Company Announcements

FOR IMMEDIATE RELEASE                                                                                                       14 SEPTEMBER 2021

CHEMRING GROUP PLC

SCHEDULED TRADING UPDATE

Chemring Group PLC ("Chemring" or "the Group") today issues a scheduled trading update for the period to 13 September 2021.

Current trading

Trading in the period has progressed as planned despite the challenging environment in which we continue to operate. The outturn for the year ending 31 October 2021 is expected to be in line with the Board's and current analyst expectations.*

The Group's order book at 31 August 2021 was £464m (30 April 2021: £450m), providing full visibility for the remainder of the current financial year based on expected delivery schedules. Order cover for FY22 is building, with Countermeasures & Energetics having 67% order cover of expected revenue and the shorter cycle Sensors & Information sector having 45% cover.  

Financial position

We continue to invest in safety, operational excellence, technology R&D, and the modernisation and automation of our manufacturing facilities. This has been funded by continued strong operating cash conversion, with net debt at 31 August 2021 at £38m, (31 October 2020: £48m; 30 April 2021: £39m). We expect to be able to maintain this strong level of operating cash conversion through to year end which will further reduce the net debt level.

Sector Update

Sensors & Information

The period has seen continued strong performance in the Sensors & Information sector, with order intake up 7% compared to the same period last year.

Roke's information security and technology markets have remained buoyant, with strong customer demand in the national security domain, and good strategic progress made in other areas. Our expectation for the year is that Roke will maintain its recent track record of double-digit growth and strong margins. The acquisition of Cubica on 2 June 2021 has added further market leading capabilities to Roke's technology portfolio and the integration is progressing well.

We have invested in establishing Roke USA Inc. and are working to secure further orders from our US customers for our Electronic Warfare ("EW") systems, a number of which are currently on trial with the US Army.

Our US Sensors business continues to perform well, with all our US Programs of Record delivering to plan during the period.

We continue to support the US DoD in their test and evaluation activities as we progress through the Engineering, Manufacturing and Development phases of the AVCAD chemical agent detection, and the sole source JBTDS biological agent detection Programs of Record. The Low Rate Initial Production contract on the Enhanced Maritime Biological Detection program has progressed positively and we expect the customer to award a Full Rate Production contract later this year.

Countermeasures & Energetics

Performance across the Countermeasures & Energetics sector is progressing in line with our expectations.

Our Countermeasures & Energetics businesses continue to work through some Covid-19 ("CV-19") related challenges associated with the timely completion of customer acceptance tests, supply chain resilience and production workforce resourcing. To date these have not had a material impact on our ability to deliver to customer requirements.

Whilst the process of doing business with government departments has on some occasions slowed as a consequence of the change of administration in the US and the continuation of CV-19 working restrictions, the Countermeasures & Energetics sector received orders totalling £74m in the period from 1 May 2021 to 31 August 2021.

The Tennessee countermeasures manufacturing capacity expansion programme is progressing as planned, with major construction and system commissioning milestones being met. The first incremental revenues from this new facility are expected in the second half of FY22.

Michael Ord, Chief Executive of Chemring, commented:

"This has been another busy period in which the resilience of the Group has been further demonstrated. We continue to make good progress against our strategic and operational goals, as such, our expectations for FY21 are in line with current analyst expectations.*

"We have good momentum as we move into FY22. I am confident the focus we have placed on building a high quality, technology-based business will enable us to take further advantage of our increasing opportunities for growth in the coming years and our long-term prospects remain strong."

-ENDS-

* The Group believes analyst forecasts for adjusted operating profit for the year ended 31 October 2021 are in the range of £56.0m to £59.6m, with a consensus of £57.5m.

For further information:

Rupert Pittman           Group Director of Corporate Affairs,                         01794 463401

                                      Chemring Group PLC             

Andrew Jaques            MHP Communications                                                0203 128 8170

James Bavister

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 FTSE-250 listed global business that specialises in the manufacture of high technology products and the provision of services to the aerospace, defence and security markets

·   Employing approximately 2,300 people worldwide, and with production facilities in four countries, Chemring meets the needs of customers in more than fifty countries

·   Chemring is organised under two strategic product segments: Sensors & Information and Countermeasures & Energetics

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

·   Operating in niche markets and with strong investment in research and development ("R&D"), Chemring has the agility to rapidly react to urgent customer needs

www.chemring.co.uk