(Alliance News) - Chemring Group PLC on Friday said trading in its recently completed financial year was in line with its own and analyst expectations, as it announced it will discontinue its explosive hazards detection business after a review.

The Romsey, England-based provider of technology products and services to aerospace, defence and security markets said that, in the financial year that ended on October 31, net debt doubled to GBP14.4 million from GBP7.2 million at the end of October 2022.

It reported "strong" operating cash conversion of 90% of earnings before interest, tax, depreciation and amortisation, compared to a three-year average of 101%. It said it used the cash intake to fund growth opportunities.

Chemring said it has decided to invest a further GBP30 million in increasing the capacity of Chemring Nobel. The Saetre, Norway-based chemicals division, which dates back to Alfred Nobel, makes specialized energetic materials for defence and civilian industries.

Chemring expects the investment, which includes a GBP90 million capacity expansion plan across its three Energetics businesses announced in June, to deliver GBP25 million of additional annual revenue.

"The group continues to see robust market conditions, with increasing customer demand for its technology-driven solutions and a resurgent demand for traditional defence capabilities. This robust growth outlook is expected to be maintained over the long term," Chemring said.

Meanwhile, the company announced a strategic review of its US Sensors business. It said that after the US Army's decision to curtail production of the Husky mounted detection system, Chemring concluded that a focus on biological detection and security markets "presents the best opportunity to maintain strong margins and deliver growth".

Resulting from its review, Chemring's explosive hazard detection business will be treated as a discontinued operation with a non-cash impairment of GBP31 million.

"The group has moved quickly and decisively to reposition and reshape its US Sensors business to ensure sustainable competitive advantage in its targeted biological detection and security markets," Chemring said.

Chemring shares were 0.1% higher at 297.90 pence each on Friday morning in London.

By Tom Budszus, Alliance News reporter

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