21 November 2017 – interim results
The group has announced its interim results for the six month period to 30 September and these have revealed that underlying revenue increased by 5.9% to £2.64bn (2016: £2.49bn) whilst underlying pre-tax profits rose by 4.9% to £239.5m (2016: £228.4m). Earnings per share on the same basis were 4.0% higher at 38.7p (2016: 37.2p) and the interim dividend was raised by 5.4% to 6.85p (2016: 6.50p). Net debt remained at a similar level to the end of September 2016 at £1.29bn. Although the group’s actual order book has declined slightly to £18.5bn (2016: £20bn) the bid pipeline of potential orders has increased to £12.2bn (2016: £10.8bn). Although these are solid results the share price has fallen back on concerns over a slowdown in UK defence spending but most of the group’s activities are critical and cannot easily be suspended whilst the group also generates about 25% of its business overseas. With adjusted pre-tax profits for the full year likely to be around £525m for earnings per share of 84p we believe the shares are too cheap. BUY.