Acquisition

FOR IMMEDIATE RELEASE 2 OCTOBER 2006

                              CHEMRING GROUP PLC                               

                      ACQUISITION OF BDL SYSTEMS LIMITED                       

Chemring Group PLC ("Chemring") announces that it has acquired the entire
issued share capital of BDL Systems Limited ("BDL") for a cash consideration of
£9 million.

Description of the business and reasons for the acquisition

BDL, based in Poole, Dorset, manufactures radio frequency initiators and
hard-wired exploders used for the remote detonation of demolition charges,
primarily for bomb disposal. It also manufactures electronic countermeasure
equipment and under-vehicle surveillance systems, and supplies third party
bomb-disposal equipment to help military and homeland security forces counter
the ever-increasing threat of Improvised Explosive Devices (IEDs).

In the year ended 31 March 2006, BDL reported an audited profit before tax
(after non-recurring costs of £0.2 million) of £0.97 million on turnover of £
4.7 million. Gross assets as at that date were £3.1 million. The acquisition is
expected to enhance Chemring's earnings in the first full financial year
post-completion.*

BDL's range of products complements the bomb-disposal and demolition stores
currently produced by Chemring's Energetics division, and BDL and Chemring have
worked together for many years selling each other's products. In addition,
BDL's strong presence in IED protection and new geographic regions opens
further growth opportunities for the Group. BDL will become part of Chemring's
Energetics division which now has operations in the UK (Derby, Portsmouth,
Ardeer and Corsham), the US, Germany, Spain and Australia.

Principal terms of the acquisition

The consideration of £9 million was paid in cash, utilising existing bank
facilities. The consideration is subject to adjustment depending on the working
capital of BDL at completion.

Commenting on the acquisition, David Price, Chief Executive of Chemring, said:

"The acquisition of BDL will substantially enhance our capabilities in the
Explosive Ordnance Disposal (EOD) market and complements our existing
demolition products. The global EOD market is almost £2 billion per year and
offers a considerable opportunity for growth in the future. The growing threat
from Improvised Explosive Devices can only enhance our prospects."

Paul Rayner, Finance Director of Chemring, said:

"The acquisition price of £9 million represents an historic post-tax price
earnings multiple (excluding non-recurring costs) of approximately eleven
times. We have funded the acquisition utilising existing facilities with Bank
of Scotland, and whilst the acquisition will increase gearing in the short
term, the cash generated by the enlarged Group will reduce gearing levels
during 2007."

For further information:

Dr David Price Chief Executive, Chemring Group PLC 01489 881880

Paul Rayner Finance Director, Chemring Group PLC 01489 881880

Rupert Pittman Cardew Group 0207 930 0777

 

* This statement should not be taken to mean that the earnings per share of
Chemring will necessarily match or exceed the historical reported earnings per
share of Chemring and no forecast is intended or implied.