TIDMCHG
RNS Number : 4627J
Chemring Group PLC
14 April 2020
FOR IMMEDIATE RELEASE 14 April 2020
CHEMRING GROUP PLC ("Chemring" or the "Group")
COVID-19 Update
Chemring today provides the following update in response to the
COVID-19 ("CV-19") global pandemic.
People
Our priority is the health, safety and well-being of our people,
their families, our customers and the communities in which we
operate. We continue to focus on risk mitigation and business
continuity, and are implementing the latest government and health
authority recommendations in each of our home markets.
Our people have risen to the challenge, adapting their working
practices to minimise the spread of the virus, whilst continuing to
focus on the critical needs of our customers.
Operations
In the US, the UK and Norway, Chemring's operations have been
designated as critical to the defence and national security
industrial base, and in Australia the risk of business interruption
is considered to be low. All our businesses remain open, with
business continuity plans mobilised at every location. We continue
to make every effort to maintain delivery of essential services and
manufacturing production in support of our customers.
Customers
We are proud of the essential contribution that Chemring makes
to the ongoing defence and national security missions of our
customers and we are committed to supporting them throughout this
crisis.
As disclosed in our trading update on 4 March 2020, the Group
has a strong order book with order cover for the 2020 financial
year of almost 90% at that time. Since that announcement order
placement has continued including the recent receipt of a $17m
order to supply countermeasures for the F-35 Joint Strike Fighter
programme; work under this contract will be carried out at our
facilities in Tennessee and Australia.
Our manufacturing businesses continue to work closely with their
customer representatives to deliver timely testing and acceptance
of products. To date we have worked through some CV-19 related
disruptions where customer representatives have not been able to
complete product acceptance procedures on a timely basis and going
forward this presents a risk of some short term revenue deferrals.
Our wide geographic and customer base provides some mitigation to
this potential short-term risk.
Financial position and mitigating actions
The Group has committed revolving credit facilities ("RCF")
totaling approximately GBP150m. These facilities mature in October
2022, with a two-year extension option. The Group's current level
of net debt is approximately GBP84m, comprising current cash
balances of c.GBP33m and drawings under the RCF of GBP108m. In
total the Group therefore has available liquidity of approximately
GBP73m.
The financial covenants associated with the RCF are Net debt :
EBITDA of less than 3.0x and Net interest cover greater than 4.0x.
At the last measurement date of 31 January 2020, the actual
covenants were 1.18x and 15.6x.
Given the uncertainty surrounding the length of the CV-19
pandemic, the Group has taken various actions to protect
profitability and to conserve cash. Operational expenditure has
been reduced and all discretionary spending is tightly controlled
as we seek to ensure the Group is well placed to navigate the
current challenges. The already established enhanced focus on
working capital management, in particular the reduction of
intra-period net debt volatility, is proving beneficial and the
Group is focusing on ensuring working capital disciplines are
maintained in these challenging times.
Dividend
The Group's FY19 final dividend of 2.4p (GBP6.7m) was approved
by shareholders at the Annual General Meeting on 4 March 2020. The
dividend will be paid on 24 April 2020 to those shareholders who
were on the register on 3 April 2020.
Outlook and guidance
The duration and impact of CV-19 across our home markets is at
this stage unknown, and we are clearly working in a changing and
more challenging environment. We will continue to work closely with
our customers and other stakeholders, and will provide further
updates as appropriate.
In the longer term, Chemring is well placed, with a robust
strategy, market-leading positions across different geographies and
sectors, and with products and services that are critical to our
government and blue-chip customers. This, together with the Group's
strong balance sheet, gives the Board confidence that despite the
near-term uncertainty, Chemring's long-term prospects remain
strong.
Michael Ord, Group Chief Executive, commented:
"These are clearly unprecedented times in which our number one
priority is the health, safety and well-being of our people, their
families, our customers and the communities in which we operate.
All of our businesses remain open reflecting our essential
contribution to the defence and national security missions of our
customers and we are committed to supporting them throughout this
crisis. Whilst we are clearly mindful of market uncertainty due to
COVID-19, we continue to see positive momentum across the Group and
our improving order book, robust financial position and strategy
ensure that our long-term prospects remain strong."
- ENDS -
For further information:
Group Director of Corporate Affairs,
Rupert Pittman Chemring Group PLC +44 (0)1794 833901
Andrew Jaques
Oliver Hughes MHP Communications +44 (0)20 3128 8100
Cautionary statement
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.
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 2,500 people worldwide, and with
production facilities in four countries, Chemring meets the needs
of customers in more than fifty countries
-- Chemring is organised under two strategic product segments:
Countermeasures & Energetics, and Sensors & Information
-- 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, Chemring has the agility to rapidly react
to urgent customer needs
www.chemring.co.uk
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of this information may apply. For further information, please
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END
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