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16 Sep 10. Chemring Group PLC issued its Interim Management Statement covering the period from 1 May 2010 to date, as required by Rule 4.3 of the Disclosure and Transparency Rules of the UK Listing Authority.
Current Trading
Trading for the four month period to the end of August 2010 continued to strengthen, with revenue in the period increasing by 23% to £176m from £143m in the same period last year. Revenue in the ten month period to the end of August 2010 was £432m, 15% higher than in the same period in 2009. The Board is therefore confident that the outlook for the financial year ending 31 October 2010 remains in line with its previous expectations.
The Group’s order book is currently £819m, which is 43% higher than at this time last year. The majority of the Group’s business is short-cycle consumables, with most of its contracts placed with six to twelve months’ duration. The value of the order book remains the most relevant forward-looking indicator and, accordingly, the Board continues to believe that the prospects for the Group for 2011 are good.
Market Conditions
Over the last six months, European governments have made a series of announcements concerning planned reductions in future defence expenditure. The Group does, however, continue to see a robust market in the USA and continued growth in defence expenditure within its Middle East and Far East markets. Our acquisitions over recent years and our geographic strategy has ensured that less than 25% of our 2011 revenues will come from European customers. The Board does, therefore, remain confident about the longer term future.
All of our countermeasures businesses performed well during the period. Our US subsidiary, Kilgore, is currently achieving record levels of production, with year-to-date revenue more than 30% higher than at this time last year. Line qualification of the M206 helicopter flare has now been completed and qualification of the M212 spectral flare is expected shortly. Production of both of these US helicopter flares over the next few months is expected to contribute to a record performance for the full year. At Chemring Countermeasures in Salisbury, full production of all flare products has been resumed following the fire in April 2010. The UK Government has recently awarded the business a new development contract for the next generation advanced naval decoy and we are currently negotiating a multi-year production contract for an upgraded chaff decoy round.
Explosive Ordnance Disposal
Trading at our Explosive Ordnance Disposal businesses continues to be very encouraging. Production of our Husky Mounted Detection System Ground Penetrating Radar at NIITEK continues to grow, with additional production facilities brought into operation over the last few months. Production has started on the $217m US Army contract for 76 HMDS systems, and we have started to increase the number of deployed maintenance and training staff towards the 70 planned under the contract. The Overseas Contingent Operation funding for the US Army has recently been approved, with $78m of funding for an additional 43 HMDS systems and support. The two contracts will underpin the performance of NIITEK throughout the 2011 financial year. The planned multi-year IDIQ (indefinite delivery, indefinite quantity) contract for further system purchases looks likely to be delayed towards the second half of next year. In Europe, good progress has been made on the qualification of insensitive explosive variants of our full range of demolition stores. All of the products will be in production by the end of the first half of 2011, and considerable interest has already been shown in the products from both our Middle East and Far East customers.
Trading in our pyrotechnics businesses remains rather flat on a year-to-year basis, principally due to the timing of orders from UK and European customers. The US businesses continue to perform well and have recently s

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