Chemring Regulatory News (CHG)

FOR IMMEDIATE RELEASE 28 AUGUST 2013

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 2013 to date, as required by Rule 4.3 of the Disclosure and Transparency Rules of the UK Listing Authority.

Current trading

Revenue from continuing operations for the three month period to the end of July 2013 was £142.8 million, compared with £165.1 million in the same period last year. This revenue decline was anticipated and the Board's current outlook for the full year remains in line with market expectations.

Revenue levels reflect the ongoing deterioration in defence spending within our NATO markets and delays in order placement by customers in each of our geographic markets. Indications from the US Department of Defense ("the DoD") are that all product orders will be delayed as a result of sequestration, continuing resolution and budget management.

The Group's order book at 31 July 2013 was £747.8 million, 6.7% higher than the £701.1 million order book at 30 April 2013, but lower than the £909.9 million order book at 31 July 2012. 24.7% of the order book at the end of July 2013 was for delivery in the current financial year.

Countermeasures

Revenue at our Countermeasures business was 32.2% below the same period last year. This was primarily due to the lower opening order book but was also due to DoD delays to product acceptance, order funding and awards. Consequently, order intake fell 30.8% compared to the same period last year.

In our Interim Results announcement in June 2013, we referred to a significant countermeasures order from a Middle East customer, for delivery in the second half of this financial year. Whilst this order has not yet been confirmed, it is currently expected to be received and delivered before the end of the financial year.

Sensors & Electronics

Revenue from the Sensors & Electronics segment was 6.0% lower than for the same period last year, primarily due to the phasing of activity under the US$579 million Husky Mounted Detection System ("HMDS") Indefinite-Delivery/Indefinite-Quantity ("IDIQ") contract, together with other major contracts. A strong order intake in the period included a further delivery order (US$76.7 million) to provide spares under the HMDS IDIQ contract. The period of performance for this delivery order is through to May 2014. An order for HMDS was also received from Turkey, and the system continues to generate interest in our NATO markets. In addition, we received an order from the US Army for Joint Biological Point Detection Systems and associated spare parts and services (US$25.2 million).

Pyrotechnics & Munitions

Revenue in our Pyrotechnics & Munitions segment decreased by 7.6% compared with the same period last year, reflecting delays in export licence approvals and slower than expected placement of orders.

Order intake in the quarter was mixed, with land ammunition contract delays offset by orders for naval ammunition from customers in the Middle and Far East.

Energetic Sub-Systems

Revenue in our Energetic Sub-Systems segment was 18.7% lower than the same period last year, reflecting a significant decline in sales of build-to-print fuze components and cartridges, and delays in the production of components for the PAC-3 missile programme.

Order intake in the period rose by 16.1% compared to the same period last year, driven by strong demand for aircraft safety and satellite sub-systems.

Performance Recovery Programme

The Performance Recovery Programme set out by the new management team in January 2013 is progressing well, with improvements in operational efficiency and responsiveness starting to come through. Our customers are beginning to see the benefits of a more co-ordinated approach to product integration and technology development.

We have begun a comprehensive planning and budgeting process covering the next three years, which will give us a better understanding of the markets in which we operate and where development spend needs to be focused. This review is comprehensive and covers all aspects of the business, and will ultimately lead to a set of strategic objectives that will set out our longer term aspirations for the business.

Financial position

The Group's net debt at the end of July 2013 was £295.2 million (31 July 2012: £315.2 million).

Outlook

Governments' budget uncertainties and a lack of visibility will continue to impact confidence in the Group's markets, as order placement decisions are delayed. However, the quality of Chemring's operations is improving as a result of the Performance Recovery Programme, and we remain focused on driving further enhancements in operational performance and restructuring the business to provide greater resilience.

As previously highlighted, we have begun a comprehensive planning process that will detail our business strategy and market forecasts for the next three years, and this will feed directly into a detailed budgeting exercise for our next financial year. This will give greater clarity on the future direction of the business, and significantly improve our understanding of prospects within our end markets. The findings of this process will be communicated in due course.

The Board's current outlook for this financial year, absent any material change in customer behaviour, remains in line with market expectations.

-ENDS-

The next scheduled announcement from Chemring will be a post-close trading update, expected to be issued in November 2013.

For further information:

Mark Papworth Group Chief Executive, Chemring Group PLC 01489 881880

Steve Bowers Group Finance Director, Chemring Group PLC 01489 881880

Rupert Pittman Group Director of Communications and

 Investor Relations, Chemring Group PLC 01489 881880

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 manufacturing business with facilities in eight countries, selling high technology electronics and energetic products to over sixty countries worldwide.

• The Company has a diverse portfolio of products protecting military people and platforms against a constantly changing threat.

• Operating in niche markets with short product development timescales, Chemring has the agility to rapidly react to urgent customer needs.

• Strong R&D investment for new products and improvements in technology continually allows Chemring to expand its addressable markets.

www.chemring.co.uk