TIDMCHG
RNS Number : 4530J
Chemring Group PLC
13 December 2022
13 DECEMBER 2022
CHEMRING GROUP PLC
("Chemring", "the Group" or "the Company")
RESULTS FOR THE YEARED 31 OCTOBER 2022
As reported At 2021 exchange
rates
2022 Change 2022 Change 2021
Order intake (GBPm) 551.5 +28% 523.1 +21% 431.0
Revenue (GBPm) 442.8 +13% 421.2 +7% 393.3
Underlying EBITDA(*) (GBPm) 82.3 +8% 79.9 +5% 76.4
Underlying operating profit(*)
(GBPm) 64.0 +11% 62.2 +8% 57.5
Underlying profit before tax(*)
(GBPm) 62.5 +12% 60.8 +9% 55.9
Underlying basic earnings per
share(*) (pence) 20.2 +20% 19.7 +17% 16.9
Statutory operating profit
(GBPm) 53.3 +6% 50.4
Dividend per share (pence) 5.7 +19% 4.8
Net debt at 31 October (GBPm) 7.2 -73% 3.9 -85% 26.6
Order book at 31 October (GBPm) 650.9 +30% 604.1 +21% 500.8
Highlights
-- FY22 performance exceeded the Board's initial expectations
with strong performance in both sectors despite a challenging
macro-economic environment
-- Roke revenue exceeded GBP100m for the first time and with order
intake of GBP168m, up 59%, is well positioned to continue its
growth trajectory in what continues to be a buoyant market
-- Post year-end acquisition of Geollect completed on 7 December
2022
-- Order intake for Countermeasures & Energetics was GBP356m,
up 40%, driven by multi-year orders received across the sector
-- Investment in the Group's manufacturing infrastructure continues
to be a key enabler to deliver improved safety and operational
excellence, with the Countermeasures & Energetics margin improving
from 16.2% to 17.4%
-- The continued reduction in net debt by 73% to GBP7.2m was driven
by strong operating cash generation and cash conversion of
109%. Net debt to underlying EBITDA of 0.1 times
-- Proposed final dividend increased by 19% to 3.8p, giving a
total dividend of 5.7p (3.5 times cover)
-- Board's expectations for FY23 are unchanged. Approximately
86% (2021: 84%) of expected FY23 revenue is covered by the
order book
Michael Ord, Group Chief Executive, commented:
"This has been another year of positive performance and growth
across the Group, exceeding the Board's initial expectations
despite a challenging macro-economic environment. I am delighted
with the financial and operational progress that continues to be
made across the Group as we build a stronger, higher quality and
technology focused business.
" Our purpose at Chemring is to deliver innovative technologies
and products that detect and defeat ever-changing threats and help
make the world a safer place. This has never been as important as
it is today given the fast changing geopolitical and technological
backdrop. Our relentless focus on living our shared values of
Safety, Excellence and Innovation is what powers this and I would
like to thank all my colleagues across Chemring for their
determination, hard work and support. Our continued progress would
not be possible without their collective efforts.
" Trading since the start of the current financial year has been
in line with expectations. With 86% of FY23 expected revenue
covered by the order book, the Board's expectations for FY23
performance are unchanged. 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 around the world. Chemring's
long-term prospects remain strong."
Notes:
* All profit and earnings per share figures in this news release
relate to underlying business performance (as defined below) unless
otherwise stated.
The principal Alternative Performance Measures ("APMs")
presented are the underlying measures of earnings which exclude:
exceptional items, gain or loss on the movement on the fair value
of derivative financial instruments, the amortisation of acquired
intangibles and the associated tax impact on these items. The
directors believe that these APMs improve the comparability of
information between reporting periods as well as reflect the key
performance indicators used within the business to measure
performance. The term underlying is not defined under IFRS and may
not be comparable with similarly titled measures used by other
companies.
A reconciliation of underlying measures to statutory measures is
provided below:
Group: Underlying Non-underlying Statutory
EBITDA (GBPm) 82.3 (6.1) 76.2
----------- --------------- ----------
Operating profit (GBPm) 64.0 (10.7) 53.3
----------- --------------- ----------
Profit before tax (GBPm) 62.5 (10.7) 51.8
----------- --------------- ----------
Tax charge (GBPm) (5.7) 1.3 (4.4)
----------- --------------- ----------
Profit after tax (GBPm) 56.8 (9.4) 47.4
----------- --------------- ----------
Basic earnings per share (pence) 20.2 (3.3) 16.9
----------- --------------- ----------
Diluted earnings per share (pence) 19.7 (3.3) 16.4
----------- --------------- ----------
Segments:
----------- --------------- ----------
Sensors & Information EBITDA (GBPm) 33.0 (1.2) 31.8
----------- --------------- ----------
Sensors & Information operating
profit (GBPm) 30.0 (3.7) 26.3
----------- --------------- ----------
Countermeasures & Energetics EBITDA
(GBPm) 64.2 - 64.2
----------- --------------- ----------
Countermeasures & Energetics operating
profit (GBPm) 48.9 (2.1) 46.8
----------- --------------- ----------
The adjustments comprise:
-- amortisation of acquired intangibles of GBP4.6m (2021: GBP6.2m)
-- costs relating to acquisitions of GBP2.0m (2021: GBP1.6m)
-- loss on the movement in the fair value of derivative financial
instruments of GBP4.1m (2021: GBP0.7m gain)
-- tax impact of adjustments of GBP1.3m credit (2021: GBP1.0m
credit)
Further details are provided in note 3.
EBITDA is defined as profit before interest, tax, depreciation
and amortisation. Reference to constant currency relates to the
re-translation of 2022 financial information at the 2021 exchange
rates to reflect the movement excluding the impact of foreign
exchange. The exchange rates applied are disclosed in note 9.
For further information:
Group Director of Corporate Affairs, Chemring
Rupert Pittman Group PLC 01794 463401
Oliver Hughes MHP 020 3128 8276
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 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 2,300 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:
Sensors & Information and Countermeasures & 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.com
Presentation
A video presentation and accompanying slides will be available
at the Chemring Group results centre
www.chemring.com/investors/results-centre at 07.00 (UK time) on
Tuesday 13 December 2022.
Analyst meeting
An analyst meeting will take place at 08.30 (UK time) on Tuesday
13 December 2022 at the offices of Investec Bank plc, 30 Gresham
St, London EC2V 7QP. To confirm attendance please contact MHP
Communications: chemringplc@mhpgroup.com / +44 (0) 20 3128
8339.
Photography
Original high resolution photography is available to the media
by contacting Catherine Chapman, MHP Communications:
catherine.chapman@mhpgroup.com / tel: +44 (0) 20 3128 8339.
Group overview
Overall 2022 performance exceeded the Board's initial
expectations with strong performance in both segments despite the
continuing challenging macro-economic environment. The Group's
reported revenue was up 13% to GBP442.8m (2021: GBP393.3m).
Underlying operating profit was up 11% to GBP64.0m (2021:
GBP57.5m), with operating margin flat at 14.5% (2021: 14.6%), as
expected given the operating expense investment in Roke. Underlying
basic earnings per share was up 20% to 20.2p (2021: 16.9p).
In 2022 the Group successfully navigated a number of operational
and financial challenges: delays in the US DoD procurement process;
labour availability; various supply chain and inflationary
pressures, in particular the cost of energy. These headwinds are
likely to continue and the Group will continue to work to mitigate
their impact.
Foreign exchange translation has provided a tailwind to
operating profit compared to last year. While exchange rates have
been volatile in the year, the US dollar has strengthened with the
average exchange rate to sterling decreasing from $1.38 to $1.23.
48% of the Group's revenue was US dollar denominated (2021: 53%).
On a constant currency basis the Group's revenue was up 7% to
GBP421.2m, underlying operating profit was up 8% to GBP62.2m and
underlying basic earnings per share was up 17% to 19.7p. A summary
of the impact of the exchange rate movements on the key metrics at
a Group and sector level is shown in the table below.
At constant currency As reported
2022 Change 2022 Change 2021
GBPm GBPm GBPm
Group
Order intake 523.1 +21% 551.5 +28% 431.0
Order book 604.1 +21% 650.9 +30% 500.8
Revenue 421.2 +7% 442.8 +13% 393.3
Underlying EBITDA 79.9 +5% 82.3 +8% 76.4
Underlying operating profit 62.2 +8% 64.0 +11% 57.5
Underlying basic earnings
per share 19.7p +17% 20.2p +20% 16.9p
Sensors & Information
Order intake 192.3 +9% 195.2 +11% 175.9
Order book 148.0 +30% 153.7 +35% 113.6
Revenue 157.8 +8% 162.3 +11% 146.6
Underlying EBITDA 32.8 -5% 33.0 -4% 34.4
Underlying operating profit 29.9 -5% 30.0 -5% 31.6
Countermeasures & Energetics
Order intake 330.8 +30% 356.3 +40% 255.1
Order book 456.1 +18% 497.2 +28% 387.2
Revenue 263.4 +7% 280.5 +14% 246.7
Underlying EBITDA 61.7 +10% 64.2 +14% 56.1
Underlying operating profit 46.6 +17% 48.9 +22% 40.0
In the Sensors & Information sector, Roke revenue exceeded
GBP100m for the first time and, in what continues to be a buoyant
market, order intake of GBP168m was up 59%. We invested in Roke
Academy and Roke USA which in the medium term enable Roke to
continue its track record of strong growth.
In the US Sensors business there has been a positive start to
the full rate production phase of the Enhanced Maritime Biological
Detection System ("EMBD") program. A customer procurement decision
is expected in 2023 on the low rate initial production ("LRIP")
phase of the Joint Biological Tactical Detection System ("JBTDS")
and Aerosol and Vapor Chemical Agent Detector ("AVCAD") programs.
The shift in the US Government priorities from counter-insurgency
operations to equipping forces for potential peer to peer/near-peer
competition in the Pacific, has resulted in a swift and unexpected
re-prioritisation of US DoD budgets. This impacted our expected
Husky Mounted Detection System ("HMDS") FY22 delivery order, which
was not funded, and we are currently working with the customer to
appropriately plan for their expected future requirements as we
expect the program to move from production to sustainment earlier
than anticipated.
In Countermeasures & Energetics, order intake was GBP356m,
up 40%, driven by multi-year orders received across the sector.
Investment in the Group's manufacturing infrastructure continues to
be a key enabler to deliver improved safety and operational
excellence, resulting in Countermeasures & Energetics margin
improving from 16.2% to 17.4%. The new Tennessee facility
commissioned in the second half of the year is expected to deliver
its first revenue in the first half of 2023. The market for
precision engineered devices and specialty materials was strong,
with order intake up 37% to GBP137m for these niche areas of our
Countermeasures & Energetics sector.
Net debt was GBP7.2m at the end of the year (2021: GBP26.6m),
the decrease since 31 October 2021 being largely attributable to
strong operating cash generation offset by the investment in
capital projects in the year. Strong underlying operating cash
inflow of GBP90.1m (2021: GBP80.0m) represented 109% (2021: 105%)
of EBITDA.
The Group's order book at 31 October 2022 was GBP651m (2021:
GBP501m), of which approximately GBP403m is scheduled for delivery
during 2023, representing cover of approximately 86% (2021: 84%) of
expected 2023 revenue. The increase since 31 October 2021 is
primarily attributable to a 59% increase in Roke's order intake,
driven by a growing number of multi-year contracts which include an
increasing element of "pass-through" products and services which
are included in revenue.
Group Chief Executive's review
Despite a challenging macro-economic environment, I am delighted
with the financial and operational progress that continues to be
made across the Group as we build a stronger, higher quality and
technology focused business. We maintain our relentless focus on
living our shared values of Safety, Excellence and Innovation, and
in doing so we are driving our collective purpose: delivering
innovative protective technologies to help make the world a safer
place.
I would like to thank all my colleagues across Chemring for
their determination, hard work and support. The progress made over
the past few years would not have been possible without their
collective efforts.
With market-leading technologies and services that are critical
to our customers, our niche market positions and our strong balance
sheet, I look to the future with excitement and confidence in our
continued success.
Environmental, Social and Governance ("ESG")
At Chemring our purpose is to help make the world a safer place,
delivering innovative technologies and products that detect and
defeat ever-changing threats. Our commitment to protection goes
beyond our customers. It embraces many different stakeholders
including our people and our suppliers, and it recognises the need
for us to contribute towards a sustainable future.
From an ESG perspective 2022 has seen us make further progress
as we proactively manage our sustainability agenda. Focus areas
included health and safety, diversity and inclusion, climate
change, and employee wellbeing. As a business we are committed to
building a sustainable company of which all our stakeholders can be
proud, both now and in the future.
Health and safety
Safety is our core value, with the health, safety and wellbeing
of our colleagues, their families, our customers and the
communities in which we operate being our priority. The successful
implementation of our HSE strategy continues, as does our focus of
achieving zero harm.
Our safety performance in terms of our Total Recordable Injury
Frequency ("TRIF") rate is currently at 0.78 which shows a slight
increase when compared to last year's 0.67 but still below our
annual limit of 1. The nature of most injuries were either slips,
trips and falls, or muscular skeletal type of events, and during
2022 there were no injuries in connection with or arising from
energetic events.
We measure our overall HSE performance to reflect both
occupational safety and process safety. In doing this we have
multiple data points, one of which is an external independent
review of our safety culture. This year saw the third review since
2018 by a team of specialist consultants from global subject matter
experts, ERM. The review, which was based on progress made since
2018 and 2019, has highlighted good progress as we journey towards
becoming a high reliability organisation.
In particular the review confirmed our businesses as approaching
a Group-wide calculative status with robust processes and systems
generating data and signals around our high hazard operations. The
level of collaboration has also increased with many businesses
sharing best practice on a regular basis to help accelerate our
performance, all of which is supported by a positive tone from the
top and underpinned by risk-informed, visible and proactive safety
leadership.
Environment
A key challenge for the Group's Sustainability Committee is to
manage our ESG-related risks - balancing both the near and
longer-term targets that were set in FY21, with the need to
continually look for ways in which we can improve further.
In 2022 we developed our updated carbon reduction plans in all
of our businesses and it is pleasing to report that we have
achieved a 7.3% reduction in market-based scope 1 and scope 2
carbon emissions, from 20,684 tCO2 e in 2021 to 19,175 tCO2 e in
2022. When normalised for gross revenue, market-based scope 1 and 2
emissions reduced 18%, from 52.6 to 43.3 tCO2 e per GBPm of
revenue.
Reductions in emissions have been achieved across the businesses
through initiatives such as the use of biofuels at our Roke and
Salisbury sites; improved efficiency and maintenance of our steam
systems in Scotland; and the use of renewable energy in
Australia.
FY22 sees the Group report for the first time under the Task
Force on Climate-related Financial Disclosures ("TCFD"). In
addition, the Group has committed to further improve its
non-mandatory disclosure and in July 2022 completed its first CDP
submission. By translating the TCFD recommendations and pillars
into actual disclosure questions and a standardised annual format,
CDP provides investors and disclosers with a unique platform where
the TCFD Framework can be brought into real-world practice in a
comparable and consistent way.
As our disclosure increases, so has the need to ensure that the
data that we report to the market is accurate. We have now put in
place an auditable framework for our emissions reduction
activities, with external subject matter experts appointed to
verify the data and to report to the Group's Audit Committee.
Culture
Chemring people are at the heart of our business. Engaged,
motivated, empowered and appropriately skilled colleagues are
integral to our success which is founded in the quality of our
people. It is imperative that we are able to sustain an environment
where we have the right people, in the right place, at the right
time, with the right skills working in a safe, healthy and
inclusive environment. We continue to invest in our people at all
levels across every location and function creating strong
foundations for our future success.
Our investment in nurturing a culture built on our core values
of Safety, Excellence and Innovation continued throughout 2022 and
is firmly embedded in every part of the business. Our determined
approach of Global Voice, Local Accent supports year on year
progress and we continue to focus on developing an inclusive,
respectful and diverse culture.
We will continue to focus throughout 2023 on developing an
inclusive and dynamic work environment for all our colleagues in
support of our business goals and to ensure that we continue to
invest in our people.
Governance and ethics
In recent years significant effort has been placed on
strengthening the governance and ethics across the Group, ensuring
that we have the necessary policies and procedures in place to
enable the business to operate with integrity and transparency, and
to the highest ethical standards.
On 1 July 2022 we announced that we had been informed by the UK
Serious Fraud Office ("SFO") that they had closed their
investigation into the activities of the Group, its subsidiary
Chemring Technology Solutions Limited and associated persons. This
investigation, which was announced on 18 January 2018, followed a
voluntary report by the Group. Chemring co-operated fully with the
SFO throughout its investigation and we are pleased that the matter
is now closed, with no fines paid or payable.
Markets
Recent geopolitical and technology trends are rapidly reshaping
many defence markets, with Russia's invasion of Ukraine having a
profound impact on defence spending and priorities, including
likely accelerated NATO expansion.
Simultaneously with this new era of defence spending in Europe,
the US is increasing its investment and action to strengthen its
position towards an assertive China with its own extensive defence
and military modernisation programmes.
The US
The US continues to represent the world's largest defence
market, and at US$813bn President Biden's 2022 national defence and
security budget request is the largest ever. The US DoD's element
of this overall request is US$773bn, with the additional US$40bn
being used to fund defence-related activities at the Department of
Energy, the Federal Bureau of Investigation and other agencies.
The Indo-Pacific region is cemented as the priority theatre for
the US DoD, with China representing the greatest military
challenge. The US's response to this challenge is seeing a major
emphasis on preparing for peer to peer/near-peer competition in the
region, with a consequent shift away from counter-insurgency
doctrines and capabilities.
The UK
2021's "Integrated Review of Security, Defence, Development and
Foreign Policy", and the accompanying "Defence Command Paper" and
the "Defence and Security Industrial Strategy", outline how
national advantage through Science and Technology ("S&T") is
central to UK defence and security policy. For the four-year period
from November 2020 to 2024 an additional GBP24.1bn has been
allocated to Defence, with this allocation being part of a
multi-year settlement to invest in pioneering technology in areas
such as cyber, AI, data-science, Electronic Warfare ("EW"),
uncrewed/autonomous systems and space.
By means of an example, digital integration across all defence
domains will be key and a GBP1.5bn investment will be provided over
the next decade to build and sustain a "Digital Backbone" that will
be part of underpinning armed forces modernisation. An investment
of some GBP500m will be made in Cyber and Electro-Magnetic
Activities ("CEMA") to enhance the UK's overall capabilities in
this environment, with GBP200m also provided over ten years to
deliver an enhanced land EW and signal intelligence capability for
the army.
Additionally, Russia's invasion of Ukraine has fostered broad
support for more long-term defence investment as part of adapting
to a more competitive and riskier world.
For Chemring, the UK MOD accounts for less than 10% of Group
revenues, however, it is an important partner for developing and
qualifying new products, a role that will gain increased
significance as new capability priorities mature.
The enhanced focus on S&T, AI, data science and autonomy as
set out in the Integrated Review, with the creation of new military
and security constructs that are data and intelligence driven, will
enlarge the opportunity space for Roke to deploy its unrivalled
capabilities to address these next-generation technology
requirements. Lastly, as the sole-source supplier of
countermeasures to the UK's F-35 Lightning II fleet, Chemring is
well placed to benefit from the UK MOD's declared plans to increase
the UK F-35 fleet size beyond the initial tranche of 48 aircraft
already on order.
Europe
Russia's invasion of Ukraine is driving a dramatic change in the
European geostrategic landscape, with Sweden and Finland formally
set to end decades of neutrality and join NATO. Joining NATO is
also under debate in several other European countries that are
presently outside the alliance.
Significant growth in European defence budgets is also being
signalled, with countries looking to make increased capital
investments to deter and protect their national interests. Seven
European countries - Belgium, Germany, Italy, Norway, Poland,
Romania and Sweden, have already announced their plans to increase
defence budgets given the invasion, targeting at least the 2% GDP
NATO threshold, and several other countries including Finland,
Latvia and The Netherlands have indicated they will follow suit in
the near term.
France has announced it will review its Loi de Programmation
("Programming Law") owing to the changed geopolitical situation,
and a new era of German foreign and security policy has been
heralded with the creation of a special fund of EUR100bn to be
spent on defence procurement and a commitment to allocate more than
2% of German GDP to defence.
The medium-term outlook for the European market is positive, and
several opportunities for our niche capabilities can be
anticipated. Against the new geostrategic backdrop, the Group will
continue to support the requirements of European allied
nations.
Australia
An enduring emphasis on future great power competition in the
Indo-Pacific region is driving increased Australian defence
spending with a focus on force readiness and capability
modernisation. The Australia-United Kingdom-United States ("AUKUS")
trilateral security alliance of 2021 provides for cooperation in
advanced cyber, AI, autonomy, quantum, undersea, hypersonic and
counter-hypersonic, EW, innovation, and information sharing
capabilities, and can make an important contribution to
strengthening the region's security and stability.
With Chemring having an industrial presence in all three AUKUS
nations, the Group is well placed to respond to relevant
opportunities resulting from the pact, as well as other bi-lateral
and tri-lateral cooperation prospects.
Strategy
The Group's strategy is to deliver sustainable, profitable
growth by operating in markets where we have differentiators such
as intellectual property, niche technology, high barriers to entry
and deep long-term customer relationships.
We will achieve this by continuing to focus our efforts and
investment on those areas of the defence and security market where
we see increasing customer budgets.
The Sensors & Information sector remains Chemring's
principal area of focus for long-term growth reflecting increasing
customer demand and one where we can capitalise on the opportunity
presented by our customer's pivot towards the acquisition of high
technology capabilities. We will expand the Group's product,
service and capability offerings, constantly innovating to enable
our customers to deliver competitive advantage and to defend their
people, assets and information.
The Countermeasures & Energetics sector strategy is to
strengthen and protect our niche, world-leading positions. We will
seek to continuously improve our technological and operational
base, and work closely with our customers in the development of new
solutions to meet emerging needs. We will continue the process of
modernisation and automation across our sites, improving our
competitiveness through investment in lean manufacturing
capabilities and operational alignment to share technology and
manufacturing excellence across the Group.
We remain alert for opportunities to expand and accelerate our
growth strategy through incremental acquisitions and by leveraging
market adjacencies. However, any acquisition target must meet a
strict set of criteria, enhance shareholder value and fit in with
our wider growth plans. To date this activity has been principally
focused around our Roke business and we are now considering
additional opportunities in the US space and missiles sectors. Both
areas, which play to the Group's high technology skillsets, offer
significant opportunities for long-term growth.
Elsewhere we will continue to focus our efforts on building a
safe, sustainable and resilient business that is able to deliver
progression through continuous improvement in operational
performance and execution. We shall continue to invest in both our
people and our infrastructure in order to deliver further growth
into the future.
Group financial performance
Order intake across the Group increased by 28% to GBP551m (2021:
GBP431m), with a 59% increase in Roke's order intake, driven by a
growing number of multi-year contracts which include an increasing
element of "pass-through" products and services which are included
in revenue. Countermeasures & Energetics order intake was
GBP356m, up 40%, driven by multi-year orders received across the
sector.
The impact of the Continuing Resolution in the US, and the
continuation of CV-19 related working restrictions slowed the
process of doing business with government departments, and as a
result some orders were received later than expected which will
adversely impact phasing of FY23.
Revenue for the year was up 13% to GBP442.8m (2021: GBP393.3m),
driven by strong performance at Roke as well as steady growth in
Countermeasures & Energetics.
The underlying operating profit of GBP64.0m (2021: GBP57.5m)
resulted in an underlying operating margin of 14.5% (2021: 14.6%).
As a result of the planned investment in Roke operating margin was
flat compared to 2021 with the improved operational execution in
Countermeasures & Energetics being offset by the discretionary
operating expense investment in Roke Academy, Roke Futures and Roke
USA.
Total finance expense fell to GBP1.5m (2021: GBP1.6m) which
resulted in an underlying profit before tax of GBP62.5m (2021:
GBP55.9m). The effective tax rate on the underlying profit before
tax was 9.1% (2021: 14.8%). The underlying basic earnings per share
was 20.2p (2021: 16.9p).
Foreign exchange translation has provided a tailwind to
operating profit compared to last year. While exchange rates have
been volatile in the year, the US dollar has strengthened with the
average exchange rate to sterling decreasing from $1.38 to $1.23.
48% of the Group's revenue was US dollar denominated (2021: 53%).
On a constant currency basis the Group's revenue was up 7% to
GBP421.2m, underlying operating profit was up 8% to GBP62.2m and
underlying basic earnings per share was up 17% to 19.7p.
Statutory operating profit was GBP53.3m (2021: GBP50.4m) and
after statutory finance expenses of GBP1.5m (2021: GBP1.6m),
statutory profit before tax was GBP51.8m (2021: GBP48.8m). The
statutory tax charge totalled GBP4.4m (2021: GBP7.3m), giving
statutory profit after tax of GBP47.4m (2021: GBP41.5m) and
statutory basic earnings per share of 16.9p (2021: 14.7p).
A reconciliation of underlying to statutory profit measures is
provided in note 3. The non-underlying costs relate to the
amortisation of acquired intangibles, costs relating to
acquisitions, loss on the movement in the fair value of derivative
financial instruments and the tax credit associated with these.
Segmental review - Sensors & Information
Performance
Order intake in the year was up 11% to GBP195m (2021: GBP176m).
This was driven by a 59% increase in Roke's order intake, with a
growing number of multi-year contracts which include an increasing
element of "pass-through" products and services which are included
in revenue (see table below for an analysis of the impact of this),
and the receipt of a US$16m delivery order for the second year of
EMBD full rate production. This was offset by orders on the HMDS
Program of Record being significantly lower than in the previous
year.
Roke "pass-through" 2022 2021 Change
impact
GBPm GBPm
----- ----- -------
Order intake
----- ----- -------
Products and services 132 100 +32%
----- ----- -------
Pass-through 36 6 +500%
----- ----- -------
As reported 168 106 +59%
----- ----- -------
Revenue
----- ----- -------
Products and services 94 75 +25%
----- ----- -------
Pass-through 16 7 +129%
----- ----- -------
As reported 110 82 +34%
----- ----- -------
Revenue for Sensors & Information increased by 11% to
GBP162.3m (2021: GBP146.6m) and underlying operating profit fell by
5% to GBP30.0m (2021: GBP31.6m), as underlying operating profit
margin declined to 18.5% (2021: 21.6%) driven by the operating
expense investment in Roke Academy, Roke Futures and Roke USA, and
the reduction in HMDS revenue in the year. On a constant currency
basis revenue would have risen 8% to GBP157.8m and underlying
operating profit would have fallen by 5% to GBP29.9m. The statutory
operating profit for the year was GBP26.3m (2021: GBP25.9m).
In the UK, the markets for EW, Cyber and data science
capabilities, in which Roke is a leading participant, have remained
buoyant in the period. As shown above Roke has delivered strong
growth in orders and revenue with double digit growth in underlying
operating profit and has maintained strong margins despite
increased investment in people, infrastructure and product
development.
The acquisition of Geollect Limited which was completed in
December 2022 having now received NSIA approval, creates further
opportunities for Chemring to enhance and further accelerate growth
in its Roke business. Geollect, based in Bristol and Virginia USA,
is a data analytics company specializing in geospatial intelligence
("GEOINT"), one of the most exciting and growing areas of spacetech
innovation. GEOINT uses imagery analysis and data to survey and
assess human activity and physical geography anywhere in the world
and has the potential to transform some of the most traditional and
complex industries. With demand for open source intelligence
("OSINT") and commercially curated intelligence growing at 25%
CAGR, Roke's customers require an exponential increase in
capability to achieve digital advantage against complex threats.
The Acquisition will enable Roke to build on its Intelligence as a
Service ("Roke IaaS") proposition by utilising the intelligence
gathering and analysis capabilities of Geollect, and enhancing
their already impressive processing capabilities with Roke's
innovative approach to AI, Machine Learning and Data Science.
In the last four years successful execution of its strategy has
seen Roke double in size. Its headcount has increased from c.400 at
the end of 2018 to over 800 today, driven in part by the success of
its graduate and apprenticeship schemes.
Building on this success, Roke invested GBP2.5m of annualised
operating expenses in the launch of the Roke Academy, to address
the challenge of recruiting appropriately skilled engineers in this
competitive market. This unique offering will be a centre of
excellence for learning and development and is designed to target
the recruitment and development of undiscovered talent, and the
enhancement of skillsets within the business. This is a significant
step in Roke's employee value proposition and will deliver a
welcome increase in workforce diversity and longer term career
progression. The first 24 recruits joined in July 2022.
In order to drive scalable growth and unlock future potential,
Roke has combined its Public Sector, Industry and Cubica business
units to create Roke Futures, which will sit alongside the National
Security and Defence business units. In doing so it has brought
together its market-leading skillset in Consulting, Intelligent
Sensing, Situational Awareness and Autonomy. It will focus on
building world-class capabilities and the development of new
intellectual property and unique technologies in support of
customers in UK Central Government & Law Enforcement,
Aerospace, Digital Healthcare and Energy markets.
We are seeing growing customer enquiries for Roke's suite of
world-leading Electronic Warfare products. The business received an
GBP8m order in November 2021 from the Swedish Ministry of Defence
for the sale of EW equipment of which part was delivered in H2
2022. This illustrates the increasing importance CEMA in today's
threat environment, heightened further as a consequence of Russia's
invasion of Ukraine.
Roke USA continues to support the customer with a view to
securing further EW orders from this potentially significant
market. We continue to invest in establishing our Roke USA business
and have now established a sales and engineering office in the US,
and hired staff with the required security clearance. This has
required investment of GBP1.4m in 2022 which has been c.1
percentage point margin dilutive in the Sensors & Information
sector. This investment has allowed us to support ongoing customer
demonstrations and field trials. Customer feedback remains very
positive albeit anticipated follow-on orders have been delayed as a
result of budget restrictions caused by the Continuing
Resolution.
Also in the US, our sensors business continued its strategic
focus on building winning solutions to convert current US Programs
of Record into low rate and full rate production, and on exploiting
a growing opportunity in bio-security and surveillance. In a
post-pandemic and contested world, governments are becoming
increasingly concerned by the risks of both naturally occurring and
engineered biological threats. Advances in synthetic biology now
give our national adversaries the capability to deliberately
engineer organisms to create hazards and cause harm.
Chemring is also working with the US Department of Homeland
Security Countering Weapons of Mass Destruction ("CWMD") Office to
design, develop and deliver an aerosol bio-sensor that can detect,
classify, and provide presumptive identification in real-time of
pathogenic bio-threats in both indoor and outdoor environments.
Chemring's technology dramatically shortens the time taken to
identify the bio-threat, which is critical to rapidly implementing
an effective response.
Key developments in the year on the major US Programs of Record
are summarised below.
Following a delay in the placement of the annual delivery order,
expected in the first half of the year, our US Sensors team
actively engaged with the US DoD to gain a better understanding of
short and medium-term demand for HMDS. Following withdrawal from
Afghanistan, the US Army budget is realigning its budget priorities
from a focus on counter-insurgency operations to the threat of peer
to peer/near-peer competition. This pivot is driving a re-alignment
of DoD funding priorities and our expectations are that the
customer will extend the duration of the existing US$200m
Indefinite Delivery / Indefinite Quantity ("IDIQ") contract for an
additional four years as the HMDS program transitions to
sustainment mode. We continue to work with the customer to
determine funding levels and timings moving forward.
The EMBD system, an automated sensor to rapidly detect, collect,
identify and sample airborne biological warfare agents, has seen a
positive start to its full rate production phase. The value of this
sole source framework contract is up to US$99m with an estimated
completion date of December 2027. A further delivery order of
US$16m covering FY23 deliveries was received in the year.
The sole source JBTDS program is progressing as planned through
the EMD phase and the next customer procurement decision is now
expected in H1 FY23.
The AVCAD program is also progressing through its EMD phase. The
next customer procurement decision point is still expected to be at
the conclusion of the EMD phase, now expected to be in H1 FY23.
Chemring remains one of two contractors currently selected for this
competitive program.
Opportunities and outlook
The focus for Sensors & Information continues to be on
expanding the Group's product, service and capability offerings in
the areas of national security, artificial intelligence and machine
learning, tactical electronic warfare and information security, and
securing positions on the US DoD Programs of Record.
In the UK, the national security and defence markets continue to
grow with a focus on emerging technologies in connectivity, cyber,
automation and data analytics. With increasing customer budgets and
growing market opportunities Roke is a key enabler of our wider
growth ambitions. Our vision for the next five years is to maintain
Roke's recent record of growth, doubling annual revenue to greater
than GBP200m organically, whilst maintaining strong margins. Roke
will continue to focus its efforts on growing across all its
business areas, delivering research, design, engineering and
advisory services using its high quality people and
capabilities.
We will continue to actively explore opportunities to expand and
accelerate the Sensors & Information sector capabilities and
offerings, both by leveraging opportunities in adjacent markets and
through further bolt-on acquisitions. However, any acquisition must
meet a strict set of criteria, enhance shareholder value and fit in
with our wider growth plans.
Over the next two years we will see the US Sensors business
transition from its primary focus being on the delivery of
explosive hazard detection systems to one of biological detection
reflecting the shift in the US Government priorities, from
counter-insurgency operations to equipping forces for peer to
peer/near-peer competition in the Pacific. In biological detection
the EMBD program provides good short-term visibility and following
the expected LRIP decision on JBTDS in 2023 we expect this program
to enhance medium-term visibility but first full rate production
revenue is not expected until 2025. In chemical detection we still
await the outcome of the competitive AVCAD program.
The order book for Sensors & Information at 31 October 2022
was GBP154m (2021: GBP114m) driven by strong order intake and an
increase in multi-year contracts in Roke, offset by the reduction
in HMDS orders in our US Sensors business. Of this, GBP112m is
expected to be delivered in 2023, providing 67% cover of expected
2023 revenue. 2023 trading performance for Sensors &
Information is expected to show a continuation of the levels of
business seen in 2022, with continued growing demand for Roke's
products and services, offset by the expected reduction in
HMDS-related revenue. Medium-term growth opportunities are driven
by the Group's sole source positions on the biological detection
Programs of Record moving into full rate production.
Segmental review - Countermeasures & Energetics
Performance
Order intake in the year was higher at GBP356m (2021: GBP255m),
driven by multi-year orders received across the sector.
Chemring Countermeasures USA ("CCM USA") has been jointly
awarded a US$225m IDIQ five-year framework contract to manufacture
MJU-61A/B infra-red countermeasures. Initial delivery orders of
US$38m were received in the year, and all work will be performed at
CCM USA's new fully-automated manufacturing facility at Toone,
Tennessee.
CCM USA's Pennsylvania facility received contracts totalling
US$36m to manufacture MJU-64/B, MJU-66/B and XM219 aircraft decoy
flares. Chemring Countermeasures UK ("CCM UK") received a five-year
contract valued at GBP34m to supply 55mm MTV air countermeasures to
international customers.
Our three niche Energetics businesses, which design and
manufacture high precision engineered devices and specialist
materials, have also seen strong customer demand with order intake
up 37% to GBP137m (2021: GBP100m), demonstrating the value our
customers place on the high-reliability products provided by
Chemring in the critical areas of space, aerospace, defence and
industrial markets.
The impact of the Continuing Resolution in the US, which was not
lifted until mid-March 2022, slowed the process of doing business
with government departments. As a result some Countermeasures &
Energetics orders that were expected in the first half were delayed
until the second half of FY22. We expect this to result in an
increase to the weighting of revenue in the second half of
FY23.
The investment in the expansion and automation of our Tennessee
facility to meet the expected demand for airborne countermeasures
continued during the year. Having completed construction work of
the buildings in FY21, FY22 saw the commissioning process progress
through characterisation and testing as production gradually ramped
up. We expect customer First Article Test units to be manufactured
and shipped to the customer in the first half of FY23.
Revenue for Countermeasures & Energetics was up by 14% to
GBP280.5m (2021: GBP246.7m). The sector reported an underlying
operating profit of GBP48.9m (2021: GBP40.0m) as underlying
operating margin increased to 17.4% (2021: 16.2%) driven by
continued improved operational execution. On a constant currency
basis revenue would have been up 7% to GBP263.4m and operating
profit would have been up 17% to GBP46.6m. The statutory operating
profit for the year was GBP46.8m (2021: GBP37.9m).
Opportunities and outlook
The focus for Countermeasures & Energetics remains on
safeguarding and growing the Group's market-leading positions in
niche markets, in particular on key platforms such as the F-35 as
it begins to enter service in increasing numbers.
We will continue the process of modernisation and automation
across our sites, and of improving our competitiveness through
investment in lean manufacturing capabilities. We will also invest
in new product development to ensure that our product portfolio
remains highly relevant to our customers and will continue the
process of operational alignment to share technology and
manufacturing excellence across the Group.
The Group's niche propellant and devices businesses in Scotland
and Chicago are increasingly securing long-term contracts with
customers, supporting greater short and medium-term visibility and
providing a framework for long-term planning and investment
decisions. Our Chicago facility is well placed to benefit from
growth in the space segment. Similarly, demand for high quality
energetic materials has enabled Chemring Nobel in Norway to work
proactively with its customer base on long-term contracting models,
providing much improved visibility.
The Countermeasures & Energetics order book at 31 October
2022 was GBP497m (2021: GBP387m). The increase compared to the 2021
year end closing order book is largely attributable to the strong
order intake across the sector where customers are increasingly
placing multi-year orders. Foreign exchange has been a tailwind in
the year and on a constant currency basis using the 2021 closing
exchange rates the order book would be GBP456m. Of the 31 October
2022 order book, approximately GBP291m is currently expected to be
delivered in 2023, representing 96% coverage of expected 2023
revenue.
Net debt and cash flow
The Group's net debt at 31 October 2022 was GBP7.2m (2021:
GBP26.6m), representing a net debt to underlying EBITDA ratio of
0.09x (2021: 0.35x). The financial health of the Group has
continued to improve in a number of aspects during the year.
Disciplined working capital practices have been maintained to
reduce intra-period volatility. The Group is working to achieve
further improvements over the medium term.
Underlying operating activities generated cash of GBP90.1m
(2021: GBP80.0m). Underlying cash conversion was 109% (2021: 105%)
of underlying EBITDA, and an average of 108% on a rolling 36-month
basis (2021: 107%). The Group has a revolving credit facility of
GBP150m which runs to December 2025 and has an option to extend for
a further two years at the lenders' discretion.
Working capital
Working capital was GBP93.9m (2021: GBP84.4m), an increase of
GBP9.5m. At constant currency, working capital would have been
GBP81.9m. As a percentage of revenue, working capital has remained
consistent at 21% at 31 October 2022, and would have fallen to 19%
at constant currency.
Given global supply chain challenges the Group invested in
certain inventory items to mitigate the risk of shortages on
production and delivery to customers. We continued with our focus
on commercial contracting, inventory levels and cash management.
Year end trade receivable days of 17 (2021: 25) and trade payable
days of 18 (2021: 18) demonstrate that working capital has been
managed in a balanced and sustainable manner.
Tax
The underlying tax charge totalled GBP5.7m (2021: GBP8.3m) on an
underlying profit before tax of GBP62.5m (2021: GBP55.9m). The
effective tax rate on underlying profit before tax for the year was
a charge of 9.1% (2021: 14.8%).
The reduction in rate is due to the recognition of a deferred
tax asset in respect of future US interest deductions of GBP4.3m.
Looking forward into 2023 we expect the Group effective tax rate to
return to the mid-teens as the change to the UK Corporation tax
rate, effective 1 April 2023, will impact the annual current tax
charge for 7 months. From FY24 we will see a full year effect and
as such the Group effective tax rate is expected to increase to
approximately 20%. The statutory tax charge totalled GBP4.4m (2021:
GBP7.3m) on a statutory profit before tax of GBP51.8m (2021:
GBP48.8m).
Retirement benefit obligations
The surplus on the Group's defined benefit pension schemes was
GBP11.2m (2021: GBP13.7m), measured in accordance with IAS 19
(Revised) Employee Benefits. The surplus relates to the Chemring
Group Staff Pension Scheme (the "Scheme"), a UK defined benefit
scheme whose assets are held in a separately administered fund. The
Scheme was closed to future accrual in April 2012. The surplus as a
percentage of scheme liabilities increased from 15% to 19%, the
increase being driven by the increase in the AA corporate bond
yield used as the discount rate for IAS19. The resilience of the
Scheme's investment strategy, which includes a liability driven
investment hedge, was demonstrated by the limited impact of
increased interest rate and inflation expectations. During the
final quarter of the year the Scheme exited its portfolio of equity
investments in anticipation of the need for liquid cash resources
to meet the margin calls on the liability driven investments, as
gilt yields rose rapidly in September 2022. The Group also lent the
Scheme GBP2m on a short-term basis to cover further margin calls in
October 2022, which was repaid in November 2022.
An updated triennial valuation was completed as at 6 April 2021
and showed a technical provisions surplus of GBP3.8m, which
represented a funding level of 104% of liabilities. The Group
agreed with the trustees that no further deficit recovery payments
are required. The next actuarial valuation is due as at 6 April
2024 after which the future funding requirements will be
reassessed.
Contingent liabilities
The Group is, from time to time, party to legal proceedings and
claims, and is involved in correspondence relating to potential
claims, which arise in the ordinary course of business.
One matter remained open at year end, relating to the incident
that occurred at the Group's countermeasures site in Salisbury on
10 August 2018. Full details are included in note 10.
Dividends
The Board continues to recognise that dividends are an important
component of total shareholder returns. The Board's objective is
for a growing and sustainable dividend and continues to target a
medium-term dividend cover of c.2.5 times underlying EPS, subject
inter alia to maintaining a strong financial position.
The Board is recommending a final dividend in respect of the
year ended 31 October 2022 of 3.8p (2021: 3.2p) per ordinary share.
With the interim dividend of 1.9p per share (2021: 1.6p), this
results in a total dividend of 5.7p (2021: 4.8p) per share, an
increase of 19% on the prior year.
If approved, the final dividend will be paid on 14 April 2023 to
shareholders on the register on 24 March 2023. In accordance with
accounting standards, this final dividend has not been recorded as
a liability as at 31 October 2022.
Current trading and outlook
Trading since the start of the current financial year has been
in line with expectations.
The Board's expectations for the Group's 2023 performance are
unchanged, with the balance of its trading performance in 2023
expected to have a greater bias towards the second half of the
financial year as a result of the delays to order intake in 2022
following the US Continuing Resolution.
The Group order book as at 31 October 2022 was GBP651m, of which
GBP403m is currently expected to be recognised as revenue in 2023,
giving excellent visibility for the full year.
Whilst there may be some macro-economic uncertainty surrounding
the level and timing of defence spending, our focus remains on
balancing short-term performance with long term growth and value
creation.
Longer-term, our strategic imperatives are to:
-- continue to grow our Roke business
-- invest in new and adapt existing technologies to meet evolving customer requirements
-- pursue new market opportunities with our Defence, Security and Industrial customers
-- enhance organic growth opportunities with focused,
strategy-led acquisitions to accelerate growth
Our multiple market-leading positions across different
geographies and sectors, together with our investment in high
technology niches and the Group's strong balance sheet, give the
Board confidence in Chemring's longer-term prospects.
Going concern
The directors believe that the Group is well placed to manage
its business risks successfully, despite the current uncertain
economic outlook. The Group's forecasts and projections, taking
account of reasonably possible changes in trading performance, show
that the Group should be able to operate within the level of its
current committed facilities.
Key financial metrics
2022 Covenant
Revolving credit facility and overdraft GBP159m
-------- ----------
Undrawn committed borrowing facilities GBP137m
-------- ----------
Leverage ratio 0.14x Less than
3x
-------- ----------
Interest cover ratio 57x Greater
than 4x
-------- ----------
The revolving credit facility and overdraft run to December 2025
with two "one-year" options to extend at the lenders' discretion.
The Group was in compliance with the covenants throughout the
year.
Assessment of near-term prospects
As part of a regular assessment of the Group's working capital
and financing position, the directors have prepared a detailed
bottom-up two-year trading budget and cash flow forecast for the
period through to October 2024. This has allowed the directors to
assess going concern for a period of at least 12 months after the
date of approval of the financial statements. This is in addition
to the Group's longer-term strategic planning process. In assessing
the forecast, the directors have considered:
- trading risks presented by the current economic conditions in
the defence market, particularly in relation to government budgets
and expenditure;
- the impact of macro-economic factors, particularly
inflationary pressures, supply chain challenges, interest rates and
foreign exchange rates;
- the status of the Group's existing financial arrangements and
associated covenant requirements;
- progress made in developing and implementing cost reduction
programmes and operational improvements;
- the availability of mitigating actions should business
activities fall behind current expectations, including the deferral
of discretionary overheads and restricting cash flows; and
- the long-term nature of the Group's business which, taken
together with the Group's order book, provides a satisfactory level
of confidence to the Board in respect of trading.
Sensitivity analysis
Additional detailed sensitivity analysis has been performed on
the forecasts to consider the impact of severe, but plausible,
reasonable worst case scenarios on the covenant requirements. These
scenarios, which sensitised the forecasts for specific identified
risks, modelled the reduction in anticipated levels of underlying
EBITDA and the associated increase in net debt. These scenarios
included significant delays to major contracts and considered the
principal risks and uncertainties discussed in the strategic
report. These sensitised scenarios show headroom on all covenant
test dates for the foreseeable future.
In addition to the above, the directors continue to monitor
developments with, and potential impact of, CV-19 in the short and
medium term and are in particular focused on the key risks of
delays by customers in testing and acceptance of products,
disruption to production capacity and the impact of the current
situation on the Group's supply chain. The CV-19 outbreak is not
currently having any material impact in relation to these risks or
any other potential impacts, however, the directors are monitoring
the situation closely.
Confirmation of going concern
After consideration of the above, the directors have a
reasonable expectation that the Group and Company will have
sufficient funds to continue to meet its liabilities as they fall
due for at least 12 months from the date of approval of the
financial statements and therefore have prepared the financial
statements on a going concern basis.
Long-term viability statement
The directors have assessed the Group's viability over a
three-year period to October 2025 based on the above assessment,
combined with the Group's strategic planning process, which gives
greater certainty over the forecasting assumptions used. Based on
this assessment, the directors have a reasonable expectation that
the Group will be able to continue in operation and meet all its
liabilities as they fall due up to October 2025.
The directors have chosen a three-year period to assess
viability to reflect the characteristics of the Group's end markets
and their contracting arrangements. These range from multi-year
contracts such as the US Programs of Record to shorter-term orders,
such as those awarded to Roke.
Principal risks
In considering our viability statement we have considered the
principal risks and uncertainties discussed in the strategic report
and assessed the impact. The impact of CV-19 on viability is
clearly a consideration for all companies at this time. The Group's
operations have been designated as critical to the defence and
national security industrial base in all territories in which we
operate. All our businesses remain open with business continuity
plans mobilised at every location.
Sensitivity analysis
Sensitivity analyses were run to model the financial and
operational impact of plausible downside scenarios of these risk
events occurring individually or in combination. These included the
impacts of a further deterioration in the macro-economic
environment, including how CV-19 may impact the economy and future
government policy and spending, underperformance in executing the
Group's strategy, failure to deliver operational improvements, the
impact of a potential climate-related risk causing business
interruption and material movements in foreign exchange rates.
Consideration was also given to the plausibility of the
occurrence of other individual events that in their own right could
have a material impact on the Group's viability.
Confirmation of viability
Based on the consolidated financial impact of the sensitivity
analyses and associated mitigating internal controls and risk
management actions that are either now in place or could be
implemented, the Board has been able to conclude that the Group
will be able to maintain sufficient bank facilities to meet its
funding needs over the three-year period and the Group's forecasts
show compliance with covenants under the revolving credit
facility.
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
2021 annual report and accounts and the 2022 interim report. A
detailed description of the Group's principal risks and
uncertainties and the ways they are mitigated can be found on pages
66 to 73 of the Group's 2022 annual report and accounts. In
summary, the principal risks relate to:
-- Health, safety, and environmental risks
-- Strategic risks
-- Financial risks
-- Operational risks
-- Reputational risks
-- Legal and compliance risks
-- Reputational risks
Management have detailed mitigation plans and assurance
processes to manage and monitor these risks.
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 2022. 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 the
applicable set of accounting standards, 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 strategic report and directors' report includes a fair
review of the development and performance of the business
and the position of the issuer and the undertakings included
in the consolidation taken as a whole, together with a description
of the principal risks and uncertainties that they face.
We consider the annual report and accounts, taken as a whole, is
fair, balanced and understandable, and provides the information
necessary for shareholders to assess the Group's position and
performance, business model and strategy.
This responsibility statement was approved by the Board of
directors on 13 December 2022, and has been signed on its behalf by
Michael Ord and Sarah Ellard.
CONSOLIDATED INCOME STATEMENT
for the year ended 31 October 2022
2022 2021
Underlying Non-underlying Underlying Non-underlying
performance* items* Total performance* items* Total
GBPm GBPm GBPm GBPm GBPm GBPm
Continuing operations
Revenue 442.8 - 442.8 393.3 - 393.3
------------- --------------- ------ ------------- --------------- ------
Operating profit 64.0 (10.7) 53.3 57.5 (7.1) 50.4
Finance expense (1.5) - (1.5) (1.6) - (1.6)
------------- --------------- ------ ------------- --------------- ------
Profit before tax 62.5 (10.7) 51.8 55.9 (7.1) 48.8
Taxation (5.7) 1.3 (4.4) (8.3) 1.0 (7.3)
------------- --------------- ------ ------------- --------------- ------
Profit after tax 56.8 (9.4) 47.4 47.6 (6.1) 41.5
Earnings per ordinary share
Basic 20.2p 16.9p 16.9p 14.7p
Diluted 19.7p 16.4p 16.5p 14.4p
------------- --------------- ------ ------------- --------------- ------
* Further information about non-underlying items is set out in
note 3.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 October 2022
2022 2021
GBPm GBPm
Profit after tax attributable to equity holders
of the parent as reported 47.4 41.5
Items that will not be reclassified subsequently
to profit or loss
Remeasurement of the defined benefit pension
schemes (2.3) 6.2
Movement on deferred tax relating to pension
schemes 0.8 (2.2)
------ ------
(1.5) 4.0
------ ------
Items that may be reclassified subsequently
to profit or loss
Exchange differences on translation of foreign
operations 35.0 (8.3)
Tax on exchange differences on translation
of foreign operations (0.4) 0.1
------ ------
34.6 (8.2)
------ ------
Total comprehensive income attributable to
equity holders of the parent 80.5 37.3
------ ------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 October 2022
Share Special
Share premium capital Translation Retained
capital account reserve reserve earnings* Total
GBPm GBPm GBPm GBPm GBPm GBPm
At 1 November 2021 2.8 307.1 12.9 (27.1) 57.1 352.8
-------- --------- --------- ------------ ---------- -------
Profit after tax - - - - 47.4 47.4
Other comprehensive
income - - - 35.0 (2.3) 32.7
Tax relating to
components of other
comprehensive income - - - (0.4) 0.8 0.4
----------------------- -------- --------- --------- ------------ ---------- -------
Total comprehensive
income - - - 34.6 45.9 80.5
Ordinary shares
issued - 0.6 - - - 0.6
Share-based payments
(net of settlement) - - - - 5.6 5.6
Dividends paid - - - - (14.4) (14.4)
Purchase of shares
by employee share
ownership plan
trust - - - - (7.0) (7.0)
At 31 October
2022 2.8 307.7 12.9 7.5 87.2 418.1
-------- --------- --------- ------------ ---------- -------
Share Special
Share premium capital Revaluation Translation Retained Own
capital account reserve reserve reserve earnings shares Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 November 2020 2.8 306.7 12.9 1.0 (18.9) 28.0 (2.9) 329.6
-------- --------- --------- ------------ ------------ --------- ------- -------
Profit after tax - - - - - 41.5 - 41.5
Other comprehensive
(loss)/income - - - - (8.3) 6.2 - (2.1)
Tax relating to
components of other
comprehensive (loss)/income - - - - 0.1 (2.2) - (2.1)
----------------------------- -------- --------- --------- ------------ ------------ --------- ------- -------
Total comprehensive
income/(loss) - - - - (8.2) 45.5 - 37.3
Ordinary shares
issued - 0.4 - - - - - 0.4
Share-based payments
(net of settlement) - - - - - 4.5 - 4.5
Dividends paid - - - - - (11.9) - (11.9)
Purchase of shares
by employee share
ownership plan
trust - - - - - (7.1) - (7.1)
Transactions in
own shares - - - - - (2.9) 2.9 -
Transfer between
reserves - - - (0.1) - 0.1 - -
At 31 October
2021 2.8 307.1 12.9 0.9 (27.1) 56.2 - 352.8
-------- --------- --------- ------------ ------------ --------- ------- -------
* Retained earnings as at 1 November 2021 includes GBP0.9m that
was previously classified as a revaluation reserve. This balance
has been amalgamated into the retained earnings balance from 1
November 2021 on the basis that it is immaterial.
CONSOLIDATED BALANCE SHEET
as at 31 October 2022
2022 2021
GBPm GBPm GBPm GBPm
Non-current assets
Goodwill 118.1 108.7
Development costs 34.6 30.0
Other intangible assets 11.4 14.1
Property, plant and equipment 231.3 198.7
Retirement benefit surplus 11.2 13.7
Deferred tax 32.3 18.2
------- -------- ------- --------
438.9 383.4
------- -------- ------- --------
Current assets
Inventories 99.6 80.7
Trade and other receivables 61.1 60.6
Cash and cash equivalents 19.8 5.8
Derivative financial instruments 0.7 1.0
------- -------- ------- --------
181.2 148.1
------- -------- ------- --------
Total assets 620.1 531.5
------- -------- ------- --------
Current liabilities
Borrowings - (0.4)
Lease liabilities (1.8) (1.4)
Trade and other payables (98.2) (85.7)
Provisions (1.6) (2.6)
Current tax (7.9) (12.0)
Derivative financial instruments (4.2) (0.4)
------- -------- ------- --------
(113.7) (102.5)
------- -------- ------- --------
Non-current liabilities
Borrowings (20.9) (28.1)
Lease liabilities (4.2) (2.4)
Provisions (16.8) (14.9)
Deferred tax (45.2) (30.7)
Derivative financial instruments (1.1) -
Preference shares (0.1) (0.1)
------- -------- ------- --------
(88.3) (76.2)
------- -------- ------- --------
Total liabilities (202.0) (178.7)
------- -------- ------- --------
Net assets 418.1 352.8
------- -------- ------- --------
Equity
Share capital 2.8 2.8
Share premium account 307.7 307.1
Special capital reserve 12.9 12.9
Revaluation reserve - 0.9
Translation reserve 7.5 (27.1)
Retained earnings 87.2 56.2
------- -------- ------- --------
Total equity 418.1 352.8
------- -------- ------- --------
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 October 2022
2022 2021
GBPm GBPm
Cash flows from operating activities
------------------------------------------------------- ------- -------
Cash generated from continuing underlying operations 90.1 80.0
Cash impact of continuing non-underlying items (1.1) (1.3)
Cash impact of discontinued non-underlying items - (0.4)
------------------------------------------------------- ------- -------
Cash flows from operating activities 89.0 78.3
Tax paid (8.5) (2.6)
------- -------
Net cash inflow from operating activities 80.5 75.7
------- -------
Cash flows from investing activities
Purchases of intangible assets (3.0) (2.2)
Purchases of property, plant and equipment (31.5) (28.0)
Acquisition of subsidiary net of cash acquired - (5.1)
Proceeds on disposal of subsidiary - 0.4
Short-term funding to defined benefit pension (2.0) -
scheme
Proceeds on disposal of property, plant and equipment 6.0 -
------- -------
Net cash outflow from investing activities (30.5) (34.9)
------- -------
Cash flows from financing activities
Dividends paid (14.4) (11.9)
Purchase of own shares (7.0) (7.1)
Net proceeds for transactions in own shares 0.1 0.4
Finance expense paid (1.3) (2.6)
Capitalised facility fees paid - (1.1)
Drawdown of borrowings 30.0 29.2
Repayments of borrowings (41.0) (55.7)
Repayments of lease liabilities (2.2) (1.6)
Net cash outflow from financing activities (35.8) (50.4)
------- -------
Increase/(decrease) in cash and cash equivalents 14.2 (9.6)
Cash and cash equivalents at beginning of the
year (including bank overdraft) 5.4 14.7
Effect of foreign exchange rate changes 0.2 0.3
------- -------
Cash and cash equivalents at end of the year
(including bank overdraft) 19.8 5.4
------- -------
Notes
1. ACCOUNTS AND AUDITOR'S REPORT
The financial information set out above does not constitute the
Company's statutory accounts for the year ended 31 October 2022 or
31 October 2021 but is derived from those accounts. Statutory
accounts for 2021 have been delivered to the Registrar of
Companies, and those for 2022 will be delivered following the
Company's Annual General Meeting. The auditor has 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 section 498(2)
or section 498(3) of the Companies Act 2006.
This announcement has been prepared on the basis of the
accounting policies set out in the Company's financial statements
for the year ended 31 October 2022.
Whilst the financial information included in this 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 post full financial statements that comply with IFRSs on
its website on 13 December 2022 (see note 13 below).
Recent accounting developments
The following International Financial Reporting Committee
("IFRIC") interpretations, amendments to existing standards and new
standards were adopted in the year ended 31 October 2022 but have
not materially impacted the reported results or the financial
position:
-- Covid-19-Related Rent Concessions beyond 30 June 2021
(Amendment to IFRS 16 Leases); and
-- Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS
9, IAS 39, IFRS 7, IFRS 4 and IFRS 16).
2. SEGMENTAL ANALYSIS
Year ended 31 October 2022
Sensors Countermeasures Unallocated Group
& Information & Energetics
GBPm GBPm GBPm GBPm
Revenue 162.3 280.5 - 442.8
Segment result before depreciation,
amortisation and non-underlying
items 33.0 64.2 (14.9) 82.3
Depreciation (3.0) (15.1) - (18.1)
Amortisation - (0.2) - (0.2)
-------------------------------------- --------------- ---------------- ------------ -------
Segmental underlying operating
profit 30.0 48.9 (14.9) 64.0
Amortisation of acquired intangibles (2.5) (2.1) - (4.6)
Non-underlying items (1.2) - (4.9) (6.1)
-------------------------------------- --------------- ---------------- ------------ -------
Segmental operating profit 26.3 46.8 (19.8) 53.3
-------------------------------------- --------------- ---------------- ------------ -------
Year ended 31 October 2021
Sensors Countermeasures Unallocated Group
& Information & Energetics
GBPm GBPm GBPm GBPm
Revenue 146.6 246.7 - 393.3
Segment result before depreciation,
amortisation and non-underlying
items 34.4 56.1 (14.1) 76.4
Depreciation (2.7) (15.5) - (18.2)
Amortisation (0.1) (0.6) - (0.7)
-------------------------------------- --------------- ---------------- ------------ -------
Segmental underlying operating
profit 31.6 40.0 (14.1) 57.5
Amortisation of acquired intangibles (4.1) (2.1) - (6.2)
Non-underlying items (1.6) - 0.7 (0.9)
-------------------------------------- --------------- ---------------- ------------ -------
Segmental operating profit 25.9 37.9 (13.4) 50.4
-------------------------------------- --------------- ---------------- ------------ -------
3. ALTERNATIVE PERFORMANCE MEASURES
The principal Alternative Performance Measures ("APMs")
presented are the underlying measures of earnings which exclude
exceptional items, gain or loss on the movement on the fair value
of derivative financial instruments, and the amortisation of
acquired intangibles. The directors believe that these APMs improve
the comparability of information between reporting periods. The
term underlying is not defined under IFRS and may not be comparable
with similarly titled measures used by other companies.
2022 2021
GBPm GBPm
(Loss)/gain on movements in the fair value
of derivative financial instruments (4.1) 0.7
Acquisition expenses (2.0) (1.6)
------- ------
Impact of non-underlying items on EBITDA (6.1) (0.9)
Intangible amortisation arising from business
combinations (4.6) (6.2)
------- ------
Impact of non-underlying items on profit before
tax (10.7) (7.1)
Tax impact of non-underlying items 1.3 1.0
------- ------
Impact of non-underlying items on profit after
tax (9.4) (6.1)
Underlying profit after tax 56.8 47.6
------- ------
Statutory profit after tax 47.4 41.5
------- ------
Derivative financial instruments
Included in non-underlying items is a GBP4.1m loss (2021:
GBP0.7m gain) on the movement in fair value of derivative financial
instruments. This is excluded from underlying earnings to ensure
the recognition of the gain or loss on the derivative matches the
timing of the underlying transaction.
Acquisition expenses
Included in non-underlying items is GBP2.0m (2021: GBP1.6m) of
acquisition expenses. This includes GBP1.0m (2021: GBP0.4m)
relating to deferred consideration contingent on continued
employment of the former owners of Cubica, which has been accounted
for as equity-settled share-based payments under IFRS 2 Share-based
Payments. We have classified this cost as a non-underlying item as
it is a non-recurring cost relating to an acquisition. The
remaining expense of GBP1.0m (2021: GBP1.2m) primarily includes
professional fees incurred in relation to the Group's mergers and
acquisitions activity during the year. The acquisition expenses are
not reflective of the underlying costs of the Group and therefore,
in order to provide an explanation of results that is not distorted
by the costs of acquiring a business rather than organically
developed, these costs have been excluded from the underlying
measures.
Amortisation of acquired intangibles
Included in non-underlying items is the amortisation charge
arising from business combinations of GBP4.6m (2021: GBP6.2m).
Amortisation of acquired intangibles arising from business
combinations is associated with acquisition accounting under IFRS 3
Business Combinations. IFRS requires intangibles to be recognised
on acquisition that would not have been capitalised had the
business grown organically under Chemring's ownership. As such,
these costs are not reflective of the underlying costs of the Group
and therefore, in order to provide an explanation of results that
is not distorted by the history of business units being acquired
rather than organically developed, have been excluded from the
underlying measures.
Tax
In the year ended 31 October 2022, the tax impact of
non-underlying items comprises a GBP1.3m credit (2021: GBP1.0m
credit) on the above non-underlying items.
4. EARNINGS PER SHARE
Earnings per share is based on the average number of shares in
issue, excluding own shares held, of 280,506,245 (2021:
281,555,716). Diluted earnings per share has been calculated using
a diluted average number of shares in issue, excluding own shares
held, of 288,218,004 (2021: 287,985,451).
The earnings used in the calculations of the various measures of
earnings per share are as follows:
2022 2021
Basic Diluted Basic Diluted
GBPm EPS (Pence) EPS (Pence) GBPm EPS (Pence) EPS (Pence)
Underlying profit after
tax 56.8 20.2 19.7 47.6 16.9 16.5
Non-underlying items (9.4) (6.1)
------ ------------- ------------- ------ -------------- -------------
Total profit after tax 47.4 16.9 16.4 41.5 14.7 14.4
------ ------------- ------------- ------ -------------- -------------
5. CASH GENERATED FROM OPERATING ACTIVITIES
2022 2021
GBPm GBPm
Operating profit from continuing operations 53.3 50.4
Amortisation of development costs 0.1 0.6
Amortisation of intangible assets arising from
business combinations 4.6 6.2
Amortisation of patents and licenses 0.1 0.1
Impairment of development costs 2.2 -
(Profit)/loss on disposal of non-current assets (1.9) 0.1
Depreciation of property, plant and equipment 18.1 18.2
Non-cash movement of non-underlying items 6.1 0.9
Share-based payment expense 6.4 5.3
------ -------
Operating cash flows before movements in working
capital 89.0 81.8
(Increase)/decrease in inventories (6.4) 7.9
Decrease in trade and other receivables 4.5 0.9
Increase/(decrease) in trade and other payables 2.9 (10.3)
Increase/(decrease) in provisions 0.1 (0.3)
------ -------
Operating cash flow from continuing underlying
operations 90.1 80.0
------ -------
Discontinued operations:
Cash impact of non-underlying items from discontinued
operations - (0.4)
Net cash outflow from discontinued operating
activities - (0.4)
Net cash inflow from discontinued investing activities - 0.4
------ -------
Net cash inflow from discontinued operations - -
------ -------
6. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
2022 2021
GBPm GBPm
Increase/(decrease) in cash and cash equivalents 14.2 (9.6)
------- -------
Decrease in debt and lease financing due to cash
flows 13.2 29.2
------- -------
Decrease in net debt resulting from cash flows 27.4 19.6
Effect of foreign exchange rate changes (3.9) 2.7
New leases entered into, lease interest and other
non-cash movements (3.8) (0.1)
Amortisation of debt finance costs (0.3) (0.6)
------- -------
Movement in net debt 19.4 21.6
Net debt at beginning of the year (26.6) (48.2)
------- -------
Net debt at end of the year (7.2) (26.6)
------- -------
7. ANALYSIS OF NET DEBT
As at As at
1 Nov Cash Non-cash Exchange 31 Oct
2021 flows changes rate effects 2022
GBPm GBPm GBPm GBPm GBPm
Cash and cash equivalents
(including bank overdraft) 5.4 14.2 - 0.2 19.8
Debt due after one year (28.1) 11.0 (0.3) (3.5) (20.9)
Preference shares (0.1) - - - (0.1)
------- ------- --------- -------------- --------
(22.8) 25.2 (0.3) (3.3) (1.2)
Lease liabilities (3.8) 2.2 (3.8) (0.6) (6.0)
------- ------- --------- -------------- --------
(26.6) 27.4 (4.1) (3.9) (7.2)
------- ------- --------- -------------- --------
The revolving credit facility is with a syndicate of six banks
and was established in July 2021 and runs until December 2025 with
two "one-year" options to extend.
The Group had GBP136.7m (2021: GBP128.1m) of undrawn borrowing
facilities as at 31 October 2022.
The Group is subject to two key financial covenants, which are
tested quarterly. These covenants relate to the leverage ratio
between "underlying EBITDA" and net debt; and the interest cover
ratio between underlying EBITDA and finance costs. The calculation
of these ratios involves the translation of non-sterling
denominated debt using average, rather than closing, rates of
exchange and includes liabilities on foreign exchange forward
contracts within its definition of net debt. Therefore the leverage
ratio of 0.14 times differs to the ratio of 0.09 times that is
disclosed elsewhere in this document, which is calculated using the
closing rates of exchange and does not include liabilities on
foreign exchange forward contracts within its definition of net
debt. The Group was in compliance with the covenants throughout the
year. The year end leverage ratio was 0.14 times (covenant limit of
3 times) and the year-end interest cover ratio was 57 times
(covenant floor of 4 times).
8. DIVID
At the Annual General Meeting on 3 March 2022 the shareholders
approved a final dividend in respect of the year ended 31 October
2021 of 3.2p per ordinary share (2021: 2.6p). This was paid on 31
March 2022 to shareholders on the register on 11 March 2022 and
totalled GBP9.1m (2021: GBP7.4m).
An interim dividend in respect of 2022 of 1.9p (2021: 1.6p) per
ordinary share was paid on 9 September 2022 to shareholders on the
register on 19 August 2022. The cash value of this dividend was
GBP5.3m (2021: GBP4.5m).
The Board is recommending a final dividend in respect of the
year to 31 October 2022 of 3.8p (2021: 3.2p) per ordinary share.
The estimated cash value of this dividend is GBP10.7m. With the
interim dividend of 1.9p per share (2021: 1.6p), this results in a
total dividend of 5.7p (2021: 4.8p) per ordinary share. If
approved, the final dividend will be paid on 14 April 2023 to
shareholders on the register on 24 March 2023. In accordance with
accounting standards, this final dividend has not been recorded as
a liability as at 31 October 2022.
9. EXCHANGE RATES
The following exchange rates applied during the year:
Average Closing Average Closing
rate rate rate rate
2022 2022 2021 2021
US dollar 1.23 1.15 1.38 1.37
AU dollar 1.75 1.80 1.82 1.83
-------- -------- -------- --------
For the year ended 31 October 2022 a 10 cent strengthening in
the US dollar exchange rate would have increased reported net debt
by approximately GBP1.9m (2021: GBP2.6m) and underlying operating
profit by GBP1.0m (2021: GBP2.8m).
10. CONTINGENT LIABILITIES
The Group is, from time to time, party to legal proceedings and
claims, and is involved in correspondence relating to potential
claims, which arise in the ordinary course of business. In
addition, the following matter remains open at year end:
On 10 August 2018 an incident occurred at our countermeasures
facility in Salisbury. The Group responded immediately to support
those who were injured, and maintains appropriate employers'
liability insurance that we expect will provide full compensation
in due course. We continue to fully support the Health and Safety
Executive ("HSE") as it undertakes its investigation. Whilst
provisions have been recorded for costs that have been identified
(included within "legal provisions"), it is possible that
additional uninsured costs and, depending on the outcome of the HSE
investigation, financial penalties may be incurred. At this stage
these costs are not anticipated to be material in the context of
the Group's financial statements.
11. EVENTS AFTER THE BALANCE SHEET DATE
ACQUISITION OF GEOLLECT
On 7 December 2022, Chemring Group PLC acquired 100% of the
issued shares in Geollect Limited ("Geollect"). Geollect is an
international provider of geospatial intelligence consultancy and
subscription services. The acquisition has strong synergies to Roke
and will expand the Group's existing capabilities and product
offerings.
The acquisition has been completed for an initial cash
consideration of GBP7.3m, funded from Chemring's existing bank
facilities. Further deferred consideration of up to GBP7.5m is
payable in Chemring 1p ordinary shares in two tranches (subject to
the former owners remaining employed in the Chemring Group) on the
second and third anniversary of completion.
Given the close proximity of the completion date of the
transaction and the date of issuing the financial statements, the
Group had not yet completed the accounting for the acquisition. The
financial effects of this transaction have not been recognised at
31 October 2022. The operating results and assets and liabilities
of the acquired company will be consolidated from 7 December
2022.
Based on unaudited accounts, in the 12 months to 31 October
2021, Geollect reported a loss before tax of GBP0.3m (2020:
GBP0.3m) on revenue of GBP0.8m (2020: GBP0.7m). The gross assets of
Geollect at 31 October 2021 were GBP0.4m (2020: GBP0.5m), and net
assets at 31 October 2021 were GBP0.0m (2020: GBP0.1m). Costs in
relation to this acquisition for the year ended 31 October 2022
have been classified as non-underlying costs in the statement of
profit or loss and are included within the acquisition costs of
GBP2.0m, see note 3.
A full provisional fair value exercise, completed in accordance
with IFRS 3, is expected to be available for the Group's interim
financial statements to 30 April 2023.
12. RELATED PARTY TRANSACTIONS
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed. The directors of the Company had no material
transactions with the Company during the year, other than in
connection with their service agreements.
As at 31 October 2022, GBP2.0m was due from the Chemring Group
Staff Pension Scheme representing a short-term loan to fund margin
calls on liability driven investments which was repaid in November
2022. The amount receivable has been classified in other
receivables in the consolidated balance sheet.
13. 2022 ANNUAL REPORT AND ACCOUNTS
The annual report and accounts for the year ended 31 October
2022 will be posted on the Company's website, www.chemring.co m ,
on 13 December 2022 and a copy will be posted to shareholders, as
required, in advance of the Company's Annual General Meeting on 15
March 2023.
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