Chemring Group PLC

Annual report and accounts 2025

Delivering

the plan

Chemring Group PLC Annual report and accounts 2025

CONTENTS

Strategic report

01 2025 performance

02 Chairman’s statement

04 Investment case

06 Group Chief Executive’s review

10 Market overview and strategy

12 Key performance indicators

14 Focus on Countermeasures & Energetics

16 Focus on Sensors & Information

18 Introduction to sustainability

20 Health and safety

21 Environment

24 Task Force on Climate-related Financial Disclosures (“TCFD”) report

33 Our people

34 Ethics and business conduct

36 Financial review

38 Risk management

40 Principal risks and uncertainties

46 Viability statement and going concern

47 Non-financial and sustainability information statement

Governance

48 Chairman’s introduction to governance

50 Board of directors

52 Corporate governance report

65 Audit Committee report

69 Nomination Committee report

71 Directors’ remuneration report

92 Directors’ report

Financial statements

95 Consolidated income statement

96 Consolidated statement of comprehensive income

97 Consolidated statement of changes in equity

98 Consolidated balance sheet

99 Consolidated cash flow statement

100 Notes to the Group financial statements

129 Parent company balance sheet

130 Parent company statement of comprehensive income

130 Parent company statement of changes in equity

131 Notes to the parent company financial statements

135 Accounting policies

142 Independent auditor’s report to the members of Chemring Group PLC

148 Five-year record

Other information

149 Corporate information and website

STRATEGIC ROADMAP

OUR PURPOSE

Chemring helps make the world a safer place. Across physical and digital

environments, our exceptional teams deliver innovative technologies and

products that detect, defeat and counter ever-changing threats.

OUR VISION

To be our customers’ preferred supplier operating in niche markets

with high barriers to entry and where weenjoy sole source or

market-leading positions.

OUR AMBITION

To double annual revenue to c.£1bn by 2030.

GROW ACCELERATE PROTECT

OUR STRATEGIC IMPERATIVES

> Read more on page 5

OUR ESG PILLARS

> Read more on pages 18 to 35

Safety Excellence Innovation

OUR VALUES

Health

and safety

Environment People

Ethics and

business

conduct

OUTLOOK

The Group continues to see robust market conditions, with increasing customer demand for its technology-driven solutions and a resurgent demand for

traditional defence capabilities driving another record order book. This strong outlook is expected to be maintained as we balance near-term performance

withlong-term growth and value creation.

KEY ACHIEVEMENTS

- Resilient revenue growth of 2% with continued strong momentum in

Countermeasures & Energetics, offset by softness in Sensors & Information

due to short-term delays in UK Government spending

- Underlying operating profit margin of 14.8% (2024: 14.3%), reflecting a

focus on operational excellence and Energetics expansion programmes

delivering ahead of schedule

- Improved cash conversion of 114% (2024: 103%) with continued focus

onworking capital

- Net debt was £89.0m (2024: £52.8m), driven by capital investment.

Netdebt to underlying EBITDA of 0.90x (2024: 0.58x)

- Another record order book of £1,345m, providing excellent medium-term

revenue visibility

- Good progress made on capital projects to date with completed programmes

delivering ahead of expectations

- Acquisition of Landguard Systems to further enhance and accelerate growth

in Roke

- The Board’s expectations for the Group’s 2026 operating performance

remain in line with market expectations. Approximately 76% (2024: 77%)

ofexpected 2026 revenue is already covered by the order book

* References to underlying operating profit and earnings per share throughout this

strategic report are to underlying measures from continuing operations; see note 3

for a reconciliation to the statutory profit after tax from both continuing and

discontinued operations of £48.2m (2024: £39.5m). Note 5 contains a reconciliation

of the comparative values that have been re-presented on the basis of the classification

of operations as discontinued. For references to constant currency equivalents of

reported numbers please refer to page 36 for further explanation and for calculation

of underlying cash conversion please refer to page13.

2025 PERFORMANCE

2025

2024

2023

£1,022m

£1,345m

£906m

Group

£1,345m

2025

2024

2023

£105m

£110m

£171m

> Read more on pages 16 to 17

Sensors & Information

£110m

> Read more on pages 14 to 15

2025

2024

2023

£917m

£1,235m

£735m

Countermeasures & Energetics

£1,235m

ORDER BOOK

Revenue

£497.5m

(+1.9%) (+2.8% at constantcurrency*)

Strong performance in Energetics delivering

ahead of schedule and improving operational

performance at our Tennessee Countermeasures

business, offset by a decline in Sensors &

Information as a result of delayed UK

Government order placement.

Underlying operating profit*

£73.5m

(+5.6%) (+6.8% at constantcurrency*)

Resilient high-quality business, and the result

of a focus on operational excellence.

Underlying diluted earnings pershare*

19.4p

(2024: 18.9p)

Increasing tax and interest charges more

thanoffset by increased profitability.

Profit before tax

£67.7m

(+31%)

Profit before tax increased as significant defined

benefit pension transaction costs in the prior

year were not repeated, and an FX gain in the

current year was a loss in the prior year.

Underlying cash conversion*

114%

(2024: 103%)

Continued strong cash conversion, with an

average of 101% on a rolling 36-month basis

(2024: 101%), driven by disciplined working

capital management.

Order intake

£781m

(2024: £649m)

Continued strong order intake in

Countermeasures & Energetics and improving

order intake in Sensors & Information.

FINANCIAL HIGHLIGHTS

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DEAR SHAREHOLDERS

Since joining the Board on 1 October 2024 and becoming Chairman

on1December 2024, I have spent much of my time this year getting

toknowourbusinesses, their leadership teams, workforce, products

andmarket opportunities.

I have continued to be impressed by the calibre of our people and the depth

of technical expertise across all our businesses. The passion and commitment

Ihave observed are underpinned by a robust culture of safety, with a collective

focus on protecting our people, customers, and the communities we serve.

Safety is the foundation of everything we do and must always be our top

priority. As a Board, we will persist in driving further investment and

improvement in this area, reducing risk to our people and automating

processes wherever possible.

Our dedication to achieving zero harm must be matched by an unwavering

focus on delivery, striving to exceed our customers’ expectations by providing

high-quality products and services on time and in full, while simultaneously

anticipating and investing in their future needs. The strength of our enduring

customer relationships enables the sharing of market and product intelligence,

therefore enabling us to respond at pace to their evolving equipment and

technology needs. This is vital in today’s defence environment where the

speed of innovation on the battlefield is such that new products are moving

from concept to deployment in record time, requiring true agility that is well

suited to Chemring.

The significant structural shift in our end markets driven by geopolitical

eventsover the last year has emphasised the critical and, in many cases,

unique sovereign capabilities the Company provides. Ongoing investment in

our capabilities is therefore essential if we are to capitalise on these significant

market opportunities, and to drive further improvements in quality and

delivery we will continue to invest in our infrastructure and people. In doing

so we will continue to grow our revenues and deliver increasing value to all

our stakeholders.

Defence budgets continue to grow, creating significant opportunities for

theGroup as our customers seek to restore and enhance their defence and

national security capabilities. This has resulted in order books that have been

at record levels throughout the year. This visibility, together with the potential

for further grant funding from our customers, opens up opportunities for

usto explore further capacity expansion projects to meet this strong and

enduring market demand, further reinforcing Chemring’s position as a key

supplier to NATO and positioning the Group well for strong future growth.

Strategy

Chemring is a technology-differentiated group operating in niche markets with

high barriers to entry and where our differentiated capabilities provide aclear

competitive advantage. We have a clear strategy for achieving our growth

ambitions which is based on three essential strategic imperatives – grow,

accelerate and protect.

First, we will drive organic growth by investing in our people, in technology

and in increasing capacity. Next, we will inorganically accelerate that growth

by seeking to make acquisitions in expanding, high-priority defence and

national security markets such as cyber, information advantage and US space

and missiles. For these market areas we have a live pipeline of technology

andcapability targets which we are actively evaluating against our robust

acquisition criteria. Finally, we will continue to invest to protect and strengthen

our sole source and market-leading positions through increased modernisation,

automation and new product development. This strategy is fully aligned to the

significant growth opportunities that we are seeing in the market and underpins

our value proposition.

Health, safety and the environment

At Chemring our goal is zero harm. This goes beyond the management of

safety and recognises that we have a duty to ensure that we take appropriate

actions to minimise the impact of our operations on many different levels,

from employee health, safety and wellbeing to climate change.

The Board recognises that the highest levels of safety are required to protect

employees, product users and the general public. We believe that all incidents

and injuries are preventable, and that all employees have the right to expect to

return home safely at the end of every working day. Safety therefore remains

one of the core values within Chemring and is central to our operating philosophy.

A key part of our health, safety and environmental (“HSE”) strategy is the

collation and analysis of data at every level to focus on the underlying causes

of incidents and the impact on our operations. This continues to facilitate the

appropriate decision making at all levels of our organisation.

Tony Wood

Chairman

“ In a geopolitical and business environment

that remains volatile and uncertain, 2025

has been another successful year for

Chemring with strong operational and

financial performance supplemented by

strategic organic and inorganic investment

to drive future growth.”

CHAIRMAN’S STATEMENT

Delivering the plan

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People and our community

Our values-based culture is central to our workforce feeling enabled to do

theright thing for their colleagues, customers and communities. The values

ofSafety, Excellence and Innovation continue to provide the clarity of what

we stand for and shape our decision making. We continue to focus on listening

to our people through both local engagement tools and our Board engagement

listening groups. Laurie Bowen, non-executive director and Chair of the

Remuneration Committee, is tasked with employee engagement for the Board

and met with employees from four business units across the Group in FY25.

Meetings with over 100 colleagues in sessions at Roke, Chemring Countermeasures

in Tennessee, Chemring Energetics UK in Scotland and Chemring Sensors &

Electronic Systems in North Carolina provided insights into both the challenges

and successes our workforces are experiencing through this period of growth.

This feedback informs the Board and provides a valuable perspective with

which to guide our thinking.

Our focus on Culture & Employee Experience has allowed us to emphasise

doing the right thing for all employees. We established two key aims to guide

our efforts in FY25 and beyond:

- We will always be an organisation where merit is recognised and rewarded.

- All our people decisions will be fair and unbiased, fostering an environment

where everyone can succeed.

These aims are the foundation of the employee experience in Chemring,

andwill serve our goal of creating a high-performing and engaged workforce

to deliver exceptional products and services for all our customers.

Governance and ethics

The Board remains focused on ensuring that we have the necessary policies

and procedures in place to enable the business to operate with integrity and

transparency, and to the highest ethical standards. To that end, we will continue

to strengthen our policies and procedures to ensure that the Group’s governance

remains fit for purpose.

The Group’s Code of Conduct and Operational Framework provide the

necessary governance to enable us to operate in a safe, consistent and

accountable way, and our ESG Committee is responsible for the oversight and

monitoring of Chemring’s governance framework and ethical business conduct

and compliance. Further details on the Committee’s activities during the year

can be found on page 34 of this report.

Dividends

The Board continues to recognise that dividends are an important component

of total shareholder returns. The Board’s objective is for a growing and

sustainable dividend and we have met the target dividend cover of c.2.5 times

underlying EPS, subject inter alia to maintaining a strong financial position.

The Board is recommending a final dividend in respect of the year ended

31October 2025 of 5.3p (2024: 5.2p) per ordinary share. With the interim

dividend of 2.7p per share, this results in a total dividend of 8.0p (2024: 7.8p)

per share, an increase of 3% on the prior year. If approved, the final dividend

will be paid on 10 April 2026 to shareholders on the register on20 March 2026.

Board of directors

Andrew Davies, who had been a non-executive director of Chemring since

May 2016 and the Senior Independent Director since May 2020, retired from

the Board on 31 January 2025, having approached the end of his nine-year

term. As indicated in the 2023 annual report, Fiona MacAulay, who has been

anon-executive director since June 2020, succeeded Andrew as the Senior

Independent Director.

In June the Board confirmed the appointment of Pete Raby as an independent

non-executive director. He joined the Board on 1 September 2025. Pete was

previously CEO of Morgan Advanced Materials plc, the FTSE 250 listed global

manufacturer of advanced carbon and ceramic materials. On joining the Board,

Pete became a member of the Audit, Nomination and Remuneration Committees.

In November 2025, Fiona MacAulay, Senior Independent Director, informed

the Board that she would not be seeking re-election at the Group’s Annual

General Meeting in February 2026. Fiona’s second three-year term as a

non-executive director would otherwise have expired on 2 June 2026.

Aprocess to identify a suitable candidate to replace her is underway.

Conclusion

In closing, and on behalf of the Board, I would like to acknowledge and thank

our people for their support and hard work throughout the year. 2025 has

been a year of further financial and operational progress across the Group

and this could not have been achieved without their skills, commitment and

focus on ensuring that we meet our customers’ critical needs.

Tony Wood

Chairman

8 December 2025

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INVESTMENT CASE

Chemring: investing in sustainable growth

and resilient performance

What we do

Chemring is a specialist manufacturing and

technology business with unique market positions

at the heart of national security, defence and

space sectors. We work with our customers

globally helping to protect their people, assets

and nations, where agility, expertise and

innovation are key to meeting their complex

and evolving needs.

We enjoy market-leading positions, often sole source and qualified on

a particular platform, with a wide range of governments and blue-chip

companies around the world. Our core competencies include:

- The manufacture of specialist materials and devices – military

explosives, propellants and pyrotechnic actuators that are used in a

wide variety of applications, from artillery rounds and strike missiles

to aircrew escape systems and heavy launch space vehicles.

- Supporting UK intelligence and law enforcement agencies with

operational mission support and active cyber defence.

- Advanced defence technologies including tactical electronic warfare,

counter drone and digital battlefield command and control systems.

- Global leader in the manufacture and development of advanced

countermeasures to protect air and naval platforms from the threat

of missiles.

- Highly effective detection systems for the US military to counter

thethreat of biological warfare agents.

With significant exposure to both short-cycle munitions rearmament

and longer-cycle structural changes in defence technology requirements,

Chemring is well placed to capitalise on growing European and US

defence sector budgets.

Strategy

Our strategy, which is based around the strategic imperatives of Grow,

Accelerate and Protect, is also focused on long-term partnerships,

technical excellence and a commitment to protecting lives through

relentless innovation.

Business model and culture

Our business model is built around high barriers to entry and

engineering expertise, sole source positions and enduring customer

relationships. Over 50% of our revenue is sole source, reflecting our

embedded role in critical platforms, on which you often have to be

qualified, and our global reach. Our people operate in high-hazard

environments with a culture of safety, precision and accountability.

Long-term growth drivers

We focus on niche, high-margin markets with global reach and high

barriers to entry – including advanced sensors, electronic warfare,

cyber and energetic materials. These sectors benefit from resilient,

long-term demand, underpinned by rising defence budgets, geopolitical

tensions and the need to modernise and increase industrial capabilities

across NATO and allied nations. Our sole source positions and

technical barriers to entry underpin strong customer loyalty and

premium margins.

Performance-driven value creation

With durable top-line growth, strong and expanding operating

margins, excellent cash generation and a robust balance sheet, we are

well positioned to deliver superior and sustainable shareholder value.

We target mid-single-digit revenue growth in the near term, accelerating

to low-double-digit growth as new capacity comes online. Our ambition

is to reach £1bn in annual revenue by 2030.

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OUR VALUES

GROW

Invest in people, technology

and increased capacity to

drive organic growth

- Attractive long-term profitable

growthunderpinned by fundamental

rearmament upcycle that is expected

tocontinue for many years

- Portfolio exposed to a number

ofstructural tailwinds in the defence

andnational security sectors

- Operational excellence evidenced by

strong margins and peer leading through

the cycle cash flow conversion

ACCELERATE

Organic growth through

capacity expansion

supplemented by

bolt-on M&A

- Capacity expansion: often supported

bygovernment funding, in areas we

seesignificant and sustained demand

- Bolt-on M&A – disciplined approach to

strengthen capabilities, fill technology

gaps and maximise synergies

PROTECT

Strengthen and protect our

world-leading positions

through increased

modernisation and R&D

investment in next-generation

products and services

- Preferred supplier in niche markets

withhigh barriers to entry – >50% sole

source and market-leading positions,

often having to be qualified on a

particular platform

- Long heritage and deep expertise in

high-hazard manufacturing – licensed

sites, highly automated, well invested

- We spend over £100m a year

on innovation, c.80% of which is

customer funded

OUR STRATEGIC AMBITION

To double annual revenue to c.£1bn by 2030.

Balancing near-term performance with longer-term growth and value creation

Underpinned by our values of Safety, Excellence and Innovation, our strategy

is comprised of three strategic imperatives. These imperatives will help us achieve

our ambition of doubling our annual revenue to c.£1bn by 2030.

Safety Excellence Innovation

OUR STRATEGIC IMPERATIVES

Our strategy is based on the following three pillars:

OUR STRATEGIC FRAMEWORK

We have evolved our strategic framework to reflect the prevailing market

dynamics and enhanced opportunity enjoyed by the Group.

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GROUP CHIEF EXECUTIVE’S REVIEW

Delivering against our strategy

Michael Ord

Group Chief Executive

INTRODUCTION

Amid heightened geopolitical uncertainty and instability, the Group has

delivered another solid performance in 2025. Global focus on defence

spending continues to intensify, driven by questions surrounding US support

for NATO, the ongoing conflict in Ukraine and the urgent need for Europe to

rebuild its defence industrial base, and rising tensions across the Asia Pacific

region. These dynamics support a sustained upcycle in defence and security

investment – one that is expected to last well into the next decade, ifnot longer.

Against this backdrop, demand for Chemring’s capabilities has reached

unprecedented levels. Meeting and exceeding our customers’ critical requirements

has never been more vital and I want to express my sincere thanks to all our

dedicated employees, whose professionalism and commitment have once

again been exemplary throughout the year.

Markets

Rising global tensions are driving increased defence spending, creating strong

opportunities that are well aligned with Chemring’s portfolio of products and

services. NATO remains the cornerstone for collective security, but pressure

from the Trump administration has forced EU member states to dramatically

escalate defence spending and to rebuild the defence industrial base.

As part of a renewed National Security Strategy, the UK aims to boost

defence spending to 2.6% of GDP by 2027, 3% in the next parliament, and 5%

by 2035, reinforcing its NATO and domestic commitments. Central to this is

the Strategic Defence Review (“SDR”) 2025, backed by a Defence Industrial

Strategy focused on sovereign capability, nuclear deterrence and industrial

resilience. The SDR outlines a “defence dividend” to strengthen innovation,

industry partnerships and economic growth – thereby supporting long-term

investment and strategic independence for the UK defence sector. In particular,

the SDR sets out clear demand signals in terms of a long-term strategic funding

pipeline for munitions and energetics, with total investment projected at £6bn

over the current parliament, distributed across “always-on” factories, stockpile

enhancements and missile procurement.

The SDR also places cyber and electronic warfare (“EW”) at the core of

national defence, establishing a new Cyber & Electromagnetic Command

tounify cyber, EW and information operations. Backed by over £1bn in

investment, the UK is developing a “Digital Targeting Web” to integrate AI,

sensors and precision weapons across domains, enabling faster, data-driven

battlefield decisions, while a dedicated £400m annual fund will drive innovation

in cyber technologies. Drawing on lessons from Ukraine, the UK emphasises

spectrum dominance and sub-threshold conflict preparedness, and aims to

lead NATO in digital warfighting capabilities.

The EU’s growing role within NATO represents a strategic diversification

ofEuropean defence policy. NATO member states have adopted the “Hague

Investment Plan,” pledging to raise defence spending to 5% of GDP by 2035

– 3.5% for core military needs and 1.5% for broader security. Simultaneously

the EU is undergoing a major transformation in defence strategy, shifting from

fragmented national programmes to deepening co-operation, financing at the

supranational level and focusing on advanced capabilities such as drones,

integrated air and missile defence, cyber and innovation.

“ 2025 has been another year of progress

across the Group with improving returns

forour shareholders underpinned by strong

margins and cash conversion. The continued

strong momentum in Countermeasures &

Energetics was offset by softness in Sensors

&Information, primarily driven by short-term

delays in UK Government spending. The

record order book demonstrates that customer

spending priorities align well with Chemring’s

market-leading products and services. Overall,

this performance reflects the focus that we

have placed on building a resilient, higher

quality business in recent years. With a

strong and sustainable platform to drive

further growth we maintain our ambition

todouble the Group’s annual revenue to

c.£1bn by 2030.“

European defence spending has risen sharply, reaching a record €326bn in 2024,

with a further €100bn increase projected by 2027. This growth is supported

by major EU initiatives, including the €800bn “Readiness 2030” programme

and the Security Action for Europe (“SAFE”) financial instrument, which offers

up to €150bn in loans for joint procurement projects. EU member states are

also activating the national escape clause to boost national defence budgets

and are raising up to €1bn to extend the Act in Support of Ammunition

Production (“ASAP”), more than doubling its original €500m funding.

The UK and the EU have also formalised a new defence partnership enabling

joint missions, industrial co-operation and strategic dialogue, marking the most

significant security alignment since Brexit.

The US remains the largest defence market globally. The US Department of

Defense (“DoD”) funding request for FY26 is US$848.3bn, with the Trump

administration seeking a one-time US$113bn infusion from Congress, via

reconciliation legislation, to elevate the total DoD funding to US$961bn. Major

investment priorities focus on preserving US technological dominance in areas

such as integrated sensing, cyber capabilities, hypersonic missiles and directed

energy. The Group’s differentiated capabilities give us the opportunity to

compete in this large and growing market.

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2025 performance

It is pleasing to report a solid set of results for the financial year despite a

challenging year for our Roke business as a result of delayed UK Government

order placement across both National Security and Defence. This outturn

continues to demonstrate good progress against our strategic goal of balancing

short-term performance with longer-term value creation, and again highlights

the resilient nature of our business model.

Revenue was up 1.9% to £497.5m (2024: £488.3m), underlying operating

profit was up 5.6% to £73.5m (2024: £69.6m) and underlying profit before tax

was up 4.6% to £67.8m (2024: £64.8m). Underlying diluted earnings per share

was up 2.6% to 19.4p (2024: 18.9p).

The underlying operating profit of £73.5m (2024: £69.6m) resulted in an underlying

operating margin of 14.8% (2024: 14.3%), driven by the strong performance

of our Energetics businesses, which have delivered ahead of schedule, and

improving operational performance at our Tennessee Countermeasures business.

At a statutory level, statutory operating profit was £73.4m (2024:£56.6m)

and after statutory finance expenses of £5.7m (2024: £4.8m), statutory profit

before tax was £67.7m (2024: £51.8m). Statutory profit after tax from continuing

operations was £53.3m (2024: £41.5m) giving a statutory basic earnings per

share from continuing operations of 19.7p (2024: 15.2p).

In the Energetics sector we continue to see increased levels of activity and

demand in the propellants and energetic materials markets as customers

re-evaluate their operational usage and stockpile requirements associated

withtraditional defence capabilities. As a result, our specialist energetic materials

businesses, which design and manufacture high-precision engineered devices

and specialist materials, have seen strong customer demand with order intake

increasing by 50.6% to £524m (2024: £348m) demonstrating the strength of

the sole source, often qualified positions, that the Group maintains.

At the start of the financial year our Norwegian subsidiary, Chemring Nobel,

signed a twelve-year framework agreement with Diehl Defence GmbH & Co.

KG("Diehl Defence") for the supply of MCX energetic material. Under this

framework agreement Chemring Nobel received an initial purchase order

valued at €231m, with deliveries to be made over a five-year period

commencing in early 2027. Chemring Nobel also signed a three-year supply

agreement with SAAB Switzerland for the supply of HMX, valued at £36m,

which will see deliveries being made between 2028 and 2030. Chemring

Nobel also signed a £23m ten-year agreement with Nammo for the supply

ofvarious HMX products, with deliveries made between 2027 and 2037.

In January, our Scotland-based business received an order valued at £23m

forthe delivery of critical components used in the Next Generation Light

Anti‐Tank Weapon ("NLAW") system, and then a further award of £24m

inOctober. These awards follow on from the £43m contract received from

SAAB in March 2023. The Group expects to see deliveries under these latest

contracts commencing in 2026 and continuing into 2028, providing a solid

foundation for operations. The business continues to make excellent progress

in the construction of its new propellants manufacturing facility which remains

on schedule, with costs in line with the plan. Construction of the new buildings

is now complete, equipment has been installed and the commissioning and

licensing process is underway. Once live production starts in early 2027 this

new facility will provide increased capacity and throughput in a safe and

modern manufacturing environment.

We have also seen growing demand for precision engineered devices for

space and missile applications, with our Chicago business receiving a significant

level of orders throughout the year. This included an order in November 2024

valued at US$106m for the delivery of critical components for use in an undisclosed

US missile programme. Deliveries under this contract will be over a five-year

period commencing in 2026, with continuous flow manufacturing made possible

by the additional 45,000 sq. ft. facility that commenced operations in April 2024.

In June, the business was awarded a US$65m contract for aircrew flight equipment

test systems. Work under this contract is expected to be completed by June 2030.

In Countermeasures we have continued to see steady customer demand

maintaining our position as a world leader inthe design, development and

manufacture of advanced expendable countermeasures. Order intake was

£78m (2024: £151m) reflecting receipt of multi-year awards in the prior year.

Our UK Countermeasures business (“CCM UK”) continued to see strong

order intake with notable awards including an £11m order from the UK MOD

for the supply of various air countermeasures in support of current and future

operations. All work under this contract will be performed at CCM UK’s

facility near Salisbury, with deliveries being made during FY27 and FY28. In

theUS, our fully automated facility in Tennessee saw steady improvement in

performance throughout the year, after a challenging period in the prior year.

Revenue for Countermeasures & Energetics was up by 16.8% to £322.7m

(2024: £276.3m). The sector reported an underlying operating profit of

£61.6m (2024: £45.0m) as underlying operating margin increased to 19.1%

(2024: 16.3%), driven by the strong performance of our Energetics businesses

that have delivered ahead of schedule and improving operational performance

atour Tennessee Countermeasures business. On a constant currency basis

revenue would have been up 18.3% to £326.8m and operating profit would

have been up 38.4% to £62.3m. The statutory operating profit for the year

was £61.0m (2024: £46.6m).

Revenue for Sensors & Information decreased by 17.5% to £174.8m

(2024:£212.0m) and underlying operating profit decreased by 24.6% to

£31.2m (2024: £41.4m), as underlying operating profit margin declined to

17.8% (2024: 19.5%). This was primarily as a result of both delayed UK

Government order placement across both National Security and Defence,

which is a continuation of the trend highlighted in our interim results, and

afallow year at our US business as it transitions between low rate initial

production (“LRIP”) and full rate production (“FRP”) contracts on a key

USProgram of Record for biological agent detectors.

The early action to match Roke’s cost base with demand resulted in

c.80employees leaving the business in the year. This was recorded as a

non-underlying restructuring cost. At the same time we protected Roke’s

reputation as a trusted mission partner, increased the recruitment of highly

cleared personnel and deepened its incumbency across its national security

customers. Ona constant currency basis revenue would have fallen 17.3%

to£175.4m and underlying operating profit would have decreased by 24.4%

to£31.4m.

Chemring Group PLC Annual report and accounts 2025 7

Strategic report Governance Financial statements

2025 performance continued

A fundamental characteristic of the increased threat environment and of

current conflicts is how conventional wars are blending in the use of new

technologies and tactics, and how agility and being able to adapt at pace

areessential to defeat both established and emerging threats. Government

customers are budgeting and investing accordingly, and in this multi-domain,

integrated environment Roke’s capabilities in active cyber defence, EW,

sensors, intelligence, autonomy and AI are seeing strong demand, and making

an important contribution to supporting vital missions. Roke has continued

tomake significant strategic progress in its Defence Products business where

it has a significant (>£300m) five-year international sales pipeline.

In April 2025 it was announced that Roke would lead a UK sovereign industry

collaborative effort to provide security to the UK and its allies. Known as Science

and Technology Oriented Research and development in Missile defence

(“STORM”), this framework contract encompasses a broad spectrum of

missile defence activities and capabilities. Partnering with the United Kingdom

Missile Defence Centre (“UK MDC”), Roke will lead a UK sovereign industry

collaborative effort to provide security to the UK and its allies by countering

current and future threats, including ballistic and hypersonic missiles. Valued at

£251m over six years, the STORM framework will see Roke enhance its role

as a trusted partner to the UK MDC, informing critical UK defence decision

making and enabling Roke to play a key role in developing next-generation

missile defence capabilities. As the overall prime contractor Roke will self-deliver

elements of the contract and will also manage industry partners as they deliver

the significant majority of contract value.

In June, the Group announced the acquisition of Landguard Nexus Limited for

up to £20m, creating further opportunities to enhance and accelerate Roke’s

growth. Landguard designs, manufactures and supports software defined

radio systems and associated security products that enable defence, government

and law enforcement customers to protect crucial operational assets. The

acquisition, which completed in August 2025, secures a key partofRoke’s

EWsupply chain and brings thirty specialist engineers to Roke inaddition to

asuite of market-leading products, unique intellectual property and a range

ofcomplementary customer relationships.

In the US, the Enhanced Maritime Biological Detection (“EMBD”) System FRP

contract continued as planned with a further US$15m order received in the

year. On the Joint Biological Tactical Detection System (“JBTDS”) program,

which last year benefited from an LRIP contract that completed in 2024,

weare now supporting the US Army in its field testing and acceptance

trialsahead of the expected FRP contract award in FY26.

These sole source positions with the US DoD provide an excellent opportunity

to penetrate international markets with these products sold under Foreign

Military Sales (“FMS”) and direct commercial sales agreements to key strategic

allies of the US Government.

GROUP CHIEF EXECUTIVE’S REVIEW continued

The Group’s order book at 31 October 2025 was £1.35bn (2024: £1.02bn),

ofwhich approximately £431m is scheduled for delivery during 2026, representing

cover of approximately 76% (2024: 77%) of expected 2026 revenue. On a

constant currency basis, using the 2024 closing exchange rates, the order book

would be £1.32bn. The increase since 31 October 2024 is attributable to strong

order intake across the Countermeasures & Energetics sector.

This leaves £914m of the order book to be delivered in 2027 and beyond.

Atthis stage, this provides approximately 93% of 2027 and 59% of 2028

expected revenue cover in Countermeasures & Energetics.

Net debt at the year end was £89.0m (2024: £52.8m), the increase since

31October 2024 being largely driven by £3.6m of share buyback, growth

individends to £21.5m, and capital investment of £95.6m offset by strong

operating cash generation. Strong underlying operating cash inflow of £112.2m

(2024: £93.9m) represented 114% (2024: 103%) of underlying EBITDA. Our

three-year rolling average cash conversion has been 101% (2024: 101%),

showing that the ongoing focus on working capital improvements is delivering

long-term, sustainable, positive results.

Environmental, social and governance (“ESG”)

From an ESG perspective, 2025 has seen us make further progress as we

proactively manage our sustainability agenda. Focus areas included health

andsafety, reducing the impact of climate change, and employee wellbeing.

Asa business we are committed to building a sustainable company of which

allour stakeholders can be proud, both now and in the future.

It is pleasing that our efforts have been recognised externally. In December 2024

we were again given a rating of AAA by MSCI, putting us in the top 3% of the

Aerospace and Defence sector.

Health and safety

Safety is our core value, with the health, safety and wellbeing of our colleagues,

their families, our customers and the communities in which we operate being

our priority. The successful implementation of our HSE strategy continues,

asdoes our focus on achieving zero harm.

Our safety performance in terms of our total recordable injury frequency

(“TRIF”) rate was 0.48, which shows a decrease when compared to last year,

and is below our annual limit of 0.9. Most injuries were either caused by slips,

trips and falls, or were musculoskeletal in nature.

Over the last six years, we have focused on enhancing our approach to

process safety to help facilitate improved design, maintenance and operations

within our high-hazard facilities. As a result, we continue to invest in modern

processes and technology to remove our employees from exposure to

energetic hazards.

In 2019 we mandated that all Countermeasures & Energetics businesses

would need to conduct regular reviews to identify the potential for major

process safety events. This year saw a continued iteration of that review

process, with a further increase in the number of hazard scenarios being

identified as the rigour of process hazard analysis matured.

As a result of this maturing process, we continue to develop an understanding

of our residual risks and throughout this year have continued to take steps

toensure our risks are reduced to the lowest level reasonably practicable.

Our Asset Integrity programme is now operational in all our high-hazard

facilities with the data proving invaluable to our engineering and operational

communities. In addition, our Electrostatic Discharge (“ESD”) Protocol

deployment has been assessed as part of the Line of Defence 2 (“LOD2”)

assurance programme with further improvements agreed.

It should be noted that for the fourth year running there have been no injuries

associated with energetic events.

Chemring Group PLC Annual report and accounts 20258

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Injury reduction

Injury prevention focuses on the reduction of injuries through the adoption of

safety as an inherent part of everything we do. This is enacted through safety

leadership, clear expectations, accountability and establishing a safety culture

that drives learning and improvement, not blame.

This year we have continued to analyse the reporting data aligned to our HSE

strategy, people, plant, process and organisation, which has given us a better

understanding of our root causes which in turn has influenced our assurance

activity. The data has reconfirmed trends regarding musculoskeletal injuries

due to the manual handling nature of some of our processes, together with

slips, trips and falls. The relevant businesses continue to manage these risks

through their local improvement plans.

HSE risk management

Safe delivery of our business continues through the management of risk and

isbuilt around understanding our hazards and establishing clear expectations

and consistency. Our HSE Management System Framework Standard puts our

HSE policy into practice by setting standards on nine core elements across the

Group to drive a robust and common approach to the management of HSE.

Each business within the Countermeasures & Energetics sector is audited

every year and the Sensors & Information sector every three years to ensure

compliance, with high-priority non-compliances being reported and monitored

at Executive Committee level. The changes made in 2025 to our operational

assurance statement process now align to our Fundamental Safety Principles

focusing on people, plant, processes and our organisation, which have been

key features in our LOD2 audits this year.

We measure our HSE performance to reflect both occupational and process

safety. In doing so we have several data points, one of which is an external

review of our prevailing safety culture. Last year a team of third party experts

confirmed all our businesses as operating within the calculative range. This

year our LOD2 programme has focused on closing out all actions related to

our internal “Red” Safety Alerts together with compliance with our Fundamental

Safety Principles. Once complete this will establish the businesses as upper

end of calculative before developing a bespoke road map to proactive.

Environment

In line with the Task Force on Climate-related Financial Disclosures (“TCFD”),

the Group continues to enhance its voluntary environmental disclosures,

completing its fourth CDP submission in 2025. Our previous submission

earned a B rating, reflecting progress in climate-related transparency and

action. CDP supports the practical application of TCFD by standardising

disclosures and enabling comparability across organisations.

As our disclosures mature, so does our focus on data quality and governance.

We have established a robust, auditable framework for monitoring emissions

reduction activities, with independent experts verifying data and reporting to

the Group’s Audit Committee. Our corporate sustainability software platform

is now being more effectively utilised and continuously developed to improve

the accuracy of our GHG emissions data across scopes 1, 2, and 3, and to

strengthen emissions tracking, reporting and decision making.

We also made strong progress toward our 2035 net zero target for scope 1

and scope 2 emissions, achieving a 10.6% reduction in market-based emissions

(2024: 13.0%). The Group’s ESG Committee remains focused on managing

ESG risks while balancing near and long-term goals.

We are committed to strengthening internal knowledge sharing and capability

development. Through the Technical Safety Committee, Technical Learning

Group and quarterly “Shared Learning” forums, we promote continuous

learning, operational awareness and the adoption of best practices across

theGroup.

Culture and our people

As we drive towards our 2030 ambitions, we ensure that our workforce is

part of this journey. Transparent and frequent communications are key to

keeping all employees informed. It gives me great pleasure to share our

regular leadership updates (our “global voice”) through our vlogs and hearing

from employees who have questions for me and the senior leadership teams.

Listening is key to creating an engaged workforce that performs at the highest

level for our customers and communities.

Our business unit employee engagement tools across the Group emphasise

the “local accent” and allow all employees to have their voices heard and

empowers line leadership to respond. Keeping the focus locally helps build

trust and strong relationships in our high-performing teams.

We saw changes to the external landscape impacting our people practices this

year. Executive Orders issued in the US provided the opportunity for us to

consider how we were creating a fair and equitable workplace for all current

and future employees. This resulted in us committing to two redefined aims:

- We will always be an organisation where merit is recognised and rewarded.

- All our people decisions will be fair and unbiased, fostering an environment

where everyone can succeed.

These aims get to the heart of doing the right thing for all employees and

reflect our commitment to creating a culture where everyone can have

acompelling career.

Recognising that our culture will help us achieve our 2030ambitions,

westarted a review of our current values-based culture during the year

tounderstand how we can clarify, enhance or evolve it in 2026 and beyond.

Ilook forward to receiving employee feedback on this important topic to

allow our leadership team to shape the best version of our culture.

Lastly, we continue to build the bench strength in our organisation through

our focus on our talent management processes. Identifying our talent and

supporting their career growth through the organisation is always rewarding,

and where external talent is needed, we have welcomed some incredible

individuals to join us at an exciting time in our growth as an organisation.

Wherever people are in our organisation, I am always impressed by their

commitment to each other, to our customers and communities. 2025 has

been another strong year on our journey to 2030.

Current trading and outlook

Trading since the start of the current financial year is running to plan.

TheBoard’s expectations for the Group’s 2026 operating performance

remain in line with market expectations. The Group order book as at

31October 2025 was £1,345m, of which £431m is currently expected to

berecognised as revenue in 2026, giving 76% order cover, which provides

excellent visibility for the full year. This leaves £914m of the order book to

bedelivered in 2027 and beyond. A similar H2 weighting to the Group’s

results asin 2025 is expected in 2026.

With market-leading technologies and services that are critical to our

customers, our niche market positions and our strong balance sheet,

theBoard remains confident that we will continue to grow in the future,

delivering both robust organic and inorganic growth whilst balancing

near-term performance with longer-term growth and value creation.

Michael Ord

Group Chief Executive

8 December 2025

Chemring Group PLC Annual report and accounts 2025 9

Strategic report Governance Financial statements

Total spend

£64bn

Source: SIPRI

Market trends

The UK is redefining its defence and security posture through a number

ofcoordinated strategies, with the Strategic Defence Review (“SDR”) 2025

focusing on warfighting readiness, expanded nuclear and conventional forces,

a new Cyber and Electromagnetic Command and a stronger defence industrial

base. Backed by the 2025 Spending Review, defence spending will rise to 2.6%

of GDP by 2027 – aiming for 3% in the next parliamentary term. The associated

National Security Strategy (“NSS”) 2025 emphasises homeland protection,

hardened infrastructure and a NATO-first, Ukraine-supporting foreign policy.

Finally, the Defence Industrial Strategy (“DIS”) will drive investment in industrial

capacity and balance classical capabilities with emerging technologies like

drones and cyber.

Our challenges and opportunities

The UK Government represents approximately 15.8% of Group revenue

andis a strategic partner in driving innovation and sustaining sovereign

industrial capabilities.

Our strengths are closely aligned with the capability priorities outlined in

theSDR 2025. For our Countermeasures & Energetics sector, this includes

replenishing munition stockpiles, ensuring a continuous supply pipeline backed

by up to sixnew energetics and munitions sites, and investing in the resilience

of the national munitions infrastructure. For Roke, the SDR places significant

emphasis on Cyber and Electromagnetic Activities (“CEMA”), prioritises

improving army lethality through greater digitisation, and highlights the

criticalimportance of integrated air and missile defence.

MARKET OVERVIEW AND STRATEGY

Supportive market dynamics

Chemring is an international technology company,

and we maintain a significant organisational presence

across the US, the UK, Europe and Australia.

The international order is becoming increasingly unstable, being shaped by

geopolitical rivalries including China’s military expansion and assertiveness in

the Indo-Pacific; Russia’s increased aggression in Eastern Europe and cyber

operations; North Korea’s advancing nuclear and missile programmes; and

Iran’s regional influence and ballistic missile capability. In response, many

nations are boosting their defence and security spending while reinforcing

bilateral and multi-lateral partnerships with allies.

The Russia-Ukraine conflict has intensified global security tensions, leading

toincreased military spending and a re-evaluation of defence strategies

worldwide. It has also disrupted energy markets and supply chains, leading

toeconomic uncertainty and prompting greater focus on geopolitical

resilience and the need to re-invest in sovereign capabilities.

China’s rapid military modernisation and expansion, particularly in areas such

as hypersonics, cyber warfare and naval power, pose a significant strategic

threat to allied interests in the Indo-Pacific region. Its growing emphasis

onadvanced technologies and anti-access/area denial capabilities challenges

regional stability and necessitates sustained defence innovation and preparedness.

Strategic priorities that have been outlined in recent UK, US and European

defence planning documents are well aligned to Chemring’s diverse and

specialised capabilities. Priorities are focused on ensuring that our customers

can respond effectively to a rapidly evolving security environment, emphasising

readiness, interoperability, and resilience across multiple domains and focusing

on advanced capabilities such as drones, integrated air and missile defence,

cyber, and innovation. The Group is therefore well placed to play a major

rolein our customers’ upcoming acquisition priorities across our three core

markets, all of which are growing.

2023

2024

2025

2022

£53bn

£63bn

£64bn

£48bn

Chemring Group PLC Annual report and accounts 202510

Strategic report Governance Financial statements

US and Australia

Total spend

US$997bn

Source: SIPRI

Market trends

The US remains the world’s largest defence market, and the Department of

Defense (“DoD”) has requested US$848.3bn in funding for FY26. Additionally,

the Trump administration is pursuing a one-time US$113bn supplemental

allocation through reconciliation legislation, which would bring total DoD funding

to US$961bn. The DoD is also requesting US$142bn for Research, Development,

Test and Evaluation (“RDT&E”) in its base budget, with another US$37bn in

funding expected from budget reconciliation, giving an overall RDT&E budget

of US$179bn. Chemring’s capabilities give us a credible position to compete

inthis expanding and strategically important market.

Total spend

AU$53bn

Source: SIPRI

Australia’s 2025-2026 defence budget is AU$62.7bn, with a focus on growing

spending to 2.3% of GDP by the early 2030s. Key priorities include expanding

missile and long-range strike capabilities and progressing the “AUKUS” trilateral

co-operation agreement between Australia, the UK andthe US. Since the

release of its 2023 Defence Strategic Review, Australia’sgeo-strategic

environment has continued to worsen, with agrowingrisk of military

miscalculation potentially triggering a conflict intheIndo-Pacific region.

The Advanced Capabilities Pillar (Pillar II) of AUKUS focuses on jointly

developing shared defence capabilities and technology interoperability

inadvanced military technologies like advanced cyber, AI, autonomy,

quantum,undersea, hypersonic and counter-hypersonic, EW, innovation

andstreamline information sharing.

Our challenges and opportunities

The US focus on strengthening missile defence, expanding naval and hypersonic

capabilities, advancing AI and cyber technologies, modernising its nuclear force

and reinforcing its defence industrial base all present significant opportunities

for us to leverage our Group-wide capabilities. With an industrial presence in

all three AUKUS nations, Chemring is well positioned to pursue opportunities

arising from the pact, as well as other emerging bilateral and multi-lateral

defence partnerships.

2023

2024

2025

2022

Europe

Total spend

€496bn

Source: SIPRI

Market trends

European defence spending is rising sharply, driven by a complex interplay of

geopolitical, strategic and institutional factors. In 2025, defence budgets across

the continent hit a record €496bn, with forecasts suggesting an additional

€100bn by 2027. This surge reflects Europe’s growing commitment to

strategic autonomy, aiming to lessen reliance on non-European, especially US,

defence suppliers. The shift also signals a broader initiative to reinforce the

continent’s security infrastructure and expand its ability to act independently

on the global stage.

The EU’s “Readiness 2030” initiative plans over €800bn in investments to

boost collective security. Key actions include activating the national escape

clause to raise member states’ defence budgets and launching the Security

Action for Europe (“SAFE”) initiative, which offers up to €150bn in loans

forjoint procurement involving at least two countries (EU, EEA, EFTA or

Ukraine). Additionally, EU countries are raising €750m to €1bn to extend

theAct in Support of Ammunition Production (“ASAP”) for another year,

more than doubling the original €500m investment.

The Norwegian Government regards the production of military explosives

(critical to numerous NATO missiles and munitions) as its foremost contribution

to international defence efforts. They acknowledge our importance as a supplier

of this capability and we continue working with them to explore the establishment

of anew facility that would substantially expand production capacity.

Our challenges and opportunities

Supported by rising geopolitical tensions and increased defence spending by

NATO member states, the outlook for the European market remains strong

across all sectors and we expect steady, long-term demand for the Group’s

specialised capabilities throughout the region. In addition, the growing

emphasis by European governments on enhancing the scale and resilience

oftheir sovereign defence industrial bases will guide our strategy and create

new opportunities for us in those markets.

2023

2024

2025

2022

€363bn

€431bn

€496bn

€297bn

US$861bn

US$916bn

US$997bn

US$806bn

2023

2024

2025

2022

AU$47bn

AU$50bn

AU$53bn

AU$46bn

Chemring Group PLC Annual report and accounts 2025 11

Strategic report Governance Financial statements

NUMBER OF ENERGETIC EVENTS

CAUSING HARM OR INJURY

NUMBER OF NEAR MISS AND POTENTIAL

HAZARD REPORTS

TOTAL RECORDABLE INJURIES NUMBER

KEY PERFORMANCE INDICATORS

Measuring ourprogress

The Group’s strategy is underpinned by focusing

on a number of key performance indicators (“KPIs”).

These KPIs enable progress to be monitored on the implementation ofthe

Group’s strategy, levels of investment, operational performance and business

development. They also give an early insight into how well the principal risks

and uncertainties are being managed.

SAFETY

ORDERS REVENUE

ORDER INTAKE ORDER BOOK REVENUE

2025

2024

£781m

£649m

2025

2024

4,711

4,744

2025

2024

2025

2024

£1,345m

£1,022m

2025

2024

2025

2024

0.48

0.69

FREQUENCY RATE

2025

2024

Nil

1 2 3

4 5 6

£498m

£488m

Similar indicators are used to review performance by each of the Group’s

businesses, albeit the exact nature of these varies between business units

toreflect the differing nature of their operations.

The KPIs that the Board and senior management utilise to assess Group

performance are set out below. All financial KPIs refer to continuing

operations and therefore exclude businesses classified as discontinued

andheld for sale.

Number of energetic events causing harm

orinjury.

Why is it a KPI?

A process safety event is one of the key strategic

safety risks of the business. This indicator

measures those events that have caused

injuryorharm.

Number of near miss and potential

hazardsreported.

Why is it a KPI?

This indicates employee awareness of hazards.

The greater the level of reporting the more

engaged our people are.

Number of recordable injuries per 200,000 man

hours worked.

Why is it a KPI?

This is the rate for all injuries, including those

requiring medical treatment or a restricted

workday, and lost time injuries. It is a more

sensitive indicator of occupational safety than

losttime injury frequency rates, as more minor

events are captured.

Order intake is measured at expected sales value

and represents the last twelve months’ activity.

Why is it a KPI?

The trend of order intake gives an indication of

market conditions and our competitiveness within

our markets.

Order book is measured at expected sales value

and indicates future potential.

Why is it a KPI?

The level of order book, in particular for delivery

in the next year, gives a degree of confidence in

expected future financial performance.

Revenue is measured at sales value less any

applicable sales taxes.

Why is it a KPI?

The trend of revenue gives an indication of both

the state of the end market and our business’

ability to execute orders on time to satisfy

customer needs.

Chemring Group PLC Annual report and accounts 202512

Strategic report Governance Financial statements

The below statutory KPIs are not utilised by the Board and senior management to assess the Group performance.

UNDERLYING OPERATING MARGIN

UNDERLYING OPERATING PROFIT UNDERLYING DILUTED EARNINGS PER

WORKING CAPITAL

7 8 9

UNDERLYING OPERATING

PROFIT AND MARGIN

UNDERLYING EARNINGS

PER SHARE

WORKING CAPITAL

AND INVENTORY

14.8%

14.3%

2025

2024

Underlying operating profit excludes

non-underlying items that, by their size or nature,

need to be separately disclosed to properly

understand the Group’s underlying quality of

earnings. Underlying operating margin is calculated

as underlying operating profit divided by revenue.

Why is it a KPI?

Underlying operating profit and margin provides a

consistent year-on-year measure of the trading

performance of the Group’s operations.

Calculated as underlying earnings after tax divided

by the number of shares in issue.

Why is it a KPI?

The measurement of underlying EPS reflects all

aspects of the Group’s income statement including

the management of interest and tax.

Working capital is defined as inventories, trade

and other receivables, less trade and other

payables excluding payroll-related and other

liabilities totalling £39.9m (2024: £33.2m).

Why is it a KPI?

Efficiently turning profit into cash demands

adegree of control over working capital.

2025

2024

£73.5m

£69.6m

19.4p

18.9p

2025

2024

2025

2024

£73.7m

£88.3m

Inventory is measured at the lower of cost andnet

realisable value.

Why is it a KPI?

The primary focus for improvement in working

capital is inventory.

£143.2m

£67.7m 19.7p £105.3m

£127.1m

£51.8m 19.3p £90.5m

2025

2025 2025 2025

2024

2024 2024 2024

INVENTORY

Statutory profit before tax Statutory continuing diluted

earnings per share

Statutory operating cash flow

WORKING CAPITAL

AND INVENTORY continued

CONVERSION OF UNDERLYING EBITDA

INTO UNDERLYING OPERATING CASH

NET DEBT: UNDERLYING EBITDA UNDERLYING OPERATING CASH FLOW

11 12

NET DEBT AND CASH FLOW

0.90x

0.58x

2025

2024

£112.2m

£93.9m

2025

2024

114%

103%

2025

2024

Measured as net debt divided by underlying

EBITDA for the previous twelve months.

Why is it a KPI?

This is a measure of leverage within the business

and is a banking covenant.

Cash flow from operating activities before tax

outflows, non-underlying items and pension

payments. The conversion is the above figure

asaratio of underlying EBITDA, presented as

apercentage.

Why is it a KPI?

This is a key measure to ensure profit turns into

cash in short order.

Statutory KPIs

Chemring Group PLC Annual report and accounts 2025 13

Strategic report Governance Financial statements

FOCUS ON

Countermeasures & Energetics

Revenue

£322.7m

(2024: £276.3m)

Underlying operating profit

£61.6m

(2024: £45.0m)

Order book

£1.2bn

(2024: £917m)

Underlying operating margin

19.1%

(2024: 16.3%)

Statutory operating profit

£61.0m

(2024: £46.6m)

Key facts

In our Countermeasures & Energetics sector,

we have deep technical expertise in high-hazard

precision engineering and manufacturing.

Chemring is the world leader in the design, development and manufacture

ofadvanced expendable countermeasures and countermeasures suites for

protecting air and sea platforms against the growing threat of guided missiles.

Our niche, world-class Energetics portfolio provides high-reliability, single-use

devices, propellants and high-quality explosive materials. These are used to

perform critical functions for the space, aerospace, defence and industrial

markets including satellite deployment, aircrew egress and aircraft safety

systems, and missiles.

Strategy

Our Countermeasures & Energetics strategy targets strong market growth,

with ongoing investments to enhance our global leadership.

A new era of threat and uncertainty, including the ongoing war in Ukraine,

continues to drive exceptional demand for our specialist capabilities in

Energetics. Additional capacity is needed to respond to this customer need,

and multiple governments are investing to support building scale and resilience

in their sovereign industrial bases. Our existing investment programme will

significantly increase our ability to meet this unparalleled demand and we will

continue to actively explore opportunities to increase capacity even further.

In Countermeasures, we are and will remain a market leader in airborne and

naval solutions. We will continue to harness our technological edge, optimise

infrastructure and operations, and reinforce manufacturing resilience through

advanced automation.

2025 performance

Order intake in the year was up 20.6% at £602m (2024: £499m), driven by

multi-year orders received across the sector. We continue to have significant

visibility next year and beyond, with 95% order cover in 2026, 93% cover in

2027 and 59% cover in 2028. Our customers are increasingly moving to

long-term partnering agreements, with a number of strategic framework

agreements signed in the year.

In the Energetics sector we continue to see increased levels of activity and

demand in the propellants and energetic materials markets as customers

re-evaluate their operational usage and stockpile requirements associated

with traditional defence capabilities. As a result, our specialist energetic

materials businesses, which design and manufacture high-precision engineered

devices and specialist materials, have seen strong customer demand with

order intake increasing by 50.6% to £524m (2024: £348m) demonstrating the

strength of the sole-source, often qualified positions that the Group maintains.

At the start of the financial year our Norwegian subsidiary, Chemring Nobel,

signed a twelve-year framework agreement with Diehl Defence GmbH & Co.

KG(“Diehl Defence”) for the supply of MCX energetic material. Under this

framework agreement Chemring Nobel received an initial purchase order

valued at €231m, with deliveries to be made over a five-year period commencing

in early 2027. Chemring Nobel also signed a three-year supply agreement with

SAAB Switzerland for the supply of HMX. This contract, valued at £36m, will

see deliveries being made between 2028 and 2030. Chemring Nobel also signed

a £23m ten-year agreement with Nammo for the supply ofvarious HMX

products with deliveries made between 2027 and 2037.