Chemring Group PLC

AGM Information • Feb 18, 2011

Chemring Group PLC

Notice of Annual General Meeting 24 March 2011

This document is important and requires your immediate attention. If you are in any doubt about its contents you should consult your independent financial adviser. If you have sold or transferred all of your Chemring Group PLC ordinary shares you should send this document and all accompanying documents to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Notice of Annual General Meeting

Notice is hereby given that the 105th Annual General Meeting of the shareholders will be held at 2.30pm on Thursday 24 March 2011 at Investec, 2 Gresham Street, London EC2V 7QP for the purpose of considering and, if approved, passing the following resolutions:

Ordinary Resolutions

• 1. To receive and adopt the financial statements and reports of the directors and auditors for the year ended 31 October 2010, together with the auditable part of the Directors' Remuneration Report.
• 1. To approve the Directors' Remuneration Report for the year ended 31 October 2010.
• 1. To approve the payment of a final dividend of 42 pence per ordinary share for the year ended 31 October 2010, to be paid on 15 April 2011 to shareholders on the register at the close of business on 25 March 2011.
• 1. To re‑appoint Mr P C F Hickson who retires under the provisions of Article 87.1 of the Company's Articles of Association.
• 1. To re‑elect Dr D J Price as a director.
• 1. To re‑elect Mr P A Rayner as a director.
• 1. To re‑elect Mr D R Evans as a director.
• 1. To re‑elect The Rt Hon Lord Freeman as a director.
• 1. To re‑elect Mr I F R Much as a director.
• 1. To re‑elect Air Marshal Sir Peter Norriss as a director.
• 1. To re‑appoint Deloitte LLP as auditors and to authorise the directors to fix their remuneration.
• 1. That the Board be and it is hereby generally and unconditionally authorised pursuant to and in accordance with section 551 of the Companies Act 2006 (the "Act") to exercise all the powers of the Company to allot shares in the Company or to grant rights to subscribe for, or convert any securities into, shares in the Company up to an aggregate nominal amount of £589,697, provided that (unless previously revoked, varied or renewed) this authority shall expire at the conclusion of the next Annual General Meeting of the Company after the passing of this resolution or on 24 June 2012 (whichever is the earlier), save that the Company may before the expiry of this authority make an offer or agreement which would or might require shares to be allotted or rights to subscribe for or to convert any security into shares to be granted after such expiry and the Board may allot shares or grant such rights in pursuance of such offer or agreement as if the authority conferred hereby had not expired.
• 1. That each of the ordinary shares of 5 pence each in the capital of the Company be sub‑divided into five ordinary shares of 1 pence each, such shares having the rights and being subject to the restrictions set out in the Articles of Association of the Company for the time being provided that this resolution is conditional upon, and shall take effect on, admission to the Official List of the UK Listing Authority and to trading on the London Stock Exchange's market for listed securities of the new ordinary shares arising from such sub‑division by 8.00am on 28 March 2011 (or such other time and/or date as the directors of the Company may at their absolute discretion determine).

Special Resolutions

• 1. That subject to resolution 12 being passed, the Board be and it is hereby generally empowered to allot equity securities (within the meaning of section 560 of the Act) for cash:
• (a) pursuant to section 570 of the Act and the authority conferred by resolution 12; and/or
• (b) pursuant to section 573 of the Act, where the allotment is an allotment of equity securities by virtue of section 560(2)(b) of the Act;

in each case, as if section 561(1) of the Act did not apply to any such allotment, provided that this power shall be limited:

• (a) to the allotment of equity securities in connection with an offer for equity securities:
• (i) to holders of ordinary shares in the capital of the Company in proportion (as nearly as practicable) to the respective numbers of ordinary shares held by them; and

(ii) to holders of other equity securities in the capital of the Company, as required by the rights of those securities or, subject to such rights, as the directors otherwise consider necessary,

but subject to such exclusions or other arrangements as the directors may deem necessary or expedient in relation to treasury shares, fractional entitlements, record dates or any legal or practical problems under the laws of any territory or the requirements of any regulatory body or stock exchange; and

(b) to the allotment of equity securities (otherwise than pursuant to paragraph (a) of this resolution) up to an aggregate nominal value of £88,454;

and (unless previously revoked, varied or reviewed) this authority shall expire at the conclusion of the next Annual General Meeting of the Company after the passing of this resolution or on 24 June 2012 (whichever is the earlier), save that the Company may before such expiry make an offer or agreement which would or might require equity securities to be allotted after such expiry and the Board may allot equity securities in pursuance of such offer or agreement as if the power conferred hereby had not expired.

• 1. That the Company be and it is hereby generally and unconditionally authorised for the purposes of section 701 of the Act to make market purchases (within the meaning of section 693(4) of the Act) of any of its ordinary shares in the capital of the Company ("Shares") on such terms and in such manner as the directors may from time to time determine, and where such Shares are held as treasury shares, the Company may use them for the purposes of its employee share schemes, provided that:
• (a) the maximum aggregate number of Shares which may be purchased is 17,690,913 if resolution 13 is passed and otherwise is 3,538,182 (representing approximately 10 per cent of the issued ordinary share capital at 1 February 2011 (exclusive of treasury shares));
• (b) the minimum price (exclusive of expenses) which may be paid for a Share is the nominal value thereof;
• (c) the maximum price (exclusive of expenses) which may be paid for a Share is the higher of:
• (i) an amount equal to 105 per cent of the average of the middle market quotations for a Share as derived from the Daily Official List of the London Stock Exchange plc for the five business days immediately preceding the day on which such Share is contracted to be purchased; and
• (ii) an amount equal to the higher of the price of the last independent trade of a Share and the highest current independent bid for a Share on the trading venue where the purchase is carried out,

and (unless previously renewed, revoked or varied), this authority shall expire at the conclusion of the next Annual General Meeting of the Company after the passing of this resolution or on 24 June 2012 (whichever is the earlier), save that the Company may make a contract to purchase Shares which would or might be executed wholly or partly after the expiry of this authority, and may make purchases of Shares pursuant to it as if this authority had not expired.

All previous unutilised authorities to make market purchases of ordinary shares are revoked, except in relation to the purchase of Shares under a contract or contracts concluded before the date of this resolution and where such purchase has not yet been executed.

1. That the Company be and it is hereby generally and unconditionally authorised, from the date of the passing of this resolution and expiring at the conclusion of the next Annual General Meeting of the Company or 24 June 2012 (whichever is the earlier), to hold general meetings (other than annual general meetings) on not less than fourteen clear days' notice.

By order of the Board

Sarah Ellard

Company Secretary 2 February 2011

Chemring House 1500 Parkway Whiteley Fareham Hampshire PO15 7AF

Notes on resolutions

Resolution 1

The directors are required to present to the meeting the audited accounts and the reports of the directors and auditors for the financial year ended 31 October 2010.

Resolution 2

It is a statutory requirement that the Directors' Remuneration Report be subject to an advisory vote by shareholders at the Annual General Meeting. The report is set out on pages 37 to 45 of the Annual Report and Accounts, which can be accessed on the Company's website (www.chemring.co.uk). Shareholders may also obtain a copy by contacting the Company Secretary at the Company's registered office during usual business hours.

Resolution 3

Shareholders must approve the final dividend payable for each ordinary share held. The final dividend declared cannot exceed the amount recommended by the directors and is stated per ordinary share before the Share Split referred to below.

Resolutions 4 to 10

In accordance with the Company's Articles of Association, Mr Peter Hickson will be standing for re‑appointment as a director following his initial appointment by the Board during the year.

In accordance with the Company's Articles of Association, all directors are required to submit themselves for re‑election every three years. However, in order to ensure compliance with the revised UK Corporate Governance Code during the financial year ending 31 October 2011, all of the remaining directors will voluntarily submit themselves for re‑election at the forthcoming Annual General Meeting.

Biographical information on all of the directors is given below.

Peter Hickson joined the Group as a non‑executive director on 1 July 2010 and was appointed Chairman of the Board on 1 October 2010. He is currently Chairman of Communisis plc, Senior Independent Director of London & Continental Railways Ltd and a non‑executive director of Kazakhymys PLC. He has had senior management experience with a number of large international companies and previous appointments include Chairman of Anglian Water Group, Finance Director of Powergen plc and non‑executive directorships of Scottish Power plc, Marconi Corporation plc and RAC plc. He is also a trustee and Board member of Orbis Charitable Trust, the international sight saving charity, and a Fellow of the Institute of Chartered Accountants. Aged 65.

Dr David Price CBE CEng CSci joined the Group in April 2005 as Chief Executive. He was formerly Managing Director, Naval Marine at Rolls‑Royce plc and Managing Director of Thomson (UK) Holdings Ltd (now part of the Thales Group). He is a member of the Defence Industries Council, and was appointed as a member of the Council for Southampton University in 2010. Fellow of the Institute of Engineering & Technology and the Institute of Marine Engineering, Science & Technology. Aged 55.

Paul Rayner joined the Group in June 1994 and acted as Finance Director to several Group companies before being appointed to the Board in August 1999. Formerly a Senior Audit Manager with Deloitte & Touche. Aged 49.

David Evans joined the Group in 1987 as Managing Director of the Countermeasures business and was appointed to the Board in 1988. He took up his current position as a non‑executive director in April 2005, after stepping down as Chief Executive, a position he had held since January 1999. He was Managing Director of the Marconi torpedo business prior to joining the Group. He is currently a non‑executive director of Avon Rubber plc, and was previously a non‑executive director of Whatman PLC. Aged 64.

The Rt Hon Lord Freeman joined the Group as a non‑executive director in May 2006. He is Chairman of the Audit Committee. He is currently a Consultant (formerly Partner) to PricewaterhouseCoopers, Chairman of Thales UK Advisory Board and a non‑executive director of Savile Group PLC. He is also on the main Board of Thales S.A., France. He was a partner with Lehman Brothers Investment Bankers between 1969 and 1985. Member of Parliament from 1983 to 1997. Made a Privy Councillor in 1993. Minister 1985–1997. Aged 68.

Ian Much joined the Group as a non‑executive director in December 2004. He is the Senior Independent Director and Chairman of the Remuneration Committee. Previous appointments include Chief Executive of De La Rue plc and T&N plc, and non‑executive director of Admiral plc, Camelot plc, Manchester United plc and Simplyhealth Group Ltd. He is currently a non‑executive director of Senior plc and BTG plc. Aged 66.

Air Marshal Sir Peter Norriss KBE CB AFC MA FRAeS joined the Group as a non‑executive director in May 2004. He is currently a consultant to Tessella plc and a Senior Adviser to Newton. He is also a member of major

programme review teams for the Office of Government Commerce and an adviser or court member at four universities. Formerly Deputy Chief of Defence Procurement (Operations) and Controller Aircraft on the Air Force Board. Past President of the Royal Aeronautical Society (2003–4). Aged 66.

Resolution 11

This resolution proposes the re-appointment of the auditors and follows the standard practice of giving authority to the directors to fix the remuneration to be paid to the auditors.

Resolution 12

The directors of the Company may only allot shares if authorised to do so by the shareholders in general meeting. This resolution, if passed, will grant new authority under section 551 of the Companies Act 2006 (the "Act") and will give the directors flexibility to act in the best interests of shareholders, when opportunities arise, by issuing new ordinary shares. The authority will enable the directors to allot ordinary shares up to an aggregate nominal amount of £589,697, which represents approximately one third of the issued ordinary share capital of the Company (exclusive of treasury shares) as at 1 February 2011. This limit is in line with the guidelines issued by the Association of British Insurers.

The directors have no present intention of exercising this authority except for the purpose of allotting shares under the terms of the Company's employee share schemes. The authority will expire at the conclusion of the next Annual General Meeting or on 24 June 2012 (whichever is the earlier).

Resolution 13

In recent years the price of the Company's ordinary shares of 5 pence each (the "Existing Ordinary Shares") has risen to the point where the closing mid‑market price on 18 January 2011 was £32.33p. The Board believes that it is appropriate to propose the sub‑division of each of the Existing Ordinary Shares into five new ordinary shares of 1 pence each (the "New Ordinary Shares") pursuant to this resolution (the "Share Split"). The Share Split will result in shareholders holding five New Ordinary Shares in the Company for each Existing Ordinary Share they held immediately prior to the Share Split. This may improve the liquidity of the market in the Company's shares and reduce the bid/offer spread of the Company's shares. The resolution is conditional upon the New Ordinary Shares being admitted to the Official List of the UK Listing Authority and to trading on the London Stock Exchange's market for listed securities.

If the proposed Share Split proceeds, it is expected that the price of each New Ordinary Share will become one fifth of the price of an Existing Ordinary Share. This will reflect the fact that shareholders will own five times as many ordinary shares. Shareholders should however note that, subject to market movements, the aggregate value of their shareholdings should remain the same.

The New Ordinary Shares will carry the same rights in all respects as the Existing Ordinary Shares, including voting rights. The final dividend proposed in resolution 3 is being declared by reference to the number of ordinary shares at close of business on 25 March 2011, which is prior to the proposed completion of the Share Split. If the final dividend had been declared by reference to the number of ordinary shares at a date after the Share Split, the final dividend would have been only one fifth per share to reflect the Share Split.

The Company's issued ordinary share capital as at 1 February 2011 was £1,842,022.75 divided into 35,590,455 Existing Ordinary Shares, having a nominal value of 5 pence each, and 62,500 £1 Cumulative Preference Shares. If the Share Split is applied to the existing ordinary share capital, the total value of the share capital will remain at £1,842,022.75 but will be divided into 177,952,275 New Ordinary Shares of 1 pence each and 62,500 £1 Cumulative Preference Shares.

The New Ordinary Shares will be in registered form and may be held in certificated or uncertificated form. Following the Share Split becoming effective, share certificates in respect of the Existing Ordinary Shares will cease to be valid and will be cancelled. New certificates in respect of the New Ordinary Shares will be issued to those shareholders who hold their Existing Ordinary Shares in certificated form, and are expected to be dispatched no later than 11 April 2011. No temporary documents of title will be issued. Transfers of New Ordinary Shares between 28 March 2011 and the dispatch of new certificates will be certified against the register of members of the Company. CREST accounts are expected to be credited on 28 March 2011. Applications will be made for admission of the New Ordinary Shares to the Official List and to trading on the London Stock Exchange's market for listed securities. If the applications are accepted, it is proposed that the last day of dealings in the Existing Ordinary Shares will be 25 March 2011 and the effective date for dealings to commence in New Ordinary Shares will be on 28 March 2011.

Notes on resolutions

continued

Based on current UK tax legislation, the Share Split should not be treated as a disposal for the purposes of UK capital gains tax. The Share Split should also not be treated as giving rise to any distribution for income tax purposes. After the sub‑division of the Existing Ordinary Shares, the base cost of those Existing Ordinary Shares for the purposes of UK capital gains tax should be apportioned between the resulting New Ordinary Shares. If you are in any doubt as to your personal tax status, you should consult your own professional adviser.

If this resolution is passed, the Share Split will become effective on admission of the New Ordinary Shares to the Official List, which is expected to be at 8.00 am on 28 March 2011.

Subject to approval, where necessary, of the Company's auditors and HM Revenue & Customs, appropriate adjustments will be made to outstanding options and other rights in accordance with the rules of the Company's employee share schemes to take account of the Share Split and option holders will be contacted separately in due course.

Resolution 14

If passed, this resolution will allow the directors, pursuant to section 571(1) of the Act, to allot shares for cash without first offering them to shareholders in accordance with the Act and renews the authority given at the Annual General Meeting in 2010. This authority is limited to the allotment of shares for cash up to an aggregate nominal amount of £88,454 which represents approximately 5 per cent of the issued ordinary share capital of the Company (exclusive of treasury shares) as at 1 February 2011, without having to first offer them to shareholders in proportion to their existing holdings. This limit is in line with the guidelines issued by the Pre‑emption Group. In addition, in accordance with normal practice, the resolution would enable the Board to allot shares pursuant to a rights issue or open offer and to deal with overseas shareholders and fractional entitlements as it thinks fit in the context of any rights issue or open offer. The authority will expire at the conclusion of the next Annual General Meeting or on 24 June 2012 (whichever is the earlier). It is the directors' intention to review this authority every year. There are no present plans to exercise this authority.

Resolution 15

If passed, this resolution will give the Company authority to purchase its own shares in the market up to a limit of 10 per cent of its issued ordinary share capital. The maximum and minimum prices are stated in the resolution. The directors believe that it is advantageous for the Company to have this flexibility to make market purchases of its own shares. In the event that shares are purchased, they would either be cancelled (and the number of shares in issue would be reduced accordingly) or retained as treasury shares, as an alternative to cancelling them.

Shares repurchased as treasury shares will be held with a view to possible resale at a future date rather than having to cancel them. The directors will consider holding repurchased shares pursuant to the authority conferred by this resolution as treasury shares. This gives the Company the ability to reissue treasury shares quickly and cost effectively, and provides the Company with additional flexibility in the management of its capital base. Any issues of treasury shares for the purposes of the Company's employee share schemes will be made within the 10 per cent anti‑dilution limit set by the Association of British Insurers.

The directors will only exercise this authority if they are satisfied that a purchase would result in an increase in expected earnings per share and would be in the interests of shareholders generally.

Resolution 16

The Act provides that general meetings of a company may be held on not less than fourteen clear days' notice in writing. However, the Shareholder Rights Directive (Directive 2007/36/EC), which come into force on 1 August 2009, made it a requirement for companies whose shares are traded on the London Stock Exchange (among other markets), to seek approval each year from its shareholders if any general meeting is to be held on less than twenty one clear days' notice in writing. Resolution 16 seeks such approval.

Shareholder notes

• 1. A shareholder entitled to attend, speak and vote at the meeting is entitled to appoint one or more proxies (who need not be shareholders in the Company) to attend, speak and vote instead of him/her. A shareholder may appoint more than one proxy in relation to the meeting, provided that each proxy is appointed to exercise the rights attaching to a different share or shares held by him/her. A separate proxy form should be used for each proxy appointment. If you intend appointing additional proxies, please contact Computershare Investor Services PLC on +44(0)870 889 3289 to obtain (an) additional proxy form(s). Alternatively, you may photocopy the enclosed form. A shareholder appointing more than one proxy should indicate the number of shares for which each proxy is authorised to act on his/her holding. Failure to specify the number of shares to which each proxy form relates or specifying a number which, when taken together with the number of shares set out in the other proxy appointments, is in excess of the number of shares held by the shareholder may result in the proxy appointment being invalid.
• 1. The appointment of a proxy will not preclude a shareholder from attending and voting in person at the meeting. A proxy form accompanies this Notice and in order to be valid should be completed and returned to the Company's registrars: Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY by not later than 2.30pm on 22 March 2011. Alternatively, you may register your vote electronically by accessing the registrar's website at www.eproxyappointment.com. In order to be valid electronic votes must also be registered not later than 2.30pm on 22 March 2011 or not later than forty-eight hours before the time appointed for any adjourned meeting.
• 1. Shareholders may change proxy instructions by returning a new proxy form using the methods set out above. A shareholder who has appointed a proxy using the hard copy proxy form but would like to change the instructions using another hard copy proxy form should contact Computershare Investor Services PLC. The above deadline for receipt of proxy appointments also applies to amended instructions. Any attempt to terminate or amend a proxy appointment received after the relevant deadline will be disregarded.
• 1. Shareholders who are users of the CREST system (including CREST Personal Members) may appoint one or more proxies or give an instruction to a proxy by having an appropriate CREST message transmitted. To appoint a proxy or to give an instruction to a proxy (whether previously appointed or otherwise) via the CREST system, the CREST message must be received by the Company's agent (ID number 3RA50) not later than forty‑eight hours before the time appointed for holding the meeting. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp generated by the CREST system) from which the Company's agent is able to retrieve the message. CREST Personal Members or other CREST sponsored members should contact their CREST sponsor for assistance with appointing proxies via CREST. For further information on CREST procedures, limitations and systems timings, please refer to the CREST Manual. The Company may treat as invalid a proxy appointment sent by CREST in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.
• 1. A person to whom this Notice is sent who is a person nominated under section 146 of the Companies Act 2006 to enjoy information rights (a "Nominated Person") may, under an agreement between him/her and the shareholder by who he/she was nominated, have the right to be appointed (or to have someone else appointed) as a proxy for the Annual General Meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may, under any such agreement, have a right to give instructions to the shareholder as to the exercise of voting rights.
• 1. The statements of the rights of shareholders in relation to the appointment of proxies in this Notice do not apply to Nominated Persons. The rights described in these paragraphs can only be exercised by registered shareholders.
• 1. Under section 319A of the Companies Act 2006 any member attending the meeting has the right to ask questions. The Company must answer any such question relating to the business being dealt with at the meeting but no such answer need be given if (a) to do so would interfere unduly with the preparation for the meeting or involve the disclosure of confidential information; (b) the answer has already been given on a website in the form of an answer to a question; or (c) it is undesirable in the interests of the Company or the good order of the meeting that the question be answered.
• 1. Only persons entered in the register of members of the Company at 5.00pm on 22 March 2011 or, in the event that the meeting is adjourned, 5.00pm on the date which is two working days prior to the reconvened meeting, shall be entitled to attend or vote at the meeting. Changes to entries on the register after this time shall be disregarded in determining the rights of any person to attend and vote at the meeting or adjourned meeting.

Shareholder notes

continued

• 1. As at 1 February 2011 (being the latest business day prior to publication of this Notice), the Company's issued share capital consisted of 35,590,455 ordinary shares, carrying one vote each, and 62,500 preference shares. Preference shareholders are not entitled to attend and vote at the meeting. The Company holds 208,629 ordinary shares in treasury, which leaves voting rights over 35,381,826 ordinary shares.
• 1. It is possible that, pursuant to requests made by members of the Company under section 527 of the Companies Act 2006, the Company may be required to publish on its website a statement setting out any matter relating to the audit of the Company's accounts (including the auditors' report and the conduct of the audit) that are to be laid before the Annual General Meeting or any circumstance connected with an auditor of the Company ceasing to hold office since the previous meeting at which annual accounts and reports were laid. The business which may be dealt with at the Annual General Meeting includes any statement that the Company has been required under section 527 of the Companies Act 2006 to publish on its website.
• 1. Copies of all service contracts between the Company and its directors are available for inspection at the Company's registered office during normal business hours every business day, and will be available for inspection at the place of the Annual General Meeting for one hour prior to and until the close of the meeting.
• 1. A copy of this notice, and other information required by section 311A of the Companies Act 2006, can be found on the Company's website (www.chemring.co.uk).

Chemring Group PLC Chemring House, 1500 Parkway, Whiteley, Fareham, Hampshire PO15 7AF, United Kingdom

Tel: +44 (0)1489 881880 Fax: +44 (0)1489 881123

www.chemring.co.uk