Interim Management Statement

RNS Number : 2835Z

Chemring Group PLC

18 September 2009

 



FOR IMMEDIATE RELEASE                                                                                    18 SEPTEMBER 2009

CHEMRING GROUP PLC

INTERIM MANAGEMENT STATEMENT

Chemring Group PLC ('Chemring' or 'the Group') today issues its Interim Management Statement covering the period from 1 May 2009 to date, as required by Rule 4.3 of the Disclosure and Transparency Rules of the UK Listing Authority.

Current Trading

Trading in both the Energetics and Countermeasures divisions for the four month period to the end of August 2009 continues to be encouraging, with revenue in the period increasing to £143 million from £102 million in the same period last year. Revenue in the ten month period to the end of August 2009 was £377 million, 50% higher than in 2008. The Group's order book is currently £574 million, which is 28% higher than at this time last year. The Board is confident that the outlook for 2009 remains in line with its expectations.

Energetics

During the period, NIITEK successfully completed delivery of thirty Husky Mine Detection Systems ('HMDS') under its first production contract from the US Army. Twenty eight systems are now being used for high reliability route clearance of buried improvised explosive devices ('IEDs') in support of US peacekeeping operations around the world. A second production contract for a further fifty HMDS units, spares and support has been awarded and this is expected to be worth in excess of $75 million. A number of other nations have expressed strong interest in the product.

Our US training and simulation activities also continued to expand during the period. Chemring Ordnance installed a further two hundred and sixty four battlefield effects simulation launchers at US Army ranges, taking the cumulative total for the year-to-date to seven hundred and eleven installations, an increase of 48% in the installed base. This will have a significant impact on the future demand for our battlefield effects pyrotechnics. Chemring Ordnance also recently received a multi-year contract from the US Army to supply M228 practice hand grenade fuzes. The new contract extends over five years, with a maximum potential value of $107.3 million, and includes an initial order worth $5.5 million for delivery in 2010. 

Countermeasures

Our UK countermeasures business continues to perform well with steady demand for our flares from the UK and other European nations. Production of Typhoon flares continues to grow and further demand is expected as the number of aircraft deliveries increases.

Trading at Alloy Surfaces improved in the period and the business has recovered the subdued first half performance identified in our interim statement. Alloy recently announced the award of two major contracts, totaling $82.8 million, for the supply of special material decoys to the US Air Force and the US Navy. Alloy now has a strong order book, over 50% higher than a year ago, which underpins its revenue for the next two years.

Trading at Kilgore, however, continues to be affected by delays in the placement of contracts by the US Air Force. 

Acquisition

On 16 September 2009, the Group announced the conditional acquisition of Hi-Shear Technology Corporation ('Hi-Shear') for a cash consideration of $132 million (£80 million). Hi-Shear, based in Los Angeles, USA, is a leading manufacturer of high reliability energetic solutions that perform critical functions in key US space and defence programmes, including satellites, space launch vehicles, missile defence and aircrew egress. The acquisition of Hi-Shear creates a Group-wide centre of excellence in advanced initiation technologies, which are critical elements of next generation missile systems such as the advanced Patriot 'PAC-3' anti-ballistic missile and have an important role in a range of modern weapons and energetic sub-systems including aircraft ejection seats and unmanned systems. Completion of the acquisition is expected to take place during the fourth quarter of 2009.

Current Financial Position

Net debt at 31 August 2009 was £167 million (31 August 2008: £155 million). Gearing was 63% (31 August 2008: 76%). 

For further information:

Dr David Price        Chief Executive, Chemring Group PLC      01489 881880

Paul Rayner            Finance Director, Chemring Group PLC    01489 881880

Rupert Pittman       Cardew Group                                             0207 930 0777 

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.

 

END

 

 

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