Chemring Group PLC Interim Management Statement

27 February 2013 Chemring Group PLC

Chemring Group PLC ("Chemring" or "the Group") today issues its Interim Management Statement covering the period from 1 November 2012 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 during the first three month period was £136.1 million, compared with £132.4 million in the prior year. Improved trading performances in Pyrotechnics and Counter-IED were offset by weaker performances in Countermeasures and Munitions. Despite the general decline in current NATO defence spending, the Group's order book is currently £756.7 million, marginally lower than the £760.9 million order book at 31 October 2012. A weak order intake in Munitions was compensated by a stronger order intake in Counter-IED, where significant orders were awarded in the period, including a contract for Joint Services Lightweight Standoff Chemical Agent Detectors (US$28.5 million) with the US Army and a contract for the provision of Husky Mounted Detection System (‘HMDS’) Ground Penetrating Radar (US$32 million) with the US Army. 51.6% of the order book at the end of January 2013 was for delivery in the current financial year.

Counter-IED

Revenue from our Counter-IED business in the quarter was 33% higher than for the same period last year, when there was a pause in demand for HMDS from the US Department of Defense. The solid order intake in the period included the award to NIITEK of a contract for HMDS systems, together with spares and training, for the Spanish Army.

Countermeasures

Revenue at our Countermeasures business was 30% below the same period last year. This was primarily as a result of the lower opening order book and production delays at our US Countermeasures businesses, which are expected to be recovered during the course of the year.

Pyrotechnics and Munitions

Revenue in our Pyrotechnics business increased by 110% compared with the same period last year, whilst revenue at our Munitions business was 22% lower than the same period last year, reflecting the weighting of our production capacity towards smoke and illumination rounds for Middle East customers, rather than artillery ammunition. Order intake at our Munitions business continues to be impacted by delays in the placing of major contracts and by the granting of export licences.

Current financial position

The Group's net debt at the end of January 2013 was £285.9 million (31 October 2012: £244.8 million, 31 January 2012: £316.9 million). The Group continues to closely manage cash and working capital balances.

Outlook

As outlined at the Group’s preliminary results release on 24 January 2013, although budget uncertainties continue to impact wider market confidence across the Group’s US, UK and European defence markets, Chemring remains focused on driving improvements in its operational performance and restructuring its businesses in order to provide the Group with greater resilience.

An update on progress made against the key priorities for 2013, as outlined at the Group’s preliminary results release, will be given alongside Chemring’s interim results in June 2013.