Trading Update

FOR IMMEDIATE RELEASE                                                                                                           06 OCTOBER 2022

CHEMRING GROUP PLC

("Chemring" or "the Group")

FY22 TRADING UPDATE AND CONTRACT WINS

FY22 Trading update

Trading in the period to 30 September 2022 has progressed as planned, despite the challenging macro-economic environment in which we continue to operate.

Expected FY22 revenue is fully covered by the order book and the outturn for the year ending 31 October 2022 is expected to be in line with the Board's expectations.

As previously announced, the results for the year ending 31 October 2022 will be released on 13 December 2022.

The Group has received a number of significant orders during the period, detailed below. As at 30 September 2022, the order book was £678m (30 April 2022: £488m), with £40m of the increase attributable to FX translation arising from the stronger US Dollar. Order cover for FY23 is building, with Countermeasures & Energetics having 93% order cover of expected revenue and the shorter cycle Sensors & Information sector having 60% cover.  

Contract awards - Roke

In the Sensors & Information sector our specialist consulting and technology business, Roke, has received a significant award under the Serapis* framework contract with the UK Government. This contract - Hyperion - will develop the next generation of phased array radar technologies to address the challenges associated with hypersonic missile defence. The programme is sponsored by the UK Missile Defence Centre. Following an initial one-year scoping study Hyperion is entering the second of four years to conduct demonstration phase activities culminating in a trials programme. The total budget for Hyperion is £30m with the demonstration phase valued at £26m. Hyperion will be delivered by Roke through the DSTL Serapis Lot 1 framework.

Activity at Roke has remained extremely buoyant with order intake in the year to date at £156m (2021: £89m), up 75%. Of this £29m is "pass through" revenue under larger framework contracts but after excluding this, order intake for Roke-delivered products and services was up 60%.

As a result of this strong order intake we expect Roke to achieve another record year in FY22, with revenue exceeding £100m for the first time. This growth has been supported by increased headcount, with Roke now employing 828 people (2021: 611), including our 2022 intake of 71 graduates and apprentices who joined in September, and the first Roke Academy cohort of 24 who joined in July.

Contract awards - Countermeasures & Energetics

In the Countermeasures & Energetics sector Chemring's US subsidiary, Chemring Countermeasures USA ("CCM USA"), has been jointly awarded a $225m Indefinite Delivery / Indefinite Quantity ("IDIQ") framework contract to manufacture MJU-61A/B infra-red countermeasures. This contract includes a five-year ordering period, with work expected to be completed by August 2027. An initial delivery order was placed at the time of the award split 60% in favour of CCM USA and 40% in favour of Armtec Countermeasures. CCM USA's initial delivery order was $10m. This initial award was followed by a further award of $28m, which was made 100% in favour of CCM USA. All work will be performed at CCM USA's new fully-automated manufacturing facility at Toone, Tennessee.

CCM USA also received firm-fixed-price contracts totalling $36m to manufacture MJU-64/B, MJU-66/B and XM219 aircraft decoy flares. All work will be performed at CCM USA's facility in Chester Township, Pennsylvania.

In the UK, Chemring Countermeasures UK ("CCM UK") received a five-year contract valued at £34m to supply 55mm MTV air countermeasures. CCM UK also received a £4m order to deliver naval countermeasures. These international orders build on CCM UK's existing order book and provide strong manufacturing demand throughout 2023 and beyond. All work will be performed at CCM UK's facility near Salisbury, UK.

Our three niche Energetics businesses, which design and manufacture high precision engineered devices and specialist materials, have also seen strong customer demand with order intake up 63% to £116m (2021: £71m), demonstrating the value our customers place on the high-reliability products provided by Chemring in the critical areas of space, aerospace, defence and industrial markets.

These significant order wins and growth in order intake across both sectors demonstrates customer confidence in Chemring to develop and supply highly effective solutions and builds on our order cover for FY23, positioning the Group well for the future.

Balance sheet

The Group's balance sheet remains robust, with net debt throughout the period at less than 0.5x EBITDA and banking facilities of c£160m which run to 31 December 2024, with options to extend. Increasing interest rates are not expected to have a material impact on the Group.

-ENDS-

* Serapis is a framework contract that enables DSTL, MOD and the frontline commands to quickly and efficiently place contracts for scientific and technical research and development. Serapis focuses on developing and bringing into operation new and battle-winning capabilities in: C4ISR (command, control, computers, communication, intelligence, surveillance and reconnaissance), space systems, synthetic environments and simulation technology to support human capability development. Roke is the Prime Contractor for Serapis Lot 1.

For further information:

Rupert Pittman           Group Director of Corporate Affairs,                        01794 463401

                                       Chemring Group PLC             

Andrew Jaques            MHP Communications                                                0203 128 8170

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 2,400 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 sectors: 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, Chemring has the agility to rapidly react to urgent customer needs

www.chemring.com