Chemring Regulatory News (CHG)

FOR IMMEDIATE RELEASE 25 NOVEMBER 2013

CHEMRING GROUP PLC

POST-CLOSE STATEMENT

Chemring Group PLC ("Chemring" or "the Group") today provides a post-close statement, having entered the close period in respect of its results for the year ended 31 October 2013, which are scheduled to be announced on 23 January 2014.

Trading

The Board's expectations for the Group's trading performance for the financial year ended 31 October 2013 remain in line with the guidance given at the trading update issued on 11 October 2013.

The issues regarding the US Government shut down have largely been resolved. The Group continues to work through specific production issues, particularly those at Kilgore, and has taken further steps to strengthen the management team at that business.

Revenue in the final quarter was approximately £185 million, down 24% from £242 million in the comparative period. For the year to 31 October 2013, revenue was approximately £625 million (2012: £740 million). The Group's order book at 31 October 2013 was approximately £702 million, 8% lower than at the end of the previous financial year. These reductions reflect the significant budgetary pressures in Chemring's core defence markets and order deferrals among the Group's non-NATO customer base.

Financial position

As reported on 11 October 2013, delays in deliveries to customers in the Middle East have had a short-term impact on cash receipts, reducing the operating cash inflow for the final quarter of the financial year.

However, despite these effects, net debt reduced by over £45 million in the quarter to approximately £249 million at 31 October 2013 (2012: £245 million). Furthermore, since 31 October 2013, the impact of the delays in deliveries has partially unwound with the receipt of £14 million of cash from the relevant customers.

The Group continues to have a positive relationship with its debt holders and is maintaining a strong focus on managing cash and working capital.

Strategic planning process

Despite the adverse market backdrop, Chemring is making good progress with its strategic planning process.

The majority of this process is now complete, providing a clearer view for each of Chemring's business units of their market environment, competitive dynamics and future prospects.

The planning process has confirmed the Group's market-leading positions and the strength of its technology in a number of areas, and has highlighted new defence and adjacent non-defence opportunities that the Group has yet fully to exploit. In addition, the process has identified a number of further operational initiatives which will allow the Group to reduce the impact of the challenges that external market conditions provide. Chemring has both reshaped its management team better to handle these challenges, and set robust targets for which management throughout the organisation is fully accountable.

Chemring has also concluded that there are a number of business units within the Group which do not form part of its longer term strategy. The Board has therefore started a process to divest of certain of these businesses which is expected to result in an improved financial position for the Group.

Segmental review

Countermeasures

Chemring has a leading share of the Countermeasures market and unsurpassed technological capability. However, following the drawdown from Afghanistan, the addressable market has contracted dramatically and will not grow significantly until new platforms, such as the F-35 and Typhoon, achieve full fleet operational capability. The Group therefore considers that current volumes are close to our customer's minimum sustaining levels.

The Group has concluded that it will invest in maintaining its technical leadership and supporting customer-funded research projects, while also delivering operational efficiencies, principally through resolving production quality issues at its US businesses.

Sensors & Electronics

Chemring's Sensors & Electronics businesses continue to perform well, often as a result of urgent operational requirements.

However, certain programmes in the US, such as the Husky Mounted Detection System Ground Penetrating Radar, are beginning the transition into long-term capabilities, while others, such as the Stryker Nuclear Biological Chemical Reconnaissance Vehicle programme, will complete during 2014.

Nonetheless, the Sensors & Electronics segment presents the greatest opportunity for the Group to diversify into adjacent and new markets.

The Group's focus will therefore be on business development activity across NATO markets to exploit our current product range, on technology investment to fill gaps in the product portfolio and to ensure a strong position on new programmes as they arise.

Pyrotechnics & Munitions

While demand from NATO customers for Chemring's Pyrotechnics & Munitions products has reduced, the Group continues to hold strong positions in the markets for naval, light armoured vehicle and tank munitions. The Group's businesses continue to develop their position in non-NATO markets, where significant growth opportunities exist.

Cash flow generation in this segment is improving, with significant focus being placed on securing improved contractual terms with customers and progressively reducing working capital.

Energetic Sub-Systems

The Energetic Sub-Systems segment comprises a number of separate businesses, each with differentiated products and capabilities. There has been a number of operational issues within this segment which have impacted recent performance, and addressing these issues should enable margins to recover over time and order backlog to be reduced.

Mark Papworth, Chief Executive, commented:

"Although the defence environment remains undeniably challenging, we continue to take the necessary steps to give Chemring a stable platform and rebuild shareholder value. These steps will be driven by the results of our strategic planning process that has crystallised our long-term objectives for the business, determined our strategy for the next three years and enabled a re-alignment of our portfolio."

-ENDS-

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 unaudited information based on management accounts and 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