Slide 1: Growing momentum and ambition
UK MOD © Crown copyright 2023 Chemring Group PLC Results for the year ended 31st October 2024 Growing momentum and ambition Presented on 17th December 2024 by: Michael Ord – Group Chief Executive James Mortensen – Chief Financial Officer Chemring Group PLC Photo credit: United Launch Alliance Photo
Slide 2: Michael Ord – Group Chief Executive
UK MOD © Crown copyright 2023 Michael Ord – Group Chief Executive Chemring Group PLC
Slide 3: Delivering continued progress
Delivering continued progress Strong operational performance Robust returns and strong cash conversion Geopolitical environment driving record order book Substantial strategic investment in organic growth Increasing momentum as we build for future growth 3 Chemring Group PLC Results for the year end
Slide 4: 2024 good progress across KPIs
2024 good progress across KPIs Growth Earnings Cash generation Order book Revenue Operating margin Earnings per share Cash conversion Net debt: EBITDA +13% +8% 13.9% 19.3p 102% 0.56x £1.0bn £510m (2023: 14.6%) (2023: 20.0p) (2023: 90%) (2023: 0.16x) (2023: £0.9bn) (2023: £473m) Safety and ESG Record
Slide 5: James Mortensen – Chief Financial Officer
James Mortensen – Chief Financial Officer Chemring Group PLC Photo credit: Blue Origin
Slide 6: Financial highlights
Financial highlights 2024 2023 Order book £1,038m +13% £922m Summary: Revenue £510.4m +8% £472.6m » Another record order book Operating profit £71.1m +3% £69.2m » Continued sales momentum Operating margin 13.9% (70)bps 14.6% » Operating margin held back by US Countermeasures Diluted EPS 19.3p (4)% 2
Slide 7: Group and segmental performance
Group and segmental performance Revenue Revenue Operating profit Operating Operating profit (£m) growth (£m) profit growth margin Countermeasures & Energetics 298.4 +4% 46.5 (8)% 15.6% Sensors & Information 212.0 +13% 41.4 +21% 19.5% Group 510.4 +8% 71.1 +3% 13.9% » Countermeasures & Energetics – gr
Slide 8: Countermeasures & Energetics
Countermeasures & Energetics Growth Revenue (£m) H2 H1 Business update 300 4% » Strong order intake continues above £0.5bn for second 200 consecutive year 100 » Solid growth in Energetics offset by Countermeasures 0 2022 2023 2024 » Good margin progression in Energetics and UK Countermeasures, Opera
Slide 9: Sensors & Information
Sensors & Information Revenue (£m) H2 H1 Growth Business update 250 200 13% » Roke revenue growth 23% excluding passthrough, with a growing 150 contribution from defence 100 50 » US Sensors delivering on EMBD FRP and JBTDS LRIP. Full rate 0 production award for JBTDS expected in 2025 for 2026 delive
Slide 10: Group net debt bridge
Group net debt bridge Operating Tax & cash finance cost Opening £(11)m Other Closing net debt £(16)m Capex net debt » Continued focus on working capital management, with cash conversion of 102% £96m » £48m capex and intangible spend; £70m spend £(70)m Purchase of Grants Dividends own shares partiall
Slide 11: Grant funding and financing update
Grant funding and financing update £90m Grant funding £80m UK Export Finance facility » Act in Support of Ammunition Production (ASAP), part of the » UK Government backed facility for up to £80m European Council’s call in March 2023 to urgently deliver ammunition to Ukraine and to help member states
Slide 12: Capital allocation
Capital allocation Invest in the business Focused M&A Ordinary dividends Surplus capital » Investment in our Energetics » Bolt-on acquisitions in our core » Key part of total shareholder » Returned to shareholders businesses to capitalise on and close adjacencies – in return » Share buyback has retu
Slide 13: Guidance and financial outlook
Guidance and financial outlook FY25 guidance Potential near-term headwinds » Countermeasures & Energetics targeting low double-digit » Near-term budget timing disruption due to administration changes growth in revenue in the US and the Strategic Defence Review in the UK » Sensors & Information reven
Slide 14: £1bn revenue ambition
£1bn revenue ambition » Energetics: >£170m revenue » >£100m for expansion programmes already >150 £1bn announced >25 >30 » plus >£70m from underlying mid-single digit CAGR >100 >170 » Roke: >£100m revenue Revenue (£m) 510 » US Sensors: >£30m revenue » Countermeasures: >£25m from low single digit CAG
Slide 15: Driving innovation
Driving innovation » We have over 1,000 engineers, scientists, and subject matter experts working at the cutting edge of technology – in AI and Data Science alone we have over 100 engineers and scientists » We spend c.£115m a year on R&D, of which c.90% is customer funded Innovation showcase – curre
Slide 16: Michael Ord – Group Chief Executive
Michael Ord – Group Chief Executive Chemring Group PLC
Slide 17: Delivering on our strategic imperatives
Delivering on our strategic imperatives Our strategic imperatives: Grow Accelerate Protect Investing in capacity, technology and Investing in value-enhancing bolt-on Investing to protect sole-source and people to drive organic growth: acquisitions to accelerate growth, e.g. market-leading positions:
Slide 18: Market update
Market update Evolving market environment 2024 Revenue by Geography » Defence and national security tailwinds driven by unsettled geopolitical environment with widening threat spectrum ROW 21% » Increasing challenges and threats from Russia, China and Middle East 45% UK » Protection of the US and de
Slide 19: Robust demand is underpinned by three core drivers
Robust demand is underpinned by three core drivers Asia Pacific threats… European threats… UK National Security threats… » Driving demand for missiles and long- » Driving demand for traditional defence Photo credit: United Launch Alliance » Driving demand for active-cyber defence UK MOD © Crown copy
Slide 20: Criticality of production and stockpiles well recognised
Criticality of production and stockpiles well recognised Chemring well positioned to benefit from sustained long-term demand for energetic enabled capabilities 20 Chemring Group PLC Results for the year ended 31st October 2024
Slide 21: Norway capacity expansion
Norway capacity expansion » Increasing production of HMX, RDX and NTO – CHN key supplier to NATO » £145m investment, offset by £90m grant funding awarded in March 2024 » Maximising the capacity of the current site, increasing capacity up to 275% » Project on track, CHN team enhanced with external en
Slide 22: US capacity expansion
US capacity expansion » 45,000 sqft building purchased in January 2024, doubling our production floorspace » Enhances our ability to maintain continuous flow manufacturing operations » Key enabler for growth ambitions, and cements position in the space launch and missiles market Key recent contract
Slide 23: Scotland capacity expansion
Scotland capacity expansion » Building the most advanced propellants manufacturing facility in Europe, which increases safety and efficiency, and adds capacity and redundancy » On schedule and within budget, on track for site handover in early 2025 » Significant commissioning and validation effort p
Slide 24: Maintaining Roke’s strong growth
Maintaining Roke’s strong growth » Another record year with robust demand expected across Roke’s markets » ‘Tip of the spear’ strategy positions Roke well in key areas of customer requirement » Robust pipeline of Information Advantage and CEMA opportunities with UK Defence customer » Significant (>£
Slide 25: Summary and outlook
Summary and outlook 2024: In line with expectations Longer-term outlook increasingly robust » Good progress despite challenges that led to a heavier H2 » Strong growth predicted over at least the next decade – weighting well positioned in high margin and growing markets » Granted c.£90m of funding t
Slide 26: Appendices
Appendices Chemring Group PLC
Slide 27: Medium term financial objectives and assumptions
Medium term financial objectives and assumptions Revenue » Group – targeting mid-single digit growth in the near term, accelerating to low double-digit % growth as new capacity comes online » S&I – flat in FY25 with a decline in US Sensors (JBTDS LRIP completed) offsetting continued growth in Roke,
Slide 28: Organisation
Organisation Sensors & Information Countermeasures & Energetics Roke Roke US Countermeasures Countermeasures Countermeasures Energetic Energetics Chemring Technology USA Sensors UK USA Australia Devices UK Nobel Solutions BUs/capabilities Operational mission support services ● Active cyber defence &
Slide 29: Group performance 2019 – 2024
Group performance 2019 – 2024 500 70 25 400 60 20 50 300 40 15 200 30 10 20 100 5 10 0 0 0 2020 2021 2022 2023 2024 2020 2021 2022 2023 2024 2020 2021 2022 2023 2024 Revenue (£m) Operating profit (£m) Earnings per share (pence) 20% 120 60 100 50 15% 80 40 10% 60 30 40 20 5% 20 10 0% 0 0 2020 2021 20
Slide 30: Adjusting items
Adjusting items Note 2024 2023 Statutory operating profit £58.1m 28% £45.4m Acquired intangibles amortisation £2.0m £3.0m Acquisition related expenses a £3.4m £3.7m Mark to market of FX forward contracts £2.0m £(1.4)m Pension Buy-in / Buy-out £7.5m — Change of senior management positions £1.2m — Imp
Slide 31: ESG
ESG » Maintained AAA ESG rating with MSCI » Maintained good progress in line with our HSE Zero Harm strategy » Recordable injuries decreased to 0.69 (2023: 0.90) and remains below our annual limit of 1.0 » Zero injuries in connection with or arising from energetic events » Continue to consolidate wi
Slide 32: Orderbook
Orderbook Total orderbook Growth 2025 Coverage £1,038m 13% 77% Sensors & Information Countermeasures & Energetics Orderbook Growth 2025 Coverage Orderbook Growth 2025 Coverage £105m (39)% 48% £933m 24% 97% » Expected 2025 revenue 48% covered » Expected 2025 revenue 97% covered, 2026 81% covered and
Slide 33: Impact of foreign exchange translation
Impact of foreign exchange translation Constant 2024 restated at currency 2023 rates 2023 2024 movement £m £m £m Revenue +9% 517.3 472.6 510.4 EBITDA +7% 94.8 88.5 93.7 Operating profit +4% 71.7 69.2 71.1 Order book +16% 1,072.5 921.6 1,037.8 Sensitivities Translation » 40% of expected revenue in 20
Slide 34: Balance sheet
Balance sheet » Net debt of £52.8m and net debt: EBITDA ratio of £m 2024 2023 0.56x Goodwill & intangibles 98.5 100.5 » Over the rolling three-year period, 101% of EBITDA Development costs 18.6 17.6 has been converted to operating cash funding Property, plant & equipment 287.8 242.2 reinvestment in
Slide 35: Market consensus
Market consensus 2024 2025 2026 » The Group is aware of five analysts publishing Revenue (£m) 510 535 583 regular independent research on the Group Underlying operating profit (£m) 71.1 76.9 86.6 » The Group has compiled consensus data* from the Underlying earnings per share (pence) 19.3 20.1 22.6 r
Slide 36: Glossary
Glossary Acronym Meaning Acronym Meaning CCM UK Chemring Countermeasures UK IDIQ Indefinite Delivery/Indefinite Quantity CCM US Chemring Countermeasures USA JBTDS Joint Biological Tactical Detection System CED Chemring Energetic Devices LRIP Low rate initial production CEUK Chemring Energetics UK LT
Slide 37: Disclaimer
Disclaimer 2024 Chemring Group PLC The information in this document is the property of Chemring Group PLC (“Chemring”) and may not be copied or communicated to a third party or used for any purpose other than that for which it is supplied without the express written consent of Chemring. This present