Chemring : Results for the year ended 31 October 2016

19 January 2017

	As reported		At 2015 exchange rates
	Change	2016	Change	2016	2015
Continuing operations
Revenue	+ 26.5%	£477.1m	+ 16.7%	£440.3m	£377.3m
Underlying operating profit	+ 41.0%	£48.5m	+ 25.0%	£43.0m	£34.4m
Underlying profit before tax	+ 71.7%	£34.0m	+ 47.0%	£29.1m	£19.8m
Net debt	- 43.2%	£87.6m	- 57.7%	£65.2m	£154.3m
Underlying earnings per share	+ 45.1%	10.3p			7.1p
Dividend per share		1.3p			2.1p
Total operating profit		£26.2m			£5.5m
Total profit/(loss) before tax		£8.0m			£(9.1)m
Total earnings/(loss) per share		2.5p			(2.4)p

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 3.
2. Prior year figure restated as a result of the rights issues. See note 4 for further details.

Highlights

• Operational and financial performance improved in H2 with strong 40mm volumes and favourable currency impact
• Cash generation improved with cash flows from operating activities of £76.4 million (2015: £35.4 million), giving cash conversion* of underlying operating profit of 123% (2015: 53%)
• Net debt reduced to £87.6 million; net debt to EBITDA at 1.15x
• Continued improvement in safety performance, with LTI rate the lowest on record
• Continued progress on R&D phases of key US Programs of Record and on F-35
• Operational Excellence Programme launched to drive further improvements in safety, knowledge sharing, gross margins and cash generation
• New Group Finance Director appointed post period end
• Order book at year end of £592.9 million (2015: £569.6 million), of which £368.0 million is currently expected to be recognised as revenue in FY17
• Board recommending a final dividend of 1.3p per share (2015: nil)

* See note 5 for further details

Michael Flowers, Chemring Group Chief Executive, commented:

'2016 was a busy year for Chemring, both from a corporate and operational perspective, and it is pleasing to see that the efforts of so many have delivered a positive result. Order intake and revenue has been solid across the Group, and strong in the Energetics segment. Subsequent to the completion of the rights issue and with good cash conversion, the balance sheet is now strengthened, positioning us well for the future.

Against the backdrop of a stronger balance sheet and improving delivery performance, I see continued opportunities for the Group. The ongoing execution against the US Programs of Record within the Sensors businesses, combined with a slow but steady ramp up of F-35 countermeasure requirements, are key to future growth, as is the continued level of performance at Roke. Our base business in Energetic Systems and Countermeasures continues to be solid, and the order book provides good visibility.

Progress on site and business consolidations in 2017, combined with efforts to ensure our cost base matches market need, is expected to underpin profitability, and the Board's expectations for FY17 are unchanged, based on current FX rates. The initiation of an Operational Excellence Programme, designed to further enhance safety, improve gross margins and cash conversion, is expected to deliver improved returns in the coming years.'

For further information:

Michael Flowers	Group Chief Executive, Chemring Group PLC	01794 833901
Andrew Davies	Deputy Group Finance Director, Chemring Group PLC	01794 833901
Rupert Pittman	Group Director of Corporate Affairs, Chemring Group PLC	01794 833901
Andrew Jaques John Olsen James White	MHP Communications	0203 128 8100

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