27 Mar 2002

As reported in the Chairman’s Statement in January, Chemring Group PLC (“Chemring”) has been endeavouring for some months to engage its insurers, Royal & Sun Alliance (“RSA”), in meaningful negotiations over settlement of the property damage and business interruption insurance claim following the incident at Kilgore Flares Company LLC (“Kilgore”), Chemring’s Tennessee-based subsidiary, in April 2001.

Regrettably, RSA has not agreed to a reasonable settlement, and consequently Chemring has been left with no option but to take the action outlined in January and commence proceedings in the name of Kilgore in the Tennessee Court. The claim which has been filed is for an additional US$16.9m, plus penalties as provided by law.

Further updates will be provided as the matter progresses.

The rebuild of facilities at Kilgore is now complete and full production will be resumed by May.

For further information please contact:

Paul Rayner Finance Director, Chemring Group PLC - 01489 881880
Jonathan Rooper Cardew & Co. - 0207 930 0777