CHEMRING GROUP PLC
(“Chemring”, “the Group” or “the Company”)
RESULTS FOR THE YEAR ENDED 31 OCTOBER 2021
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As reported |
At 2020 exchange rates |
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2021 |
Change |
2021 |
Change |
2020 |
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|
|
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Order intake (£m) |
431.0 |
-1% |
448.6 |
+3% |
436.6 |
|
Revenue (£m) |
393.3 |
– 2% |
408.0 |
+ 1% |
402.5 |
|
Underlying EBITDA* (£m) |
76.4 |
+ 2% |
79.4 |
+ 6% |
74.6 |
|
Underlying operating profit* (£m) |
57.5 |
+ 5% |
60.1 |
+ 10% |
54.7 |
|
Underlying profit before tax* (£m) |
55.9 |
+ 8% |
58.4 |
+ 13% |
51.7 |
|
Underlying basic earnings per share* (pence) |
16.9 |
+ 12% |
17.7 |
+ 17% |
15.1 |
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Statutory operating profit (£m) |
50.4 |
+ 9% |
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|
46.3 |
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Dividend per share (pence) |
4.8 |
+ 23% |
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|
3.9 |
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Net debt at 31 October (£m) |
26.6 |
– 45% |
28.4 |
-41% |
48.2 |
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Order book at 31 October (£m) |
500.8 |
+ 5% |
514.1 |
+8% |
476.0 |
Key points
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2021 performance was in line with the Board's expectations with strong performance in both segments, despite an FX translation headwind caused by the 10 cent weakening of the US dollar |
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Roke order intake exceeded £100m for the first time, with double digit growth in orders, revenue and operating profit in a positive market |
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Successful acquisition and integration of the Cubica Group, performing well since completion in June 2021 |
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Continued progress in our US Sensors Programs of Record. Further orders received in the year for the next phase of HMDS delivery, valued at $69m, under the previously announced $200m IDIQ contract $99m EMBD full rate production six-year contract awarded in October 2021 |
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Sensors & Information underlying operating margin increased from 20.0% to 21.6% |
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Countermeasures & Energetics underlying operating margin increased from 15.0% to 16.2% as the UK countermeasures site delivered strong operational and financial performance |
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Continued reduction in net debt with strong operating cash generation and cash conversion of 105%. Continued scheduled capital expenditure ahead of depreciation. Net debt to underlying EBITDA of 0.35 times |
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New policy to target a medium-term dividend cover of c.2.5 times underlying EPS. Proposed final dividend increased by 23% to 3.2p, giving a total dividend of 4.8p (3.5 times cover) |
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Investment in the Group's manufacturing infrastructure continues to be a key enabler to deliver improved safety and operational excellence. TRIF rate was down 21% at 0.67 (2020: 0.85) |
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Board's expectations for 2022 are unchanged. Approximately 84% (2020: 78%) of expected 2022 revenue is covered by the order book |
Michael Ord, Group Chief Executive, commented:
“Despite being another challenging year in which we have continued to operate under the restrictions of CV-19, I am delighted with the financial and operational progress that has been made across Chemring. We have continued the process of transformation that was launched in 2019 as we build a stronger, higher quality and technology focused business. We maintain our relentless focus on safety and on living our shared values of Safety, Excellence and Innovation. In doing so we are driving our collective purpose – delivering innovative protective technologies to help make the world a safer place.
Chemring is now a stronger business with increasing opportunities for development and growth and 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.
Trading since the start of the current financial year has been in line with expectations. With 84% of 2022 expected revenue covered by the order book, the Board's expectations for 2022 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 discontinued operations, 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:
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Group – continuing operations: |
Underlying |
Non-underlying |
Statutory |
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EBITDA (£m) |
76.4 |
(0.9) |
75.5 |
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Operating profit (£m) |
57.5 |
(7.1) |
50.4 |
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Profit before tax (£m) |
55.9 |
(7.1) |
48.8 |
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Tax charge (£m) |
(8.3) |
1.0 |
(7.3) |
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Profit after tax (£m) |
47.6 |
(6.1) |
41.5 |
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Basic earnings per share (pence) |
16.9 |
|
14.7 |
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Diluted earnings per share (pence) |
16.5 |
|
14.4 |
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Segments – continuing operations: |
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Sensors & Information EBITDA (£m) |
34.4 |
– |
34.4 |
|
Sensors & Information operating profit (£m) |
31.6 |
(5.7) |
25.9 |
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Countermeasures & Energetics EBITDA (£m) |
56.1 |
– |
56.1 |
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Countermeasures & Energetics operating profit (£m) |
40.0 |
(2.1) |
37.9 |
The adjustments to continuing operations comprise:
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amortisation of acquired intangibles of £6.2m (2020: £8.9m) |
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costs relating to acquisitions of £1.6m (2020: £nil) |
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gain on the movement in the fair value of derivative financial instruments of £0.7m (2020: £0.5m gain) |
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tax impact of adjustments of £1.0m credit (2020: £0.5m 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 2021 financial information at the 2020 exchange rates to reflect the movement excluding the impact of foreign exchange. The exchange rates applied are disclosed in note 10.