Chemring Regulatory News (CHG)

FOR IMMEDIATE RELEASE 17 SEPTEMBER 2014

CHEMRING GROUP PLC

INTERIM MANAGEMENT STATEMENT

Chemring Group PLC ("Chemring" or "the Group") today issues its Interim Management Statement covering the period from 1 May 2014 to date, as required by Rule 4.3 of the Disclosure and Transparency Rules of the UK Listing Authority.

Key points

· Q3 revenue in line with the Group's expectations

· Financial strength continues to improve through repayment of £102.5 million ($167.5 million) of loan notes and signing of new revolving credit facility

· Key research and development contracts won for Sensors & Electronics Programs of Record

· Based on current expectations of order intake and product delivery and absent any material change in customer behaviour, full year expectations broadly unchanged

Michael Flowers, Chief Executive of Chemring, commented:

"Our focus remains on creating a platform for growth, as reflected in our strengthened financial position and the improving quality of our operations. The Group has continued to make progress, and whilst the trading environment remains challenging, I am pleased that Chemring has gained a number of contracts that position the Group for the longer term.

"Current world events and increasing NATO commitment indicate the potential for the recent trend of declining defence spending to moderate. Recent customer enquiries and improved order intake gives us confidence that our markets are stabilising. Whilst the timing of international order placement remains difficult to predict, Chemring is well positioned to benefit from any sustained increase in demand."

Current trading

Revenue from continuing operations for the three month period to 31 July 2014 was £77.5 million, compared with £110.5 million in the same period last year.

The Group's order book at 31 July 2014 was £417.5 million, 3.9% higher than the continuing operations order book of £401.8 million at 30 April 2014. Of the order book at 31 July 2014, 25.8% was for delivery in the current financial year.

Countermeasures

Countermeasures revenue was 2.3% below the same period last year, reflecting its continued stabilisation. In the US, although deferrals in customer order placement have continued, a $22.2 million order was received in August for infra-red decoys from the Alloy Surfaces facility. Chemring Australia has been awarded an AU$5.0 million contract to become a qualified supplier of flares for the F-35 Joint Strike Fighter, strengthening Chemring's position on this platform.

At Chemring Countermeasures UK, work continues to complete the delivery of the advanced countermeasure that has been the subject of long term development. Resolution of technical problems associated with this product is anticipated to enable customer acceptance in the current financial year.

Following the incident at the Kilgore site in February, the appropriate regulatory approvals have been granted and the re-commissioning of the impacted area of the facility will complete by October 2014.

Sensors & Electronics

Revenue in the Sensors & Electronics segment was 54.5% lower than the same period last year, as activity transitions from urgent operational requirements to customer funded research and development contracts in support of long term US Department of Defense ("US DoD") Programs of Record. Reflecting this, Chemring was awarded a $26.1 million contract for the Program of Record for the next generation of the Husky Mounted Detection System ("HMDS"). Chemring has also secured participation in all three initial research and development contracts for the Next Generation Chemical Detector Program of Record, to an initial value of $3.9 million.

The Group continues to pursue opportunities for the sale of ground penetrating radar into non-NATO and commercial markets. Dialogue with a number of customers in the Middle East is ongoing with orders and revenue targeted before the end of the current financial year.

Energetic Systems

Revenue in our Energetic Systems segment was 4.4% lower than the same period last year. Activity levels are stabilising and operational performance continues to improve.

Order intake in the period to 31 July 2014 fell by 17.2% compared to the same period last year. However, since the period end, orders totalling £53.5 million have been received from US and Middle East customers providing essential base load manufacturing activity.

Financial position

The receipt of net proceeds of £134.5 million from the disposal of the European Munitions business has resulted in an improved financial position. At 31 July 2014, the Group's net debt was £116.8 million (30 April 2014: £229.2 million).

Following receipt of these proceeds, £14.5 million ($24.7 million) of the Group's private placement loan notes were repaid at par in June 2014. The Group is now applying a further £88.0 million ($142.8 million) of the disposal proceeds to repay loan notes. This will lead to an accelerated interest payment of £13.0 million ($21.1 million) being incurred in the current financial year, equivalent to 14.8% of the principal repaid. In view of the non-recurring nature of this payment, it will be treated as a non-underlying item in the Group's financial statements.

On 31 July 2014, Chemring successfully concluded the refinancing of its revolving credit facility with the signing of a £70.0 million, four year facility. In addition, the Group entered into ancillary UK facilities of £70.0 million in respect of bonding and trade finance requirements, and a $15.0 million US facility to fulfil trade finance and working capital requirements.

Outlook

The Group has continued to make progress, implementing structural and financial change to position the Group for long term growth. While the trading environment remains challenging and there is potential for a Continuing Resolution in the US, Chemring has gained a number of contracts that position the Group for long term Programs of Record. Work continues to gain production orders for Sensors & Electronics products to offset the pause in US DoD manufacturing, however the timing of international order placement remains difficult to predict.

Based on current expectations of order intake and product delivery, and absent any material change in customer behaviour, the Board's current outlook for this financial year is broadly unchanged.

-ENDS-

The next scheduled announcement from Chemring will be a trading update to be issued in November 2014.

For further information:

Michael Flowers Group Chief Executive, Chemring Group PLC 01794 833901

Steve Bowers Group Finance Director, Chemring Group PLC 01794 833901

Rupert Pittman Group Director of Communications and

Investor Relations, Chemring Group PLC 01794 833901

Andrew Jaques MHP Communications 0203 128 8100

John Olsen

James White

Cautionary statement

This announcement contains forward-looking statements that are based on current expectations or beliefs, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as anticipate, target, expect, estimate, intend, plan, goal, believe, will, may, should, would, could, is confident, or other words of similar meaning. Undue reliance should not be placed on any such statements because they speak only as at the date of this document and, by their very nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and Chemring's plans and objectives, to differ materially from those expressed or implied in the forward-looking statements.

There are a number of factors which could cause actual results to differ materially from those expressed or implied in forward-looking statements. Among the factors that could cause actual results to differ materially from those described in the forward-looking statements are; increased competition, the loss of or damage to one or more key customer relationships, changes to customer ordering patterns, delays in obtaining customer approvals for engineering or price level changes, the failure of one or more key suppliers, the outcome of business or industry restructuring, the outcome of any litigation, changes in economic conditions, currency fluctuations, changes in interest and tax rates, changes in raw material or energy market prices, changes in laws, regulations or regulatory policies, developments in legal or public policy doctrines, technological developments, the failure to retain key management, or the key timing and success of future acquisition opportunities or major investment projects.

Chemring undertakes no obligation to revise or update any forward-looking statement contained within this announcement, regardless of whether those statements are affected as a result of new information, future events or otherwise, save as required by law and regulations.

 Notes to Editors

· Chemring is a global business that specialises in the manufacture of high technology products and services to the aerospace, defence and security markets

· Employing more than 3,500 people worldwide, and with production facilities in four countries, Chemring meets the needs of customers in more than fifty countries worldwide

· Chemring is now organised under three strategic product segments: Countermeasures, Sensors & Electronics, and Energetic Systems

· Chemring has a diverse portfolio of products that deliver high reliability solutions to protect people, platforms, mission and information against constantly changing threats

· Operating in niche markets and with strong investment in research and development, Chemring has the agility to rapidly react to urgent customer needs

www.chemring.co.uk