Introduction to Chemring Group

Transcription

1 Introduction to Chemring Group

2 Chemring is a leader in Countermeasures, Sensors and Energetic Systems Company overview Financial summary ( m) Chemring develops and manufactures protection solutions for defense and security markets worldwide Operates in three market sectors: Countermeasures: Offers protection for aircraft, ships and land platforms against guided missile threats growth from F-35 Sensors: Provides equipment to detect, disable and defeat the threats posed by concealed IEDs (improvised explosive devices) unexploded ordnance, electronic warfare, and chemical and biological agents growth from US detection programs; HMDS, NGCD and JBTDS Energetic: Offers military pyrotechnics, 40mm ammunition, and a range of high reliability energetic components for aircraft, missiles and space applications Serves customers in more than 50 countries worldwide Headquartered in Romsey, UK, it has an employee strength of 2,577 worldwide, at locations in the UK, the US, Norway, United Arab Emirates and Australia US businesses (except CED): Operate under an SSA and SSA Board Company management Michael Flowers Chief Executive Officer Rupert Pittman Group Director of Corporate Affairs Andrew Lewis Group Finance Director Sarah Ellard Group Legal Director Rik Armitage Group Director of Strategy & Technology Terry Bridgewater Group Safety Director FYE Oct FY16A FY17E FY18E Group Revenue Group Operating Profit Countermeasures - Margin Sensors - margin Energetics - Margin % % % Segment breakdown FY 2016 Sales: 477m % % % % % % Corporate & unallocated Group EBIT Group Margin 10.2% 9.4% 10.7% Sensors 20% Countermeasures 29% Energetics 51% Source: Investec Securities estimates / company accounts FY 2016 EBIT: 48.5m Sensors 20% Countermeasures 23% Energetics 57% 2

3 Chemring is structured into three operating divisions Countermeasures Sales: 138.3m (29.0% of FY 2016 Group sales) EBIT: 12.8m (FY 2016) (1) Sensors Sales: 96.9m (20.3% of FY 2016 Group sales) EBIT: 11.4m (FY 2016) (1) Energetics Sales: 241.9m (50.7% of FY 2016 Group sales) EBIT: 31.7m (FY 2016) (1) Chemring Countermeasures UK Chemring Technology Solutions (UK) Military pyrotechnics Energetic sub-systems Chemring Countermeasures US (Kilgore Flares) Roke (UK) Chemring Defence (UK) Chemring Energetic Devices (US) Chemring Countermeasures US (Alloy Surfaces) Chemring Sensors & Electronic Systems (US) Chemring Ordnance (US) Chemring Energetics (UK) Chemring Australia Chemring Australia Chemring Prime Contracts (UK) Chemring Nobel (Norway) The Countermeasures segment manufactures expendable countermeasures for protecting air, sea and land platforms This segment s products include conventional and advanced flares, special material decoys, chaff, as well as naval RF and IR decoys and naval decoy launchers The Sensors segment provides technologies and services for chemical, biological and IED threat detection, electronic warfare and cyber protection Manufacture a range of detonators, initiators and disruptors for demolition and explosive ordnance disposal Provides force protection (detection, route clearing & breaching and site access & security) as well as homeland security (electronic warfare, electronic surveillance and signals intelligence) The Energetics segments manufactures military pyrotechnics and a range of high reliability energetic components for aircraft, missiles and space markets. Applications include emergency egress, missile and space systems Also manufactures military pyrotechnic products (land forces ammunition, smokes and illumination and training effects), as well as high explosive products, including mine-field clearance systems, demolition stores and 40mm grenades SH-60 Seahawk Flares F-15 Flares IED Disruptor Mine Detection 40mm Munitions Thrusters 3

4 Chemring s evolution in recent years The company is making several divestitures over last few years to re-shape the company s growth strategy and bolster balance sheet Jul-05 Acquires Comet for $11.6m Sep-05 Acquires Chemring Energetics UK for $39.3m Nov-05 Acquires Drew Marine Signal & Safety for $11.6m Jan-06 Acquires Leafield Marine & Leafield Engineering Feb-06 Acquires Technical Ordnance for $47.5m Mar-07 Acquires Simmel Difesa for $109.8m Apr-07 Sells McMurdo Marine Lights May-07 Sells I.C.S. Electronics Jan-08 Acquires Pirotecnia Oroquieta for $0.6m Jan-08 Acquires Titan Dynamics Systems for $4.8m May-08 Acquires Scot for $40.0m Sep-09 Acquires Hi-Shear Technology for $132.3m Jun-10 Acquires Allied Defense Group for $68.5m Aug-10 Acquires Roke Manor Research for $89.3m Apr-11 Acquires General Dynamics Detection Systems for $90.0m Apr-14 Sells Mecar & Simmel for $164.8m May-14 Acquires 3d-Radar for $3.0m Jun-14 Sells Chemring Defence Germany for $3.8m Feb-01 Acquires Alliant Kilgore Flares for $23.0m 7.3x EV/EBITDA Min 7.1x Max 13.0x Avg. 9.5x 8.8x 9.9x 67m 95m 85m Oct-06 Acquires BDL Systems for $17.0m Dec-06 Sells Leafield Marine for $0.9m Rev CAGR % % 9.0x 110m Jun-07 Acquires Chemring Nobel AS for $5.5m Nov-07 Acquires Richarmond EEI for $23.1m 7.8x 7.9x 11.3x 126m 121m 188m Jun-08 Acquires Martin Electronics for $70.0m Oct-08 Acquires Non-Intrusive Inspection Technology for $40.0m 12.8x 255m 11.6x 354m 504m 597m 724m 740m 8.7x 9.9x 8.8x Jun-12 Sells Chemring Marine for $49.5m 7.1x 8.8x Nov-15 Acquires Wallop Defence Systems 9.7x 13.0x Acquisitions Disposals 9.4x 472m 403m 377m 477m (2) (1) 4

5 Chemring has outperformed its peers over the past year Chemring s indexed total return versus peers (Since 01/01/2016) Total shareholder returns (Since 01/01/16) Jan Announced a fully underwritten right issues of ~ 80.8m Price: 1.61 Jun Reported HYE 2016 Results Price: 1.15 Dec Appointed Andrew Lewis as Group Finance Director Price: 1.67 Feb Awarded a $4.9m contract from the US Army for ten ground penetrating radar trial systems Price: 1.92 Mar AGM trading update expectations unchanged Price: 1.98 FTSE % 10.6% % % % (32.2%) (52.7%) 7.7% 2017 YTD Total shareholder returns 14.6% Apr Jul Feb Jan Appointed Carl Foster as Awarded R&D contract on Jan Announced the Reported FYE Independent Non- Next Generation Chemical Reported FYE opening of a 2015 Results Executive Director & Detection (NGCD) Program 2016 Results new office in the Price: 1.61 Chairman of Record Price: 1.72 UAE 0 Price: 1.36 Price: 1.36 Price: /4/16 3/12/16 5/19/16 7/26/16 10/2/16 12/9/16 2/15/17 4/24/17 FTSE % 8.2% 6.1% Chemring Peers Index FTSE 250 (19.4%) Source: Company website and Capital IQ as of Apr 27, 2017 Note: Total returns inclusive of dividend reinvestment 5

6 The Board of Directors has seen significant changes in the past year Board of directors Executive management Carl-Peter Forster Non-Executive Director, Chairman Appointed as a Non-Executive Director of Chemring on 1 May 2016 Succeeded Peter Hickson as Chairman on 1 July 2016 Currently a non-executive director of Rexam plc, IMI plc and Cosworth Ltd. Also Chairman of the London Taxi Company, Board member of Volvo Cars Corporation, and Board member of Geely Automobile From 2003 to 2006, he was a non-executive director of Rolls-Royce plc Daniel Dayan Non-Executive Director Appointed as a Non-Executive Director of Chemring on 7 March 2016, and is Chairman of the Remuneration Committee. He is also Chairman and CEO of LINPAC Group and is non-executive Chairman of the Nonwovens Innovation and Research Institute Ltd From , Daniel was CEO of Fiberweb plc, a global, specialty industrial textiles manufacturer Nigel Young Non-Executive Director Appointed as a Non-Executive Director of Directoron 1 May 2013, following his appointment as Interim CFO in July 2012 Nigel was previously Group Finance Director of Morgan Crucible Company plc, as well as finance director of United Scientific Holdings plc, First Technology plc and Babcock International plc Andrew Davies Non-Executive Director Appointed as a Non-Executive Director of Chemring on 17 May 2016 Currently, Chief Executive of Wates Group Andrew was a Managing Director of BAE Systems Maritime business, Group Strategy Director, member of Executive Committee of BAE Systems and a Managing Director of BAE System Land Systems division Michael Flowers Group Chief Executive Appointed to the Board as Group Chief Executive on 24 June 2014, having previously been Group Director Munitions, with responsibility for running and subsequently disposing of the Group s European munitions businesses Joined Chemring in 2006, and ran the Group s Australian operations for seven years Previously, worked for BAE Systems in program management roles, principally in the weapons systems and electronic warfare domains Andrew Lewis Group Finance Director Appointed Group Finance Director on 09 January 2017 Previously, Group Finance Director and Interim CEO of Avon Rubber Prior, Director at PwC and Group Financial Controller at Rotork Plc Sarah Ellard Group Legal Director & Company Secretary Appointed as Group Legal Director on 7 October 2011, having been Group Company Secretary since 1998 Prior to joining the Group, Sarah trained and worked at Ernst & Young LLP 6

7 Key growth drivers Future growth will be driven by a combination of key long-term US Programs of Record and operational improvement initiatives across the Group US Programs of Records: Husky Mounted Detection System ( HMDS ) Ground Penetrating Radar ( GPR ) - Locates buried roadside bombs and improvised explosive devices - Over 230 systems fielded in Iraq and Afghanistan in response to Urgent Operational Requirement - International customers include Canada, Australia, Spain & Turkey - Now transitioning to a long term core capability for the US DoD - Program valued at >$500m Chemring awarded sole source EMD contract to design the next generation HMDS to provide enhanced GPR capabilities Program realigned to incorporate spiral development, funding remains unchanged - Feb 2017 contract received for ten trial systems. Successful evaluation expected to lead to upgrades to the entire US HMDS fleet Husky Mounted Detection System Joint Biological Tactical Detection System ( JBTDS ) A man-portable biological warfare detection and identification system to support future detection capability requirements for all US services. Replaces Joint Biological Point Detection System, also a Chemring product 2015 Chemring selected as sole source provider of JBTDS Program valued at >$300m EMD phase on-going with low rate initial production to follow completion of Government testing Joint Biological Point Detection System 7

8 Key growth drivers (2) Future growth will be driven by a combination of key long-term US Programs of Record and operational improvement initiatives across the Group US Programs of Records: Next Generation Chemical Detector ( NGCD ) - A program for all branches of the US military with three different variants to support future chemical detection capability requirements. Builds on existing technology, including the Joint Service Lightweight Standoff Chemical Agent Detector ( JSLSCAD ), also a Chemring product - Program valued at >$800m - All three variants are competitive and Chemring has progressed to the prototype phase on all three - EMD phase to follow competitive tendering process F-35 Joint Strike Fighter ( F-35 ) - Next generation combat aircraft capable of ground attack and air defence missions - Global fleet expected to be c.3000 platforms, first US squadron entered service August Deliveries to the US are scheduled until 2037m with a projected service life up to Chemring is the sole qualified supplier of specialist countermeasures for the global F-35 fleet - Qualification of Chemring Australia as second source is on-going - Low Rate Initial Production continues to gradually gain momentum Stryker NBC vehicle with JSLSCAD Operational improvement initiatives - Improved productivity. Operational Excellence Programme launched early FY17 driving further improvements in safety, knowledge sharing, sales coordination, gross margins and cash generation - Site optimization. Further site consolidation and plant closures expected to deliver c.$6.5m per annum saving once completed Crown Copyright F-35 Joint Strike Fighter 8

9 Progress on our roadmap We continue to make good progress against operational improvements and against future growth programmes Productivity Operational Excellence Programme underway - driving further improvements in safety, knowledge sharing, sales coordination, gross margins and cash generation Site optimisation HMDS JBTDS Plant consolidation at Alloy Surfaces completed post delivery of urgent requirements Closure of Torrance facility in 2018 progressing according to plan Minor sites closed at Charlottesville and Tallahassee Upgrade programme realigned to incorporate spiral development, funding unchanged Contract received for development, trials and manufacturing efforts in half. Significant further development and production contracts expected in 2018 EMD phase ongoing Milestone review Q3 followed by Government testing program, LRIP to follow NGCD Prototype phase on all three variants. EMD phase to follow competitive tendering process Initial tenders expected H2 F-35 Low rate initial production continues to gradually gain momentum, LRIP 6 ongoing, LRIP 7 in award phase. F-35 SMD requirement in pre solicitation phase Conclusion of second source qualification programme in Australia 9

10 Operational Excellence Programme Leveraging the synergies of the individual businesses through: a programme of disciplined collaboration, and the establishment of a culture of continuous improvement Six operational excellence teams established to create a cohesive operational environment that delivers: greater customer satisfaction an empowered workforce superior shareholder value Health & Safety Key H achievements: Procurement New Products & Services Continuous operational improvement Sales Effectiveness Operational Performance Internal Systems & Processes Group level operational improvement initiatives at four sites Local improvement projects launched at each site Lean assessment tool developed and assessments complete Safety maturity assessment tool developed and assessments ongoing Group wide CRM system roll out commenced >50% complete, target 100% by year end UAE office opened as part of country management strategy 10

11 Disciplined capital allocation Investment for growth remains the priority... Capital allocation framework PP loan note repayment Investing to drive organic growth M&A million PP loan notes outstanding at Apr million repayment due in Nov 2017, remaining 64.6m Nov 2019 R&D c million per annum Capex (maintenance and safety related) c. 15 million per annum Capacity and capability enhancements at Norway and Kilgore Operational excellence programme will drive increased capex for systems and improvement initiatives Targeted bolt-on acquisitions to fill capability gaps Complementing existing technologies, factory footprints and routes to market Dividend Board is committed to a sustainable dividend, seeking to grow the dividend over the long term, commensurate with other capital needs as we seek to maximise shareholder returns. 11

12 Emerging stronger from the downturn The actions taken in recent years Balance sheet strengthened Divestment of non-core assets Removal of divisional operating structure Business unit integration and site closures Refreshed Board of Directors Operational Excellence Programme launched Targeted operational and R&D investment Progress to a culture of continuous improvement and value creation Bolt-on acquisitions Bank facilities renegotiated...have built a stronger platform for future growth. 12

13 Summary and H2 Outlook Solid H1 performance across the Group Board s expectations for FY 2017 are unchanged Order book solid, approximately 85% of expected H2 revenue covered Safety remains an imperative Operational Excellence Programme progressing well with positive results already being seen Major growth programmes continue to progress, underpinning medium term opportunities Improving outlook for global defence spending 13

14 Organisation Chart Chemring Group PLC Operating Business Units Countermeasures Sensors Energetics Chemring Countermeasures UK Chemring Technology Solutions (UK) Chemring Defence (UK) Chemring Energetic Devices (USA) Chemring Countermeasures USA (Kilgore Flares) Roke (UK) Chemring Ordnance (USA) Chemring Energetics (UK) Chemring Countermeasures USA (Alloy Surfaces) Chemring Australia Chemring Sensors & Electronic Systems (USA) NIITEK & Chemring Detection Systems Chemring Prime Contracts (UK) Military Pyrotechnics Chemring Nobel (Norway) Energetic Sub-systems 3d-Radar (Norway) 14

15 Countermeasures F-22 flare suite CH-47 special material decoys RF / IR Naval Countermeasures Centurion Naval Launcher Chemring Group is the global leader in the manufacture of countermeasures which are used to protect aircraft and ships from the threat of heat-seeking and radar-guided missiles and tracking systems. Markets - 50% world market share Largest supplier of airborne decoy countermeasures to the US Department of Defense and the UK Ministry of Defence Technology leader in spectral, special material and thrusted flares for fixed-wing and rotary-wing aircraft Customers in 33 countries Products - world leading capabilities Air countermeasures Conventional and advanced flares protection against heat-seeking and guided missiles Special material decoys covert and pre-emptive infra-red decoys Chaff protection against radar guided threats Naval countermeasures Radio Frequency decoys protect ships against radar-guided threats Infra-Red decoys protect ships from infra-red guided threats Centurion naval decoy launcher optimises the placement of naval decoys Maintain world lead in expendable decoys Exploit clear lead in conventional and advanced flares Build market leading position in naval launchers and decoys 15

16 Sensors HMDS Resolve EW system Cyber security IED defeat solutions Markets Leading positions in mission critical niches Over 230 US Husky-Mounted Detection System (HMDS) fielded in theatre Leading US supplier of stand-off chemical detection (Joint Service Lightweight Standoff Chemical Agent Detector - JSLSCAD) and biological agent detection (Joint Biological Point Detection System - JBPDS) UK technical lead in electronic warfare and signals intelligence Connectivity, cyber, data analytics and autonomy services for defence, national security, high value manufacturing and infrastructure clients. Advanced solutions and equipment for counter-ied and Explosive Ordnance Disposal (EOD) scenarios Products - world leading capabilities Hand-portable, vehicle-mounted and networked detection systems Man-portable and vehicle-mounted Electronic Warfare systems and electronic surveillance Advisory services, technology research and development, engineering and design Remote initiators, recoilless de-armers and lightweight disruptors for counter-ied/eod Exploit world leading technologies Maintain lead in GPR and jamming technology Become market leader in IED detection and neutralisation, and chemical/biological threat detection 16

17 Energetics Energetic Sub-Systems Atlas rocket & boosters Market - sole source supply to NASA and Martin Baker Leading supplier of low shock satellite separation products and NASA Standard Initiators Largest supplier of pyromechanisms for aircraft egress systems Trusted supplier to key prime contractors including Lockheed-Martin, Boeing, Raytheon, MBDA and ATK Aircrew egress Satellite separation nuts Products - high quality, high reliability Missile launch and fly - actuators, retention mechanisms, safe and arm units, motors and weapon release cartridges Space and satellite launch - initiators, separation sub-systems, thrusters, actuators, CADs/PADs Ejection seat components and canopy cutting charges to Martin Baker High explosives and rocket motor compositions including HMX, RDX, NTO, NENA products and insensitive munitions Rocket motor design and manufacture Maintain leading niche positions Exploit trans-atlantic footprint to promote US space qualified products Ensure position on next generation platforms for missile and space programmes Explore non-defence opportunities 17

18 Energetics Military Pyrotechnics Markets - NATO/Non-NATO balance Major supplier to US and UK Strong routes to market in the Middle East Products - specialist rounds and products for niche applications Ammunition 40mm grenades and mortar ammunition for infantry forces Demolition and breaching systems Anti Personnel Obstacle Breaching Systems Sabrex shaped cutting charges Bangalore Torpedo breaching system Pyrotechnic Smokes, signals and illumination rounds Advanced spectral pyrotechnic illumination and screening products Training rounds, launchers and simulators Security products - CS grenades, cartridges and stun grenades Roll-out operational excellence Promote newly developed products Improve asset utilisation by winning major US build-to-print programmes 18

19 Global Footprint 11 facilities located across 4 countries United States of America Chemring Countermeasures USA, Pennsylvannia & Tennessee Chemring Energetic Devices, Illinois & California Chemring Ordnance, Florida Chemring Sensors and Electronic Systems, Virginia & N.Carolina UAE office Europe Chemring Countermeasures, UK Chemring Technology Solutions, UK Roke, UK Chemring Defence, UK Chemring Energetics, UK & Norway 3d-Radar, Norway Australia Chemring Australia 19

20 Global Customer Base FY16 revenue split 69:31 between NATO and Non-NATO customers FY million Global revenues by segment US DoD is Chemring s single largest customer Chemring has extensive relationships with prime contractors Lockheed Martin BAE Systems Boeing General Dynamics Raytheon 54% ATK 17% UK 32% 14% 6% Europe (ex UK) 50% Countermeasures 29% 48% Sensors 20% Energetics 51% 48% North America 2% 25% 21% Middle East 16% 59% 24% 12% 64% 8% Asia Pacific 5% 13% 82% 1% ROW 54% 35% 11% 20

21 Our market strategy Position for growth through innovation, manufacturing excellence and international expansion Countermeasures Strengthen position on key programs: Typhoon and F-35 Improve position in Naval countermeasures market Continue focused R&D effort Investment in operational processes Sensors Focus on areas of technological strength in counter-ied, Electronic Warfare, and chemical and biological detection Increase technology leadership through customer funded and internally funded R&D Win key NATO programmes to exploit globally Growth in connectivity, cyber, automation and data analytics Energetics Maintain current business base and product range whilst seeking new markets Broaden into adjacent commercial markets Growth focus on higher technology niche aerospace, space and missile system applications 21

22 Our segmental strategies Deliver profit and cash Embed operational excellence Invest for growth Countermeasures Complete restructuring and site rationalisations Operational excellence programme Targeted facilities investment Secure F-35 flare Broaden naval countermeasure business Sensors Products Rationalise sites and manufacturing operations Targeted R&D investment to secure Growth Programmes Roke Recruit to meet current demand Enhance internal development capability for cyber and security professionals Establish satellite offices Energetics Deliver current order book Complete restructuring and site rationalisation Operational excellence programme Exploit synergies in internal supply and routes to market Deliver cash to fund growth Focus segment on higher margin niche products 22

23 Our Capabilities 23

24 Countermeasures - Capabilities Air Countermeasures Naval Launcher Advanced Countermeasures Naval Decoys Special Material Decoys 24

25 Countermeasures - Capabilities Air Countermeasures Chemring s comprehensive product range is based on proven threat driven solutions to protect all types of air platforms fast-jets, transport aircraft and helicopters. Our products support the challenges of modern air missions and offer mission specific capabilities including day and night visual covertness and tailored spectral characteristics. SH-60 Seahawk C-17 Tornado CH-47 Chinook Chemring supplies conventional and advanced flares for most NATO platforms AC-130 Typhoon F-35 F-15 F-22 F-18 25

26 Countermeasures - Capabilities Advanced Countermeasures Chemring s advanced countermeasures are designed to defeat the latest-generation guided missiles, which can discriminate between traditional flares and target aircraft, by emulating flight characteristics and infra-red spectral emissions. Our advanced countermeasures protect both legacy and next generation platforms, including F35 and Typhoon. Typhoon Chemring is the sole supplier for Typhoon flares Thrusted flare K7 thrusted 2 x 1 flare protects F-16 and defeats seeker by maintaining similar flight profile to target aircraft Spectral flare Royal Navy Lynx helicopter deploys cocktail of spectral and MTV flares Chemring is the sole supplier for F-22 and F-35 flares 26

27 Aircraft delivered Growth drivers Case study: Next generation aircraft drive market growth 1,600 Global aircraft fleet 1,400 1,200 F-35 Fleet F-35 Chemring sole supplier of F-35 unique flares: - Ultimate global fleet of c.3,000 platforms 1, Typhoon Fleet Typhoon Chemring sole supplier of decoys: - 55mm flare and spectral variant unique to Typhoon - Additional opportunity for BOL chaff & IR - Potential export opportunities remain in Bahrain, UAE, Kuwait, Denmark, Malaysia, and Qatar - Global fleet of c.800 platforms - Build-up of operational stockpiles of 3,000 flares per aircraft, but only for 50% of the actual fleet - Training and test consumption of 150 flares per in-service aircraft per year (10% of war stock) - New flares more expensive than the flares they replace - Decoy user base expands as retiring platforms are sold on to new NATO and growing economies Source: SIPRI, Global Military Balance, IHS Jane s 27

28 Countermeasures - Capabilities Special Material Decoys Chemring s Special Material Decoys rapidly oxidise in air to generate an Infra-Red signature to protect against advanced heat-seeking air-to-air and surface-to-air missile threats. Used on multiple platforms including fast-jets, helicopters and transport aircraft. Material is dispensed from conventional cartridges, or a BOL dispenser to provide a pre-emptive solution to prevent missile lock-on before launch. BOL- Infra-red cassette M211 1 x1 decoy cartridge Chinook CH-47 dispensing flares and Special Material Decoys Infra-red image of BOL IR preemptive decoy 28

29 Countermeasures - Capabilities Naval Decoys Chemring is the world leader in the provision of naval anti-ship missile countermeasures or soft kill expendables for protecting warships. It is the prime supplier of passive radio frequency / infra-red decoys to the Royal Navy, many NATO and other navies throughout the world. Type 45 Destroyer HMS Dauntless fitted with Chemring s Naval decoys Infra-red chaff fired from launchers on board Type 23 Frigate HMS Iron Duke 130mm round firing 29

30 Countermeasures - Capabilities Naval launcher Chemring s CENTURION launcher is a twelve barrelled fully trainable launcher that optimises decoy placement, minimising the need for ship manoeuvre, delivering rapid, accurate and enhanced protection, increasing survivability and sustainment of naval platforms. CENTURION delivers accurate payload placement to maximise decoy effectiveness Fixed Launcher CENTURION can be easily retro-fitted to a broad number of platforms as well as operating autonomously on a range of vessels. Centurion provides a major improvement in ship borne EW defensive capabilities and can also address surface threats, torpedo threats, and has the potential for longer range offensive capability. CENTURION can be configured with a range of 130mm rounds, as well as being adaptable to other calibres, to suit mission profiles. CENTURION Trainable Launcher 30

31 Sensors - Capabilities Force Protection Innovation Chem Bio Detection Cyber security, autonomy and connectivity Electronic Warfare 31

32 Sensors - Capabilities Force Protection From technology to capability Roke s R&D and innovation generating solutions to complex sensing problems HMDS vehiclemounted IED detection R-VISOR autonomous mine detection Disruptors safely neutralise IEDs, protecting assets and forensic evidence 3D Radar GPR antenna arrays SHARD handheld reconfigurable IED detection 32

33 Growth drivers Case Study: HMDS counter-ied systems development and market penetration HMDS HMDS originally funded as urgent operational requirement in Iraq and Afghanistan for US DoD Significant additional sales to coalition forces Canada, Australia, Spain, Italy, Turkey The system is transitioning to baseline capability through customer funded R&D. Solution includes Roke developed detection technologies. Significant international demand remains 3d-Radar 3d-Radar acquired to provide complementary non-itar solutions Opportunities in Middle East are progressing positively 3d-Radar solutions marketed in adjacent markets. Applications include infrastructure, tunnel detection and industrial survey Hand-held and Robot HMDS technologies utilised in Groundshark hand-held detector Initial orders received, substantial opportunities in pipeline Small remotely operated vehicle-based system also developed Originally a single solution for a single customer, GPR capability has now transitioned to a family of solutions The HMDS is a combat proven, high-performance ground penetrating radar (GPR) system providing rapid detection of landmines and other explosive devices (IEDs) Groundshark employs HMDS technologies to provide latest generation hand-held solution for land mine and IED detection 33

34 Sensors - Capabilities Chem Bio Detection Chemring is a leading provider and systems integrator or advanced point and stand-off chemical threat detection systems and biological agent detectors. As of January 2017 Chemring is the only manufacturer to be participating in all three initial R&D contracts for the Next Generation Chemical Detector Program of Record. Funded development of Chemring s sole source position on the Joint Biological Tactical Detection System is ongoing. In 2017, the programme is expected to move from the engineering and development phase into low rate initial production. The ISCAD passive infra-red Chemical detection system is fitted in the Stryker NBCRV JUNO Hand-held chemical detector PGR-1064 Explosives, narcotics, chemical warfare agents, and toxic chemical detection JBPDS Automatic detection and identification of airborne biological agents I-Collector Low cost biological detection and collection 34

35 Sensors - Capabilities Electronic Warfare Chemring s EW technology detects, intercepts, locates and disrupts enemy communications on a tactical and strategic level. Chemring also provides solutions to protect friendly forces communication networks. Tactical Electronic Warfare system for radio Direction Finding and interception Strategic signals intelligence geolocation and intercept SAMPSON Advanced processing algorithms for the radar fitted to Type 45 Destroyer HMS Daring Locate-T A mobile version of LOCATE to extend range and improve accuracy 35

36 Sensors - Capabilities Cyber Security Chemring provides full lifecycle cyber security, starting with awareness and education at both board and at a deeptechnical level. We can fully assess a system, be it a product or an entire organisation, looking at cyber risk and applying appropriate mitigation to protect them according to their unique threat profile. Chemring can provide ongoing monitoring, managing and keeping pace with the everchanging threat landscape. SmartToken Making commercial devices suitable for government use A turnkey suite of modular products for lawful intercept Crypto network design and device management tool Passive content inspection network probe Bio-inspired cyber security solution for enterprise networks 36

37 Sensors - Capabilities Innovation Chemring is one of the UK s leading suppliers of innovative solutions, product development and contract R&D. With more than 400 patents, Chemring continually invests in technology, people and research to rapidly solve complex problems and provide state-of-the-art products that meet the needs of customers worldwide. Video Moving Target Indication and analytics Churchward Radio transmitter detection and direction finding. Autoland Enables a rotatory wing UAV to land on a moving platform. Altimeters for UAVs and target drones Portable 3G network 37

38 Energetics - Capabilities Aircrew egress / safety Missile Components Space 38

39 Energetics - Capabilities Aircrew Egress / Safety Canopy cutting cords to assist in canopy break-up and removal Chemring designs and manufactures a range of safety systems used in emergency situations including crew egress. These products are supported by our safety testing equipment, including communications and oxygen supply testing. Scot Communication and Oxygen System Tester (SCOT) Emergency Egress Handles Exclusive supplier to Martin Baker, the world s leading manufacturer of ejection seats Joint Combined Aircrew Systems Tester (JCAST) 39

40 Energetics - Capabilities Space Chemring is a leading space component supplier, with a 55 year heritage proven through space programmes. Chemring actuators, thrusters and retractors are used on a number of significant NASA and ESA programmes including the Atlas, Delta and Titan family of launch vehicles, space exploration vehicles and satellites. Over 200 high-reliability Chemring products contributed to the successful landing of NASA s Curiosity rover on Mars. In collaboration with the Gioconda consortium, Chemring is supporting the UK MOD s miniaturised satellite research project currently being developed for space research. Large thrusters are used for booster rocket separation, including the Atlas launcher. 40

41 Energetics - Capabilities Missile Components Chemring supplies a wide range of high quality, high reliability, zero maintenance components supporting a number of missile, bomb and torpedo programmes across an international military customer base. US Tomahawk long range cruise missile uses a number of Chemring products within its launch sequence PAC-3 Surface to Air missile Chemring also supplies rocket motors, with a strong track record in fuze and warhead design, manufacture and integration Rocket Weapon Release Cartridges NLAW disposable anti-tank weapon 41

42 Energetics - Capabilities Signalling, screening & illumination Demolition stores Law enforcement and crowd control Mine & obstacle breaching systems 40mm grenades 42

43 Energetics - Capabilities Signalling, screening & illumination Chemring has an extensive portfolio of products that covers illumination, signalling, search and rescue, screening, training, law enforcement and high energy products. Illumination mortars Our screening and obscuring products can be used for rapid and highly effective concealment of troops and equipment in the visual, infra-red and laser wavelengths during operations and training. Vehicle launched grenades for screening Screening smokes 43

44 Military Pyrotechnics - Capabilities Law enforcement Chemring manufactures a range of non-lethal security products for military and law enforcement applications. Products include: - CS smoke pellets - Baton rounds - Rubber bursting CS grenades - Vehicle launched grenades - Stun grenades 40mm baton round Illumination mortars CS and Stun grenades 44

45 Military Pyrotechnics - Capabilities 40mm grenades Chemring manufactures low and high velocity High Explosive and High Explosive Dual Purpose ammunition. Chemring also produces a new range of 40mm extended range low velocity ammunition for under-slung infantry rifle grenade launchers. Special Forces troops using under-slung rifle 40mm grenade launcher Illumination mortars Soldier carrying a bandolier of 40mm High Explosive grenades 45

46 Military Pyrotechnics - Capabilities Mine & obstacle breaching systems Chemring is the leading manufacturer of man-portable obstacle breaching systems for quickly clearing safe passageways through antipersonnel minefields, IED threat areas, multi-strand wire and other obstacles. APOBS is a self-contained, oneshot, expendable linear demolition charge which can be transported and deployed by a two person team Reusable, inert training versions are also available. APOBS firing Advanced Performance Bangalore Torpedo (AP Bangalore) gives significant improvement in performance and is easier to carry and use. and detonating. 46

47 Military Pyrotechnics - Capabilities Demolition stores Sheet Explosive Chemring has developed a complete capability in demolition stores to meet the needs of military users for Explosive Ordnance Disposal, field engineering and demolition. We provide a full range of explosive products from initiation systems to main charges, both bulk explosive and cutting charges. Sabrex flexible Linear cutting charge C4 Mouldable Plastic Explosive 47

48 Our Businesses 48

49 Organisation Chart Chemring Group PLC Operating Business Units Countermeasures Sensors Energetics Chemring Countermeasures UK Chemring Technology Solutions (UK) Chemring Defence (UK) Chemring Energetic Devices (USA) Chemring Countermeasures USA (Kilgore Flares) Roke (UK) Chemring Ordnance (USA) Chemring Energetics (UK) Chemring Countermeasures USA (Alloy Surfaces) Chemring Australia Chemring Sensors & Electronic Systems (USA) NIITEK & Chemring Detection Systems Chemring Prime Contracts (UK) Military Pyrotechnics Chemring Nobel (Norway) Energetic Sub-systems 3d-Radar (Norway) 49

50 Countermeasures Chemring Countermeasures Location: Salisbury, Wiltshire, UK Number of employees: 425 Typhoon flare Naval decoy deployment Centurion launcher Chemring Countermeasures has world-leading decoy technology for air and naval platforms Main UK supplier of decoy flares and chaff to protect military aircraft from electro optic, infra-red and radio frequency guided missiles and has developed a range of tailored spectral, thrusted and multi-shot flare and chaff products 30 million investment in fully automated production facility, able to provide a significant increase in capacity to meet the high surge requirements during times of conflict Strong position in naval countermeasures Centurion naval launcher developed for perceived UK and world market need for trainable launcher Licensed explosive site complying with all HSE requirements in accordance with UK Legislation - The Explosive Regulations 2014 Constant research and development requirement to maintain technology lead supported by a dedicated R&D team and comprehensive environmental test facilities. The majority of programs are funded by UK MoD combined with some PV programs to support export customer requirements Customers are National Ministries of Defence including the UK, Germany, Italy, Norway, Netherlands, Singapore and Saudi Arabia 50

51 Countermeasures Chemring Australia Location: Lara, Victoria, Australia Number of employees: 81 F-18 P-3 Orion ASCEND military smoke grenade Chemring Australia manufactures flares and pyrotechnics, and distributes other Group products for the Australian market $36 million investment in a state of the art automated countermeasures facility to manufacture KC-38 and CM-118 flares. Ten-year supply agreement underpinning on-shore manufacturing capability Recently awarded a contract to become a qualified supplier of MJU-66/B flares for the F35 Joint Strike Fighter for US and global market Manufactures a small range of military pyrotechnics and marine pyrotechnics Provides route to Australian market for other Group products Establishing electronic systems development and support capability Principal customer is Australia s Department of Defence Marine hand-smoke 51

52 Countermeasures SMD cloud in mixed decoy cocktail Alloy Surfaces Location: Chester Township, Pennsylvania, USA Number of employees: 150 HMDS Infra-red view of BOL-IR M211 Helicopter decoy - Alloy Surfaces manufactures Special Material Decoys (SMDs) - SMDs eject a cloud of patented pyrophoric metal leaves which heat up on contact with air to create an infra-red (IR) area decoy - SMD s and new variants have spectral, kinematic and area decoy characteristics likely to future-proof the technology against most foreseen IR threats - BOL-IR deploys cassettes of Special Materials as a pre-emptive IR decoy preventing guided missiles from locking-on to the aircraft before they are launched - Alloy Surfaces also offers SMD material as a covert hand thrown infra-red signalling device for soldiers on the ground - Customers are US Navy, Marine Corps Army and Air Force, with significant exports to UK and Australia IR illumination device 52

53 Countermeasures Kilgore Flares Location: Toone, Tennessee, USA Number of employees: 311 F-22 F-35 Kilgore Flares is a high volume manufacturer of traditional magnesium flares, with a sole source position on US next generation fighters Products dominated by traditional high volume MTV flares, with growth from advanced flares for new platforms (F-22 and F-35) Manufactures the standard US flares: - M206 - a 1 x1 square flare for helicopters and the C MJU-7 a 2 x 1 rectangular flare for the F-16 - MJU-10 a 2.52 x 1 rectangular flare for the F-15 New products include M212 spectral flare for helicopters Kilgore also manufactures air dropped marine location markers and flares Customers are US Navy, Marine Corps Army and Air Force, with significant exports to UK and Australia Marine location marker deployment 53

54 Sensors HMDS HMDS with 3D-Radar Handheld GPR/MD 3d-Radar Commercial Chemring Sensors & Electronic Systems (CSES) IED Detection Location: Sterling, Virginia, USA and Trondheim, Norway Number of employees: 60 CSES (Dulles & Norway) designs and develops the Husky Mounted Detection System (HMDS) GPR payload, and now includes 3d-Radar s civil and military products - World lead in vehicle-based mine and IED detection based on Ground Penetrating Radar sensor and advanced algorithm technology - Current GPR and Handheld customers dominated by the US Army, but exports now include Canada, Australia, Spain, Poland, Turkey, Saudi Arabia, Jordan, Egypt and Italy - HMDS Achieved US Army Program of Record classification in Solidly positioned for future sustainment, plus phased technology insertion plans for next generation Ground Penetrating Radar (GPR), Wire Detection (WD) and other Counter IED sensors - 3d-Radar acquired in 2014 to add commercial and foreign military GPR - 3d-Radar customer base includes UK MoD, US Government FMS as well as commercial construction, geology, archaeology and rail inspection operations GPR Large Vehicle-Mounted 54

55 Sensors PGR-1064 JBTDS NGCD1 Chemring Sensors & Electronic Systems (CSES) Chem/Bio Detection Location: Charlotte, North Carolina, USA Number of employees: 72 CSES (Charlotte) designs and manufactures hand-held and platform integrated Chemical and Biological detection systems Acquired in 2011 to add chemical/biological detection to complete the Force Protection detection portfolio Provides the two main sensors for the US Stryker NBC Reconnaissance Vehicle: JBPDS (point biological) and JSLSCAD (standoff chemical) Hand-held products developed for military, security and non-military applications: JUNO (chemical vapors) and PGR-1064 (chemical liquids/solids) Prime contractor on the JBTDS (tactical biological) program currently in development and qualification testing Active on three variants of NGCD (Next Generation Chemical Detector) program, having completed TMRR (Technology Maturation and Risk Reduction) phases in 2017; Competing for EMD/Production contracts in 2018 JBPDS JUNO JSLSCAD Main customer is US JPEO-CBD 55

56 Sensors Roke Autoland Location: Hampshire and Gloucestershire, UK Number of employees: 390 A leading UK advanced technology, engineering and advisory services business. Sensors for soldiers Cyber security We aim to ENABLE our clients to deliver competitive advantage, DEFEAT their adversaries and to DEFEND their people, assets and secrets. We provide advisory services, research, engineering and design in cyber, data analytics, connectivity and automation. We work at the heart of our clients missions, enabling them to harness the latest technology through the sharing of knowledge, ideas and generation of thought leadership. We have a mixture of scientists, engineers and consultants to develop engineering solutions to some of the world s most difficult technology problems. High margin business with scope to expand into commercial applications, including cyber operations and space. Maritime autonomy Customers; UK Government, defence industry, manufacturing and infrastructure

57 Sensors Chemring Technology Solutions Resolve portable EW Location: Romsey and Poole, UK Number of employees: 78 Locate SIGINT Smartlink deployable base-station Chemring Technology Solutions is the Group s centre of excellence in land electronic warfare, with a complementary portfolio in IED detection and neutralisation systems, including vehicle-mounted and hand-held sensors, disruptors and initiation systems. Core portfolios are Resolve (man-portable EW), Locate (strategic Signals Intelligence), Initiation Devices and IED Detectors and Disruptors New opportunities include: Smartlink deployable 3-G mobile base station; Smartswitch mobile phone policy-on-the-device; Perception cyber-security protection; subsystems for UAVs and non-defence Protection opportunities Trusted by armed forces, governments and commercial customers worldwide their understanding of operational requirements allows them to deliver products able to meet today s asymmetric threat environments. Their products are relied upon by the best equipped armed forces in the world, including the UK MOD and NATO allies. Customers are in 47 countries and include military and commercial organisations and primes including Ultra, Lockheed Martin and Cobham LoRIS remote initiation 57

58 Energetics Chemring Energetic Devices (Downers Grove) Atlas rocket & boosters Location: Downers Grove, Illinois, USA Number of employees: 199 Aircraft ACES II Egress components JASSM Lug Retraction Device Chemring Energetic Devices (Downers Grove) manufactures missile & ammunition components and space thrusters and test equipment Scot acquired in 2008 to bring US footprint for ejection seat and missile components complementing CEUK and adding new space market Manufactures pyrotechnic components for missiles, space launcher and aircrew egress also test equipment for aircrew life-support systems Customers are USAF, USN, Boeing, and FMS countries for aircraft DCA/PAD egress safety; Raytheon and Lockheed Martin (Lug Retraction) for missile components; NASA, Northrop Grumman and ULA for space thrusters, explosive bolts and pyro-valves JCAST 58

59 Energetics Chemring Energetic Devices (Torrance) PAC-3 Missile Location: Torrance, California, USA Number of employees: 213 (total including Downers Grove) Safe/arm device Chemring Energetic Devices (Torrance) manufactures space initiators and separation components and Safe / Arm system for the PAC-3 missile Hi-Shear acquired in 2009 to build clear lead in US space market with Scot, as well as adding advanced missile safe / arm technology PAC-3 Electronic Safe/Arm Fuze is the largest single product line High margin business with scope to use Chemring European presence to expand sales into lucrative European satellite market Sole-source for NASA Standard Initiator, and lead supplier of low shock satellite separation devices Satellite separation nuts Customers are Lockheed Martin (PAC-3 and space) Boeing, Harris and ULA Explosive Bolts 59

60 Energetics Ejection Seat Chemring Energetics UK Location: Ardeer, Ayshire, UK Number of employees: 295 NLAW Shoulder-launched missile Sabrex cutting charges Metron range of actuators CEUK manufactures propellants, rocket motors, explosives and pyromechanisms for aircraft, missile and demolitions - Nobel acquired in 2005, Leafield in Strong position in aircrew egress through supply of propellants, cartridges and rocket motors to Martin-Baker - Supply of missile components and sub-systems including rocket motors for the UK s Next Generation Light Anti-tank Weapon (NLAW) and 2.75 rockets - UK MoD partnering agreement for high explosives and modern demolition stores Detonators, Bangalore Torpedo, Sabrex, and in future sheet and block explosives - Metron actuators are a growing non-defence business - Customers are UK MoD, Martin-Baker, Saab, Thales and BAES 60

61 Energetics Chemring Nobel Location: Saétre, Norway Number of employees: 116 High Explosive Compositions Chemring Nobel synthesises powdered base explosives for high performance military and civil applications Acquired in 2007 to provide internal supply of HMX and RDX-based compositions Leader in high performance compositions for pressable, cast cure and melt pour explosive manufacture Supplies high-quality materials with controlled powder morphology to optimise performance with insensitivity Customers in the defence market are Nexter, ATK, Aerojet, Nammo, Diehl and Rheinmetall Italy; in the commercial market Schlumberger and Dyno Nobel 61

62 Energetics Military Pyrotechnics Vehicle Launched Grenades Chemring Defence UK Location: Draycott, Derbyshire, UK Number of employees: 141 Conventional & Compact Smoke Chemring manufactures pyrotechnic products, payloads and mine-breaching systems for military and security users Mature market with very little product innovation Military products are flares, smokes, trip-flares, signalling cartridges and training products Security products include CS grenades and cartridges and stun grenades Day/night distress signal for both military and non-military users Customers are UK MOD, Europe and Middle Eastern users CS products Day/night distress smoke & flare 62