Peter Hickson, Chemring Group Chairman, commented:
"Chemring produced another year of growth in profits and earnings, with revenue up 25% to £745.3 million and underlying profit before tax* up 6% to £125.6 million.
The Board has considered its long term dividend policy as part of a balance sheet review. For many years, the Group has adopted a policy of maintaining dividend cover at around four times. With our strong annual cash generation, we believe it would be appropriate to bring the cover down to three times over the next year. As part of this move, the proposed total dividend of 14.8p for 2011 will be covered 3.5 times by underlying after tax earnings*, compared with 4.2 times last year. We have also concluded that we should consider returning surplus capital to shareholders whilst maintaining the strength of the balance sheet. Accordingly, we will seek approval at the forthcoming Annual General Meeting to renew our authority to buy back shares, when it is considered appropriate, over the course of the next year. We would only expect to exercise this authority for a buyback of up to £50 million of shares.
During the last year, many governments have struggled with increasing deficits and lower economic growth. This has affected defence procurement, leading to volume reductions and delays. The continuing problems of the Eurozone and the impact of possible sequestration in the US indicate that our traditional markets will not be any easier this year. We continue to pursue our policy of reducing our dependence on these markets, and are actively seeking more business from elsewhere. Our order book has risen by 12% since the year end and currently stands at £980 million. It is encouraging to note that 44% of today's order book emanates from non-NATO markets, and this compares with 33% at the same time last year. We see further good growth prospects in these markets and will pursue the opportunities they offer. I am confident that we have the products, the management and technological skills to achieve our objectives and provide the foundation for steady growth."
