TIDMCHG
RNS Number : 4029F
Chemring Group PLC
24 April 2014
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, IN OR INTO ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS OF THAT JURISDICTION
24 April 2014
For immediate release
Chemring Group PLC
("Chemring", the "Company" or the "Group")
PROPOSED DISPOSAL OF EUROPEAN MUNITIONS BUSINESS
Highlights:
-- Aggregate cash consideration for Mecar and Simmel of up to
EUR167.8 million (GBP138.0 million) from Nexter Systems SA,
following a competitive sale process.
-- This strategic disposal re-shapes the Group for future growth
and enables Chemring to refocus on its core competencies.
-- Chemring will become a focused defence technology business
with well-established positions in Sensors & Electronics,
Countermeasures and Energetic Systems.
-- Significant reduction in pro-forma net debt of GBP120.4
million from GBP248.7 million at 31 October 2013 to GBP128.3
million.
-- Net Disposal proceeds will be applied to repay part of the
Group's revolving credit facility with the balance offered to
holders of the Group's loan notes, with whom it has agreed improved
arrangements.
-- Since Chemring's IMS released on 27 February 2014, there has
been no material change to the Group's current trading and
prospects. The Disposal is expected to have a dilutive effect on
underlying earnings per share in the current financial year ending
31 October 2014.
-- The Disposal is conditional, inter alia, upon the approval of
Chemring shareholders and regulatory approval in Italy.
Mark Papworth, Chief Executive Officer of Chemring, said:
"The sale of our European Munitions Business implements a key
recommendation of our strategic review and represents a significant
milestone as we reposition Chemring for future growth. It not only
enables us to strengthen our balance sheet through the reduction of
net debt, but also provides us with flexibility to invest in our
core technologies. Following the Disposal, Chemringwill have
technologies, products and market positioning which provide
opportunities to achieve sustainable high margins and revenue
growth."
This summary should be read in conjunction with the full text of
this announcement. This announcement is available at
http://www.chemring.co.uk. A circular containing further details of
the Disposal and a notice convening a general meeting of the
Company will be sent to Shareholders as soon as is practicable.
Enquiries:
Chemring Group
PLC 01489 881880
Mark Papworth Chief Executive
Steve Bowers Finance Director
Rupert Pittman Group Director of Communications
and Investor Relations
Moelis & Company (Financial Adviser 020 7634
to Chemring) 3500
Liam Beere
Edward Eppler
Investec Bank plc (Sponsor and Corporate 020 7597
Broker to Chemring) 4000
Keith Anderson
Christopher
Baird
MHP Communications (Financial PR Adviser 020 3128
to Chemring) 8100
Andrew Jaques
John Olsen
James White
This announcement has been issued by, and is the sole
responsibility of, Chemring.
Moelis & Company UK LLP ("Moelis & Company"), which is
authorised and regulated by the Financial Conduct Authority
("FCA"), is acting exclusively for Chemring in relation to the
Disposal. Moelis & Company is not acting for any other person
and Moelis & Company will not be responsible to any person
other than Chemring for providing the protections afforded to
clients of Moelis & Company or for providing advice in relation
to the Disposal or in relation to the contents of or any
transaction or arrangement referred to in this announcement.
Investec Bank plc, which is authorised by the Prudential
Regulation Authority ("PRA") and regulated by the FCA and the PRA,
is acting exclusively for Chemring in relation to the Disposal.
Investec is not acting for any other person and Investec will not
be responsible to any person other than Chemring for providing the
protections afforded to clients of Investec or for providing advice
in relation to the Disposal or in relation to the contents of or
any transaction or arrangement referred to in this
announcement.
Forward-looking statements
Certain statements made in this announcement constitute
forward-looking statements. Forward-looking statements can be
identified by the use of words such as "may", "will", "should",
"predict", "assurance", "aim", "hope", "risk", "expect", "intend",
"estimate", "anticipate", "believe", "plan", "seek", "continue" or
other similar expressions that are predictive or indicative of
future events. All statements other than statements of historical
facts included in this announcement, including, without limitation,
those regarding the Group's expectations, intentions and beliefs
concerning, amongst other things, the Group's results of
operations, financial position, growth strategy, prospects,
dividend policy and the industries in which the Group operates, are
forward-looking statements. By their nature, such forward-looking
statements involve known and unknown risks, uncertainties and other
factors, many of which are outside the control of the Group and its
Directors, which may cause the actual results, performance,
achievements, cash flows, dividends of the Group or industry
results to be materially different from any future results,
performance or achievements expressed or implied by such forward
looking statements. As such, forward-looking statements are no
guarantee of future performance.
Such forward-looking statements are based on numerous
assumptions regarding the Group's present and future business
strategies and the environment in which the Group will operate in
the future. Among the important factors that could cause the
Group's actual results, performance or achievements to differ
materially from those in the forward-looking statements include,
among others, economic conditions in the relevant markets of the
world, market position of the Company or its subsidiaries,
earnings, financial position, cash flows, return on capital and
operating margins, political uncertainty, the actions of
competitors, activities by governmental authorities such as changes
in taxation or regulation, changing business or other market
conditions and general economic conditions and such other risk
factors as may be identified in the "Risk Factors" section of the
Circular. Forward-looking statements should, therefore, be
construed in light of such risk factors and undue reliance should
not be placed on forward-looking statements. These forward-looking
statements speak only as of the date of this announcement and are
not intended to give assurance as to future results. The Company
will update this announcement as required by applicable law,
including the City Code, Listing Rules, Prospectus Rules and/or the
Disclosure and Transparency Rules of the FCA, but otherwise
expressly disclaims any such obligation or undertaking to release
publicly any updates or revisions to any forward-looking statement
contained herein to reflect any change in Chemring's expectations
with regard thereto or any change in events, conditions or
circumstances on which any such statement is based.
Conference call and presentation
A conference call for analysts and investors will be held at
8.15 a.m. this morning. Dial in details are as follows:
Access number: +44 (0)20 3059 8125
Password: Chemring
A short presentation on the proposed Disposal is due to be
available to view on the Chemring website
www.chemring.co.uk/investors later today.
Photography
Original high-resolution photography is available to the media
by contacting Ben Griffiths, MHP Communications:
ben.griffiths@mhpc.com / Tel: 0203 128 8100.
Chemring Group PLC ("Chemring", the "Company" or the
"Group")
Proposed Disposal of European Munitions Business
1. Introduction
The board of directors of Chemring (the "Board") announces that
it has entered into certain agreements with Nexter Systems SA
("Nexter") with respect to the sale of its European Munitions
Business, which comprises Mecar SA ("Mecar") and Simmel SpA
("Simmel") (the "Disposal"). This strategic disposal re-shapes the
Group for future growth, enabling Chemring to refocus on its core
competencies and implements a key recommendation of the strategic
review. Following completion of the Disposal, Chemring will be a
focused defence technology business with well-established positions
in Sensors & Electronics, Countermeasures and Energetic
Systems.
The aggregate cash consideration payable to Chemring for Mecar
and Simmel under the terms of the Disposal is up to EUR167.8
million (GBP138.0 million) of which EUR119.2 million relates to
Mecar and up to EUR48.6 million relates to Simmel (which includes
an earn-out payment of up to EUR8.0 million). The earn-out payment
of up to EUR8.0 million for Simmel will become payable subject to
the terms of a customer contract which is expected to be awarded to
Simmel.
The Disposal constitutes a Class 1 transaction for Chemring
under the Listing Rules and completion is therefore conditional on
the approval of Chemring shareholders (the "Shareholders")at a
general meeting of the Company (the "Meeting"). Accordingly, a
circular containing further details of the Disposal and a notice
convening the Meeting will be sent to Shareholders as soon as is
practicable.
2. Background to and Reasons for the Disposal
Chemring is a global defence technology company primarily
focused on the development and manufacture of Sensors &
Electronics, Countermeasures and Energetic Systems, which are sold
to a range of NATO and non-NATO customers. Chemring entered the
ammunition market in 2007 with the acquisition of Simmel, followed
by the acquisition of Mecar in 2010. Over recent years, each of
Mecar and Simmel has made significant progress, executing a
strategy of expanding ammunition sales into higher growth, non-NATO
markets, winning new customers in South America and the Far East
and major contracts in the Middle East. However, the businesses
remain of a relatively small scale in a competitive international
munitions market, which tends to be volatile and requires high
levels of working capital.
Following the strategic review undertaken in 2013, the Board
decided to initiate a competitive sale process for Mecar and
Simmel. The Board believes that Nexter's munitions division is
better placed over the medium to long term to maximise the
potential value of Mecar and Simmel as part of Nexter's broader
ammunition offering. The Board also believes that the consideration
of up to EUR167.8 million for Mecar and Simmel represents an
attractive value for the businesses. In addition to refocusing
Chemring around its core competencies, the Disposal will enable the
Board to meet its objective of improving the Group's financial
position. Given limited commonality of products, factories and
routes to market with the rest of the Group, it is not anticipated
that the Disposal will have any detrimental impact on the ongoing
operations of the Group. In light of these factors and its
strategic objectives for Chemring, the Board proposes to sell Mecar
and Simmel to Nexter.
3. Information on the European Munitions Business
The European Munitions Business consists of Mecar and
Simmel.
Information on Mecar
Mecar is a Belgian manufacturer of ammunition for light armoured
vehicles, tanks and infantry. It has well-established routes into
Middle Eastern markets, supported by an agile capability to develop
and manufacture modern rounds for a range of current and legacy
weapon-systems. Its product range is matched to the requirements of
its land-forces customers:
-- medium and large calibre ammunition - a range of high
explosive, armour-piercing and pyrotechnic rounds;
-- mortar ammunition - a range of high explosive and pyrotechnic
rounds for 120mm high pressure mortar systems, including the NEMO
turreted system;
-- legacy ammunition - a range of ammunition for older weapon systems; and
-- rifle grenades, hand grenades and pyrotechnics.
Information on Simmel
Simmel is an Italian medium and large calibre ammunition
supplier specialising in naval ammunition. It has a geographically
balanced portfolio of NATO and non-NATO customers, and its products
include:
-- naval ammunition - a range of single and multi-function
rounds for the main NATO naval guns;
-- mortar ammunition - supplies UK Ministry of Defence with
specialist pyrotechnic illumination rounds; and
-- missile and ammunition components - provides devices for a
number of advanced missiles including the Aster and IRIS-T and
modern proximity and multi-function ammunition fuzes.
Results for the European Munitions Business
The following summary of the results for the European Munitions
Business has been extracted without material adjustments from the
consolidation schedules used in preparing Chemring's audited
consolidated financial statements for the years ended 31 October
2011, 31 October 2012 and 31 October 2013.
Year ended Year ended Year ended
31 October 31 October 31 October
2011 2012 2013
GBPm GBPm GBPm
------------------- ---------------- ---------------- ----------------
Revenue 195.2 206.7 152.0
Operating
profit 43.4 28.3 16.8
Profit before 41.7 27.2 16.1
tax
Profit after 39.5 26.0 14.0
tax
As at 31 October 2013, the European Munitions Business had gross
assets of GBP205.4 million and net assets of GBP98.5 million.
4. Information on Nexter
Nexter applies its expertise in land defence systems to meet the
needs of the French army and other forces internationally. The
scope of its business includes the supply of weapons systems and
munitions for Army, Air Force, Navy and law enforcement
applications. In 2013, Nexter reported revenue of EUR787.3 million,
of which 18% were allocated to research and development. The range
of products offered by Nexter includes: Artillery systems CAESAR(R)
, TRAJAN and 105LG1, Leclerc main battle tank, VBCI Infantry combat
vehicle, ARAVIS(R) highly protected armoured vehicle, TITUS(R) ,
Nexter new armoured 6x6 and BONUS smart ammunition, all backed up
by customer service, support and recycling.
5. Summary of Terms of the Disposal
Chemring has agreed to sell each of Mecar and Simmel to Nexter
for an aggregate cash consideration of up to EUR167.8 million
(GBP138.0 million), of which EUR119.2 million relates to Mecar and
up to EUR48.6 million relates to Simmel, payable in cash, in each
case, subject to minor adjustments for amounts paid to Chemring
since 31 October 2013 for management services and the use of a
trademark licence. Included in the consideration for Simmel is an
earn-out payment of up to EUR8.0 million which will become payable
subject to the terms of a customer contract which is expected to be
awarded to Simmel. In addition, and separate from the consideration
to be paid by Nexter, Mecar is due to pay a dividend of EUR13.0
million to Chemring before completion.
Completion of the disposal of each of Mecar and Simmel is
subject to the satisfaction of certain conditions precedent,
including approval of the Disposal by Shareholders and regulatory
approval in Italy.
6. Use of Proceeds and Financial Effects of the Disposal
Chemring currently has committed debt finance arrangements
through loan notes and a revolving credit facility (the "RCF" and,
together with the loan notes, the "Facilities"), both of which
contain financial covenants with which it is required to
comply.
The estimated net cash proceeds arising from the Disposal are
expected to be GBP131.4 million. It is Chemring's intention to
offer GBP99.1 million of the net cash proceeds from the Disposal to
the loan note holders, in accordance with the revision to the loan
note agreement described in this section, and for the balance of
the net cash proceeds from the Disposal of GBP32.3 million to be
applied to repay part of the RCF.
Following completion of the Disposal, Chemring's pro-forma net
debt will be significantly reduced by GBP120.4 million from
GBP248.7 million as at 31 October 2013 to GBP128.3 million.
Had the Disposal occurred, the projected headroom on certain of
the financial covenants previously contained within the Facilities
would have reduced. To address this situation, Chemring has agreed
a revised set of covenants which increases the headroom available
to the Group and allows for a more flexible use of Disposal
proceeds.
The following revisions have been agreed with the providers of
the Facilities:
-- Chemring now has the ability to offer a proportion of the
Disposal proceeds to the loan note holders to repay outstanding
Notes at par immediately following receipt of Disposal proceeds. To
the extent that note holders reject this application of proceeds in
repayment, the Company is entitled to offset the rejected proceeds
against gross debt to derive a reduced debt value used in
calculating covenant compliance under the Notes. Following receipt
of Disposal proceeds, the loan note leverage will be calculated
based on the ratio of earnings before interest, tax, depreciation
and amortisation ("EBITDA") to this reduced debt value, such ratio
not to exceed 3.00x;
-- in addition, a covenant based upon total debt has been
retained but at a permanently increased level of 3.75x EBITDA
assuming the Disposal completes. In the event that the proposed
Disposal does not complete, Chemring has agreed an increase in the
gross debt covenant to 3.50x EBITDA for the four quarters up to and
including 31 January 2015; and
-- at 30 April 2014, the RCF leverage covenant is at its
tightest level in the 12-month period following the date of this
announcement. As a matter of prudence, additional headroom has been
obtained at that date, and a net debt covenant of 3.25x EBITDA will
apply. The Directors continue to believe the April 2014 RCF
leverage covenant will be met.
The RCF is due to expire on 30 April 2015 and, as part of its
ordinary course negotiations, the Company has commenced discussions
with debt providers in relation to the refinancing of this
facility. The Directors expect to enter into a revised RCF on
acceptable commercial terms in the coming months. If the Disposal
does not complete, the Directors still expect to enter into a
revised RCF, but on less favourable terms including, for example, a
higher on-going interest charge, than if the Disposal had
completed.
It is expected that the Disposal will have a dilutive effect on
the underlying earnings per Chemring share in the current financial
year ending 31 October 2014. This statement is not intended to be,
and should not be construed as, a profit forecast and should not be
interpreted to mean the underlying earnings per Chemring share for
the current or future financial years will necessarily match, or be
greater or less than, the historical underlying earnings per
Chemring share.
As a result of the Disposal, a loss on disposal of approximately
GBP61.4 million is expected to be incurred.
7. Overview and Strategy for the Group
Following completion of the Disposal, Chemring will be a focused
defence technology business with well-established positions in
Sensors & Electronics, Countermeasures and Energetic Systems.
Chemring's strategy will be focused on directing investment into
those lines of business which have technologies, products and
market positioning that provide opportunities to achieve
sustainable high margins and revenue growth.
In the Group's annual results for the year ended 31 October
2013, the Group outlined a clear strategic plan, the elements of
which include:
-- maintaining technology leadership through targeted research
and development investment and leveraging existing intellectual
property;
-- focusing on new product and market development;
-- continuing with its operational "self-help" recovery
programme and looking to deliver structural efficiencies; and
-- commercialising know-how and focusing business development
activity to provide a balanced portfolio.
Sensors & Electronics
Overview
Chemring's Sensors & Electronics segment, which comprises
approximately 44.0 per cent. of Chemring's revenue (based on the
year ended 31 October 2013 excluding revenues from Mecar and
Simmel), is one of the world's leading developers and manufacturers
of products to detect and neutralise improvised explosive devices
("IEDs"). Over 250 Chemring-produced Husky Mounted Detection
Systems ("HMDS") have been supplied to a number of NATO users
including the US, Canada, Australia and Spain; Chemring's chemical
and biological detection systems are in-service with the US Army
and Navy; and Chemring Technology Solutions supplies UK agencies,
including the Ministry of Defence, with technologies and products
to detect and defeat a range of threats, including cyber-attacks,
electronic warfare and IEDs.
The segment comprises two businesses: Chemring Sensors &
Electronic Systems (based in the US) and Chemring Technology
Solutions (based in the UK). Both businesses have attractive market
shares in their respective niches, industry leading brands and
long-term customer relationships. They delivered margins that were
above the average for the Group's for both the years ended 31
October 2012 and 2013. Taken as a whole, in the year ended 31
October 2013, Sensors & Electronics generated revenue of
GBP211.3 million and operating profit of GBP44.7 million. The Board
believes that the Sensors & Electronics businesses will
continue to offer the potential for attractive margins, good
long-term growth prospects and excellent cash conversion.
Strategic and Investment Priorities
The Board believes that Sensors & Electronics represents the
greatest opportunity for Chemring to diversify into adjacent and
new markets, and Chemring will strategically invest to extend its
portfolio of technologies to meet four key objectives:
-- ensuring critical wins in the US market - the US defence
market is the world's largest, and Chemring will invest to secure
its leading position and win key programmes;
-- building a world-leading technology base across our
trans-Atlantic footprint - Chemring's technical centres in the US
and UK are well recognised nationally, but do not fully exploit the
scale and synergies of the Group's international footprint.
Chemring intends to build upon its customer relationships to
anticipate user needs and growing the Group's technology base
through targeted investment;
-- leveraging capability and reputation to build a cyber-protection business; and
-- incubating technologies for non-defence markets.
Countermeasures
Overview
The Countermeasures segment, which comprises approximately 26.0
per cent. of Chemring's revenue (based on the year ended 31 October
2013 excluding revenues from Mecar and Simmel), is the world's
leading manufacturer of expendable decoys to protect aircraft and
ships from the threat of guided missile attacks. The segment
comprises three businesses: Chemring Countermeasures UK (a
manufacturer of conventional and advanced flares and chaff for
aircraft, as well as the Centurion launcher and a range of naval
decoys for ship protection); Chemring Countermeasures USA (which
produces special material and flare decoys to protect the US Army,
Navy and Air Force fleets of aircraft and helicopters from
infra-red-guided missiles); and Chemring Australia (the only
national factory to produce flare countermeasures for the
Australian Defence Forces, as well as supplying a range of other
products drawing on Chemring's expertise in IED defeat, electronic
warfare and pyrotechnics).
In the year ended 31 October 2013, Countermeasures generated
revenue of GBP125.0 million and operating profit of GBP13.2
million.
Strategic and Investment Priorities
Chemring is a leader in expendable decoys having customer
relationships and factories in the US, UK and Australia, combined
with advanced technologies in flares, special materials and radio
frequency decoys. In the face of reducing short-term demand,
Chemring is optimising efficiencies across its sites, starting with
the creation of Chemring Countermeasures USA by the integration of
Alloy Surfaces and Kilgore. The strategic priorities for the
Countermeasures segment are to:
-- maintain technological lead in home markets - Chemring's
"home" customers in the US, UK and Australia are amongst the most
advanced in the world, and Chemring will promote targeted
customer-funded development projects to maintain national
capabilities to support future military operations; and
-- optimise Chemring's supply-base and routes to market -
current Chemring capacity is scaled to meet surge levels of demand
in each of its home markets. Chemring intends to optimise this
capacity and its utilisation to ensure that it has a safe, flexible
and efficient manufacturing base to meet both national and
international demands.
Energetic Systems
Overview
The Energetic Systems segment which comprises 30.0 per cent. of
Chemring's revenue (based on the year ended 31 October 2013
excluding revenues from Mecar and Simmel). This segment, which
comprises what was formerly classified as Energetic Sub-Systems and
the remaining businesses from the former Pyrotechnics &
Munitions segment, manufactures energetic devices for missiles,
aircrew egress, space launch and satellite deployment and military
pyrotechnic products for battlefield screening, signalling and
illumination and training. This segment comprises six businesses:
Hi-Shear (a US-based manufacturer of energetic solutions for space
and missile applications); Chemring Energetic Devices (a US-based
manufacturer of thrusters, actuators, cartridges and cutters);
Chemring Energetics UK (a supplier of rocket motors and cartridges
for ejection seats, and products and devices for missiles);
Chemring Nobel (a Norwegian company specialising in the synthesis
of explosive materials); Chemring Ordnance (a US-based manufacturer
of pyrotechnic products and APOBS - a rocket launched mine-field
clearance system); and Chemring Defence UK (which supplies a range
of pyrotechnic products, including signalling and smoke
grenades).
In the year ended 31 October 2013, Energetic Systems generated
revenue of GBP143.6 million and operating profit of GBP9.2
million.
Strategic and Investment Priorities
The Energetic Systems business offers a wide variety of
specialised components produced infrequently in batch production
runs. The market for energetic components is stable, and the
segment has the potential to generate high margins. Recent
operational challenges have impacted Chemring's performance in this
segment and the key priority is to address these challenges in
order to maintain quality and manufacturing through-put in order to
sustain margins. The global market for pyrotechnic products has
been heavily impacted by the decline in NATO operations in
Afghanistan, leaving many stockpiles full and a target for
short-term cuts.
8. Current Trading and Prospects
On 27 February 2014, Chemring released its Interim Management
Statement for the period 1 November 2013 to 27 February 2014. The
following has been extracted without material adjustment from that
announcement:
"Current trading
As anticipated, the challenging market conditions the Group
continues to experience across its operations, combined with the
effect of adverse foreign exchange movements, has resulted in
revenue during the three month period to 31 January 2014 falling to
GBP118.3 million compared with GBP136.1 million in the same period
last year.
The Group's order intake increased by 2.1 per cent. against the
comparative period, helped by an increasing penetration of non-NATO
markets. The order book at 31 January 2014 was GBP644.5 million,
unchanged in the first quarter, after adjusting for the effects of
foreign exchange and disposals. Of the order book at 31 January
2014, 55.6 per cent. is due for delivery in the current financial
year.
Countermeasures
The Countermeasures businesses continued to stabilise, with
revenue in the three month period to 31 January 2014 being 1.8 per
cent. below last year, indicating that customer demand is reaching
minimum sustaining volumes. Order intake remained slow, with a
number of customers deferring the placement of orders.
Regrettably, on 22 February 2014, an incident at the Kilgore
facility in Tennessee resulted in one of our employees being
fatally injured. The incident caused damage to parts of Kilgore's
manufacturing operations and production is currently suspended. An
investigation into the cause of the incident has been launched. A
gradual re-start of manufacturing operations is expected during the
first week of March 2014.
Sensors & Electronics
Against a strong comparative period, revenue from Sensors &
Electronics was 10.7 per cent. lower than the same period last
year, reflecting the scheduling of demand for the Husky Mounted
Detection System ("HMDS") from the US Department of Defense
("DoD"). Order intake included demand for HMDS spares from the
Canadian Army and orders from the US DoD for biological detection
systems. A final order under the HMDS Indefinite Delivery
Indefinite Quantity ("IDIQ") contract is expected to be received in
the second half of the current financial year.
Pyrotechnics & Munitions
Revenue in Pyrotechnics & Munitions was 16.5 per cent. lower
than the same period last year, reflecting the timing of deliveries
to Middle East customers. There was however a marked improvement in
revenue and operational performance at Chemring Ordnance. Order
intake at the Munitions businesses improved, primarily due to the
receipt of significant orders from Middle East customers.
Energetic Sub-Systems
Revenue in Energetic Sub-Systems was 25.9 per cent. below the
same period last year, partly due to the phasing of activity which
will be more heavily weighted toward the second half of the current
financial year. The Group continues to focus on resolving
production issues and integrating manufacturing sites. Order
intake, whilst marginally lower than the comparable period, showed
an improving performance from the European businesses.
Current financial position
The Group's net debt at 31 January 2014 was GBP253.8 million, an
improvement of GBP32.1 million on the position at 31 January 2013.
A modest rise in working capital since the financial year end is
the result of expected seasonal fluctuations. Proceeds of GBP6.1
million ($10.0 million) from the sale of the Clear Lake facility
were received on 24 January 2014.
Outlook
The process of reshaping and strengthening the Group's portfolio
of businesses through the disposal of non-core activities is
ongoing; however, market conditions are expected to remain
challenging. Chemring continues to pursue opportunities for growth,
together with a focus on improvements in operational performance
and restructuring businesses."
The Board's expectations for the current financial year remain
unchanged from those outlined in the 23 January 2014 results
announcement, subject to fluctuations in exchange rates."
Since the publication of Chemring's Interim Management
Statement, there has been no material change to the current trading
and prospects of the Group, save for the future impact of the
Disposal.
On 10 April 2014, the Group entered into an agreement for the
disposal of Chemring Defence Germany, which forms part of the
Energetic Systems segment, for gross consideration of EUR2.75
million; after transaction costs and certain other adjustments, net
proceeds are de minimis. This disposal is expected to complete in
May 2014, following the satisfaction of certain regulatory
approvals.
9. Expected Timetable to Completion
A circular, which contains further details of the Disposal and
the resolution to approve the Disposal (the "Resolution"), the
Board's recommendation to vote in favour of the Resolution, and the
notice of Meeting, will be sent to Shareholders as soon as
practicable. Completion of the Disposal is expected to occur by 31
May 2014.
The release, publication or distribution of this announcement in
jurisdictions other than the United Kingdom may be restricted by
law and therefore any persons who are subject to the laws of any
jurisdiction other than the United Kingdom should inform themselves
about, and observe, any applicable requirements. This announcement
has been prepared for the purposes of complying with the Listing
Rules and the information disclosed may not be the same as that
which would have been disclosed if this announcement had been
prepared in accordance with the laws and regulations of any
jurisdiction outside of England.
This announcement is not intended to, and does not constitute,
or form part of, any offer to sell or an invitation to purchase or
subscribe for any securities or a solicitation of any vote or
approval in any jurisdiction. Shareholders are advised to read
carefully the formal documentation in relation to the Disposal once
it has been despatched. Any response to the proposals should be
made only on the basis of the information in the formal
documentation to follow.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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