-- Operating margin: 17%
Our total Munitions revenue in 2011 was GBP237 million, a 104%
increase on the previous year and equating to a market share of 6%.
Our highest growth comes from the sale of ammunition for light
armoured vehicles (LAVs), which increased by 198% to GBP158 million
of revenue. Naval ammunition sales increased by 122% to GBP20
million, as deliveries of 76mm ammunition started to ramp upwards.
The global market for munitions components is estimated to be GBP2
billion. In 2011, our revenue from components was GBP58 million,
representing 24% of our total Munitions revenue, an increase of 8%
compared with the previous year and equating to a market share of
3%.
The closing order book for the Munitions division was GBP372
million, an increase of 39% on the previous year, and a clear
indication of further growth in 2012. About 71% of the order book
is from non-NATO customers.
The naval ammunition market continues to grow, principally
driven by the number of 76mm guns fitted to new naval ships. There
is considerable interest in our products from Middle East and South
American customers. A live-firing demonstration is planned in Italy
to demonstrate its capability against pirate boats or fast attack
craft to a number of Middle East customers.
The Middle East and South America are also growing markets for
our 90mm, 105mm and 115mm ammunition. In particular, the CMI 90mm
Mk8 gun is often fitted to the LAVs prevalent in these regions, and
offers the Group a substantial opportunity to develop new customer
relationships and markets. Discussions are also underway with the
Brazilian government for the supply of 90mm ammunition for the 400
new Iveco LAVs which they are planning to acquire over the next ten
years.
The Group is under contract with General Dynamics Land Systems,
Canada for the supply of vehicle-based 120mm mortar systems for
sale under a US Foreign Military Sales programme. System deliveries
will commence in 2012 and will involve production testing by the US
Army during 2012 and 2013, using Mecar supplied ammunition. New
inspection requirements from the US government have delayed the
expected delivery programme and the majority of deliveries are now
scheduled for 2013. Annual ammunition contracts are then
expected.
The order book for the Munitions division grew by 39% to GBP372
million in 2011, with strong growth in both the land and naval
prime contract markets. Growth in 2012 revenues is expected to be
good, albeit at a lower rate than would be implied by the increase
in the opening order book.
ELECTRONICS
In line with the Group's strategy, electronics, including
electronic countermeasures and IED detection systems, is of growing
importance across our four market segments. With the acquisition of
Chemring Detection Systems and Roke, we have significantly enhanced
our capabilities in electronic systems design, development and
integration. In 2011, electronics contributed 40% of the Group
revenue, and this is expected to grow to 50% over the next five
years. These electronic capabilities are in five niche areas:
-- Initiation - delays, sequencing and safety/arming
-- Detection - radar and infra-red stand-off technologies
-- Electronic warfare- interception of communications and electronic attack
-- Electronic countermeasures - active jamming systems
-- Network protection- legal intercept and anomaly detection
Roke has become a strategic European centre-of-excellence for
product and technology development of electronic systems. It is
heavily engaged in the system engineering and software development
of our Centurion countermeasure launcher, it is designing low-cost,
active-jamming technology for our air and naval expendable markets,
and it has completed the design of our new SPLINTER hand-held mine
detector.
In 2011, Roke was given the Queens Award for Innovation for its
RESOLVE modular, man-portable, electronic warfare system for the
exploitation and suppression of hostile communication equipment.
RESOLVE is now in service with the UK Ministry of Defence and a
number of customers in the global export market. Roke has produced
and demonstrated a vehicle-mounted RESOLVE capability, and there is
strong interest from Europe and the Middle East in vehicle-mounted
surveillance systems for dedicated electronic surveillance
applications.
Principal Risks and Uncertainties
The principal risks and uncertainties which could have a
material impact on the Group's performance and could cause actual
results to differ materially from expected and historical results
have not changed significantly from those set out in the Group's
2010 Financial Statements and the 2011 Interim Report. These can be
summarised as:
-- Health and safety risks
-- Political, economic and financial risks, including possible defence budget cuts
-- Risks associated with the timing of receipt of orders
-- Risks associated with the introduction of new manufacturing facilities
-- Risks associated with the introduction of new products
-- Risks related to the strength and breadth of management resource
-- Competitive risks
-- Compliance and corruption risks
-- Financial risks, including credit, interest rate and foreign exchange risks
Acquisitions
On 1 July 2011, the Group completed the acquisition of the
Detection Systems operations and certain related assets of General
Dynamics Armament and Technical Products, a subsidiary of General
Dynamics Corporation, for a cash consideration of $90 million
(GBP56.1 million). The business, which has been renamed Chemring
Detection Systems, is based in Charlotte, North Carolina, and is a
US leader in chemical and biological threat detection. It also has
advanced capability in the stand-off detection of improvised
explosive devices.
A summary of the business acquired, together with the
provisional fair value adjustments made on acquisition is set out
below:
Provisional
Book fair value Fair
value adjustments value
GBPm GBPm GBPm
Intangible assets 4.8 30.3 35.1
Property, plant and
equipment 4.2 (0.7) 3.5
Overdraft assumed (1.9) - (1.9)
Working capital 8.0 (2.1) 5.9
Net assets acquired 15.1 27.5 42.6
Goodwill 13.5
Total 56.1
Total cash consideration 56.1
During the year, the provisional fair value adjustments made to
the 2010 acquisitions were finalised. As a result, the net assets
of the acquired companies increased by GBP5.4 million, with a
commensurate reduction in goodwill. As required by accounting
standards, the 2010 balance sheet has been restated.
During the summer, we were in discussions with a third party
regarding a significant acquisition that would have made a major
impact to our market position. However, the restructuring required
to deliver the full benefit was considerable, and we felt that the
vendor's valuation of the business was too high. Although we are no
longer pursuing this opportunity, the core strategy of the Group
remains focused on organic growth that is augmented by small
bolt-on acquisitions.
Research and Development
Research and development expenditure totalled GBP59.6 million
(2010: GBP34.2 million), 74% higher than last year. The increase
reflects the Group's investment in future growth, and includes the
significant full year impact of Roke's customer-funded research and
development. An analysis of expenditure is set out below:
2011 2010
GBPm GBPm
Customer-funded research and development 38.4 20.6
Internally-funded research and development 21.2 13.6
Total research and development expenditure 59.6 34.2
GBP12.4 million (2010: GBP7.8 million) of the internally-funded
research and development costs were capitalised in the year.
The Group's policy is to write-off capitalised development costs
over a three year period. Amortisation of development costs was
GBP2.4 million (2010: GBP2.1 million).
PENSIONS
The deficit on the Group's defined benefit schemes before
associated tax credits, as defined by IAS 19 Accounting for pension
costs, was GBP25.2 million (2010: GBP23.0 million).
The Chemring Group Staff Pension Scheme is a defined benefit
scheme, with the assets held in a separate trustee-administered
fund. A full actuarial valuation for the Staff Pension Scheme as at
6 April 2009 has been prepared and updated to 31 October 2011 by a
qualified actuary, using the projected unit credit method.
The Group has given a bank guarantee and letters of credit
totalling GBP27.2 million (2010: GBP7.2 million) to the Staff
Pension Scheme. The guarantee and letters of credit may be drawn
upon in certain events of default by the Company. The increase in
this contingent funding during the year resulted in the release of
the GBP15.0 million of previously restricted cash pledged to the
Staff Pension Scheme, with GBP5.0 million of the increase being
provided in line with the agreed funding plan.
The Group is currently consulting with active members of the
Staff Pension Scheme on the proposed closure of the scheme to
future accrual.
Most of our UK employees are now offered membership of a defined
contribution pension scheme. The majority of our overseas pension
arrangements are also defined contribution, save in those European
countries where certain defined benefit pension arrangements are
required.
Cash Flow
Underlying operating cash flow* was GBP124.6 million (2010:
GBP128.0 million(#) ), which represents a conversion rate of
underlying operating profit* to operating cash of 88% (2010:
93%).
Fixed asset expenditure across the Group was GBP61.7 million
(2010: GBP48.7 million), which includes GBP19.7 million related to
the construction of new facilities at our sites in Salisbury and
Australia, and GBP4.5 million relating to new facilities in
Scotland.
Tax payments were lower than last year due to the availability
of R&D tax credits and lower tax rates, combined with the
timing of payments.
Interest was higher due to the timing of interest payments
relating to some of the US loan notes.
A summary of underlying Group cash flow is set out below:
2011 2010
GBPm GBPm
Underlying operating cash flow 124.6 128.0
Fixed asset expenditure (61.7) (48.7)
Tax (17.2) (30.0)
Interest (17.8) (14.0)
Underlying free cash flow 27.9 35.3
WORKING CAPITAL
A summary of working capital balances is set out below:
2011 2010 Variance
GBPm GBPm GBPm
Inventories 146.8 141.3 5.5
Trade receivables 164.1 139.1 25.0
Trade payables (105.3) (100.1) (5.2)
Advance payments (48.7) (52.8) 4.1
Total working capital 156.9 127.5 29.4
Total working capital days 77 78
Overall working capital increased by 23% on 2010, slightly lower
than the increase in revenue. Total working capital days are
consistent with last year at 77 days (2010: 78 days). Trade
receivables were 18% higher than 2010, although lower than the rate
of revenue growth. At the end of 2010, trade payables were high as
a result of payables acquired with Mecar. During the first half of
2011, these trade payables were settled. It is anticipated that
working capital will reduce in 2012.
BALANCE SHEET
In April 2011, GBP112 million of new equity was raised in order
to fund two potential acquisitions. We went ahead with the purchase
of Chemring Detection Systems but did not, in the end, proceed with
the other potential opportunity, as further investigation indicated
that it would not generate sufficient value. In the light of this,
the Board has reviewed the balance sheet to determine the
appropriate levels of debt and gearing for the Group in the future.
We have taken a cautious view in the light of the world's economic
and financial uncertainties and will continue reducing debt levels
when appropriate. However, we have also concluded that we should
consider returning surplus capital to shareholders whilst
maintaining the strength of the balance sheet. Accordingly, we will
seek approval at the forthcoming Annual General Meeting to renew
our authority to buy back shares, when it is considered
appropriate, over the course of the next year. We would only expect
to exercise this authority for a buyback of up to GBP50 million of
shares.
The Board also considered its long term dividend policy as part
of this balance sheet review. For many years, the Group has adopted
a policy of maintaining dividend cover at around four times. With
our strong annual cash generation, we believe it would be
appropriate to reduce the cover to three times over the next year.
As part of this move, the proposed total dividend for 2011 will be
covered 3.5 times by underlying after tax earnings*, compared with
4.2 times last year.
Net Debt, Facilities and Going Concern
Net debt at the year end was GBP262.7 million (2010: GBP307.5
million), a decrease of 15%. The Group had GBP150.1 million (2010:
GBP104.6 million) of undrawn borrowing facilities at the year
end.
On 14 January 2011, the Group completed a refinancing of its
bank facilities with a syndicate of five banks. The new Group
facilities, which are unsecured, total GBP230 million, a GBP55
million increase on the previous secured facilities. The term of
the facilities is now through to April 2015.
Gearing at the year end was 55% (2010: 95%). A summary of debt
is set out below:
2011 2010
GBPm GBPm
Cash 91.9 58.4
Loans and finance leases (94.4) (104.7)
Loan notes (260.2) (261.2)
(262.7) (307.5)
The directors have acknowledged the latest guidance on going
concern. Whilst the current volatility in financial markets has
created general uncertainty, the Group has significant working
capital headroom and strong covenant compliance. Thus, the
directors have a reasonable expectation that adequate financial
resources will continue to be available for the foreseeable
future.
Dividends
In line with the revised dividend policy outlined above, the
Board is recommending a final dividend for the year of 10.8p (2010:
8.4p). With the interim dividend paid of 4p (2010: 3.4p), this
gives a total dividend for 2011 of 14.8p (2010: 11.8p), an increase
of 25%. The dividend is covered 3.5 times by underlying after tax
earnings*, and with a solid balance sheet and cash flow, the Group
remains well positioned to increase its return to shareholders.
SHAREHOLDER RETURNS
Underlying basic earnings per ordinary share* was 52.1p (2010:
49.8p(#) ), an increase of 5%. Basic earnings per share were 39.8p
(2010: 37.8p), an increase of 5%.
The Group's underlying return on capital employed was 19% (2010:
22%).
Shareholders' funds at the year end were GBP475.4 million (2010:
GBP323.2 million), an increase of 47%.
BOARD OF DIRECTORS
David Evans, who has been a director since 1988, first as Chief
Executive and for the last seven years as a non-executive director,
has indicated his intention to retire from the Board at the Annual
General Meeting in March. During his time with the Group, David has
made a major contribution to its development, and the Board would
like to take the opportunity to thank him and wish him well in the
future.
Prospects
During the last year, many governments have struggled with
increasing deficits and lower economic growth. This has affected
defence procurement, leading to volume reductions and delays. The
continuing problems of the Eurozone and the impact of possible
sequestration in the US indicate that our traditional markets will
not be any easier this year. We continue to pursue our policy of
reducing our dependence on these markets, and will actively seek
more business from elsewhere. It is encouraging to note that 44% of
today's order book emanates from these non-NATO markets, compared
with 33% at the same time last year. We see further good growth
prospects in these markets and will pursue the opportunities they
offer. We are confident that we have the products, the management
and technological skills to achieve our objectives and provide the
foundation for steady growth.
Responsibility Statement of the Directors on the Annual Report
and Accounts
The responsibility statement below has been prepared in
connection with the Company's full Annual Report and Accounts for
the year ended 31 October 2011. Certain parts thereof are not
included within this announcement.
We confirm to the best of our knowledge:
1. The financial statements, prepared in accordance with International
Financial Reporting Standards as adopted by the European Union,
give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Company and the undertakings
included in the consolidation taken as a whole; and
2. The Statement by the Chairman, the Review by the Chief Executive
and the Review by the Finance Director, together with the
sections of the Annual Report on each of the business segments,
key performance indicators and principal risks, and the Corporate
Responsibility Review, which are incorporated into the Directors'
Report, include a fair review of the development and performance
of the business and the position of the Company and the undertakings
included in the consolidation taken as a whole, together with
a description of the principal risks and uncertainties they
face.
This responsibility statement was approved by the Board of
Directors on 24 January 2012 and has been signed on its behalf by
Dr D J Price and Mr P A Rayner.
* Before acquisition related costs, restructuring and incident
costs, provision release, (gain)/loss on fair value movements on
derivatives and intangible amortisation arising from business
combinations (see Note 3)
(#) Restated figure for prior years to reflect the subdivision
of shares (see Note 5), as well as the reclassification of certain
items from underlying costs to non-underlying costs (see Note
3)
SUMMARY FINANCIAL INFORMATION
Note 2011 2010
GBPm GBPm(#)
Revenue
Counter-IED 167.6 114.9
Countermeasures 200.8 196.3
Pyrotechnics 139.9 170.0
Munitions 237.0 115.9
Total revenue 2 745.3 597.1
Underlying operating profit*
- continuing operations 139.6 137.5
- acquired 2.2 -
Total underlying operating profit* 141.8 137.5
Underlying profit before tax* 125.6 118.7
Underlying basic earnings per ordinary
share* 52.1p 49.8p
Operating profit 107.0 107.9
Profit before tax 90.8 89.1
Basic earnings per ordinary share 39.8p 37.8p
Diluted earnings per ordinary share 39.4p 37.4p
Dividend per ordinary share 14.8p 11.8p
Net debt (GBPm) 262.7 307.5
Shareholders' funds (GBPm) 475.4 323.2
* Further information about non-underlying items can be found in
Note 3
(#) Restated figures for prior year to reflect the subdivision
of shares (see Note 5), as well as the reclassification of certain
items from underlying costs to non-underlying costs (see Note
3)
CONSOLIDATED INCOME STATEMENT
for the year ended 31 October 2011
2011 2010
As restated(#)
Underlying Non- Underlying Non-
business underlying business underlying
performance* items Total performance* items Total
GBPm GBPm GBPm GBPm GBPm GBPm
Continuing operations
Revenue
- continuing 730.7 - 730.7 597.1 - 597.1
- acquired 14.6 - 14.6 - - -
Total revenue 745.3 - 745.3 597.1 - 597.1
Operating profit
- continuing 139.6 (33.5) 106.1 137.5 (29.6) 107.9
- acquired 2.2 (1.3) 0.9 - - -
Total operating profit 141.8 (34.8) 107.0 137.5 (29.6) 107.9
Share of post-tax
results
of associate 0.1 - 0.1 0.1 - 0.1
Finance income 0.1 - 0.1 0.5 - 0.5
Finance expense (16.4) - (16.4) (19.4) - (19.4)
Profit before tax 125.6 (34.8) 90.8 118.7 (29.6) 89.1
Tax (28.8) 11.9 (16.9) (30.7) 8.3 (22.4)
Profit after tax 96.8 (22.9) 73.9 88.0 (21.3) 66.7
Earnings per ordinary
share*
Basic 52.1 39.8 49.8 37.8
Diluted 39.4 37.4
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 October 2011
2011 2010
GBPm GBPm
Profit after tax for the year attributable
to equity holders of the parent 73.9 66.7
Other recognised income
(Losses)/gains on cash flow hedges (0.1) 1.0
Exchange differences on translation of foreign
operations (7.4) 0.4
Actuarial (losses)/gains on defined benefit
pension schemes (1.8) 4.0
Movement on deferred tax relating to cash flow
hedges - (0.3)
Movement on deferred tax relating to pension
schemes 0.4 (1.4)
Current tax on items taken directly to equity - 0.1
Deferred tax on items taken directly to equity 0.3 (0.5)
Total comprehensive income for the year attributable
to
equity holders of the parent 65.3 70.0
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 October 2011
Share Special
Share premium capital Hedging Revaluation Translation Retained Own
capital account reserve reserve reserve reserve earnings shares Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 November
2010 1.8 120.4 12.9 (2.7) 1.4 (12.4) 209.0 (7.2) 323.2
--------------- --------- ---------- --------- --------- ------------ ------------ --------- -------- --------
Profit after
tax for
the year - - - - - - 73.9 - 73.9
Other
comprehensive
income for
the
year - - - (0.1) - (7.1) (1.4) - (8.6)
Total
comprehensive
income for
the
year - - - (0.1) - (7.1) 72.5 - 65.3
Ordinary
shares
issued 0.2 110.2 - - - - - - 110.4
Dividends paid - - - - - - (22.7) - (22.7)
Share-based
payments (net
of
settlement) - - - - - - (2.1) - (2.1)
Current tax
relating to
share-based
payments - - - - - - 0.7 - 0.7
Transactions
in own shares - - - - - - - 0.6 0.6
Transfers
between
reserves - - - 2.8 - - (2.8) - -
At 31 October
2011 2.0 230.6 12.9 - 1.4 (19.5) 254.6 (6.6) 475.4
Share Special
Share premium capital Hedging Revaluation Translation Retained Own
capital account reserve reserve reserve reserve earnings shares Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 November
2009 1.8 120.3 12.9 (3.4) 1.4 (11.7) 157.5 (5.2) 273.6
--------------- --------- ---------- --------- --------- ------------ ------------ --------- -------- --------
Profit after
tax for
the year - - - - - - 66.7 - 66.7
Other
comprehensive
income for
the
year - - - 0.7 - 0.4 2.2 - 3.3
Total
comprehensive
income for
the
year - - - 0.7 - 0.4 68.9 - 70.0
Ordinary
shares
issued - 0.1 - - - - - - 0.1
Dividends paid - - - - - - (18.7) - (18.7)
Share-based
payments (net
of
settlement) - - - - - - 0.1 - 0.1
Current tax
relating to
share-based
payments - - - - - - 0.1 - 0.1
Transactions
in own shares - - - - - - - (2.0) (2.0)
Transfers
between
reserves - - - - - (1.1) 1.1 - -
At 31 October
2010 1.8 120.4 12.9 (2.7) 1.4 (12.4) 209.0 (7.2) 323.2
CONSOLIDATED BALANCE SHEET
as at 31 October 2011
2011 2010
GBPm GBPm GBPm GBPm
As restated(#) As restated(#)
Non-current assets
Goodwill 243.4 231.0
Development costs 23.3 13.3
Other intangible assets 191.8 182.0
Property, plant and equipment 231.1 197.5
Interest in associate 1.5 1.1
Deferred tax 21.7 17.3
712.8 642.2
Current assets
Inventories 146.8 141.3
Trade and other receivables 190.8 165.6
Cash and cash equivalents 91.9 58.4
Derivative financial instruments 1.9 1.9
431.4 367.2
Total assets 1,144.2 1,009.4
Current liabilities
Borrowings (86.0) (65.6)
Obligations under finance leases (2.0) (2.6)
Trade and other payables (212.4) (222.3)
Provisions (2.5) (1.9)
Current tax liabilities (5.6) (7.7)
Derivative financial instruments (1.5) (1.6)
(310.0) (301.7)
Non-current liabilities
Borrowings (262.1) (294.6)
Obligations under finance leases (4.4) (3.0)
Trade and other payables (1.2) (1.0)
Provisions (2.4) (3.1)
Deferred tax (59.0) (52.4)
Preference shares (0.1) (0.1)
Retirement benefit obligations (25.2) (23.0)
Derivative financial instruments (4.4) (7.3)
(358.8) (384.5)
Total liabilities (668.8) (686.2)
Net assets 475.4 323.2
Equity
Share capital 2.0 1.8
Share premium account 230.6 120.4
Special capital reserve 12.9 12.9
Hedging reserve - (2.7)
Revaluation reserve 1.4 1.4
Translation reserve (19.5) (12.4)
Retained earnings 254.6 209.0
482.0 330.4
Own shares (6.6) (7.2)
Equity attributable to equity
holders of the parent 475.4 323.2
Total equity 475.4 323.2
(#) The restatement above relates to the reassessment of fair
value assets on prior year acquisitions (see Note 8)
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 October 2011
2011 2010
Note GBPm GBPm
As restated(#)
Cash flows from operating activities
Cash generated from underlying operations A 124.6 128.0
Acquisition related costs (6.6) (6.7)
Restructuring and incident costs (6.7) (1.9)
Cash generated from operations 111.3 119.4
Tax paid (17.2) (30.0)
Net cash inflow from operating activities 94.1 89.4
Cash flows from investing activities
Dividends received from associate 0.1 0.1
Purchases of intangible assets (12.9) (7.8)
Purchases of property, plant and equipment (48.8) (40.9)
Proceeds on disposal of property, plant 0.4 -
and equipment
Acquisition of subsidiary undertakings
(including overdraft assumed) (58.0) (176.8)
Net cash outflow from investing activities (119.2) (225.4)
Cash flows from financing activities
Dividends paid (22.7) (18.7)
Interest paid (17.8) (14.0)
Proceeds on issues of shares 110.4 0.1
New borrowings 107.2 211.5
Capitalised facility fees (4.8) (2.7)
Repayments of borrowings (112.6) (41.7)
Proceeds from new finance leases 3.4 4.5
Repayments of finance leases (2.6) (0.7)
Purchase of own shares (1.5) (3.9)
Net cash inflow from financing activities 59.0 134.4
Increase/(decrease) in cash and cash equivalents
during the year 33.9 (1.6)
Cash and cash equivalents at start of the
year 58.4 61.3
Effect of foreign exchange rate changes (0.4) (1.3)
Cash and cash equivalents at end of the
year 91.9 58.4
(#) Restated figures for prior year to reflect the
reclassification of certain items from underlying costs to
non-underlying costs in order to conform with the current year
treatment of the corresponding items (see Note 3)
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 October 2011
2011 2010
GBPm GBPm
As restated(#)
A. Cash generated from operations
Operating profit from continuing operations 106.1 107.9
Operating profit from acquired operations 0.9 -
107.0 107.9
Adjustment for:
Amortisation of development costs 2.4 2.1
Amortisation of intangible assets arising
from business combinations 24.3 17.0
Amortisation of patents and licences 0.2 0.3
Loss on disposal of property, plant and equipment 0.5 0.2
Depreciation of property, plant and equipment 17.2 11.6
Gain/(loss) on fair value movements on derivatives (2.4) 4.0
Share-based payment expense 0.2 2.3
Difference between pension contributions paid
and amount recognised in Income Statement (0.4) 0.7
Decrease in provisions (0.1) (1.4)
Operating cash flows before movements in working
capital 148.9 144.7
Increase in inventories (1.2) (19.2)
Increase in trade and other receivables (22.5) (44.0)
(Decrease)/increase in trade and other payables (13.5) 37.9
Cash generated from operations 111.7 119.4
Acquisition related costs 5.7 6.7
Restructuring and incident costs 7.2 4.3
Provision release - (2.4)
Cash generated from underlying operations 124.6 128.0
Reconciliation of net cash flow to movement
in net debt
Increase/(decrease) in cash and cash equivalents
during the year 33.9 (1.6)
Decrease/(increase) in debt and lease financing
due to cash flows 9.4 (171.1)
Change in net debt resulting from cash flows 43.3 (172.7)
Acquired debt - (5.4)
Foreign exchange differences 3.0 (5.4)
Amortisation of debt finance costs (1.5) (1.2)
Movement in net debt in the year 44.8 (184.7)
Net debt at start of the year (307.5) (122.8)
Net debt at end of the year (262.7) (307.5)
(#) Restated figures for prior year to reflect the
reclassification of certain items from underlying costs to
non-underlying costs in order to conform with the current year
treatment of the corresponding items (see Note 3)
Analysis of net debt
As at Cash Non-cash Exchange As at
1 Nov 2010 flow changes movement 31 Oct
2011
GBPm GBPm GBPm GBPm GBPm
Cash at bank and in
hand 58.4 33.9 - (0.4) 91.9
Debt due within one
year (65.6) (18.8) (2.7) 1.1 (86.0)
Debt due after one
year (294.6) 29.0 1.2 2.3 (262.1)
Finance leases (5.6) (0.8) - - (6.4)
Preference shares (0.1) - - - (0.1)
(307.5) 43.3 (1.5) 3.0 (262.7)
Notes
1. ACCOUNTS AND AUDITORS' REPORT
The financial information set out above does not constitute the
Company's statutory accounts for the year ended 31 October 2011 or
31 October 2010 but is derived from those accounts. Statutory
accounts for 2010 have been delivered to the Registrar of
Companies, and those for 2011 will be delivered following the
company's Annual General Meeting. The auditors have reported on
these accounts; their reports were unqualified, did not draw
attention to any matters by way of emphasis without qualifying
their report, and did not contain any statements required under
either s498(2) or s498(3) of the Companies Act 2006.
The preliminary announcement has been prepared on the basis of
the accounting policies as stated in the financial statements for
the year ended 31 October 2011.
Whilst the financial information included in this preliminary
announcement has been computed in accordance with International
Financial Reporting Standards (IFRSs), this announcement does not
itself contain sufficient information to comply with IFRSs. The
Company expects to publish full financial statements that comply
with IFRSs on 16 February 2012 (see Note 9 below).
2. ANALYSIS OF REVENUE
2011
Continuing Acquired Total
GBPm GBPm GBPm
Counter-IED 153.0 14.6 167.6
Countermeasures 200.8 - 200.8
Pyrotechnics 139.9 - 139.9
Munitions 237.0 - 237.0
730.7 14.6 745.3
3. RECONCILIATION OF STATUTORY OPERATING PROFIT TO
UNDERLYING OPERATING PROFIT
Underlying profit is used by the Board to measure and monitor
the underlying performance of the Group. Set out below is a
reconciliation of statutory operating profit and underlying
operating profit.
2011 2010
GBPm GBPm
As restated(#)
Statutory operating profit 107.0 107.9
Add back:
Acquisition related costs 5.7 6.7
Restructuring and incident costs 7.2 4.3
Provision release - (2.4)
Gain/(loss) on fair value movements on
derivatives (2.4) 4.0
Intangible amortisation arising from business
combinations 24.3 17.0
Underlying operating profit 141.8 137.5
Further details on the non-underlying items are provided earlier
in this preliminary results announcement.
Profit before tax and underlying profit before tax also vary by
the above amounts.
4. EARNINGS PER ORDINARY SHARE
Earnings per share are based on the average number of shares in
issue of 185,633,996 (2010: 176,602,225) and profit on ordinary
activities after tax of GBP73.9 million (2010: GBP66.7 million).
Diluted earnings per share has been calculated using a diluted
average number of shares in issue of 187,636,114 (2010:
178,388,435) and profit on ordinary activities after tax of GBP73.9
million (2010: GBP66.7 million).
The earnings and shares used in the calculations are as
follows:
2011 2010
Ordinary Ordinary
shares Shares
Earnings Number EPS Earnings Number EPS
GBPm 000s Pence GBPm 000s Pence
As restated(#)
Basic 73.9 185,634 39.8 66.7 176,602 37.8
Additional shares issuable
other than at fair value
in respect of options outstanding - 2,002 (0.4) - 1,786 (0.4)
Diluted 73.9 187,636 39.4 66.7 178,388 37.4
The number of shares in issue differs from the number held by
third parties due to the fact that the Group holds Chemring Group
PLC shares in treasury.
Reconciliation from basic earnings per share to underlying
earnings per share:
Underlying basic earnings are defined as earnings before
acquisition related costs, restructuring and incident costs,
provision release, intangible amortisation arising from business
combinations and gain/(loss) on fair value movements on
derivatives. The directors consider this measure of earnings allows
a more meaningful comparison of earnings trends.
2011 2010
Ordinary Ordinary
shares Shares
Earnings Number EPS Earnings Number EPS
GBPm 000s Pence GBPm 000s Pence
As restated(#)
Basic 73.9 185,634 39.8 66.7 176,602 37.8
Non-underlying items* 22.9 - 12.3 21.3 - 12.0
Underlying 96.8 185,634 52.1 88.0 176,602 49.8
(#) Restated figures for prior year to reflect the
reclassification of certain items from underlying costs to
non-underlying costs in order to conform with the current year
treatment of the corresponding items (see Note 3)
* Before non-underlying items (see Note 3)
5. SHARE SPLIT
At the Company's Annual General Meeting on 24 March 2011 a
resolution was passed to split the Company's ordinary shares of 5p
each (the "Existing Ordinary Shares") in issue or held in treasury
into ordinary shares of 1p each (the "Ordinary Shares"), resulting
in shareholders holding five Ordinary Shares for each Existing
Ordinary Share they held prior to the share split. This share split
took effect on 28 March 2011.
6. DIVIDEND
The final dividend of 10.8p per ordinary share will be paid on
13 April 2012 to all shareholders registered at the close of
business on 23 March 2012. The ex-dividend date will be 21 March
2012. The total dividend for the year will be 14.8p (2010: 11.8p).
The final dividend is subject to approval by the shareholders at
the Annual General Meeting, and accordingly, has not been included
as a liability in the financial statements for the year ended 31
October 2011.
7. RELATED PARTY TRANSACTIONS
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed.
8. BALANCE SHEET RESTATEMENT
As set out in the earlier acquisition section of this
preliminary results announcement and as required under accounting
standards, the Group balance sheet has been restated to reflect the
updated acquired balance sheets of Roke, Mecar and Chemring Fuze
Technology.
9. 2011 FINANCIAL STATEMENTS
The financial statements for the year ended 31 October 2010 will
be posted to shareholders on 16 February 2012. They will also be
available from that date at the registered office, Chemring House,
1500 Parkway, Whiteley, Fareham, Hampshire PO15 7AF and will be
posted on the Company's website at www.chemring.co.uk the following
morning.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BXLLLLFFBBBQ
Chemring (LSE:CHG)
과거 데이터 주식 차트
부터 6월(6) 2024 으로 7월(7) 2024
Chemring (LSE:CHG)
과거 데이터 주식 차트
부터 7월(7) 2023 으로 7월(7) 2024