01 Feb 2006
RESULTS
- Profit before tax and impairment of goodwill £17.3 million (2004: £13.3 million), up 30%
- Basic earnings per ordinary share before impairment of goodwill 42.22p (2004: 33.32p), up 27%
- Profit before tax £14.3 million (2004: £13.3 million), up 8%
- Basic earnings per ordinary share 31.90p (2004: 33.32p), down 4%
- Dividend per ordinary share 10.50p (2004: 9.00p), up 17%
HIGHLIGHTS
- Over 80% turnover growth at Alloy Surfaces, creating the world’s largest expendable decoy business, and further significant expansion announced post year end
- Acquisition of Nobel Energetics within the newly-formed Energetics division
- Marine division classified as non-core and divestment announced
- Strong operational cash flow
- Order book up 32% to £123 million at the year end
- Current order book at record high of £160 million
- Four acquisitions in the Energetics division since the year end
Commenting on the results, Ken Scobie, Chemring Group Chairman, said: “The Group’s profitability has been substantially influenced by another record year for sales and earnings at Alloy Surfaces in the US. The rest of the Countermeasures division delivered excellent results in the second half and this, together with a good performance from the Energetics division, provided a very respectable increase in earnings per ordinary share before impairment of goodwill to 42.22p (2004: 33.32p).
The strength of the Group’s underlying performance is masked in part by the Marine division which made losses of £2.5 million in the year, equating to approximately 6p of post-tax earnings. Without these losses, the Group would have been reporting even higher growth in earnings. The Board has now determined that the Marine division is non-core and accordingly will be divested.
The Board has reviewed the direction of the Group, taking into account our unique position in the defence industry worldwide. It has determined that it will remain totally focussed on the defence industry, with its commercial activities limited to exploiting any technology arising from its defence products.
The Group will obviously continue with its core Countermeasures business, where it is experiencing excellent growth and is by some distance the world leader, with more than half of the world decoys market and supplying in excess of 60% of the US military’s decoy requirements.
Our second core business is that of Energetics, where the Group already has significant experience and where we believe the worldwide market is highly fragmented and capable of consolidation. The Board believes that good organic growth can be generated in this division, and combined with acquisitions, this could provide excellent returns. The acquisitions of Technical Ordnance, Leafield Engineering and Leafield Marine announced today will significantly strengthen the division, and the UK Government’s recently published Defence Industrial Strategy would appear to support our focus in this area.
The Group’s order book is at a record level, demand for our decoys promises solid growth in Countermeasures, and our concentration on Energetics will produce a strong second division. I look forward to reporting further dynamic progress of the Group, including its newly acquired businesses, at the half year.”
For further information:
| Ken Scobie | Chairman | 0207 930 0777 |
| Dr David Price | Chief Executive | 0207 930 0777 |
| Paul Rayner | Finance Director | 0207 930 0777 |
| Rupert Pittman | Cardew Group | 0207 930 0777 |
View the full press release in PDF format.