Table of Contents

Rpt. 21351104 24-Jan-2013

CHEMRING GROUP PLC LIBERUM CAPITAL - BOURNE, BEN, ET AL

2-4

Rpt. 21352211 24-Jan-2013

CHEMRING GROUP PLC-INITIATING COVERAGE FINNCAP - BUXTON, DAVID, ET AL

5-8

Rpt. 21313298 18-Jan-2013

CHEMRING GROUP PLC CREDIT SUISSE - EUROPE - ARNOLD, DAVID, ET AL

9 - 13

These reports were compiled using a product of Thomson Reuters

www.thomsonreuters.com

HOLD
24 January 2013

Chemring
Early stages of recovery but strong headwinds
FY results are in line with operational and market issues already reported. Adj EPS down 43% to 28.5p, marginally below our estimate. Net debt of 245m is in line. Cash conversion has improved. Management have identified 5 key priorities following their initial review, which all look sensible. 2013 expectations unchanged. The rating has already recovered to a CY13 EV/EBIT of 9.5x, in line with the long term average. Troop withdrawal in 2014 and ongoing US budget pressure are significant headwinds - we are in line with consensus EPS this year but remain 15% below in 2014.

FY earnings in line - Revenue grew by 2% to 740m. Adj PBT fell by 42% to 70m and EPS to 28.5p, which is
2% below our estimate. DPS, reduced by 36% to 9.5p, in line with our estimate. The underlying ROCE was 11% from 16% in 2011.

Improved cash conversion Net debt of 245m, representing 2.1x underlying EBITDA. Underlying operating
cash flow represents a conversion rate of 103% (2011: 76%). There was a w/c inflow of 20m.

New management The new CEO (ex Wood Group) and FD (ex Umeco) have an opportunity to rebuild the
Chemring story. Better expectation management is the first step. Following an initial review they have identified the following key priorities, which seem sensible 1) Strengthen and simplify the management structure, 2) Integration of operating units, 3) Operational performance improvement, 4) Focussed business development and 5) Prioritisation of cash and cost management.

Arduous road ahead With full troop withdrawal from Afghanistan in 2014 and ongoing US budget pressure
(CHG is a short cycle business), we fear significant headwinds. The Group's order book closed down 13% on 2011.

M&A angle - While Carlyle walked away, others such as Rheinmetall or ATK could still be interested once there
is clarity on US defence spending cuts.

Conflict catalyst While headlines on Iran have dissipated, the likelihood of (more) assets being sent to North
Africa and / or Syria has increased. Given the number of portable surface-to-air missiles that became loose during the Libyan conflict, we would expect a rise in countermeasure demand with any escalation. Although, we suspect it would be too politically unsavoury to commit to more kinetic involvement.

Valuation assumes successful restructuring The shares have performed well ahead of results as the
market discounts an improved management team and restructuring plan. Given the market headwinds we doubt the fix will be quick and the estimate bar may need to be further lowered (we are 15% below consensus eps in 2014). A CY13 EV/EBIT of 9.5x is in line with its long term average and reflects market headwinds with restructuring potential from new management.

Ben Bourne +44 (0)20 3100 2275 ben.bourne@liberumcapital.com

Disclaimer
This message may not be forwarded without the express permission of Liberum Capital. It is based on current public information and/or proprietary data which Liberum Capital considers reliable, but we accept no responsibility or liability for, the accuracy or completeness of the information included herein, including any third party information, and it should not be relied upon as such. Any information or opinions contained are subject to change. Unless stated otherwise, this material is not investment research or a research recommendation for the purpose of FSA rules or a research report under U.S. law. It is provided on the understanding that Liberum Capital is not acting in a fiduciary capacity and it is not a personal recommendation to you. The securities referred to may not be suitable for you and this material should not be relied upon in substitution for the exercise of independent judgement. Liberum Capital and/or its officers, directors and employees may have or take positions in securities of companies mentioned in this communication (or in any related investment) and may from time to time dispose of any such positions. Liberum Capital may act as a market maker in the securities of companies discussed in this communication (or in any related investments), may sell them or buy them from customers on a principal basis, and may also provide corporate finance or underwriting services for or relating to those companies, for which it is remunerated. This material has been prepared and issued by Liberum Capital Limited, authorised and regulated in the United Kingdom by the Financial Services Authority (FSA) for conduct of designated investment business in the European Economic Area. Notice to US investors: This communication is only for major US institutional investors pursuant to SEC rule 15a-6. Any US person wishing to discuss this message or effect transactions in any security mentioned herein should contact Liberum Capital Inc at 441 Lexington Avenue (15th Floor) New York NY10017. Telephone: (212) 596 4800.

Disclaimer
This message may not be forwarded without the express permission of Liberum Capital. It is based on current public information and/or proprietary data which Liberum Capital considers reliable, but we accept no responsibility or liability for, the accuracy or completeness of the information included herein, including any third party information, and it should not be relied upon as such. Any information or opinions contained are subject to change. Unless stated otherwise, this material is not investment research or a research recommendation for the purpose of FSA rules or a research report under U.S. law. It is provided on the understanding that Liberum Capital is not acting in a fiduciary capacity and it is not a personal recommendation to you. The securities referred to may not be suitable for you and this material should not be relied upon in substitution for the exercise of independent judgement. Liberum Capital and/or its officers, directors and employees may have or take positions in securities of companies mentioned in this communication (or in any related investment) and may from time to time dispose of any such positions. Liberum Capital may act as a market maker in the securities of companies discussed in this communication (or in any related investments), may sell them or buy them from customers on a principal basis, and may also provide corporate finance or underwriting services for or relating to those companies, for which it is remunerated. This material has been prepared and issued by Liberum Capital Limited, authorised and regulated in the United Kingdom by the Financial Services Authority (FSA) for conduct of designated investment business in the European Economic Area. Notice to US investors: This communication is only for major US institutional investors pursuant to SEC rule 15a-6. Any US person wishing to discuss this message or effect transactions in any security mentioned herein should contact Liberum Capital Inc at 441 Lexington Avenue (15th Floor) New York NY10017. Telephone: (212) 596 4800.

Morning Note
24 January 2013

Chemring: Full-year results (U/R)

FY results appear poor on a year-on-year basis, with significantly reduced market expectations following several downgrades. However, with new management and a refocusing on core manufacturing driving margins there is some scope for operational recovery. On a wider view, the ongoing pressure on NATO budgets continues to give a negative backdrop. The shares post their de-rating appear cheap, but management still has to prove itself and the scale of defence cuts, especially in the US, remains unclear. Analyst: David Buxton

Edenville*: Initiation of coverage (CORP)

Edenville offers a focused exposure to coal in Tanzania. We initiate coverage with a target price of 0.49p, some 48% above the current price. We see the potential for further uplift in the near future, with the release of the scoping study for the Namwele project and new resource studies for the other projects. Analyst: Martin Potts

finnCap. 60 New Broad St London EC2M 1JJ Tel: 020 7220 0500 Web: www.finncap.com

Chemring
24 January 2013 Full-year results
Ticker Price Target Price Upside Market Cap Index Sector Net Debt Shares in Issue Next Results What's changed Adj. EPS (FD) Recommendation Target Price Share Price Performance CHG 282.5p 420.0p 49.0% 546.1m FTSE All Share Aerospace & Defence 244.8m 193.3m FY - Jan From To

U/R

FY results appear poor on a year-on-year basis, with significantly reduced market expectations following several downgrades. However, with new management and a refocusing on core manufacturing driving margins there is some scope for operational recovery. On a wider view, the ongoing pressure on NATO budgets continues to give a negative backdrop. The shares post their de-rating appear cheap, but management still has to prove itself and the scale of defence cuts, especially in the US, is remains unclear.
Results. Full-year results illustrate the year-on-year decline in trading, with

47.2p n/c U/R n/c 420.0p n/c

turnover up just 2% to 740.3m, adjusted PTP down 42% to 70.1m giving EPS of 28.5p, down 43%. This results in the operating margin dropping from 19% to 12%. The dividend has also been cut by 36% to 9.5p for the full year. The order book is down by 13% to 760.9m. These results appear to be in line with market forecasts and management signals unchanged expectations. New management will refocus and integrate operations and drive forward factory efficiencies to deliver internal recovery, but outside of the companys control is the continuing decline in NATO budgets coupled with the withdrawal from Afghanistan, issues with the US sequestration etc: order placement is therefore still expected to be subject to delays and cuts.
Forecasts. We will re-introduce forecasts shortly, with the re-existing market

range for PTP between 58m to 64m, giving EPS of around 24p.
Summary. The group has had a difficult year, with several profit warnings and

Source: Thomson Reuters

% Actual Relative

1M +16.7 +12.2

3M -20.0 -24.0

12M -30.2 -37.3

Company Description Energetics and countermeasure devices for defence industry Analyst: David Buxton dbuxton@finncap.com Sales: Simon Johnson sjohnson@finncap.com Chris Jeffrey cjeffrey@finncap.com Rhys Williams rwilliams@finncap.com Tony Quirke tquirke@finncap.com Sales Traders: STX

a change in management. New management has good scope to turnaround both the groups performance and also its rating. However, the ongoing reductions in NATO defence budgets as well as the withdrawal from Afghanistan will mean demand for countermeasures and land mine detection systems will continue to see declines. The shares have seen some small upside post settlement of the fiscal cliff, but remain at low levels, trading on a P/E of 8.1x in 2012. With many issues continuing, a cautious view would rate the shares a Hold, albeit some will see scope for recovery providing some upside. Our forecasts and recommendation remain under review.

Year ending October (m)

020 7220 0542

2010A

2011A

2012

2013E

020 7220 0525 020 7220 0524 020 7220 0522 020 7220 0517 020 7220 0531 73240

Data Sales (m) Adj EBITDA (m) Adj PBT (m) Tax rate (%) Adj EPS (FD) (p) DPS (p) Ratios EV/Sales (x) EV/EBITDA (x) P/E (x) Yield (%) Cash flow yield (%) EPS growth (%)

597.1 164.2 116.8 19 48.7 11.8 1.4 4.9 5.8 4.2 4.9 n/a

724.1 176.7 118.8 23 49.5 14.2 1.1 4.6 5.7 5.0 8.8 1.6

740.3 112.0 70.1 22 28.5 9.5 1.1 6.1 8.1 4.1 -43

*Denotes corporate client of finnCap . This research cannot be classified as objective under finnCap research policy. Visit www.finncap.com

Edenville Energy*
24 January 2013 Initiation of coverage
Ticker Price Target Price Upside Market Cap Index Sector Net Cash Shares in Issue Next Results What's changed Adj. EPS (FD) Recommendation Target Price Share Price Performance 0.5p EDL 0.3p 0.5p 48.0% 15.1m FTSE AIM All Share Mining 2.4m 4,571.2m Final results May 2013 From To 0.0p

CORP

Edenville offers a focused exposure to coal in Tanzania. We initiate coverage with a target price of 0.49p, some 48% above the current price. We see the potential for further uplift in the near future, with the release of the scoping study for the Namwele project and new resource studies for the other projects.
We have derived a valuation for Edenville based on a deeply discounted

DCF analysis of Namwele and nominal values for the other projects. We calculate an unrisked value for the company of 40.2m, equivalent to 0.91p. After applying a risk discount, we arrive at the 0.49p price target.
Results from the scoping study at Namwele and updated resource

statements for all three projects are expected in the near future. These results should considerably strengthen our valuation of the company.
The stock has reacted positively to the improved sector sentiment in

recent months. However, it is still well below our target price and substantially below the high of 2.48p reached two years ago. Summary of valuation of Edenvilles assets (unrisked basis) Namwele Mkomolo Muze Balance sheet Total m 26.6 7.8 5.0 0.8 40.2 p/share 0.60 0.18 0.11 0.02 0.91

Source: Thomson Reuters

Source: finnCap

% Actual Relative

1M +3.1 -0.9

3M +22.2 +16.2

12M -13.2 -21.9

Company Description Exploring for coal in Tanzania Analyst: Martin Potts mpotts@finncap.com Sales: Simon Johnson sjohnson@finncap.com Chris Jeffrey cjeffrey@finncap.com Rhys Williams rwilliams@finncap.com Tony Quirke tquirke@finncap.com Sales Traders: STX

Year ending December (m)

020 7220 0544

2010A

2011A

2012E

2013E

020 7220 0525 020 7220 0524 020 7220 0522 020 7220 0517 020 7220 0531 73240

Data Sales (m) Adj EBITDA (m) Adj PBT (m) Tax rate (%) Adj EPS (FD) (p) DPS (p) Ratios EV/Sales (x) EV/EBITDA (x) P/E (x) Yield (%) Cash flow yield (%) EPS growth (%)

0.0 -0.3 -0.3 0 0.0 0.0 n/a n/a n/a 0.0 -3.1 n/a

0.0 -1.2 -1.2 0 0.0 0.0 n/a n/a n/a 0.0 -11.1 243.3

0.0 -0.9 -0.9 0 0.0 0.0 n/a n/a n/a 0.0 -9.3 40.5

0.0 -1.0 -1.0 0 0.0 0.0 n/a n/a n/a 0.0 -11.9 8.1

*Denotes corporate client of finnCap . This research cannot be classified as objective under finnCap research policy. Visit www.finncap.com

Research Contacts David Buxton Mark Paddon Duncan Hall Dr Keith Redpath Andrew Darley Will Arnstein Lorne Daniel Martin Potts Corporate Broking Contacts Simon Johnson Stephen Norcross Joanna Weaving Simon Starr Brian Patient Mia Gardner Victoria Bates Elizabeth Johnson Corporate Sales Contacts Tony Quirke Sales Contacts Simon Johnson Chris Jeffrey Rhys Williams Sales Trading Contacts Mick McNamara Mike Nally Jeremy Smith Ben Tonnison Danny Smith Melvyn Brown

020 7220 0542 020 7220 0541 020 7220 0546 020 7220 0550 020 7220 0547 020 7220 0543 020 7220 0545 020 7220 0544 020 7220 0525 020 7220 0513 020 7220 0514 020 7220 0516 020 7220 0515 020 7220 0512 020 7220 0518 020 7220 0523 020 7220 0517 020 7220 0525 020 7220 0524 020 7220 0522 020 7220 0521 020 7220 0534 020 7220 0536 020 7220 0535 020 7220 0533 020 7220 0537

dbuxton@finncap.com mpaddon@finncap.com dhall@finncap.com kredpath@finncap.com adarley@finncap.com warnstein@finncap.com ldaniel@finncap.com mpotts@finncap.com sjohnson@finncap.com snorcross@finncap.com jweaving@finncap.com sstarr@finncap.com bpatient@finncap.com mgardner@finncap.com vbates@finncap.com ejohnson@finncap.com tquirke@finncap.com sjohnson@finncap.com cjeffrey@finncap.com rwilliams@finncap.com mmcnamara@finncap.com mnally@finncap.com jsmith@finncap.com btonnison@finncap.com dsmith@finncap.com mbrown@finncap.com

A marketing communication under FSA Rules, this document has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. This research cannot be classified as objective under finnCap Ltd research policy. Visit www.finncap.com The recommendation system used for this research is as follows. We expect the indicated target price relative to the FT All Share Index to be achieved within 12 months of the date of this publication. A Hold indicates expected performance relative to this index of +/ -10%, a Buy indicates expected outperformance >10% and a Sell indicates expected underperformance of >10%. Approved and issued by finnCap Ltd for publication only to UK persons who are authorised persons under the Financial Services and Markets Act 2000 and to Professional customers. Retail customers who receive this document should ignore it. finnCap Ltd uses reasonable efforts to obtain information from sources which it believes to be reliable, but it makes no representation that the information or opinions contained in this document are accurate, reliable or complete. Such information and opinions are provided for the information of finnCap Ltd's clients only and are subject to change without notice. finnCap Ltds salespeople, traders and other representatives may provide oral or written market commentary or trading strategies to our clients that reflect opinions contrary to or inconsistent with the opinions expressed herein. This document should not be copied or otherwise reproduced. finnCap Ltd and any company or individual connected with it may have a position or holding in any investment mentioned in this document or a related investment. finnCap Ltd may have been a manager of a public offering of securities of this company within the last 12 months, or have received compensation for investment banking services from this company within the past 12 months, or expect to receive or may intend to seek compensation for investment banking services from this company within the next three months. Nothing in this document should be construed as an offer or solicitation to acquire or dispose of any investment or to engage in any other transaction. finnCap Ltd is authorised and regulated by the Financial Services Authority, London E14 5HS, and is a member of the London Stock Exchange.

60 New Broad St London EC2M 1JJ Tel 020 7220 0500 Fax 020 7220 0597 Email info@finncap.com Web www.finncap.com
finnCap is registered as a company in England with number 06198898. Authorised and regulated by the Financial Services Authority. Member of the London Stock Exchange

18 January 2013 Europe/United Kingdom Equity Research Aerospace & Defense (Aerospace and Defence (Europe))

Chemring (CHG.L)
SMALL & MID CAP RESEARCH

Managing expectations
Chemring will release 2012 full year results on 24th January at 7am. The results presentation is at 9.30am, with a webcast at www.chemring.co.uk Important to be realistic. We think investors expecting a full strategic roadmap and turnaround plan from new CEO Mark Papworth may come away disappointed next week. We believe the focus will be on operational improvements to address the immediate business performance, with longer term strategy (including attitude towards disposals) likely to be communicated at the half year. Factoring in a deteriorating core-end market, and visibility still very poor given sequester deferral, we think the challenge facing Chemrings new management team is a formidable one. We think it is important for investors to be realistic in their expectations, given a new CEO who has been in place for just two months, and a new FD for two weeks. Full year expectations. The 27th November trading update provided an approximate full year revenue number of 740m. We forecast underlying EBIT of 87.7m, and EPS of 28.9p, which is roughly in line with consensus (28.7p). For 2013, our (conservative) forecasts assume a top line decline of 9%, and flat margins, with earnings recovery from 2014. We expect significant cash improvements through 2013, especially working capital. Valuation: On our estimates, Chemring is trading on 10.5x 2013E P/E, which is more expensive than defence peers, however, reflecting a distressed earnings number. We remain Neutral and await the presentation.
Rating Price (17 Jan 13, p) Target price (p) Market cap. ( m) Enterprise value ( m)
*Stock ratings are relative to the coverage universe in each analyst's or each team's respective sector. Target price is for 12 months.

Research Analysts Oliver Sleath 44 20 7888 0275 oliver.sleath@credit-suisse.com Specialist Sales: David Arnold 44 20 7883 3549 david.arnold@credit-suisse.com

Chemring is a global defence company specialising in the manufacture of energetic material products and advanced countermeasures. US defence spending makes up 43% of the Group's revenues, with a further 17% from the UK and 11% in the rest of Europe. In 2011, Chemring recorded sales of 745m on adjusted operating margin of 19%.

NEUTRAL* 275.20 210.00 531.94 832.7

The Group is divided into a Countermeasures division and three energetics segments: Pyrotechnics, Counter-IED and Munitions. Chemring has 51% global market share in niche, highmargin Countermeasures. The Energetics markets are more fragmented.

Financial and valuation metrics Year Revenue ( m) EBITDA ( m) Pre-tax Profit Adjusted ( m) CS adj. EPS (p) Prev. EPS (p) ROIC (%) P/E (adj., x) P/E rel. (%) EV/EBITDA Dividend (10/12E, p) Dividend yield (%) Net debt (10/12E, m) Net debt/equity (10/12E, %) BV/share (10/12E, )
Source: Company data, Credit Suisse estimates

10/11A 745.3 151.10 90.8 52.15 11.77 5.28 48.4 5.3 9.62 3.5 300.7 64.5 2.4

10/12E 10/13E 740.0 673.9 102.42 104.50 32.7 39.7 28.86 26.11 29.74 27.20 5.45 6.32 9.54 10.54 81.2 96.0 8.1 7.8 IC (10/12E, m) EV/IC Current WACC Free float (%) Number of shares (m)

10/14E 686.9 117.14 54.7 30.85 27.79 7.90 8.92 89.2 6.9 766.72 1.1 10.0 95.0 193.29

DISCLOSURE APPENDIX CONTAINS ANALYST CERTIFICATIONS AND THE STATUS OF NON US ANALYSTS. US

Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

CREDIT SUISSE SECURITIES RESEARCH & ANALYTICS

BEYOND INFORMATION Client-Driven Solutions, Insights, and Access

18 January 2013

Chemring CHG.L
Price (17 Jan 13): 275.20p, Rating: NEUTRAL, Target Price: 210.00p
Income statement ( m) Sales revenue EBITDA Depr. & amort. EBIT (CS) Net interest exp. Associates Other adj, PBT (CS) Income taxes Profit after tax Minorities Preferred dividends Associates & other Net profit (CS) Other NPAT adjustments Reported net income Cash flow () EBIT Net interest Cash taxes paid Change in working capital Other cash & non-cash items Cash flow from operations CAPEX Free cash flow to the firm Acquisitions Divestments Other investment/(outflows) Cash flow from investments Net share issue/(repurchase) Dividends paid Issuance (retirement) of debt Other Cash flow from financing activities Effect of exchange rates Changes in Net Cash/Debt . Net debt at start Change in net debt Net debt at end Balance sheet ( m) Assets Cash and cash equivalents Accounts receivable Inventory Other current assets Total current assets Total fixed assets Intangible assets and goodwill Investment securities Other assets Total assets Liabilities Accounts payable Short-term debt Other short term liabilities Total current liabilities Long-term debt Other liabilities Total liabilities Shareholders' equity Minority interest Total equity & liabilities Net debt ( m) 10/11A 745 151 (44) 107 (16) 0.10 91 (17) 74 23 97 (23) 74 10/11A 107 (16) (17) (37) 58 94 (48) 46 (58) (13) (119) 109 (23) (5) (10) 71 (0) 45 310 (45) 265 10/11A 92 191 147 2 431 231 459 23 1,144 212 86 12 310 262 97 669 475 1,144 265 10/12E 740 102 (52) 51 (18) 0.10 33 (6) 27 29 56 (27) 28 10/12E 51 (18) (15) (57) 76 37 (40) (3) 32 (10) (18) (4) (31) (1) (18) (54) (1) (36) 265 36 301 10/12E 51 224 118 2 396 251 431 23 1,100 176 86 15 277 260 97 634 466 1,100 301 10/13E 674 105 (47) 58 (18) 0.10 40 (7) 33 18 50 (18) 33 10/13E 58 (18) (14) 15 65 105 (37) 68 (9) (46) (5) (18) (1) (19) (42) 17 301 (17) 284 10/13E 68 204 108 2 382 267 413 23 1,086 161 86 15 262 260 97 619 467 1,086 284 10/14E 687 117 (44) 73 (18) 0.10 55 (10) 45 15 60 (15) 45 10/14E 73 (18) (17) (3) 62 97 (38) 60 (9) (47) (5) (18) (1) (19) (42) 9 284 (9) 275 10/14E 77 208 110 2 397 283 400 23 1,103 164 86 15 265 260 97 622 481 1,103 275 Per share data No. of shares (wtd avg) CS adj. EPS (p) Prev. EPS (p) Dividend (p) Dividend payout ratio Free cash flow per share (p) Key ratios and valuation Growth(%) Sales EBIT Net profit EPS Margins (%) EBITDA margin EBIT margin Pretax margin Net margin Valuation metrics (x) EV/sales EV/EBITDA EV/EBIT P/E P/B Asset turnover ROE analysis (%) ROE stated-return on equity ROIC Interest burden Tax rate Financial leverage Credit ratios (%) Net debt/equity Net debt/EBITDA Interest coverage ratio 10/11A 186 52.15 14.80 28.38 24.62 10/11A 10/12E 193 28.86 29.74 9.62 33.33 (1.64) 10/12E 10/13E 193 26.11 27.20 8.70 33.33 35.21 10/13E 10/14E 193 30.85 27.79 10.28 33.33 30.83 10/14E

24.8 (0.8) 10.0 4.6 20.3 14.4 12.2 13.0 1.1 5.3 7.4 5.3 1.1 0.65 18.5 11.8 0.85 18.6 0.75 55.7 1.8 6.6

(0.7) (52.4) (42.4) (44.7) 13.8 6.9 4.4 7.5 1.1 8.1 16.4 9.5 1.1 0.67 6.0 5.4 0.64 18.0 0.75 64.5 2.9 2.8

(8.9) 13.6 (9.5) (9.5) 15.5 8.6 5.9 7.5 1.2 7.8 14.1 10.5 1.1 0.62 7.0 6.3 0.69 18.0 0.75 60.7 2.7 3.2

1.9 26.0 18.2 18.2 17.1 10.6 8.0 8.7 1.2 6.9 11.1 8.9 1.1 0.62 9.5 7.9 0.75 18.0 0.73 57.1 2.3 4.0

Source: FTI, Company data, Thomson Reuters, Credit Suisse Securities (EUROPE) LTD. Estimates.

618 418
218 Jan-11 May-11 Sep-11 Price Jan-12 May-12 Sep-12 Price relative

The price relative chart measures performance against the FTSE ALL SHARE INDEX which closed at 3216.23 on 17/01/13 On 17/01/13 the spot exchange rate was .83/Eu 1. - Eu .75/US$1

Chemring (CHG.L)

10

18 January 2013

Companies Mentioned (Price as of 17-Jan-2013)

Chemring (CHG.L, 275.2p, NEUTRAL, TP 210.0p)

Disclosure Appendix
Important Global Disclosures
I, Oliver Sleath, certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and securities and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.
Price and Rating History for Chemring (CHG.L)
CHG.L Date 20-Jan-10 14-Sep-10 31-Mar-11 05-Sep-11 12-Sep-11 18-Nov-11 26-Jan-12 02-Jul-12 14-Nov-12 Closing Price (p) 615.00 595.20 691.50 532.50 533.00 421.60 378.80 274.10 222.20 Target Price (p) 680.00 690.00 630.00 460.00 420.00 330.00 210.00

Rating O * O * O N

* Asterisk signifies initiation or assumption of coverage.

O U T PERFO RM N EU T RA L

The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities

As of December 10, 2012 Analysts stock rating are defined as follows:

Outperform (O) : The stocks total return is expected to outperform the relevant benchmark*over the next 12 months. Neutral (N) : The stocks total return is expected to be in line with the relevant benchmark* over the next 12 months. Underperform (U) : The stocks total return is expected to underperform the relevant benchmark* over the next 12 months.
*Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stocks total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ra tings are based on a stocks total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Ou tperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin American and non-Japan Asia stocks, ratings are based on a stocks total return relative to the average total return of the relevant country or regional benchmark; Austr alia, New Zealand are, and prior to 2nd October 2012 U.S. and Canadi an ratings were based on (1) a stocks absolute total return potential to its current share price and (2) the relative attrac tiveness of a stocks total return potential within an analysts coverage universe. For Australian and New Zealand stocks, 12 -month rolling yield is incorporated in the absolute total return calculation and a 15% and a 7.5% threshold replace the 10-15% level in the Outperform and Underperform stock rating definitions, respectively. The 15% and 7.5% thresholds replace the +10-15% and -10-15% levels in the Neutral stock rating definition, respectively. Prior to 10th December 2012, Japanese ratings were based on a stocks total return relative to the average total return of the relevant country or regional benchmark.

Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances. Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward. Analysts sector weightings are distinct from analysts stock ratings and are based on the analysts expectations for the fundamenta ls and/or valuation of the sector* relative to the groups historic fundamentals and/or valuation: Overweight : The analysts expectation for the sectors fundamentals and/or valuation is favorable over the next 12 months. Market Weight : The analysts expectation for the sectors fundamentals and/or valuation is neutral over the next 12 months. Underweight : The analysts expectation for the sectors fundamentals and/or valuation is cautious over the next 12 months.
*An analysts coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cov er multiple sectors.

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Credit Suisse's distribution of stock ratings (and banking clients) is:

Global Ratings Distribution

Rating

Versus universe (%)

Of which banking clients (%)

Outperform/Buy* 43% (53% banking clients) Neutral/Hold* 38% (47% banking clients) Underperform/Sell* 16% (41% banking clients) Restricted 3% *For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, an d Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdin gs, and other individual factors.

Credit Suisses policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector o r the market that may have a material impact on the research views or opinions stated herein. Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer to Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research: http://www.csfb.com/research and analytics/disclaimer/managing_conflicts_disclaimer.html Credit Suisse does not provide any tax advice. Any statement herein regarding any US federal tax is not intended or written to be used, and cannot be used, by any taxpayer for the purposes of avoiding any penalties. Price Target: (12 months) for Chemring (CHG.L) Method: Our 210p target price for Chemring is derived using a 7.6x forward earnings multiple on our12-month forward EPS forecasts. Risk: US$ is the key risk to our Chemring forecasts. Other potential risks are change in demand from current assumptions.

Please refer to the firm's disclosure website at www.credit-suisse.com/researchdisclosures for the definitions of abbreviations typically used in the target price method and risk sections.
See the Companies Mentioned section for full company names

Important Regional Disclosures

Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report. The analyst(s) involved in the preparation of this report have not visited the material operations of the subject company (CHG.L) within the past 12 months Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares; SVS--Subordinate Voting Shares. Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not contain regulatory disclosures the non-affiliated Canadian investment dealer would be required to make if this were its own report. For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit http://www.csfb.com/legal_terms/canada_research_policy.shtml. The following disclosed European company/ies have estimates that comply with IFRS: (CHG.L). As of the date of this report, Credit Suisse acts as a market maker or liquidity provider in the equities securities that are the subject of this report. Principal is not guaranteed in the case of equities because equity prices are variable. Commission is the commission rate or the amount agreed with a customer when setting up an account or at any time after that. To the extent this is a report authored in whole or in part by a non-U.S. analyst and is made available in the U.S., the following are important disclosures regarding any non-U.S. analyst contributors: The non-U.S. research analysts listed below (if any) are not registered/qualified as research analysts with FINRA. The non-U.S. research analysts listed below may not be associated persons of CSSU and therefore may not be subject to the NASD Rule 2711 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. Credit Suisse Securities (Europe) Limited........................................................................................................................................... Oliver Sleath For Credit Suisse disclosure information on other companies mentioned in this report, please visit the website at www.creditsuisse.com/researchdisclosures or call +1 (877) 291-2683.

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