05 Jan 2006

Chemring Group PLC (“Chemring”) announces that its US countermeasures business, Alloy Surfaces Company, Inc. (“Alloy Surfaces”), has signed a Memorandum of Understanding with the US Department of Defense (the “DoD”) which will lead to Alloy Surfaces increasing capacity for one of its special material decoys from 20,000 units to 80,000 units per month. On that basis, the increase in orders can be expected to generate additional sales of at least $150 million over the next three years.

Alloy Surfaces is expanding one of its two existing plants and has commissioned a third manufacturing facility, which will become operational in the summer of 2006, in order to satisfy the significantly increased requirement from the DoD for these unique decoys, which are utilised on helicopters and transport aircraft. It is envisaged that the investment will cost in the region of $8 million and will be funded out of existing resources.

Dr David Price, Chief Executive of Chemring, commented: “I am delighted to announce the signing of this Memorandum of Understanding between Alloy Surfaces and the DoD. Over the last few years, operational demand for our special material decoys has grown significantly, and Alloy Surfaces is now the largest supplier of expendable decoys in the world, with annual sales currently in excess of $75 million. The opening of a third facility, a year after Alloy Surfaces’ second plant became operational, demonstrates the massive growth that this business has delivered in recent years.”

Chemring is an international leader in defensive countermeasures, energetic materials and marine safety products. The countermeasures division comprises Alloy Surfaces Company, Inc. and Kilgore Flares Company LLC in the US, and Chemring Countermeasures in the UK.

For further information:

Paul Rayner
Finance Director
Chemring Group PLC
01489 881880

Anthony Cardew
Cardew Group
0207 930 0777