Chemring : Results for the year ended 31 October 2014

22 January 2015

1. Underlying measures referred to in this announcement are stated before costs relating to acquisitions and disposals, business restructuring and incident costs, profit/loss on disposal of businesses, items deemed to be of an exceptional nature, impairment of goodwill and acquired intangibles, impairment of assets held for sale, amortisation of acquired intangibles and gains/losses on the movement in the fair value of derivative financial instruments. A reconciliation of underlying and total operating profit is set out in note 4.
2. Comparative figures have been restated as a result of the adoption of IAS 19 (Revised) Employee Benefits.

Strategic highlights

• Post divestments, Chemring is now a far more focused business
• Core competencies in market sectors with leading positions
• Strengthened position on long-term Sensors & Electronics programmes
• Acquisition of 3d-Radar broadens market position in ground penetrating radar

Financial highlights

• Improving operational performance in the second half
• Strategic divestments completed, strengthening the balance sheet
• Improved loan note funding terms and new revolving credit facility put in place
• Significant reduction in net debt and improved working capital management
• FY15 outlook unchanged, timing of Sensors & Electronics orders expected to result in H2 weighting

Michael Flowers, Chemring Group Chief Executive, commented:

"2014 has been an important and challenging year for Chemring, characterised by a stabilisation and subsequent improvement in operational performance, coupled with a strengthened position on major future US, NATO and broader global programmes. Against a backdrop of a subdued defence market, we see clear opportunities for future revenue growth and improving margins, although risks remain due to continued difficulty in predicting the timing of orders.

In 2015, the Group will seek to grow market share in Sensors & Electronics, particularly counter-IED. We are well-positioned on strategic programmes in the US, with success in capturing research and development phases of both counter-IED and chemical detection Programs of Record. Our immediate priorities are to secure orders in NATO and the Middle East for our US Sensors & Electronics products, while continuing to improve the performance of all our manufacturing operations. Overall, the outlook for 2015 is unchanged though the timing of Sensors & Electronics contracts is expected to lead to a weighting towards the second half."

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