introduction to chemring group plc

CHEMRING GROUP PLC20 October 2006, Version 2

0

Introduction to Chemring Group PLC

CHEMRING GROUP PLC


1

Chemring Group PLCChemring, a FTSE 250 company, has:

a market capitalisation in excess of £500m.a compound underlying EPS growth rate of 14% for the last 6years.operations in UK, USA, Germany, Spain, France & Australiasuccessful market access to 70+ countries world-wide

World Leader in expendable countermeasures.Core Competencies in:

the design & manufacture of energetic materialshigh volume manufacturinghigh reliability & safety


2

Historical Performance

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

2000 2001 2002 2003 2004 2005 2006 AnalystConsensus

Pro

fit B

efor

e Ta

x (£

milli

on)

0.0

50.0

100.0

150.0

200.0

250.0

2000 2001 2002 2003 2004 2005 2006Analyst

Consensus

Turn

over

(£ m

illio

n)Countermeasures

Energetics

Marine

Discontinued activities


3

Our Vision

“….To be the leading producer of countermeasures & energetic materials for

the global defence market.”

A strongly focussed company:- Priority to deliver above average shareholder returns - Balanced US/European production- Global supply to defence, government & law enforcement

Customers


4

Chemring Group PLC – The Company Today

Countermeasures £90.8m

Air – IR & chaff

Sea – IR, chaff &acoustic

Land – Smokes, VDGsMarine Electronics £11.5m

Beacons

Transponders

Communications

Weather systems

Survivor location lights

Energetics £30.2mInitiators

Gas generators

Rockets & propulsion

Smokes

Flares & signals

Cutting charges

Demolition stores

Law Enforcement

Total sales £132.5m(2005)

Sales by Division


5

CHEMRING GROUP PLCOperating Companies

Marine ElectronicsCompanies

ICS ElectronicsArundel, UK

McMurdoPortsmouth, UK

Energetic MaterialsCompaniesCountermeasures

Companies

PWSSPortsmouth, UK

PW DefenceDerby, UK

Oroquieta (51%)Pamplona, Spain

Chemring AustraliaVictoria, Australia

Nobel EnergeticsArdeer, UK

Alloy SurfacesPhiladelphia, USA

Kilgore FlaresTennessee, USA

Cirra (49%)France

Chemring Countermeasures

Salisbury, UK

CometBremerhaven, Germany

Leafield EngineeringCorsham, UK

Technical OrdnanceSouth Dakota, USA

BDL SystemsPoole, UK


6

Corporate StrategyOrganic Growth

Divest

Organic & Acquisitive Growth

Countermeasures Energetics Marine

Impact of Acquisitions

Excellent BrandExcellent Products

Excellent Staff


7

Chemring is a Multi-domestic Group with Manufacturing in the USA, UK, Germany, Spain and Australia


8

Analysis of Turnover

CountermeasuresEnergeticsMarine

Countermeasures remains dominant business.New acquisitions will enhance size of Energetics.£90.8m

69%

£30.2m23%

£11.5m8%

USAUKEuropeROW

£60.6m46%

£31.5m24%

£26.0m19%

£14.4m11%

US remains largest market at 46%.US Airforce is largest CustomerUS Army using more Special Material Decoys

UK sales have grown from £21m to £26mRAF using more Special Material DecoysChemring largest supplier to MOD


9

Make in the US, for the US market

Make in EU, for the EU market

Export to the global defence market from both US and EU

Geographic Strategy

Marketing presence in middle and

far east


10

Global Market (£m)The Global Countermeasure Market

Decoy market expected to grow steadily with ongoing threat

UK deployment in Afghanistan increases decoy usage

Typhoon flare suite adds to existing demand

USAF largest user & plans to buy new products:

MJU-10ALA-17 for B-52F-22 advanced flaresJSF advanced flaresV-22 introduction

Source: Internal estimates based on US program documentation & export market knowledge

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

2004 2006 2008 2010

£ m

illio

n

US Army

US Navy

US AirForce

UK

RoW


11

New PlatformsHelicopters:

Tiger – France, Germany, Spain, AustraliaNH-90 – Germany, France, Italy, Holland, Sweden, Finland, Norway, Australia, Greece, New Zealand, SpainEH 101 – UK, US, Japan, Portugal, Canada, Italy, Denmark

Transport Aircraft:V-22 – US, others?A400m – Germany, France, Spain, UK, Turkey, South Africa, Belgium, Malaysia, Luxembourg

Combat Aircraft:F-22 – US, Japan(?)JSF – US, UK, Italy, Holland, Turkey, Canada, Norway, AustraliaTyphoon – UK, Germany, Italy, Spain, Austria Saudi ArabiaSu-30 – India, Indonesia, Malaysia, Algeria


12

Growth in Helicopter ProtectionIncreasing threat to helicopter platforms

High profile target

Vulnerable to attack – low altitude, slow

Development of helicopter Defensive Aids Suites (DAS) by major systems prime contractors

Growth in helicopter fleet fitted with countermeasures dispensers

Apache – HIDAS upgrades for UK, Kuwait, UAE, Greece, Singapore, Saudi

NH90 & Tiger – DAS and countermeasure dispensers fitted as standard


13

0

5

10

15

20

25

30

35

40

45

Alloy

Armtec

CCMKilg

oreThio

kolWall

opLac

roix IM

IOther

Estimated Global Countermeasure Market

(2005)£180-190m

0

20

40

60

80

100

2005

Percent

Other

US

UK

Estimated Revenues of Leading Suppliers of Expendable Countermeasures

(2005)

£m

Source: Chemring internal estimates

The Countermeasures Market in 2005

Chemring Total = £90.8m


14

Decoys for Fixed Wing A/C

Countermeasures - Air

Decoys for Helicopters Wide Range of Circular IR Flares


15

Countermeasures – Naval

Naval Rounds and Payloads


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Energetics

Coloured Signaling Smoke

Electrical and RF Initiators

Stun Grenades & Explosives

Illumination Flares

Large Caliber Primers

Battlefield Simulation

Propellants Pyromechanisms Missile components


17

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

US & EU A

mmunition

US & EU M

issiles

£ m

illio

n

US & EU Energetics Market

Initiators and explosive trainHigh ExplosivePropellantPyrotechnics, cartridges and products

350

90170 170

20 50

350

70

190

10

0

100

200

300

400

500

600

700

800

900

1,000

Ammunitio

n Compo

nents

Missile

Compo

nents

Military

pyro

Demolitio

n & E

ODMari

ne pyro

Aircra

ft Pyro

£ m

illio

n

Small Calibre

MediumCalibre

Large Calibre

Mortar

GrenadesRockets

Anti-tank

Air to Air

Air to Surface

S to S

Anti-tank

Surface to Air

US & EU Systems MarketUS & EU Energetic Materials Market

Source: Chemring internal estimates


18

FUZ

E PR

OX D

M84

FUZ

E PR

OX D

M84

Fuze

Primer

Primer

Initiator

Booster

Main Charge (High Explosive) Propellant

Tracer or base bleed grain Percussion Initiatior

Energetics – Ammunition Components


19

Energetics – Missile Components

Rocket motorExplosive train

Detent ActuatorSafety Arming Unit

Warhead

Fuze


20

KC-25 Marine Location Marker

Coloured Signaling Smoke

Vehicle Discharge Grenades

MANPADS Simulation

Battlefield Simulation

Energetics – Military Pyrotechnics

Stun Grenades and Cutting Charges


21

Energetics – Demolition Stores

Mine BreachingElectrical and RF Initiators

Detonators and stores

Explosives

Shaped Charges


22

Line cutters

Ejector seat and crew egress

• Seats

• Shaped cutting charges

• Fire suppression

Cartridge and flare squibs

Energetics – Aircraft Pyrotechnics


23

Para rockets

Lifesmokes

Handflares

Man Over Boards (MOBs)

Speedlines

Energetics – Marine Pyrotechnics


24

Customers DefenceOEM

DefenceOEM

MarketSegments

Service /Products

SegmentsSegments

•Ammunition•Missiles•Military Pyrotechnics•Aircraft Pyrotechnics•Niche

•Ammunition•Missiles•Military Pyrotechnics•Aircraft Pyrotechnics•Niche

ProductsProducts

•Sub Systems.

•Pyro mechanisms.•Propellants.

•HE.•Demolition Stores

•Sub Systems.

•Pyro mechanisms.•Propellants.

•HE.•Demolition Stores

DefenceEnd UserDefenceEnd User

SegmentsSegments

ProductsProducts

•Countermeasures•Ammunition

•Military Pyro•Demolition Stores

•Countermeasures•Ammunition

•Military Pyro•Demolition Stores

DefencePrime

Contracting

DefencePrime

Contracting

SegmentsSegments

ProductsProducts

•Chemring & Out Sourced Products•Chemring & Out Sourced Products

MarineMarine

SegmentsSegments

ProductsProducts

•Commercial Pyro.

•Leisure Pyro.

•Commercial Pyro.

•Leisure Pyro.

•Countermeasures•Ammunition•Military Pyrotechnics•Dem Stores, EOD IED •Aircraft Pyrotechnics




•Commercial Marine•Leisure Marine•Commercial Marine•Leisure Marine

Customer Strategy

introduction to chemring group plc

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