27th Oct 2015 07:51
LONDON (Alliance News) - Chemring Group PLC on Tuesday warned about its profit outlook for the full year after saying there is potential for revenue from the 40mm ammunition contract it announced in September to be delayed.
The company, which makes countermeasures such as flares and decoys that military aircraft use against missile attack, as well as sensors and electronics used in military vehicles, said there is now a "realistic prospect" that its underlying operating profit for the year to the end of October could fall by around GBP16.0 million to about GBP33.0 million.
This is due to a potential delay to revenue from a contract it announced in September to supply 40mm ammunition, despite progress on the contract having been made. The company is still awaiting the necessary permits and export approvals for the contract, which is for an unnamed client in the Middle East, hence the potential the revenue will be delayed into its next financial year.
Chemring has now entered talks with debt providers to negotiate amendments to its debt covenants and the waiver of any default that could arise from a delay to the contract revenue.
The company has also proposed launching a rights issue of up to GBP90.0 million in the first quarter of its 2016 financial year, which has been fully underwritten by Investec and JPMorgan Cazenove.
By Sam Unsted; [email protected]; @SamUAtAlliance
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