Chemring : Interim results for the six months to 30 April 2024 presentation

UK MOD © Crown copyright 2023

Chemring Group PLC 2024 Interim results

Record order book and strong long-term prospects

Presented on 4th June 2024 by:

Michael Ord - Group Chief Executive

James Mortensen - Chief Financial Officer

Chemring Group PLC

Photo credit: United Launch Alliance

Introduction

Michael Ord - Group Chief Executive

H1 2024 Good progress across KPIs

- in line with our expectations

Growth

Order intake	Revenue
+2%	+8%
£345m	£223m
(H1 2023: £338m)	(H1 2023: £206m)

Earnings

Operating margin	Earnings per share
11.2%	6.6p
(H1 2023: 12.7%)	(H1 2023: 7.4p)

Safety and ESG

Cash generation

Cash conversion	Net debt: EBITDA
83%	0.85x
(H1 2023: 64%)	(H1 2023: 0.36x)

Recordable injury rate

0.8

(H1 2023: 0.9)

Throughout this presentation, prior period comparatives have been re-presented to reflect continuing operations only. References to operating profit, operating margin, EPS, operating cash and cash conversion are to continuing underlying measures

On track to meet both near and longer term ESG targets

3 Chemring Group PLC Results for the six months to 30th April 2024

Significant long-term visibility

- positive outlook unchanged

• Board's expectations for 2024 performance remain unchanged

• Record order book of >£1bn with 93% of H2 2024 expected revenue covered by order book (H1 2023: 90%)

• The outlook for the global defence market is increasingly robust, with strong growth predicted for at least the next decade

• Significant opportunity to capitalise on the Group's unique capabilities reinforcing Chemring's position as a key supplier to NATO

• Long-term visibility and customer support gives confidence to further invest in capacity and capability to meet customers' evolving needs

Ambition to increase annual revenue to c.£1bn by 2030

4 Chemring Group PLC Results for the six months to 30th April 2024

Financial review

James Mortensen - Chief Financial Officer

Chemring Group PLC

Photo credit: Blue Origin

Initial observations

©Lockheed Martin

Demand is long term	Chemring is more than just
	countermeasures

We have unique manufacturing capabilities

Confidence in the delivery of the plan and the outlook

6 Chemring Group PLC Results for the six months to 30th April 2024

Financial highlights

	H1 2024		H1 2023	2023
Order book	£1,041m	+39%	£750m	£922m
Revenue	£223.4m	+8%	£206.3m	£472.6m
Operating profit	£25.0m	(5)%	£26.3m	£69.2m
Operating margin	11.2%	(150) bps	12.7%	14.6%
Diluted EPS	6.6p	(11)%	7.4p	20.0p
Cash conversion	83%	+190 bps	64%	90%
Dividend	2.6p	+13%	2.3p	6.9p

Summary:

• Record order book
• Good sales momentum
• Lower operating margin and H1 weighting
• EPS impacted by higher tax and finance costs
• Strong cash conversion

7 Chemring Group PLC Results for the six months to 30th April 2024

Order book

Total orderbook

£1,041m

Growth

39%

H2 2024 Coverage

93%

Sensors & Information

Countermeasures & Energetics

OrderbookGrowth

£158m 3%

H2 2024 Coverage

83%

Orderbook

£883m

Growth

48%

H2 2024 Coverage

99%

• Expected 2025 revenue 30% covered
• Continued strong order intake for Roke National Security and Defence

8 Chemring Group PLC Results for the six months to 30th April 2024

• Expected 2025 revenue 90% covered and 2026 65% covered
• Significant orders for our specialist energetic materials businesses, space and missiles

Group and segmental performance

	Revenue	Revenue	Operating profit	Operating	Operating profit
	(£m)	growth	(£m)	profit growth	margin
Sensors & Information	105.7	+15%	21.6	+16%	20.4%
Countermeasures & Energetics	117.7	+3%	11.8	(22)%	10.0%
Group	223.4	+8%	25.0	(5)%	11.2%

• Sensors & Information - strong growth in Roke (+19%) with margin improvement despite continued investment
• Countermeasures & Energetics - growth in energetics offset a weaker period for countermeasures. Margin impacted by operational challenges at our Tennessee countermeasures facility

9 Chemring Group PLC Results for the six months to 30th April 2024

Group operating profit bridge

	Sensors &	Countermeasures
	Information	& Energetics
			Unallocated	Exchange
			central costs
			effects
	£3.0m	£(3.3)m
£26.3m	£(0.9)m	£(0.1)m

£25.0m

• Overall operating profit down 5%
• Good momentum across the majority of the business
• Held back by our Tennessee countermeasures facility, but now back on track

H1 2023

H1 2024

10 Chemring Group PLC Results for the six months to 30th April 2024