3 JUNE 2025
CHEMRING GROUP PLC
("Chemring" or "the Group" or "the Company")
INTERIM RESULTS FOR THE SIX MONTHS TO 30 APRIL 2025
Record order book, full year expectations unchanged, strong long-term prospects
|
|
As reported |
At H1 2024 exchange rates |
|
||
|
|
H1 2025 |
Change |
H1 2025 |
Change |
H1 2024 |
|
Continuing operations |
|
|
|
|
|
|
Order book (£m) |
1,303.8 |
+25% |
1,327.9 |
+28% |
1,040.6 |
|
Order intake (£m) |
488.0 |
+42% |
496.6 |
+44% |
344.5 |
|
Revenue (£m) |
234.3 |
+5% |
236.0 |
+6% |
223.4 |
|
Underlying EBITDA*(£m) |
39.8 |
+12% |
40.4 |
+14% |
35.5 |
|
Underlying operating profit* (£m) |
27.1 |
+8% |
27.5 |
+10% |
25.0 |
|
Underlying profit before tax* (£m) |
24.1 |
+6% |
24.6 |
+8% |
22.7 |
|
Underlying diluted earnings per share* (pence) |
6.8 |
+3% |
7.0 |
+6% |
6.6 |
|
Statutory operating profit (£m) |
29.5 |
+69% |
29.9 |
+71% |
17.5 |
|
Interim dividend per share (pence) |
2.7 |
+4% |
|
|
2.6 |
|
Net debt at 30 April (£m) |
93.3 |
+24% |
93.6 |
+24% |
75.3 |
Key highlights
|
· Record H1 order intake of |
|
· H1 2025 was in line with the Board's expectations: - Revenue growth of 5%, driven by strong performance within Countermeasures & Energetics, up 20.4% - Underlying operating profit margin improving to 11.6% (H1 2024: 11.2%) · Good progress made on organic growth projects to date, with |
|
· Net debt was · Interim dividend per share of 2.7p, up 4% (H1 2024: 2.6p) |
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· · The Board's expectations for 2025 are unchanged, with a similar H2 weighting of operating profit to last year (as previously guided). Approximately 85% (H1 2024: 96%) of expected 2025 revenue was delivered or in the order book at 30 April 2025 · The Group's longer-term growth prospects are strong, underpinned by robust customer demand for our market-leading products and services, high barriers to entry across our market segments, and a high quality pipeline of organic and inorganic growth opportunities |
Michael Ord, Chemring Group Chief Executive, commented:
"Our 2024 momentum has continued into this year with another period of record order intake and an order book of over
"Operational and trading performance has been in line with our expectations, with improving returns for our shareholders underpinned by solid cash conversion. Both sectors benefitted from the receipt of several significant orders in the period, evidencing confidence in our market leading products and services.
"With growing geopolitical uncertainty resulting in increased defence expenditure, particularly across NATO, the Group is well positioned, with a strong and sustainable platform to increase revenue to
Notes:
* All profit and earnings per share figures in this news release relate to underlying business performance (as defined below) from continuing operations unless otherwise stated.
The principal Alternative Performance Measures ("APMs") presented are the underlying measures of earnings which exclude the amortisation of acquired intangibles, gain or loss on the movement on the fair value of derivative financial instruments, exceptional items and the associated tax impact of these. The directors believe that these APMs assist with 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.
EBITDA is defined as operating profit before interest, tax, depreciation and amortisation. Reference to constant currency relates to the re-translation of H1 2025 financial information at the H1 2024 exchange rates to reflect the movement excluding the impact of foreign exchange. The exchange rates applied are disclosed in note 12.
A reconciliation of underlying measures to statutory measures is provided below:
|
Group - continuing operations: |
Underlying |
Non-underlying |
Statutory |
|
EBITDA (£m) |
39.8 |
3.1 |
42.9 |
|
Operating profit (£m) |
27.1 |
2.4 |
29.5 |
|
Profit before tax (£m) |
24.1 |
2.4 |
26.5 |
|
Tax charge on profit (£m) |
(5.2) |
(0.5) |
(5.7) |
|
Profit after tax (£m) |
18.9 |
1.9 |
20.8 |
|
Basic earnings per share (pence) |
7.0 |
0.7 |
7.7 |
|
Diluted earnings per share (pence) |
6.8 |
0.7 |
7.5 |
|
Group - discontinued operations: |
|
|
|
|
(Loss)/profit after tax (£m) |
(0.3) |
(0.1) |
(0.4) |
|
Segments - continuing operations: |
|
|
|
|
Sensors & Information EBITDA (£m) |
19.5 |
(2.3) |
17.2 |
|
Sensors & Information operating profit (£m) |
16.1 |
(2.6) |
13.5 |
|
Countermeasures & Energetics EBITDA (£m) |
29.7 |
- |
29.7 |
|
Countermeasures & Energetics operating profit (£m) |
20.4 |
(0.4) |
20.0 |
The adjustments comprise:
|
· amortisation of acquired intangibles of |
|
· gain on the movement in the fair value of derivative financial instruments of · exceptional items of |
|
o acquisition expenses of o expense of · costs relating to a restructuring within the Sensors & Information segment of · tax impact of adjustments of · discontinued operations in respect of the Explosive Hazard Detection ("EHD") business, net of tax, of £nil profit (H1 2024: |
Further details are provided in note 3.
For further information:
|
Rupert Pittman |
Group Director of Corporate Affairs, Chemring Group PLC |
01794 463401 |
|
James McFarlane |
MHP Group |
07584 142665 |
|
Ollie Hoare |
|
07817 458804 |
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.
Notes to editors
· Chemring is a global business that specialises in the manufacture of high technology products and the provision of services to the defence, security and aerospace markets
· Employing approximately 2,700 people worldwide, and with production facilities in four countries, Chemring meets the needs of customers in more than fifty countries
· Chemring is organised under two strategic product segments: Sensors & Information and Countermeasures & Energetics
· Chemring has a diverse portfolio of products that deliver high reliability solutions to protect people, platforms, missions and information against constantly changing threats
· Operating in niche markets and with strong investment in research and development ("R&D"), Chemring has the agility to rapidly react to urgent customer needs
Analyst meeting
An analyst meeting will take place at 09.00 (
Presentation
The presentation slides and a live audio webcast of the presentation to analysts will be available at the Chemring Group results centre www.chemring.com/investors/results-centre at 09.00 (
Photography
Original high resolution photography is available to the media by contacting MHP Group: chemringplc@mhpgroup.com .
INTERIM MANAGEMENT REPORT
Group overview
H1 2025 performance was in line with the Board's expectations. Revenue was up 5% to
Order intake for H1 2025 was strong, up 42% to
Underlying operating profit was up 8% to
Total finance expense was higher at
Underlying profit before tax was
Net debt has increased since the year end to
Underlying operating cash inflow of
Of the Group's
Statutory operating profit was
A reconciliation of underlying to statutory profit measures is provided in note 3. The non-underlying costs relate to the amortisation of acquired intangibles, the gain on the movement in the fair value of derivative financial instruments and exceptional items, plus the tax impact associated with these adjustments.
Markets
Global attention on defence spending remains high, fuelled by uncertainty around US support for NATO, the ongoing events in
With the
The European Defence Industrial Strategy ("EDIS") sets out a clear long-term vision to achieve defence industrial readiness in the European Union ("EU"), with the Readiness 2030 initiative (was the ReArm Europe Plan) aiming to increase defence investment and defence capabilities quickly and significantly. Readiness 2030 aims to mobilise up to
Roke's specialist capabilities and advanced technologies make it well placed to support multiple priorities identified in the SDR including the development of the United Kingdom Ministry of Defence's ("MOD") new "digital targeting web" - a major initiative aimed at enhancing battlefield connectivity and decision-making, backed by an investment of over
The SDR also commits to investing
The
The
The US remains the world's largest defence market, with the Trump administration focused on deterring adversaries by maintaining overwhelming military superiority. In its recent budget proposal, the White House is requesting a total of
The Group's significant capabilities position it well to contribute to both current and emerging defence and security requirements across multiple markets.
Strategy
Chemring is a technology-driven mid-tier defence and security company operating in specialised, high-barrier to entry markets where our differentiated capabilities provide a clear competitive advantage. Our growth strategy is built around three core strategic pillars - Grow, Accelerate, and Protect - designed to drive long-term value creation, scale our presence in key markets, and strengthen our position as a trusted partner in defence and national security.
Since
The Sensors & Information sector represents a further strategic growth area for Chemring. Our advanced capabilities align closely with evolving customer priorities, addressing increasingly complex and diverse threats. We are expanding our offerings across data science, software engineering, sensors, secure communications, cyber, and AI - areas where our deep customer relationships, mission expertise, and integration capabilities create clear differentiation. This positions us well to deliver enhanced value to defence, national security, and other critical customers, supporting long-term, sustainable growth.
The Group remains committed to pursuing strategy-led, bolt-on acquisitions, guided by a disciplined capital allocation framework and clearly defined criteria approved by the Board. M&A represents an important lever for accelerating growth in high-priority defence and national security segments - including cyber, information advantage, and US space and missile sub-systems. For these market areas we have a live pipeline of technology and capability targets which we are actively evaluating against our robust acquisition criteria.
Segmental review - Countermeasures & Energetics
Performance
In Countermeasures & Energetics, order intake was
In the Energetics sector we continue to see increased levels of activity and demand in the propellants and energetic materials markets as customers re‐evaluate their operational usage and stockpile requirements associated with traditional defence capabilities. As a result, our specialist energetic materials businesses, which design and manufacture high precision engineered devices and specialist materials, have seen strong customer demand with order intake increasing by 154% to
At the start of the financial year our Norwegian subsidiary, Chemring Nobel, signed a twelve-year framework agreement with Diehl Defence GmbH & Co. KG ("Diehl Defence") for the supply of MCX energetic material. Under this framework agreement Chemring Nobel also signed an initial purchase order valued at
In the
We have also seen growing demand for precision engineered devices for space and missile applications, with our
Order intake for our Countermeasures business was
Revenue for Countermeasures & Energetics was up by 20% to
Opportunities and outlook
The Countermeasures & Energetics segment focus remains on maintaining and growing the Group's market-leading positions, in particular in the growing markets for specialist energetic materials and precision engineered energetic devices, and in countermeasures where we see sustained demand for our air and naval decoy products, particularly within our
The improved market conditions for our Energetics businesses reflected in our order intake and order book has presented a strong organic growth opportunity to expand capacity at these sites and in 2023 we announced a
In October 2024, the Norwegian Government announced that, in partnership with Chemring Nobel, it had launched a feasibility study into the establishment of a new production facility to further increase the production of military explosives, as they view Chemring Nobel as the producer in
As part of the twelve-year framework agreement with Diehl Defence (referenced above) Chemring is exploring options to perform the blending stage of the manufacturing process in
Alongside these investments in expanding our capacities we continue to invest in new product development to ensure that our product portfolio remains highly relevant to our customers and will continue the process of operational alignment to share technology and manufacturing excellence across the Group.
The Countermeasures & Energetics order book at 30 April 2025 was
Segmental review - Sensors & Information
Performance
Order intake in the period was down at
Roke has continued to make significant strategic progress in its Defence products business where it has a significant (>
In January 2025 Roke signed a multi-year strategic agreement with a major US Prime Contractor for the supply of its high-speed Miniature Radar Altimeter ("MRA"). With a value of at least
In April 2025 it was announced that Roke will lead a
Roke continues to win contracts as the prime contractor and therefore order intake and revenue contains an element of "pass-through". For H1 2025, "pass-through" order intake was
In the US, the Enhanced Maritime Biological Detection System ("EMBD") Full Rate Production ("FRP") contract continued as planned with a further
These sole source positions with the United States Department of Defence ("US DoD") provide an excellent opportunity to penetrate international markets with these products sold under Foreign Military Sales ("FMS") and direct commercial sales agreements to key strategic allies of the US Government.
Underlying operating profit in Sensors & Information decreased, as expected, by 26% to
Opportunities and outlook
The focus for Sensors & Information continues to be on expanding the Group's product, service and capability offerings to government and commercial customers in the technology-driven areas of national security, AI and machine learning, tactical EW, information security and biological detection.
In the
Roke will continue to focus its efforts on growing across all its business areas, delivering research, design, engineering and advisory services using its high-quality people and capabilities. New product launches and strategic partnerships form an integral part of this work. In the period Roke launched EM-Vis Deceive, a new portable EW system that brings electromagnetic attack capabilities directly to troops on the ground. It also signed a strategic partnership with Kagai Corporation to deliver advanced technologies to the Japanese market.
With strong positions in markets with high barriers to entry and where customers have unique profiles, we remain on track to organically grow Roke's revenues to greater than
The order book for Sensors & Information at 30 April 2025 was
Retirement benefit obligations
On 28 November 2023 the trustees of the Group's legacy
On completion of the full buy-out of the Scheme, the defined benefit assets and matching defined benefit liabilities will be derecognised from the Group balance sheet.
Board of Directors
Andrew Davies, who had been a non-executive director of Chemring since May 2016 and the Senior Independent Director since May 2020, retired from the Board on 31 January 2025, having approached the end of his nine-year term. As previously indicated in the 2023 annual report, Fiona MacAulay, who has been a non-executive director since June 2020, succeeded Andrew as the Senior Independent Director.
In a separate announcement the Board has today confirmed the appointment of Pete Raby as an independent non-executive director. He will join the Board on 1 September 2025. Pete is currently CEO of Morgan Advanced Materials plc, the FTSE-250 listed global manufacturer of advanced carbon and ceramic materials. Pete has been in this role for ten years and is due to retire on 1 July 2025. Upon joining the Board, Pete Raby will become a member of the Audit, Nomination and Remuneration committees.
Dividends
At the Annual General Meeting on 26 February 2025 the shareholders approved a final dividend in respect of the year ended 31 October 2024 of 5.2p per ordinary share. This was paid on 11 April 2025 to shareholders on the register on 21 March 2025.
The Board continues to recognise that dividends are an important component of total shareholder returns. The Board's objective is for a growing and sustainable dividend and continues to target a dividend cover of c.2.5 times underlying EPS, subject inter alia to maintaining a strong financial position. Therefore, the Board has declared an interim dividend in respect of the 2025 financial year of 2.7p (H1 2024: 2.6p) per ordinary share which will be paid on 5 September 2025 to shareholders on the register on 15 August 2025.
Share buyback programme
On 26 February 2025 the Group announced that it had commenced a share buyback programme of up to a maximum consideration of
As at 30 April 2025 0.9m shares have been purchased under the buyback programme at a cost of
RCF refinancing
On 28th April, the Group refinanced its revolving credit facility. The Group now has available revolving credit facilities of
Outlook - full year and longer term
The Board's full year expectations are unchanged, supported by order coverage at 30 April 2025 of 85% of expected 2025 revenue, and with a similar H2 weighting of operating profit to last year as previously communicated in February 2025.
The Group has previously communicated certain medium term financial objectives and assumptions. The material elements of these are:
- Group - targeting mid-single digit % growth in the near term, accelerating to low double digit % growth as new capacity comes online
- S&I - targeting mid-single digit % growth, from double digit growth in Roke, and US Sensors expected to be flat with a subsequent step change in growth as the JBTDS Program of Record commences FRP
- C&E - targeting low single digit % growth in Countermeasures, with a step change in growth in Energetics as additional capacity is commissioned
- Group targeting mid-teen return on sales in the medium term, with some operational leverage expected longer term
The market backdrop for defence is increasingly robust. The Group's longer-term growth prospects are strong, underpinned by robust activity levels, our leading technological offerings, our people, our order book and pipeline of further opportunities, high barriers to entry, the investments we continue to make in our strong, high-quality business and the potential for further bolt-on opportunities over time.
The Group remains on track to achieve its ambition to increase the Group's annual revenue to c.
With market-leading innovative technologies and services that are critical to our customers the Board is confident that Chemring will continue to deliver both robust organic and inorganic growth, balancing near-term performance with longer-term growth and value creation.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors are responsible for the maintenance and integrity of the Company website.
Legislation in the
Responsibility statement
We confirm that to the best of our knowledge:
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a) |
the Condensed Set of Financial Statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted for use in the |
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b) |
the Interim Management Report includes a fair review of the information required by: - DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and - DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so. |
By order of the Board
|
Michael Ord |
James Mortensen |
|
Group Chief Executive |
Chief Financial Officer |
|
3 June 2025 |
3 June 2025 |
CONDENSED CONSOLIDATED INCOME STATEMENT
for the half year to 30 April 2025
|
|
Note |
Unaudited Half year to 30 April 2025 |
Unaudited Half year to 30 April 2024 |
Audited Year to 31 Oct 2024 |
|
|
|
£m |
£m |
£m |
|
Continuing operations |
|
|
|
|
|
Revenue |
2 |
234.3 |
223.4 |
510.4 |
|
|
|
|
|
|
|
Operating profit |
2 |
29.5 |
17.5 |
58.1 |
|
Finance expense |
|
(3.0) |
(2.3) |
(4.8) |
|
Profit before tax |
|
26.5 |
15.2 |
53.3 |
|
Tax charge on profit |
5 |
(5.7) |
(3.0) |
(10.6) |
|
Profit after tax for the period |
|
20.8 |
12.2 |
42.7 |
|
|
|
|
|
|
|
Discontinued operations |
|
|
|
|
|
(Loss)/profit after tax from discontinued operations |
13 |
(0.4) |
4.2 |
(3.2) |
|
Profit after tax for the period |
|
20.4 |
16.4 |
39.5 |
|
|
|
|
|
|
|
Earnings per ordinary share |
|
|
|
|
|
Continuing operations |
|
|
|
|
|
Basic |
6 |
7.7p |
4.4p |
15.7p |
|
Diluted |
6 |
7.5p |
4.3p |
15.3p |
|
Continuing operations and discontinued operations |
|
|
|
|
|
Basic |
6 |
7.5p |
6.0p |
14.5p |
|
Diluted |
6 |
7.4p |
5.8p |
14.2p |
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the half year to 30 April 2025
|
|
Unaudited Half year to 30 April 2025 £m |
Unaudited Half year to 30 April 2024 £m |
Audited Year to 31 Oct 2024 £m |
|
|
|
|
|
|
Profit after tax attributable to equity holders of the parent |
20.4 |
16.4 |
39.5 |
|
|
|
|
|
|
Items that will not be reclassified subsequently to profit or loss |
|
|
|
|
Remeasurement of the defined benefit pension schemes |
(0.2) |
(2.1) |
(1.3) |
|
Movement on deferred tax relating to pension schemes |
(0.1) |
0.5 |
0.5 |
|
|
(0.3) |
(1.6) |
(0.8) |
|
Items that may be reclassified subsequently to profit or loss |
|
|
|
|
Exchange differences on translation of foreign operations |
(6.0) |
(6.6) |
(12.0) |
|
Tax on exchange differences on translation of foreign operations |
(0.7) |
- |
0.1 |
|
|
(6.7) |
(6.6) |
(11.9) |
|
|
|
|
|
|
Total comprehensive income attributable to equity holders of the parent |
13.4 |
8.2 |
26.8 |
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the half year to 30 April 2025
Unaudited half year to 30 April 2025
|
|
Share capital £m |
Share premium account £m |
Special capital reserve £m |
Translation reserve £m |
Retained earnings £m |
Total £m |
|
|
|
|
|
|
|
|
|
At 1 November 2024 |
2.7 |
309.0 |
13.0 |
(20.7) |
52.3 |
356.3 |
|
Profit after tax |
- |
- |
- |
- |
20.4 |
20.4 |
|
Other comprehensive loss |
- |
- |
- |
(6.0) |
(0.2) |
(6.2) |
|
Tax relating to components of other comprehensive loss |
- |
- |
- |
(0.7) |
(0.1) |
(0.8) |
|
Total comprehensive (loss)/income |
- |
- |
- |
(6.7) |
20.1 |
13.4 |
|
Ordinary shares issued |
- |
0.1 |
- |
- |
- |
0.1 |
|
Share-based payments (net of settlement) |
- |
- |
- |
- |
3.0 |
3.0 |
|
Dividends paid |
- |
- |
- |
- |
(14.2) |
(14.2) |
|
Purchase of own shares |
- |
- |
- |
- |
(6.1) |
(6.1) |
|
At 30 April 2025 |
2.7 |
309.1 |
13.0 |
(27.4) |
55.1 |
352.5 |
Unaudited half year to 30 April 2024
|
|
Share capital £m |
Share premium account £m |
Special capital reserve £m |
Translation reserve £m |
Retained earnings £m |
Total £m |
|
|
|
|
|
|
|
|
|
At 1 November 2023 |
2.8 |
308.7 |
12.9 |
(8.8) |
62.9 |
378.5 |
|
Profit after tax |
- |
- |
- |
- |
16.4 |
16.4 |
|
Other comprehensive loss |
- |
- |
- |
(6.6) |
(2.1) |
(8.7) |
|
Tax relating to components of other comprehensive loss |
- |
- |
- |
- |
0.5 |
0.5 |
|
Total comprehensive (loss)/income |
- |
- |
- |
(6.6) |
14.8 |
8.2 |
|
Ordinary shares issued |
- |
0.3 |
- |
- |
- |
0.3 |
|
Share-based payments (net of settlement) |
- |
- |
- |
- |
2.9 |
2.9 |
|
Dividends paid |
- |
- |
- |
- |
(12.5) |
(12.5) |
|
Purchase of own shares |
(0.1) |
- |
0.1 |
- |
(26.5) |
(26.5) |
|
At 30 April 2024 |
2.7 |
309.0 |
13.0 |
(15.4) |
41.6 |
350.9 |
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the half year to 30 April 2025
Audited year to 31 October 2024
|
|
Share capital £m |
Share premium account £m |
Special capital reserve £m |
Translation reserve £m |
Retained earnings £m |
Total £m |
|
|
|
|
|
|
|
|
|
At 1 November 2023 |
2.8 |
308.7 |
12.9 |
(8.8) |
62.9 |
378.5 |
|
Profit after tax |
- |
- |
- |
- |
39.5 |
39.5 |
|
Other comprehensive loss |
- |
- |
- |
(12.0) |
(1.3) |
(13.3) |
|
Tax relating to components of other comprehensive loss |
- |
- |
- |
0.1 |
0.5 |
0.6 |
|
Total comprehensive (loss) / income |
- |
- |
- |
(11.9) |
38.7 |
26.8 |
|
Ordinary shares issued |
- |
0.3 |
- |
- |
- |
0.3 |
|
Purchase of own shares |
(0.1) |
- |
0.1 |
- |
(38.4) |
(38.4) |
|
Share-based payments (net of settlement) |
- |
- |
- |
- |
8.7 |
8.7 |
|
Dividends paid |
- |
- |
- |
- |
(19.6) |
(19.6) |
|
At 31 October 2024 |
2.7 |
309.0 |
13.0 |
(20.7) |
52.3 |
356.3 |
CONDENSED CONSOLIDATED BALANCE SHEET as at 30 April 2025
|
|
Note |
Unaudited As at 30 April 2025 |
Unaudited As at 30 April 2024 |
Audited As at 31 Oct 2024 |
|
|
|
£m |
£m |
£m |
|
Non-current assets |
|
|
|
|
|
Goodwill |
|
97.3 |
99.4 |
98.5 |
|
Development costs |
|
18.9 |
17.5 |
18.6 |
|
Other intangible assets |
|
27.9 |
8.5 |
10.0 |
|
Property, plant and equipment |
|
303.8 |
261.0 |
287.8 |
|
Retirement benefit surplus |
|
- |
0.8 |
0.1 |
|
Deferred tax |
|
9.6 |
6.4 |
7.3 |
|
|
|
457.5 |
393.6 |
422.3 |
|
Current assets |
|
|
|
|
|
Inventories |
|
150.5 |
124.2 |
127.1 |
|
Trade and other receivables |
|
115.5 |
86.4 |
91.0 |
|
Cash and cash equivalents |
11 |
22.6 |
4.6 |
45.0 |
|
Current tax |
|
1.0 |
- |
- |
|
Derivative financial instruments |
8 |
2.3 |
0.6 |
0.9 |
|
|
|
291.9 |
215.8 |
264.0 |
|
Assets classified as held for sale |
13 |
5.7 |
6.0 |
5.8 |
|
Total assets |
|
755.1 |
615.4 |
692.1 |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Borrowings |
11 |
(3.4) |
(14.3) |
(43.0) |
|
Lease liabilities |
11 |
(2.8) |
(1.0) |
(2.1) |
|
Trade and other payables |
|
(207.0) |
(147.1) |
(163.3) |
|
Provisions |
|
(3.4) |
(5.4) |
(3.2) |
|
Current tax |
|
- |
(5.3) |
(8.8) |
|
Derivative financial instruments |
8 |
(0.7) |
(1.1) |
(1.5) |
|
|
|
(217.3) |
(174.2) |
(221.9) |
|
Non-current liabilities |
|
|
|
|
|
Borrowings |
11 |
(98.0) |
(59.1) |
(43.7) |
|
Lease liabilities |
11 |
(11.6) |
(5.4) |
(8.9) |
|
Government grants |
|
(35.5) |
- |
(24.0) |
|
Provisions |
|
(16.3) |
(11.3) |
(16.7) |
|
Deferred tax |
|
(23.7) |
(14.3) |
(17.6) |
|
Derivative financial instruments |
8 |
(0.1) |
(0.1) |
(2.9) |
|
Preference shares |
11 |
(0.1) |
(0.1) |
(0.1) |
|
|
|
(185.3) |
(90.3) |
(113.9) |
|
Total liabilities |
|
(402.6) |
(264.5) |
(335.8) |
|
Net assets |
|
352.5 |
350.9 |
356.3 |
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
Share capital |
|
2.7 |
2.7 |
2.7 |
|
Share premium account |
|
309.1 |
309.0 |
309.0 |
|
Special capital reserve |
|
13.0 |
13.0 |
13.0 |
|
Translation reserve |
|
(27.4) |
(15.4) |
(20.7) |
|
Retained earnings |
|
55.1 |
41.6 |
52.3 |
|
Total equity |
|
352.5 |
350.9 |
356.3 |
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
for the half year to 30 April 2025
|
|
Note |
Unaudited Half year to 30 April 2025 £m |
Unaudited Half year to 30 April 2024 £m |
Audited Year to 31 Oct 2024 £m |
|
Cash flows from operating activities |
|
|
|
|
|
Cash generated from underlying operations |
10 |
32.0 |
29.4 |
96.0 |
|
Cash impact of non-underlying items |
|
(1.5) |
(1.1) |
(2.5) |
|
Cash (utilised in)/generated from discontinued underlying operations |
10 |
(0.3) |
(0.6) |
(1.5) |
|
Cash impact of discontinued non-underlying items |
10 |
(0.3) |
(1.4) |
(1.5) |
|
Cash flows from operating activities |
|
29.9 |
26.3 |
90.5 |
|
Employer contributions to defined benefit pension scheme |
|
(0.2) |
(2.0) |
(3.0) |
|
Tax paid |
|
(11.5) |
(5.2) |
(6.5) |
|
Net cash inflow from operating activities |
|
18.2 |
19.1 |
81.0 |
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
Purchases of intangible assets |
|
(5.5) |
(0.9) |
(4.8) |
|
Purchases of property, plant and equipment |
|
(40.6) |
(34.2) |
(64.8) |
|
Grant funding |
|
12.9 |
- |
22.0 |
|
Net cash outflow from investing activities |
|
(33.2) |
(35.1) |
(47.6) |
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
Dividends paid |
7 |
(14.2) |
(12.5) |
(19.6) |
|
Purchase of own shares |
|
(6.4) |
(29.7) |
(41.0) |
|
Proceeds for transactions in own shares |
|
- |
0.5 |
0.9 |
|
Paid accrued dividends on shares |
|
(0.3) |
(0.2) |
(0.2) |
|
Finance expense paid |
|
(0.7) |
(1.7) |
(4.0) |
|
Capitalised facility fees paid |
|
- |
(0.3) |
(0.8) |
|
Drawdown of borrowings |
|
105.0 |
75.0 |
100.0 |
|
Repayments of borrowings |
|
(50.0) |
(30.1) |
(70.1) |
|
Payment of lease liabilities |
|
(1.3) |
(0.7) |
(2.5) |
|
Net cash inflow/(outflow) from financing activities |
|
32.1 |
0.3 |
(37.3) |
|
|
|
|
|
|
|
(Increase)/Decrease in cash and cash equivalents |
|
17.1 |
(15.7) |
(3.9) |
|
Cash and cash equivalents at beginning of period/year |
|
2.0 |
6.4 |
6.4 |
|
Effect of foreign exchange rate changes |
|
0.1 |
(0.4) |
(0.5) |
|
Cash and cash equivalents at end of period/year* |
11 |
19.2 |
(9.7) |
2.0 |
* Cash and cash equivalents of
NOTES TO THE CONDENSED SET OF FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
Basis of preparation
The condensed set of financial statements do not constitute statutory accounts as defined by section 434 of the Companies Act 2006 and were approved by the Board of Directors on 3 June 2025.
Full accounts for the year ended 31 October 2024, which include an unqualified audit report, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report and did not contain statements under section 498(2) or (3) of the Companies Act 2006, have been delivered to the Registrar of Companies. These were prepared in accordance with
Whilst the financial information included in this announcement has been computed in accordance with International Financial Reporting Standards ("IFRSs"), this announcement does not itself contain sufficient information to comply with IFRSs. This condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted for use in the
As required by the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority, the condensed set of financial statements has been prepared applying the accounting policies and presentation that were applied in the preparation of the company's published consolidated financial statements for the year ended 31 October 2024 except for income tax and any new and amended standards as set out below.
The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates.
Going concern
The directors believe the Group is well placed to manage its business risks successfully. The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of its current committed facilities.
As part of their regular assessment of the Group's working capital and financing position, the directors have prepared a detailed bottom-up two-year trading budget and cash flow forecast for the period through to October 2026, being at least twelve months after the date of approval of the interim financial statements. This is in addition to the Group's longer-term strategic planning process. In assessing the forecast, the directors have considered:
|
· trading risks presented by the current economic conditions in the defence market, particularly in relation to government budgets and expenditure; |
|
· the impact of macroeconomic factors, particularly inflationary pressures, supply chain challenges, interest rates, tariffs and foreign exchange rates; |
|
· the status of the Group's financial arrangements and associated covenant requirements; |
|
· progress made in developing and implementing operational improvements; |
|
· the availability of mitigating actions available should business activities fall behind current expectations, including the deferral of discretionary overheads and restricting cash outflows; and |
|
· the long-term nature of the Group's business which, taken together with the Group's order book, provides a satisfactory level of confidence to the Board in respect of trading. |
Additional detailed sensitivity analysis has been performed on the forecasts to consider the impact of severe, but plausible, reasonable worst case scenarios on the covenant requirements. These scenarios, which sensitised the forecasts for specific identified risks, modelled the reduction in anticipated levels of underlying EBITDA and the associated increase in net debt. These scenarios included significant delays to major contracts and considered the principal risks and uncertainties referred to in note 16. These sensitised scenarios show headroom on all covenant test dates for the foreseeable future.
After consideration of the above, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis in preparing the half-yearly condensed financial statements.
Alternative Performance Measures ("APMs")
In the analysis of the Group's financial performance and position, operating results and cash flows, APMs are presented to provide readers with additional information. The principal APMs presented are underlying measures of earnings including underlying operating profit, underlying profit before tax, underlying profit after tax, underlying EBITDA, underlying earnings per share, and underlying operating cash flow. In addition, EBITDA, net debt, and constant currency are presented which are also considered to be non-IFRS measures. These measures are consistent with information regularly reviewed by management to run the business, including planning, budgeting and reporting purposes and for its internal assessment of the operational performance of individual businesses.
The directors believe that the use of these APMs assist in providing additional information on the underlying trends, performance and position of the Group. APMs are used to improve the comparability of information between reporting periods by adjusting for items that are non-recurring or otherwise non-underlying. Management consider non-underlying items to be:
|
· amortisation of acquired intangibles; |
|
· material exceptional items, for example relating to acquisitions and disposals, business restructuring costs, impairments and legal costs; |
|
· material exceptional items from changes in legislation; |
|
· gains or losses on the movement in the fair value of derivative financial instruments; and |
|
· the tax impact of all of the above. |
Our use of APMs is consistent with the prior year and we provide comparatives alongside all current period figures.
Accounting policies
The accounting policies applied by the Group in this half-yearly financial report are the same as those applied by the Group in its consolidated financial statements for the year ended 31 October 2024 with the exception of income tax which is detailed below. In addition, there have been no significant changes in accounting judgements or key sources of estimation uncertainty as disclosed in the consolidated financial statements for the year ended 31 October 2024.
Income tax expense is recognised at an amount determined by multiplying the profit before tax for the interim reporting period by management's best estimate of the weighted-average annual income tax rate expected for the full financial year.
Recent accounting developments
The following International Financial Reporting Committee ("IFRIC") interpretations, amendments to existing standards and new standards were adopted in the period ending 30 April 2025 but have not materially impacted the reported results or the financial position:
· Classification of liabilities as Current or Non-current (Amendments to IAS 1);
· Non-current liabilities with covenants (Amendments to IAS 1);
· Supplier finance (Amendments to IAS 7 and IFRS 7); and
· Financial instrument disclosures (Amendments to IFRS 17).
2. SEGMENTAL ANALYSIS - CONTINUING OPERATIONS
|
Half year to 30 April 2025 (unaudited) |
|
|||
|
|
Sensors & Information |
Countermeasures & Energetics |
Unallocated* |
Group |
|
|
£m |
£m |
£m |
£m |
|
Revenue |
92.6 |
141.7 |
- |
234.3 |
|
|
|
|
|
|
|
Segment result before depreciation, amortisation and non-underlying items |
19.5 |
29.7 |
(9.4) |
39.8 |
|
Depreciation |
(2.8) |
(8.9) |
- |
(11.7) |
|
Amortisation |
(0.6) |
(0.4) |
- |
(1.0) |
|
Segmental underlying operating profit |
16.1 |
20.4 |
(9.4) |
27.1 |
|
Amortisation of acquired intangibles |
(0.3) |
(0.4) |
- |
(0.7) |
|
Non-underlying items |
(2.3) |
- |
5.4 |
3.1 |
|
Segmental operating profit |
13.5 |
20.0 |
(4.0) |
29.5 |
|
Half year to 30 April 2024 (unaudited) |
|
|||
|
|
Sensors & Information |
Countermeasures & Energetics |
Unallocated* |
Group |
|
|
£m |
£m |
£m |
£m |
|
Revenue |
105.7 |
117.7 |
- |
223.4 |
|
|
|
|
|
|
|
Segment result before depreciation, amortisation and non-underlying items |
24.5 |
19.4 |
(8.4) |
35.5 |
|
Depreciation |
(2.2) |
(7.6) |
- |
(9.8) |
|
Amortisation |
(0.7) |
- |
- |
(0.7) |
|
Segmental underlying operating profit |
21.6 |
11.8 |
(8.4) |
25.0 |
|
Amortisation of acquired intangibles |
(0.4) |
(0.6) |
- |
(1.0) |
|
Non-underlying items |
(1.7) |
- |
(4.8) |
(6.5) |
|
Segmental operating profit |
19.5 |
11.2 |
(13.2) |
17.5 |
|
Year ended 31 October 2024 (audited) |
|
|||
|
|
Sensors & Information |
Countermeasures & Energetics |
Unallocated* |
Group |
|
|
£m |
£m |
£m |
£m |
|
Revenue |
212.0 |
298.4 |
- |
510.4 |
|
|
|
|
|
|
|
Segment result before depreciation, amortisation and non-underlying items |
47.3 |
63.2 |
(16.8) |
93.7 |
|
Depreciation |
(4.6) |
(16.4) |
- |
(21.0) |
|
Amortisation |
(1.3) |
(0.3) |
- |
(1.6) |
|
Segmental underlying operating profit |
41.4 |
46.5 |
(16.8) |
71.1 |
|
Amortisation of acquired intangibles |
(0.8) |
(1.2) |
- |
(2.0) |
|
Non-underlying items |
(3.2) |
2.8 |
(10.6) |
(11.0) |
|
Segmental operating profit |
37.4 |
48.1 |
(27.4) |
58.1 |
* Unallocated items are specific corporate level costs that cannot be allocated to a business segment.
3. ALTERNATIVE PERFORMANCE MEASURES
The principal Alternative Performance Measures ("APMs") presented are the underlying measures of earnings which exclude exceptional items, gain or loss on the movement on the fair value of derivative financial instruments, and the amortisation of acquired intangibles. The directors believe that these APMs improve the comparability of information between reporting periods. The term underlying is not defined under IFRS and may not be comparable with similarly titled measures used by other companies.
Reconciliation from underlying to statutory performance:
|
|
Unaudited Half year to 30 April 2025 |
Unaudited Half year to 30 April 2024 |
||||
|
|
|
|
|
|
|
|
|
|
Underlying |
Non-underlying |
Statutory |
Underlying |
Non-underlying |
Statutory |
|
|
performance |
items |
Total |
performance |
items |
Total |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
|
Continuing operations |
|
|
|
|
|
|
|
Revenue |
234.3 |
- |
234.3 |
223.4 |
- |
223.4 |
|
|
|
|
|
|
|
|
|
Operating profit |
27.1 |
2.4 |
29.5 |
25.0 |
(7.5) |
17.5 |
|
Finance expense |
(3.0) |
- |
(3.0) |
(2.3) |
- |
(2.3) |
|
Profit/(loss) before tax |
24.1 |
2.4 |
26.5 |
22.7 |
(7.5) |
15.2 |
|
Taxation |
(5.2) |
(0.5) |
(5.7) |
(4.3) |
1.3 |
(3.0) |
|
Profit/(loss) after tax |
18.9 |
1.9 |
20.8 |
18.4 |
(6.2) |
12.2 |
|
|
|
|
|
|
|
|
|
Discontinued operations |
|
|
|
|
|
|
|
(Loss)/profit after tax from discontinued operations |
(0.3) |
(0.1) |
(0.4) |
(0.5) |
4.7 |
4.2 |
|
Profit after tax |
18.6 |
1.8 |
20.4 |
17.9 |
(1.5) |
16.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per ordinary share |
|
|
|
|
|
|
|
Continuing operations |
|
|
|
|
|
|
|
Basic |
7.0p |
|
7.7p |
6.7p |
|
4.4p |
|
Diluted |
6.8p |
|
7.5p |
6.6p |
|
4.3p |
|
|
|
|
|
|
|
|
|
Continuing operations and discontinued operations |
|
|
|
|
|
|
|
Basic |
6.9p |
|
7.5p |
6.5p |
|
6.0p |
|
Diluted |
6.7p |
|
7.4p |
6.4p |
|
5.8p |
|
|
|
|
|
|
|
|
|
|
Audited Year to 31 October 2024 |
||
|
|
|
|
|
|
|
Underlying |
Non-underlying |
Statutory |
|
|
performance |
items |
Total |
|
|
£m |
£m |
£m |
|
Continuing operations |
|
|
|
|
Revenue |
510.4 |
- |
510.4 |
|
|
|
|
|
|
Operating profit |
71.1 |
(13.0) |
58.1 |
|
Finance expense |
(4.8) |
- |
(4.8) |
|
Profit/(loss) before tax |
66.3 |
(13.0) |
53.3 |
|
Taxation |
(12.3) |
1.7 |
(10.6) |
|
Profit/(loss) after tax |
54.0 |
(11.3) |
42.7 |
|
|
|
|
|
|
Discontinued operations |
|
|
|
|
(Loss)/profit after tax from discontinued operations |
(1.3) |
(1.9) |
(3.2) |
|
Profit after tax |
52.7 |
(13.2) |
39.5 |
|
|
|
|
|
|
|
|
|
|
|
Earnings per ordinary share |
|
|
|
|
Continuing operations |
|
|
|
|
Basic |
19.8p |
|
15.7p |
|
Diluted |
19.3p |
|
15.3p |
|
|
|
|
|
|
Continuing operations and discontinued operations |
|
|
|
|
Basic |
19.3p |
|
14.5p |
|
Diluted |
18.8p |
|
14.2p |
|
|
|
|
|
Breakdown of non-underlying items:
|
|
Unaudited Half year to 30 April 2025 |
Unaudited Half year to 30 April 2024 |
Audited Year to 31 Oct 2024 |
|
|
£m |
£m |
£m |
|
|
|
|
|
|
Gain/(Loss) on the movement in the fair value of derivative financial instruments |
5.5 |
1.1 |
(2.0) |
|
Acquisition expenses |
(0.8) |
(1.7) |
(3.4) |
|
Defined benefit pension buy-in and buy-out transaction |
(0.1) |
(5.0) |
(7.5) |
|
Change in senior management positions |
- |
(0.9) |
(1.2) |
|
Business restructuring |
(1.5) |
- |
- |
|
Decrease in legal and disposal provisions |
- |
- |
3.1 |
|
Impact of non-underlying items on EBITDA |
3.1 |
(6.5) |
(11.0) |
|
Intangible amortisation arising from business combinations |
(0.7) |
(1.0) |
(2.0) |
|
Impact of non-underlying items on operating profit and profit before tax |
2.4 |
(7.5) |
(13.0) |
|
Tax impact of non-underlying items |
(0.5) |
1.3 |
1.7 |
|
Impact of non-underlying items on continuing profit after tax |
1.9 |
(6.2) |
(11.3) |
|
Non-underlying discontinued operations after tax |
(0.1) |
4.7 |
(1.9) |
|
Impact of non-underlying items on profit after tax |
1.8 |
(1.5) |
(13.2) |
|
Underlying profit after tax |
18.6 |
17.9 |
52.7 |
|
Statutory profit after tax |
20.4 |
16.4 |
39.5 |
Derivative financial instruments
Included in non-underlying items is a
Acquisition expenses
Included in non-underlying items is
Defined benefit pension buy-in and buy-out transaction
Included in non-underlying items is an expense of
Change in senior management positions
Included in non-underlying items are costs of £nil (H1 2024:
Business restructuring
Included in non-underlying items are costs of
Legal and disposal provisions
Included in non-underlying items is a £nil (H1 2024: £nil, 2024
Amortisation of acquired intangibles
Included in non-underlying items is the amortisation charge arising from business combinations of
Tax
In the period to 30 April 2025, the tax impact of non-underlying items comprises a
Discontinued operations
Included in discontinued non-underlying items is a £nil profit (H1 2024:
4. SEASONALITY OF REVENUE
Revenue in the Countermeasures & Energetics segment is expected to be weighted towards the second half of the financial year. This second half weighting arises due to customer behaviours in the defence marketplace, the timing of expected contract activity, public holidays, planned facility maintenance work programmes, and the acceptance testing of products by customers.
Revenue in the Sensors & Information segment normally is more evenly weighted across the first and second half of the year, with revenue at Roke driven by the
5. TAX - CONTINUING OPERATIONS
|
|
Unaudited |
Unaudited |
Audited |
|
|
£m |
£m |
£m |
|
|
|
|
|
|
Underlying tax charge |
5.2 |
4.3 |
12.3 |
|
Tax impact of non-underlying items |
0.5 |
(1.3) |
(1.7) |
|
Total statutory tax charge |
5.7 |
3.0 |
10.6 |
Income tax charge is recognised at an amount determined by multiplying the profit before tax for the interim reporting period by management's best estimate of the weighted-average annual income tax rate expected for the full financial year.
The effective tax rate on underlying profit before tax for the period is a charge of 21.6% (H1 2024: 18.9%, 2024: 18.6%). The effective tax rate is higher than the 2024 effective tax rate, in line with our expectation, as it trends toward the
6. EARNINGS PER SHARE
Earnings per share is based on the average number of shares in issue, excluding own shares held, of 270,743,454 (H1 2024: 273,990,325, 2024: 272,875,033). Diluted earnings per share has been calculated using a diluted average number of shares in issue, excluding own shares held, of 276,142,462 (H1 2024: 280,604,559, 2024: 279,133,292).
The earnings used in the calculations of the various measures of earnings per share are as follows:
|
|
Unaudited Half year to 30 April 2025 |
Unaudited Half year to 30 April 2024 |
||||
|
|
£m |
Basic EPS (pence) |
Diluted EPS (pence) |
£m |
Basic EPS (pence) |
Diluted EPS (pence) |
|
|
|
|
|
|
|
|
|
Underlying profit after tax |
18.9 |
7.0 |
6.8 |
18.4 |
6.7 |
6.6 |
|
Non-underlying items |
1.9 |
|
|
(6.2) |
|
|
|
Profit from continuing operations |
20.8 |
7.7 |
7.5 |
12.2 |
4.4 |
4.3 |
|
Profit/(loss) from discontinued operations |
(0.4) |
|
|
4.2 |
|
|
|
Total profit after tax |
20.4 |
7.5 |
7.4 |
16.4 |
6.0 |
5.8 |
|
|
Audited Year to 31 October 2024 |
||
|
|
£m |
Basic EPS (pence) |
Diluted EPS (pence) |
|
|
|
|
|
|
Underlying profit after tax |
54.0 |
19.8 |
19.3 |
|
Non-underlying items |
(11.3) |
|
|
|
Profit from continuing operations |
42.7 |
15.7 |
15.3 |
|
Loss from discontinued operations |
(3.2) |
(1.2) |
(1.1) |
|
Total profit after tax |
39.5 |
14.5 |
14.2 |
7. DIVIDENDS
At the Annual General Meeting on 26 February 2025 the shareholders approved a final dividend in respect of the year ended 31 October 2024 of 5.2p per ordinary share (2024: 4.6p). This was paid on 11 April 2025 to shareholders on the register on 21 March 2025 and totalled
The Board also declared an interim dividend in respect of 2025 of 2.7p per ordinary share (2024: 2.6p) which will be paid on 5 September 2025 to shareholders on the register on 15 August 2025. The estimated cash value of this dividend is
8. FINANCIAL INSTRUMENTS
During the six months to 30 April 2025, movements on derivative financial instruments were primarily driven by FX rate fluctuations. At 30 April 2025 there are no significant differences between the book value and fair value (as determined by market value) of the Group's derivative financial instruments.
The fair value of derivative financial instruments is estimated by discounting the future contracted cash flow using readily available market data and represents a Level 2 measurement in the fair value hierarchy under IFRS 7 Financial Instruments: Disclosures. As at 30 April 2025, the total fair value of forward foreign exchange contracts recognised in the condensed consolidated balance sheet were an asset of
9. RELATED PARTY TRANSACTIONS
Past transactions with related parties are shown on page 168 of the Group's 2024 Annual report and accounts. There were no significant related party transactions during the current period requiring disclosure.
10. CASH GENERATED FROM OPERATING ACTIVITIES
|
|
Unaudited Half year to 30 April 2025 £m |
Unaudited Half year to 30 April 2024 £m |
Audited Year to 31 Oct 2024 £m |
|
|
|
|
|
|
Operating profit from continuing operations |
29.5 |
17.5 |
58.1 |
|
|
|
|
|
|
Amortisation of development costs |
0.8 |
0.7 |
1.3 |
|
Amortisation of intangible assets arising from business combinations |
0.7 |
1.0 |
2.0 |
|
Amortisation of patents and licences |
0.2 |
- |
0.3 |
|
Loss on disposal of non-current assets |
- |
- |
1.7 |
|
Depreciation of property, plant and equipment |
11.7 |
9.8 |
21.0 |
|
Defined benefit pension buy-in and buy-out transaction expenses |
0.1 |
5.0 |
- |
|
Other non-underlying items |
(3.4) |
1.5 |
11.0 |
|
Share-based payment expense |
2.3 |
1.9 |
5.8 |
|
Operating cash flows before movements in working capital |
41.9 |
37.4 |
101.2 |
|
|
|
|
|
|
Increase in inventories |
(27.4) |
(24.6) |
(30.1) |
|
Increase in trade and other receivables |
(26.7) |
(12.5) |
(16.9) |
|
Increase in trade and other payables |
44.2 |
29.1 |
41.8 |
|
|
|
|
|
|
Operating cash flow from continuing underlying operations |
32.0 |
29.4 |
96.0 |
|
|
|
|
|
|
Discontinued operations |
|
|
|
|
Cash utilised in discontinued underlying operations |
(0.3) |
(0.6) |
(1.5) |
|
Cash impact of discontinued non-underlying items |
(0.3) |
(1.4) |
(1.5) |
|
Net cash outflow from discontinued operations |
(0.6) |
(2.0) |
(3.0) |
11. ANALYSIS OF NET DEBT
|
|
As at 1 Nov 2024 |
Cash flows |
Non-cash changes |
Exchange rate effects |
As at 30 April 2025 |
|
|
£m |
£m |
£m |
£m |
£m |
|
|
|
|
|
|
|
|
Cash and cash equivalents* |
2.0 |
17.3 |
- |
(0.1) |
19.2 |
|
Debt due after one year |
(43.7) |
(55.0) |
0.4 |
0.3 |
(98.0) |
|
Lease liabilities |
(11.0) |
1.3 |
(4.7) |
- |
(14.4) |
|
Preference shares |
(0.1) |
- |
- |
- |
(0.1) |
|
|
(52.8) |
(36.4) |
(4.3) |
0.2 |
(93.3) |
* Cash and cash equivalents of
The Group's principal debt facilities comprise a
In October 2024, the Group entered into a
The Group had
The Group is subject to two key financial covenants, which are tested quarterly. These covenants relate to the leverage ratio between underlying EBITDA and net debt; and the interest cover ratio between underlying EBITDA and finance costs. The calculation of these ratios involves the translation of non-Sterling denominated debt using average, rather than closing, rates of exchange. The Group was in compliance with the covenants throughout the period. The half year leverage ratio was 0.97 times (covenant limit of 3 times) and the half year interest cover ratio was 13.94 times (covenant floor of 4 times).
12. EXCHANGE RATES
The following exchange rates applied during the period:
|
|
Average rate H1 2025 |
Closing rate H1 2025 |
Average rate H1 2024 |
Closing rate H1 2024 |
Average rate 2024 |
Closing rate 2024 |
|
US dollar |
1.28 |
1.34 |
1.26 |
1.25 |
1.27 |
1.29 |
|
AU dollar |
2.01 |
2.09 |
1.92 |
1.93 |
1.95 |
1.96 |
|
NOR krone |
14.01 |
13.85 |
13.59 |
13.87 |
13.69 |
14.18 |
The translation of foreign currency items in the financial statements are dependent on the prevailing foreign exchange rates. For the period ended 30 April 2025, a 10 percent increase in the US dollar exchange rate would have decreased reported underlying operating profit for the first half of 2025 by approximately £0.2m, and a 10 percent increase in the Norwegian Krone would have decreased reported underlying profit by
13. DISCONTINUED OPERATIONS AND HELD FOR SALE
Total losses from discontinued operations for the period to 30 April 2025 were
EHD Business
In 2023 the decision was taken that the Explosive Hazard Detection ("EHD") business would not continue to operate as a result of the US DoD's decision in 2022 to transition the HMDS Program of Record into sustainment earlier than previously indicated. After evaluating the potential sustainment program it was determined that in the short to medium term there was insufficient DoD funding to make it economically viable for Chemring to continue to operate the EHD business. Therefore the business was abandoned and treated as a discontinued operation.
During the year to 31 October 2024 and prior to the assets being physically disposed of, the Group received an offer to purchase the EHD business. An asset purchase agreement was signed for the purchase of the EHD business and a held for sale asset of
Subsequent to the period ended 30 April 2025, the sale transaction has completed and the EHD business has been sold. See note 15 for further information.
|
|
Unaudited Half year to 30 April 2025 |
|
Unaudited Half year to 30 April 2024 |
||||
|
|
Underlying £m |
Non-underlying £m |
Total £m |
|
Underlying £m |
Non-underlying £m |
Total £m |
|
EHD business |
|
|
|
|
|
|
|
|
Revenue |
0.8 |
- |
0.8 |
|
1.0 |
- |
1.0 |
|
Operating loss/(profit) |
(0.3) |
- |
(0.3) |
|
(0.6) |
5.4 |
4.8 |
|
Tax |
- |
- |
- |
|
0.1 |
(0.7) |
(0.6) |
|
|
(0.3) |
- |
(0.3) |
|
(0.5) |
4.7 |
4.2 |
|
Other discontinued operations |
|
|
|
|
|
|
|
|
Increase in provisions |
- |
(0.1) |
(0.1) |
|
- |
- |
- |
|
Total loss/(profit) from discontinued operations |
(0.3) |
(0.1) |
(0.4) |
|
(0.5) |
4.7 |
4.2 |
|
|
|
|
|
Audited Year to 31 Oct 2024 |
|
|
|
Underlying £m |
Non-underlying £m |
Total £m |
|
EHD business |
|
|
|
|
|
Revenue |
|
1.8 |
- |
1.8 |
|
Operating loss |
|
(1.5) |
5.2 |
3.7 |
|
Tax |
|
0.2 |
(0.7) |
(0.5) |
|
|
|
(1.3) |
4.5 |
3.2 |
|
Other discontinued operations |
|
|
|
|
|
Increase in provisions |
|
- |
(6.4) |
(6.4) |
|
Total loss from discontinued operations |
|
(1.3) |
(1.9) |
(3.2) |
The cash flows from discontinued operations are presented in note 10.
14. CONTINGENT LIABILITIES
The Group is, from time to time, party to legal proceedings and claims, and is involved in correspondence relating to potential claims, which arise in the ordinary course of business. There are currently no material open matters.
15. EVENTS AFTER THE BALANCE SHEET DATE
SALE OF THE EHD BUSINESS
The Group completed the sale of the EHD business to Elta North America, Inc. on 22 May 2025. Under the terms of the agreement, the Group received consideration of
16. PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks and uncertainties which could have a material impact on the Group's performance and could cause actual results to differ materially from expected and historical results have not changed significantly from those set out in the Group's 2024 Annual report and accounts. A detailed description of the Group's principal risks and uncertainties and the ways they are mitigated can be found on pages 76 to 82 of the 2024 Annual report and accounts. These risks can be summarised as:
|
· occupational and process safety risks; |
|
· environmental laws and regulations risks; · climate risks; |
|
· market-related risks; |
|
· political risks; |
|
· contract-related risks; |
|
· technology risks; |
|
· financial risks; |
|
· operational risks; |
|
· people risks; |
|
· compliance and corruption risks; and |
|
· cyber-related risks. |
Management have detailed mitigation plans and assurance processes to manage and monitor these risks.
17. CORPORATE WEBSITE
Further information on the Group and its activities can be found on the corporate website at www.chemring.com.
INDEPENDENT REVIEW REPORT TO CHEMRING GROUP PLC
Conclusion
We have been engaged by Chemring Group PLC ("the Company") to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 April 2025 which comprises the Condensed Consolidated Income Statement, the Condensed Consolidated Statement of Comprehensive Income, the Condensed Consolidated Statement of Changes in Equity, the Condensed Consolidated Balance Sheet, the Condensed Consolidated Cash Flow Statement and the related explanatory notes.
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 April 2025 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted for use in the
Basis for conclusion
We conducted our review in accordance with International Standard on Review Engagements (
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention that causes us to believe that the directors have inappropriately adopted the going concern basis of accounting, or that the directors have identified material uncertainties relating to going concern that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with ISRE (
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the
As disclosed in note 1, the annual financial statements of the group are prepared in accordance with UK-adopted international accounting standards.
The directors are responsible for preparing the condensed set of financial statements included in the half-yearly financial report in accordance with IAS 34 as adopted for use in the UK.
In preparing the condensed set of financial statements, the directors are responsible for assessing the group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or to cease operations, or have no realistic alternative but to do so.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. Our conclusion, including our conclusions relating to going concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for conclusion section of this report.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the DTR of the
Kate Teal
for and on behalf of KPMG LLP
Chartered Accountants
66 Queen Square
BS1 4BE
3 June 2025
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