Chemring full-year revenue up 15%; SFO opens criminal investigation

Chemring posted a rise in full-year revenues on Thursday as the Serious Fraud Office announced that it has launched an investigation into the defence group and one of its subsidiaries.

The SFO said it has opened "a criminal investigation into bribery, corruption and money laundering" arising from the conduct of business by Chemring and Chemring Technology Solutions Limited.

In its results for the year to the end of October 2017, Chemring said: "The investigation commenced following a voluntary report made by CTSL relating to two specific historic contracts, the first of which was awarded prior to the group's ownership of the business concerned and the second in 2011, neither of which are considered to be material in the context of the group.

"It is too early to predict the outcome of the SFO's investigation. The group continues to co-operate fully with the SFO in its investigation, and will provide a further update as and when appropriate."

The company reported a 15% jump in revenue to £547.5m, as underlying pre-tax profit rose 30% to £44.1m. However, statutory pre-tax profit fell 50% to £4m in the year.

Chief executive Michael Flowers said: "In 2017 the group continued to build on its improved performance of recent years, delivering strong results that exceeded expectations from both a financial and operational performance perspective. Significant progress has been made on the Operational Excellence Programme, with tangible sustainable results already delivered and further improvement in the pipeline.

"Improvements from Countermeasures and Sensors, together with the Operational Excellence Programme, are due to offset scheduled reductions in Energetics. The group began the year with approximately £360m of orders due to be recognised as revenue in FY18, representing 70% of targeted FY18 revenues. FY18 trading performance is again likely to have a significant second half weighting."

At 1205 GMT, the shares were up 3% to 183.60p.