TIDMCHG
RNS Number : 4020H
Chemring Group PLC
15 November 2018
FOR IMMEDIATE RELEASE 15 NOVEMBER 2018
This announcement contains inside information that qualified, or
may have qualified, as inside information for the purposes of
Article 17 of the Market Abuse Regulation (EU) 596/2014 (MAR). For
the purposes of MAR and Article 2 of commission Implementing
Regulation (EU) 2016/1055, this announcement is made by Sarah
Ellard, Company Secretary, for Chemring Group PLC.
CHEMRING GROUP PLC
POST YEAR- STATEMENT
Chemring Group PLC ("Chemring" or "the Group") today provides a
post year-end statement in respect of the year ended 31 October
2018 ("FY18").
Key Points
-- Underlying trading for FY18 was in line with expectations
-- FY18 year-end net debt was GBP82m
-- Significant progress in Sensors, with positions now secured
on all targeted Programs of Record. Countermeasures market
continues to recover, primarily driven by the US
-- Strategic decision to exit from commoditised Energetics
businesses and treat as discontinued activities
-- FY18 year-end order book was GBP462m, of which GBP68m relate to discontinued activities
-- Non-underlying items, primarily non-cash, of c.GBP130m to be
included in FY18 results (FY17: GBP29m)
Michael Ord, Chief Executive, commented:
"We finished the year in line with our expectations for
underlying trading and net debt with progress in all businesses and
the recovery in the UK Countermeasures business well underway. We
have taken two strategic decisions which are reflected in the
full-year results. The decision to exit the commoditised Energetics
businesses will simplify the Group and enable a greater focus on
our growing and differentiated Sensors and Countermeasures
positions, where we have recently made significant progress. We
also took the decision to review a number of balance sheet items,
which in light of the strategic review, are no longer considered
fully recoverable. Together, these are necessary actions and part
of us building a stronger business for the future. Further detail
on my views of the Group and its future direction will be provided
in January."
Strategic review of the Group's portfolio
The Group retains strong market positions in the global Sensors
and Countermeasures segments. Recent successes on major US Programs
of Record, together with Roke's innovation and engineering business
growth, provide a strong underpin to the continuing Group.
Following a strategic review of the Group's Energetics portfolio
the Board has concluded that the future focus within the Energetics
segment should be on the niche specialist energetic materials
businesses in Chicago, Ardeer and Norway. It has therefore made the
decision to exit the commoditised Energetics businesses located in
Derby and Florida. These businesses will be treated as discontinued
in the 2018 financial statements.
The discontinued businesses contributed GBP139m (2017: GBP240m,
2016: GBP173m) to revenue, GBP8m (2017: GBP24m, 2016: GBP17m) to
underlying operating profit, and GBP10m (2017: GBP26m, 2016:
GBP20m) to EBITDA. The order book of the discontinued businesses at
31 October 2018 was GBP68m (2017: GBP153m, 2016: GBP285m).
The businesses will be classified as held for sale and the Group
expects to record a non-cash impairment charge against these
businesses of approximately GBP68m in the 2018 financial
statements.
FY18 outturn
With the exception of the impact of the CCM UK incident, trading
across the Group in the final quarter of FY18 remained in line with
the Board's expectations and led to total full year revenue of
GBP436m (2017: GBP547m), of which GBP139m (2017: GBP240m) related
to discontinued businesses.
The Group's trading performance for the year to 31 October 2018
is expected to be in line with the revised guidance given in the
trading update on 4 September 2018.
At 31 October 2018, net debt was GBP81.8m (2017: GBP80.0m).
Amortisation of acquired intangibles totalled GBP14m (2017:
GBP15m), of which GBP2m (2017: GBP3m) related to discontinued
operations.
In addition, the Group expects non-underlying items from
continuing operations of a further GBP48m. These items
comprise:
- the revaluation of deferred tax assets in the USA following
the new tax legislation enacted in December 2017 (GBP17m - as
previously announced)
- legal costs associated with on-going investigations (GBP13m)
- non-capital costs of the Tennessee transformation project,
including the write-off of assets and demolition costs (GBP8m)
- following a strategic product portfolio review the Group has
recognised an impairment charge in respect of certain products
where capitalised development costs are no longer considered fully
recoverable (GBP7m)
- deferred consideration on acquisitions (GBP4m)
- other (GBP3m)
- deferred tax credit on the above - GBP4m
Update on CCM UK Incident
The investigation into the incident is on-going and the Group
continues to work closely with the regulatory bodies. The Group has
taken the decision not to re-open the damaged production line;
instead, it will over time transition all MTV mixing to the
automated facility on site. A phased re-start of the CCM UK site
started in September, with the shipping of finished goods and
production of non-Energetic products.
Further guidance of the impact of the phased re-start on FY19
will be given as it becomes available.
Order book
The on-going Group order book at 31 October 2018 was GBP394m
(2017: GBP325m). The discontinued businesses order book was GBP68m
(2017: GBP153m). The on-going order book principally reflects a
number of significant orders that were received in both the
Countermeasures and Sensors segments.
A number of these awards were on long-term Programs of Record,
reflecting the Group's move to focus on higher margin, niche market
positions, and which give confidence in the Group's prospects.
The closing order book by segment shows: Countermeasures GBP183m
(2017: GBP179m), Sensors GBP75m (2017: GBP53m), Energetics
(continuing) GBP136m (2017: GBP93m) and Energetics (discontinued)
GBP68m (2017: GBP153m).
FY18 Results and update on Chief Executive's Review
The Group's FY18 results are scheduled to be announced on 17
January 2019. At the time of these results Michael Ord, Chief
Executive, will provide an update on his review of the Group's
businesses and future strategy.
-S-
For further information:
Rupert Pittman Group Director of Corporate Affairs, 01794
833901
Chemring Group PLC
Andrew Jaques MHP Communications 020 3128 8100
James White
Notes to editors
-- Chemring is a global business that specialises in the
manufacture of high technology products and the provision of
services to the aerospace, defence and security markets
-- Employing approximately 2,600 people worldwide, and with
production facilities in four countries, Chemring meets the needs
of customers in more than fifty countries
-- Chemring is organised under three strategic product segments:
Countermeasures, Sensors, and Energetics
-- Chemring has a diverse portfolio of products that deliver
high reliability solutions to protect people, platforms, missions
and information against constantly changing threats
-- Operating in niche markets and with strong investment in
research and development ("R&D"), Chemring has the agility to
rapidly react to urgent customer needs
www.chemring.co.uk
Cautionary statements
This announcement contains unaudited information based on
management accounts and 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.
No statement in this announcement is intended as a profit
forecast for FY18 and no statement in this announcement should be
interpreted to mean that underlying operating profit for the
current or future financial years would necessarily be above a
minimum level, or match or exceed the historical published
underlying operating profit or set a minimum level of underlying
operating profit.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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