3rd Jun 2021 13:34
(Clarifying that financial half-year ended April 30 and correcting that dividend comparison was to previous interim payout.)
(Alliance News) - Chemring Group PLC on Thursday increased its interim dividend after reporting a rise in both profit and revenue in the first half of its financial year.
The Hampshire-based defence contractor also said it plans to acquire Cubica Group for an undisclosed sum drawn from Chemring's current banking facilities.
Cubica is a Surrey-based research and development company specialising in machine learning and artificial intelligence and comprised of Cubica Technology Limited and Q6 Holdings Limited.
The company plans to add Cubica to its Roke technology and engineering advisory business, using Cubica's machine learning expertise to accelerate Roke. The company plans to invest GBP1 million in Cubica and Vigil AI Ltd, the latter of which provides technology for detecting online images of child sexual exploitation. A constituent part of Cubica, Q6, is the majority shareholder of Vigil AI.
On Thursday, Chemring said that, for the six months ended April 30, pretax profit rose 28% to GBP24.3 million from GBP19.0 million a year prior.
Revenue also increased, growing 3.9% year-on-year to GBP198.5 million from GBP191.0 million.
The group declared an interim dividend of 1.6 pence, up 23% from 1.3p a year before.
Chemring said its expectations for the full-year remain unchanged. The company said that it has booked orders accounting for 92% of expected revenue in the second half of its current financial year. As of April, Chemring had booked GBP450 million worth of orders, with GBP199 million scheduled for the second half.
However, Chemring's mid-year order book total has dropped by 11% compared to the previous year, when GBP504 million worth of orders were recorded by the end of April. Chemring said this was primarily due to the delivery of a significant portion of a two-ear project worth AUD107 million by its Australian business.
"Chemring's positive first-half performance again demonstrates the progress that we continue to make in building a higher quality technology-based group. With strong order cover for the full year the group remains on track to deliver year on year growth, and the board's expectations for the full year remain unchanged," said Chief Executive Michael Ord.
"Whilst there may be some macro-economic uncertainty surrounding the level and timing of defence spending as a result of the Covid-19 pandemic, our multiple market leading positions and investment in high technology niches, provide attractive growth opportunities. Chemring's long-term prospects remain strong," Ord added.
Chemring shares were trading up 5.1% at 322.17 pence each in London on Thursday afternoon, the biggest gainer in the FTSE 250 index of mid-cap stocks.
By Scarlett Butler; [email protected]
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