REG - Chemring Group PLC - Results for the year ended 31 October 2025
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RNS Number : 7298K Chemring Group PLC 09 December 2025
9 December 2025
CHEMRING GROUP PLC
("Chemring", "the Group" or "the Company")
RESULTS FOR THE YEAR ENDED 31 OCTOBER 2025
Resilient performance, delivering the plan, record order book and robust
outlook
As reported At 2024 exchange rates
2025 Change 2025 Change 2024
Continuing operations
Revenue (£m) 497.5 +2% 502.2 +3% 488.3
Underlying EBITDA (£m) 98.6 +8% 99.7 +9% 91.5
Underlying operating profit (£m) 73.5 +6% 74.3 +7% 69.6
Underlying diluted earnings per share (pence) 19.4 +3% 19.7 +4% 18.9
Profit before tax (£m) 67.7 +31% 51.8
Dividend per share (pence) 8.0 +3% 7.8
Net debt at 31 October (£m) 89.0 88.7 52.8
Order intake (£m) 781.4 +21% 792.0 +22% 649.0
Order book at 31 October (£m) 1,345.4 +32% 1,318.0 +29% 1,022.4
Highlights
· 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 unchanged. Higher capex and finance charges now expected
as a result of increased investment in Norway
· Approximately 76% (2024: 77%) of expected 2026 revenue is already covered by
the order book
Michael Ord, Group Chief Executive, commented:
"2025 has been another year of progress, delivering improved shareholder
returns supported by strong margins and robust cash conversion. This
performance reflects our commitment to building a resilient, high-quality
Group.
Momentum in Countermeasures & Energetics continued during the year,
partially offset by short-term softness in Sensors & Information due to
delays in UK Government spending. Looking ahead, our record order book
demonstrates that customer priorities remain aligned with Chemring's
market-leading products and services.
The outlook for sustained defence spending remains strong. Growing
geopolitical uncertainty is driving increased expenditure across our target
markets, particularly within NATO, and Chemring is well positioned to
capitalise on this demand, which we expect to persist well into the next
decade.
We have created a strong, sustainable platform for growth and remain committed
to our ambition of doubling annual revenue to approximately £1 billion by
2030."
Notes:
* All profit and earnings per share figures in this news release relate to
underlying business performance (as defined below) from continuing operations
unless otherwise stated.
The principal alternative performance measures ("APMs") presented are the
underlying measures of earnings which exclude: exceptional items, gain or loss
on the movement on the fair value of derivative financial instruments, the
amortisation of acquired intangibles and the associated tax impact on these
items. The directors believe that these APMs assist with the comparability of
information between reporting periods as well as reflect the key performance
indicators used within the business to measure performance. The term
underlying is not defined under IFRS and may not be comparable with similarly
titled measures used by other companies.
A reconciliation of underlying measures to statutory measures is provided
below:
Group - continuing operations: Underlying Non-underlying Statutory
EBITDA (£m) 98.6 1.6 100.2
Operating profit (£m) 73.5 (0.1) 73.4
Profit before tax (£m) 67.8 (0.1) 67.7
Tax charge (£m) (14.2) (0.2) (14.4)
Profit after tax (£m) 53.6 (0.3) 53.3
Basic earnings per share (pence) 19.8 (0.1) 19.7
Diluted earnings per share (pence) 19.4 (0.1) 19.3
Group - discontinued operations:
Loss after tax (£m) (2.3) (2.8) (5.1)
Segments - continuing operations:
Sensors & Information EBITDA (£m) 38.2 (5.4) 32.8
Sensors & Information operating profit (£m) 31.2 (6.3) 24.9
Countermeasures & Energetics EBITDA (£m) 79.7 0.2 79.9
Countermeasures & Energetics operating profit (£m) 61.6 (0.6) 61.0
The adjustments comprise:
· amortisation of acquired intangibles of £1.7m (2024: £2.0m)
· costs relating to acquisitions, including deferred consideration treated as an
expense under IFRS 2, remuneration for continued employment of former owners
under IFRS 3 and professional fees incurred relating to acquisitions, of
£3.0m (2024: £3.4m)
· costs relating to the defined benefit pension buy-in and buy-out transaction
£0.4m (2023: £7.5m)
· costs relating to changes in senior management positions £nil (2024: £1.2m)
· business restructuring at Roke £2.5m (2024: £nil)
· release of legal and disposal provisions £0.2m (2024: £3.1m)
· gain on the movement in the fair value of derivative financial instruments of
£7.3m (2024: £2.0m loss)
· tax impact of the adjustments above: £0.2m charge (2024: £1.7m credit)
· discontinued operations in relation to EHD business, Alloy Surfaces Company,
Inc. and other discontinued operations: £5.1m (2024: £2.0m)
Further details are provided in note 3.
EBITDA is defined as profit before interest, tax, depreciation and
amortisation. Reference to constant currency relates to the re-translation of
2025 financial information at the 2024 exchange rates to reflect the movement
excluding the impact of foreign exchange. The exchange rates applied are
disclosed in note 11.
For further information:
Rupert Pittman Group Director of Corporate Affairs, Chemring Group PLC 01794 463401
James McFarlane MHP 07584 142665
Cautionary statement
This announcement may contain forward-looking statements that are based on
current expectations or beliefs, as well as assumptions about future events.
These forward-looking statements can be identified by the fact that they do
not relate only to historical or current facts. Forward-looking statements
often use words such as anticipate, target, expect, estimate, intend, plan,
goal, believe, will, may, should, would, could, is confident, or other words
of similar meaning. Undue reliance should not be placed on any such statements
because they speak only as at the date of this document and, by their very
nature, they are subject to known and unknown risks and uncertainties and can
be affected by other factors that could cause actual results, and Chemring's
plans and objectives, to differ materially from those expressed or implied in
the forward-looking statements. There are a number of factors which could
cause actual results to differ materially from those expressed or implied in
forward-looking statements. Among the factors that could cause actual results
to differ materially from those described in the forward-looking statements
are: increased competition, the loss of or damage to one or more key customer
relationships, changes to customer ordering patterns, delays in obtaining
customer approvals for engineering or price level changes, the failure of one
or more key suppliers, the outcome of business or industry restructuring, the
outcome of any litigation, changes in economic conditions, currency
fluctuations, changes in interest and tax rates, changes in raw material or
energy market prices, changes in laws, regulations or regulatory policies,
developments in legal or public policy doctrines, technological developments,
the failure to retain key management, or the key timing and success of future
acquisition opportunities or major investment projects. Chemring undertakes no
obligation to revise or update any forward-looking statement contained within
this announcement, regardless of whether those statements are affected as a
result of new information, future events or otherwise, save as required by law
and regulations.
Notes to editors
· Chemring is a global business that specialises in the manufacture of high
technology products and the provision of services to the aerospace, defence
and security markets
· Employing approximately 2,700 people worldwide, and with production facilities
in four countries, Chemring meets the needs of customers in more than fifty
countries
· Chemring is organised under two strategic product segments: Sensors &
Information and Countermeasures & Energetics
· Chemring has a diverse portfolio of products that deliver high reliability
solutions to protect people, platforms, missions and information against
constantly changing threats
· Operating in niche markets and with strong investment in research and
development ("R&D"), Chemring has the agility to rapidly react to urgent
customer needs
www.chemring.com (http://www.chemring.com)
Analyst meeting
An analyst meeting will take place at 09.00 (UK time) on Tuesday 9 December
2025 at the offices of Investec Bank plc, 30 Gresham St, London EC2V 7QP. To
confirm attendance please contact MHP: chemringplc@mhpgroup.com
(mailto:chemringplc@mhpgroup.com) / 07817 458804
Presentation
The presentation slides and a live audio webcast of the presentation to
analysts will be available at the Chemring Group results centre
www.chemring.com/investors/results-centre
(http://www.chemring.com/investors/results-centre) at 09.00 (UK time) on
Tuesday 9 December 2025.
Photography
Original high resolution photography is available to the media by contacting
MHP : chemringplc@mhpgroup.com / 07817 458804
Group overview
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 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 we have continued to execute well and are delivering
against our strategic priorities. Chemring continues to play a vital role
supplying mission-critical products and services, as demonstrated by the
highest order book in Chemring's history.
Order intake for 2025 remained strong, up 20.3% at £781m (2024: £649m).
Countermeasures & Energetics order intake was up 20.6% at £602m (2024:
£499m) demonstrating growing customer demand for traditional defence
capabilities. Sensors & Information order intake increased 19.3% to £179m
(2024: £150m), with the total order book ending the year 4.8% higher.
Revenue was up 1.9% to £497.5m (2024: £488.3m), as Energetics delivered
ahead of schedule and we delivered improving operational performance at our
Tennessee Countermeasures business, which offset a weaker period for Sensors
& Information due to short-term delays in UK Government spending.
The underlying operating profit of £73.5m (2024: £69.6m) resulted in an
underlying operating margin of 14.8% (2024: 14.3%), the increase a result of
higher Countermeasures & Energetics volumes and strong operational
execution.
Total finance expense has increased to £5.7m (2024: £4.8m) with the
continued investment in our niche Energetics businesses leading to higher
borrowings.
Statutory operating profit was up 29.7% to £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). The 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). A
reconciliation of underlying to statutory profit measures is provided in note
3.
On a constant currency basis the Group's revenue was up 2.8% to £502.2m
(2024: £488.3m), underlying operating profit was up 6.8% to £74.3m (2024:
£69.6m) and underlying diluted earnings per share was up 4.2% to 19.7p (2024:
18.9p). Foreign exchange translation has proved to be a headwind to revenue
and operating profit compared with last year. While exchange rates have been
volatile in the year, the US dollar and Australian dollar have weakened
against sterling. Constant Currency and Reported data is summarised below:
At constant currency As reported
2025 Change 2025 Change 2024
£m £m £m
Group:
Order intake 792.0 +22% 781.4 +20% 649.0
Order book 1,318.0 +29% 1,345.4 +32% 1,022.4
Revenue 502.2 +3% 497.5 +2% 488.3
Underlying EBITDA 99.7 +9% 98.6 +8% 91.5
Underlying operating profit 74.3 +7% 73.5 +6% 69.6
Underlying diluted earnings per share (pence) 19.7 +4% 19.4 +3% 18.9
Countermeasures & Energetics:
Order intake 612.9 +23% 602.1 +21% 498.5
Order book 1,207.0 +32% 1,234.9 +35% 916.7
Revenue 326.8 +18% 322.7 +17% 276.3
Underlying EBITDA 80.8 +33% 79.7 +31% 60.9
Underlying operating profit 62.3 +38% 61.6 +37% 45.0
Sensors & Information:
Order intake 179.1 +20% 179.3 +20% 149.7
Order book 111.0 +6% 110.4 +5% 104.5
Revenue 175.4 -17% 174.8 -18% 212.0
Underlying EBITDA 38.4 -19% 38.2 -19% 47.3
Underlying operating profit 31.4 -24% 31.2 -25% 41.4
The Group's net debt at 31 October 2025 was £89.0m (2024: £52.8m),
representing a net debt to underlying EBITDA ratio of 0.90x (2024: 0.58x). The
financial health of the Group has continued to improve in a number of aspects
during the year. Disciplined working capital practices have been maintained to
reduce intra-period volatility, with working capital as a percentage of
revenue also reducing to 14.8% (2024: 18.1%).
The Group's order book at 31 October 2025 was £1,345m (2024: £1,022m), a new
record, of which £431m is currently expected to be recognised as revenue in
2026. This gives 76% (2024: 77%) order cover for 2026, providing excellent
visibility for the full year. This leaves £914m of the order book to be
delivered in 2027 and beyond.
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.
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.
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 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.
Segmental review - Countermeasures & Energetics
Performance
Revenue for Countermeasures & Energetics was up by 16.8% to £322.7m
(2024: £276.3m), driven by the strong performance of our Energetics
businesses that have delivered ahead of schedule and improving operational
performance at our Tennessee Countermeasures business. The sector reported an
underlying operating profit of £61.6m (2024: £45.0m), an increase of 36.9%,
which resulted from both improving operational execution and the impact of
higher prices. This resulted in underlying operating margin increasing to
19.1% (2024: 16.3%), with a particularly strong H2 margin performance. On a
constant currency basis revenue would have been up 18.3% to £326.8m and
underlying operating profit would have been up 38.4% to £62.3m. The statutory
operating profit for the year was £61.0m (2024: £46.6m).
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 also 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.
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 the world leader in the design, development and
manufacture of advanced expendable countermeasures. Order intake was £78m
(2024: £151m) reflecting the receipt of multi-year orders 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.
Over recent years the Group has seen a significant decrease in US Department
of Defense demand for the special material pyrophoric airborne decoys
manufactured by Alloy Surfaces Company, Inc. ("ASC") in Philadelphia, and
despite significant effort we have been unable to secure sufficient orders to
viably sustain continuous manufacturing operations. As such, a strategic
review was conducted in the year and the Board concluded that the business
would be divested and marketed for sale. As announced in November 2025, ASC
has been treated as discontinued in 2025 under IFRS 5 Non-current Assets Held
for Sale and Discontinued Operations. As a result, all 2024 comparatives both
at a divisional level and group level have been re-presented. A full
reconciliation of this is provided in note 4.
Opportunities and outlook
The Countermeasures & Energetics segment focus remains on maintaining and
growing the Group's market-leading positions, in particular in the growing
markets for specialist energetic materials and precision engineered energetic
devices, and in Countermeasures where we see sustained demand for our air and
naval decoy products, particularly within our UK Countermeasures business. Our
focus on seeking to achieve appropriate margins, mindful of financial
constraints from our customers, will continue.
The improved market conditions for our Energetics businesses reflected in our
order intake and order book have presented a strong organic growth opportunity
to expand capacity at these sites and in 2023 we announced a £200m investment
programme to capitalise on this long-term demand. In 2024 our Norwegian
business was awarded grant funding of £90m in support of our expansion
projects, meaning the net investment required by the Group at that time was
£110m.
To date we have spent £101m and received £39m of grant funding in support of
these expansion projects. The projects in Chicago and Scotland are
substantially complete, with just the commissioning phase to be completed in
Scotland. In Norway, the first phase is complete and delivering ahead of
schedule. However, infrastructure and groundworks costs have been higher than
anticipated. We now expect gross costs of £180m on our Norwegian expansion
project, up from the £145m initial estimate. When offset by £90m of
grants, expected net spend is £90m on the project. We still expect to
generate attractive returns on the investment and for Group revenue to
increase by £100m per annum and operating profit by £30m per annum from
2028, once the three capacity expansion programmes are complete.
In October 2024, the Norwegian Government announced that, in partnership with
Chemring Nobel, it had launched a feasibility study into the establishment of
a new production facility to further increase the production of military
explosives. This co-funded feasibility study investigated the geographic
location, infrastructure requirements and environmental considerations of
building a new production facility. The study also considered the role and the
levels of any financial contribution made by the Norwegian Government. Phase
I, which focused on technical feasibility, the energetics market,
cost/benefits to the local community and the overall business case, concluded
in January 2025, and in June the Norwegian Government announced that the study
had progressed to the second stage. This concept selection phase will
determine the size of the facility, initial engineering, along with commercial
arrangements, and is expected to be finalised in the second half of 2026.
The Group is also exploring other opportunities to further increase its
capacity to meet growing and long-term market demand. As part of the
twelve-year framework agreement with Diehl Defence, announced in November
2024, Chemring will perform the blending stage of the manufacturing process at
a new facility in Germany which is expected to commence operations in 2027.
In the UK the Government has committed significant funding to munitions and
stated their intention to build six new munitions and energetics facilities.
Early in the year the Group completed an initial Government-funded feasibility
study into developing further manufacturing capacity at our site in Scotland.
The Group has now been funded to complete further feasibility studies on the
site in recent months.
Alongside these investments in expanding our capacities we continue to invest
in new product development to ensure that our product portfolio remains highly
relevant to our customers and will continue the process of operational
alignment to share technology and manufacturing excellence across the Group.
Segmental review - Sensors & Information
Performance
Order intake in the year was up 19.3% to £179m (2024: £150m) with Roke's
order intake up 24.0% to £162m and order intake included the receipt of a
US$15m delivery order for the fourth year of EMBD full rate production.
Revenue for Sensors & Information decreased by 17.5% to £174.8m (2024:
£212.0m). This was primarily as a result of both delayed UK Government order
placement across both National Security and Defence at Roke, and a fallow year
at our US business, as expected, 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. Excluding lower margin
"pass-through" revenue Roke would have declined 12.7%. Despite the early
action to manage our cost base, the drop in revenue meant underlying operating
profit decreased by 24.6% to £31.2m (2024: £41.4m) and underlying operating
profit margin declined to 17.8% (2024: 19.5%). On a constant currency basis
revenue would have decreased by 17.3% to £175.4m and underlying operating
profit would have decreased by 24.2% to £31.4m. The statutory operating
profit for the year was £24.9m (2024: £37.4m).
2025 2024 Change
Roke "pass-through" impact
£m £m
Order intake
Products and services 153 115 +33%
Pass-through 9 16 -44%
As reported 162 131 +24%
Revenue
Products and services 137 157 -13%
Pass-through 17 28 -39%
As reported 154 185 -17%
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.
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. Customers are
planning 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 $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 2026.
These sole source positions with the United States Department of Defense ("US
DoD") provide an excellent opportunity to penetrate international markets
where we are able to sell these products under Foreign Military Sales ("FMS")
and direct commercial sales agreements to key strategic allies of the US
Government.
Opportunities and outlook
The focus for Sensors & Information continues to be on expanding the
Group's product, service and capability offerings to government and commercial
customers in the technology-driven areas of national security, AI and machine
learning, tactical EW, information security and biological detection. Roke has
a strong qualified pipeline of opportunities that is in excess of £900m with
a significant international sales pipeline of defence products as customers
increasingly focus on Cyber & Electromagnetic activities ("CEMA").
In the UK, the national security and defence markets are being increasingly
shaped by a rapidly-changing threat environment with AI, EW and data
proliferation of particular focus. This is driving increased investment as
customers look to modernise their capabilities at pace.
Roke will continue to focus its efforts on growing across all its business
areas, delivering research, design, engineering and advisory services using
its high-quality people and capabilities. New product launches and strategic
partnerships form an integral part of this work. We have continued to invest
in Roke's growing portfolio with the launch of a number of new products
throughout the year. This included DECEIVE, our EW attack system, and CORTEXA,
our counter-drone system. Both have been well received by our user community
and we have significant customer interest in both systems. Roke also signed a
strategic partnership with Kagai Corporation to deliver advanced technologies
to the Japanese market, where Roke has already had success in selling its
Resolve EW system into the Japanese Self-Defence Forces.
With strong positions in markets with high barriers to entry and where
customers have unique profiles, we remain on track to organically grow Roke's
revenues to greater than £250m by 2028, while maintaining strong margin
performance. We will also continue to explore further bolt-on, strategy-led
acquisitions that can accelerate our growth strategy for Roke. However, any
acquisition must meet a strict set of criteria, enhance shareholder value and
fit in with our wider growth plans.
The order book for Sensors & Information grew 4.8% to £110m (2024:
£105m). Of this, £95m is expected to be delivered in 2026, providing 45%
cover of expected 2026 revenue. 2026 trading performance for Sensors &
Information is expected to start to improve in the second half of 2026, with
continued demand for Roke's products and services returning to more normal
levels. Medium-term growth opportunities in the US are driven by the Group's
sole source positions on the biological detection Programs of Record moving
into full rate production and by exploiting overseas opportunities for our
biological threat detection capabilities.
Net debt and cash flow
The Group's net debt at 31 October 2025 was £89.0m (2024: £52.8m),
representing a net debt to underlying EBITDA ratio of 0.90x (2024: 0.58x).
Underlying operating activities generated cash of £112.2m (2024: £93.9m) and
statutory operating activities generated cash of £105.3m (2024: £90.5m).
Underlying cash conversion was 114% (2024: 103%) of underlying EBITDA, and an
average of 101% on a rolling 36-month basis (2024: 101%).
Working capital
Working capital was £73.7m (2024: £88.3m), a decrease of £14.6m. As a
percentage of revenue, working capital has reduced to 14.8% (2024: 18.1%). We
continued with our focus on commercial contracting, inventory levels and cash
management.
Tax
The underlying tax charge totalled £14.2m (2024: £12.0m) on an underlying
profit before tax of £67.8m (2024: £64.8m). The effective tax rate on
underlying profit before tax for the year was a charge of 20.9% (2024: 18.5%).
The Group effective tax rate increased, as it converges with the UK
corporation tax rate. The statutory tax charge totalled £14.4m (2024:
£10.3m) on a statutory profit before tax of £67.7m (2024: £51.8m).
Retirement benefit obligations
On 28 November 2023 the trustee of the Chemring Group Staff Pension Scheme
entered into a buy-in contract with an insurer, Pension Insurance Corporation
("PIC"). The trustee is in the final stages of agreeing the verified data for
the scheme with PIC and expects to agree the true-up premium for full buy-out
of the scheme with PIC in early 2026.
The deficit on the Group's defined benefit pension scheme was £0.1m (2024:
£0.1m surplus), measured in accordance with IAS 19 (Revised) Employee
Benefits.
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 Raby 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.
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 has 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.
Share buyback programme
On 26 February 2025 the Group announced that it had commenced a share buyback
programme of up to a maximum consideration of £40m; we have spent £3.6m in
2025 and the buyback remains ongoing.
Current trading and outlook
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. Trading since the
start of the current financial year is in line with our plans and the Board's
expectations for the Group's 2026 operating performance remain unchanged. In
2026 gross capex is now expected to be higher at £100-110m (offset by grants
of c.£15m), mainly resulting from higher costs in Norway, with an increased
finance expense as a result. Cash conversion is expected to be in the range of
80-85%. 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.
Going concern
The directors believe that the Group is well placed to manage its business
risks successfully. The Group's forecasts and projections, taking account of
reasonably possible changes in trading performance, show that the Group should
be able to operate within the level of its current committed facilities.
Key financial metrics
2025 Covenant
Revolving credit facility, UKEF facility and overdraft £275.2m
Undrawn committed borrowing facilities £134.7m
Leverage ratio 0.95x Less than 3x
Interest cover ratio 12.17x Greater than 4x
In April 2025, the Group refinanced its revolving credit facility. The new
facility of £180m, which is a £30m increase on the previous facility of
£150m, runs to December 2028 and includes the option for three one-year
extensions to December 2031. The Group also has a $20m swingline overdraft
facility for use in the US. In October 2024, the Group entered into an £80m
UK Export Finance loan facility led by Barclays Bank PLC. This is a four-year
facility with a one-year draw down period and a three-year amortising
repayment schedule. The leverage ratio for covenants purposes in the table
above differs to the leverage ratio disclosed elsewhere as the translation of
non-sterling denominated debt is calculated at average, rather than closing,
rates of exchange.
The Group was in compliance with its financing covenants throughout the year.
Confirmation of going concern
After consideration of the above, the directors have a reasonable expectation
that the Group and the Company will have sufficient funds to continue to meet
its liabilities as they fall due for at least twelve months from the date of
approval of the financial statements and therefore have prepared the financial
statements on a going concern basis.
A detailed description of the Group's going concern and long-term viability
assessment, together with sensitivity analysis, can be found on page 46 of the
Group's 2025 annual report and accounts.
Principal risks and uncertainties
The principal risks and uncertainties which could have a material impact on
the Group's performance and could cause actual results to differ materially
from expected and historical results have not changed significantly from those
set out in the Group's 2024 annual report and accounts and the 2025 interim
report. A detailed description of the Group's principal risks and
uncertainties and the ways they are mitigated can be found on pages 40 to 45
of the Group's 2025 annual report and accounts. In summary, the principal
risks relate to:
· Occupational and process safety
· Environmental laws and regulations
· Climate change
· Market
· Political
· Contracts
· Technology
· Financial
· Operational
· People
· Cyber-security
· Compliance and corruption
Management have detailed mitigation plans and assurance processes to manage
and monitor these risks.
RESPONSIBILITY STATEMENT OF THE DIRECTORS ON THE ANNUAL REPORT AND ACCOUNTS
The responsibility statement below has been prepared in connection with the
Company's full annual report and accounts for the year ended 31 October 2025.
Certain parts thereof are not included within this announcement.
We confirm to the best of our knowledge:
1. the financial statements, prepared in accordance with the applicable set of
accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company and the undertakings
included in the consolidation taken as a whole; and
2. the strategic report and directors' report includes a fair review of the
development and performance of the business and the position of the issuer and
the undertakings included in the consolidation taken as a whole, together with
a description of the principal risks and uncertainties that they face.
We consider the annual report and accounts, taken as a whole, is fair,
balanced and understandable, and provides the information necessary for
shareholders to assess the Group's position and performance, business model
and strategy.
This responsibility statement was approved by the Board of directors on 8
December 2025, and has been signed on its behalf by Michael Ord and Sarah
Ellard.
CONSOLIDATED INCOME STATEMENT
for the year ended 31 October 2025
Note 2025 2024(1)
£m £m
Continuing operations
Revenue 2 497.5 488.3
Operating profit 2 73.4 56.6
Finance expense (5.7) (4.8)
Profit before tax 67.7 51.8
Tax charge on profit (14.4) (10.3)
Profit after tax for the period 53.3 41.5
Discontinued operations
Loss after tax from discontinued operations 4 (5.1) (2.0)
Profit after tax for the period 48.2 39.5
Earnings per ordinary share
Continuing operations
Basic 5 19.7p 15.2p
Diluted 5 19.3p 14.9p
Continuing operations and discontinued operations
Basic 5 17.8p 14.5p
Diluted 5 17.5p 14.1p
1. 2024 comparative information has been re-presented to reclassify an
operation which has been discontinued in the year. See note 4 for further
details.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 October 2025
2025 2024
£m £m
Profit after tax attributable to equity holders of the parent as reported 48.2 39.5
Items that will not be reclassified subsequently to profit or loss
Remeasurement of the defined benefit pension scheme (0.7) (1.3)
Movement on deferred tax relating to the pension scheme 0.1 0.5
(0.6) (0.8)
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations (0.2) (12.0)
Tax on exchange differences on translation of foreign operations (0.5) 0.1
(0.7) (11.9)
Total comprehensive income attributable to equity holders of the parent 46.9 26.8
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 October 2025
Share Share premium Special capital Translation Retained
capital account reserve reserve Earnings Total
£m £m £m £m £m £m
At 1 November 2024 2.7 309.0 13.0 (20.7) 52.3 356.3
Profit after tax - - - - 48.2 48.2
Other comprehensive loss - - - (0.2) (0.7) (0.9)
Tax relating to components of other comprehensive loss - - - (0.5) 0.1 (0.4)
Total comprehensive (loss)/income - - - (0.7) 47.6 46.9
Ordinary shares issued - 0.2 - - - 0.2
Purchase of own shares - - - - (6.6) (6.6)
Share-based payments (net of settlement) - - - - 6.7 6.7
Dividends paid - - - - (21.5) (21.5)
At 31 October 2025 2.7 309.2 13.0 (21.4) 78.5 382.0
Share Share premium Special capital Translation Retained
capital account reserve reserve Earnings Total
£m £m £m £m £m £m
At 1 November 2023 2.8 308.7 12.9 (8.8) 62.9 378.5
Profit after tax - - - - 39.5 39.5
Other comprehensive loss - - - (12.0) (1.3) (13.3)
Tax relating to components of other comprehensive loss - - - 0.1 0.5 0.6
Total comprehensive (loss)/income - - - (11.9) 38.7 26.8
Ordinary shares issued - 0.3 - - - 0.3
Purchase of own shares (0.1) - 0.1 - (38.4) (38.4)
Share-based payments (net of settlement) - - - - 8.7 8.7
Dividends paid - - - - (19.6) (19.6)
At 31 October 2024 2.7 309.0 13.0 (20.7) 52.3 356.3
CONSOLIDATED BALANCE SHEET
as at 31 October 2025
Note 2025 2024
£m £m £m £m
Non-current assets
Goodwill 99.6 98.5
Development costs 20.2 18.6
Other intangible assets 43.7 10.0
Property, plant and equipment 354.7 287.8
Derivative benefit plus 1.9 -
Retirement benefit surplus - 0.1
Deferred tax 11.2 7.3
531.3 422.3
Current assets
Inventories 143.2 127.1
Trade and other receivables 110.5 91.0
Cash and cash equivalents 9 65.3 45.0
Derivative financial instruments 2.5 0.9
321.5 264.0
Assets classified as held for sale 4 10.3 5.8
Total assets 863.1 692.1
Current liabilities
Borrowings 8 (47.2) (43.0)
Lease liabilities 8 (3.1) (2.1)
Government grants (0.4) -
Contract liabilities (38.4) (26.6)
Trade and other payables (99.4) (85.1)
Provisions (8.1) (3.2)
Current tax (3.9) (8.8)
Derivative financial instruments (0.8) (1.5)
Retirement benefit surplus (0.1) -
(201.4) (170.3)
Non-current liabilities
Borrowings 8 (91.6) (43.7)
Lease liabilities 8 (12.4) (8.9)
Government grants (48.0) (24.0)
Contract liabilities (85.6) (51.6)
Provisions (13.5) (16.7)
Deferred tax (28.5) (17.6)
Derivative financial instruments - (2.9)
Preference shares 8 (0.1) (0.1)
(279.7) (165.5)
Total liabilities (481.1) (335.8)
Net assets 382.0 356.3
Equity
Share capital 2.7 2.7
Share premium account 309.2 309.0
Special capital reserve 13.0 13.0
Translation reserve (21.4) (20.7)
Retained earnings 78.5 52.3
Total equity 382.0 356.3
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 October 2025
Note 2025 2024**
£m £m
Cash flows from operating activities
Cash generated from continuing underlying operations 6 112.2 93.9
Cash impact of continuing non-underlying items (3.6) (2.5)
Cash (utilised in)/generated from discontinued underlying operations 6 (0.5) 0.6
Cash impact of discontinued non-underlying items 6 (2.8) (1.5)
Cash flows from operating activities 105.3 90.5
Retirement benefit deficit contributions (0.9) (3.0)
Tax paid (13.3) (6.5)
Net cash inflow from operating activities 91.1 81.0
Cash flows from investing activities
Purchases of intangible assets (12.1) (4.8)
Purchases of property, plant and equipment (90.2) (63.0)
Capitalised interest (3.2) (1.8)
Grant funding 23.5 22.0
Acquisition of subsidiary net of cash acquired (13.5) -
Proceeds on disposal of subsidiary 6.6 -
Net cash outflow from investing activities (88.9) (47.6)
Cash flows from financing activities
Dividends paid (21.5) (19.6)
Purchase of own shares (6.6) (41.0)
Proceeds for transactions in own shares 0.9 0.9
Paid accrued dividends on shares (0.3) (0.2)
Finance expense paid (3.3) (4.0)
Capitalised facility fees paid (1.4) (0.8)
Drawdown of borrowings 145.0 100.0
Repayments of borrowings (70.0) (70.1)
Payments of lease liabilities (2.8) (2.5)
Net cash inflow/(outflow) from financing activities 40.0 (37.3)
Increase/(decrease) in cash and cash equivalents 42.2 (3.9)
Cash and cash equivalents at beginning of the year 2.0 6.4
Effect of foreign exchange rate changes 0.6 (0.5)
Cash and cash equivalents at end of the year* 44.8 2.0
* Cash and cash equivalents of £44.8m (2024: £2.0m) at 31 October 2025
includes £20.5m (2024: £43.0m) of bank overdrafts which are classified as
current borrowings on the balance sheet. See note 9 for further details.
** 2024 comparative information has been re-presented to reclassify an
operation which has been discontinued in the year. See note 4 for further
details.
Notes
1. ACCOUNTS AND AUDITOR'S REPORT
The financial information set out above does not constitute the Company's
statutory accounts for the year ended 31 October 2025 or 31 October 2024 but
is derived from those accounts. Statutory accounts for 2024 have been
delivered to the Registrar of Companies, and those for 2025 will be delivered
following the Company's Annual General Meeting. The auditor has reported on
these accounts; their reports were unqualified, did not draw attention to any
matters by way of emphasis without qualifying their report, and did not
contain any statements required under either section 498(2) or section 498(3)
of the Companies Act 2006.
This announcement has been prepared on the basis of the accounting policies
set out in the Company's financial statements for the year ended 31 October
2025.
Whilst the financial information included in this announcement has been
computed in accordance with UK-adopted International Financial Reporting
Standards ("UK-adopted IFRSs"), this announcement does not itself contain
sufficient information to comply with UK-adopted IFRSs. The Company expects to
post full financial statements that comply with UK-adopted IFRSs on its
website on 9 December 2025 (see note 15 below).
Recent accounting developments
The following IFRIC interpretations, amendments to existing standards and new
standards were adopted in the year ended 31 October 2025 but have not
materially impacted the reported results or the financial position:
• Classification of Liabilities as Current or Non-current (Amendment to IAS
1);
• Non-current Liabilities with Covenants (Amendment to IAS 1);
• Lease Liability in a Sale and Leaseback (Amendment to IFRS 16); and
• Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7).
2. SEGMENTAL ANALYSIS - CONTINUING OPERATIONS
Year ended 31 October 2025
Countermeasures & Energetics Sensors & Information Unallocated Group
£m £m £m £m
322.7 174.8 - 497.5
Revenue
Segment result before depreciation, amortisation and non-underlying items and 79.7 38.2 (19.3) 98.6
discontinued operations
Depreciation (17.3) (5.5) - (22.8)
Amortisation (0.8) (1.5) - (2.3)
Segmental underlying operating profit 61.6 31.2 (19.3) 73.5
Amortisation of acquired intangibles (0.8) (0.9) - (1.7)
Non-underlying items 0.2 (5.4) 6.8 1.6
Segmental operating profit 61.0 24.9 (12.5) 73.4
Year ended 31 October 2024
Countermeasures & Energetics Sensors & Information Unallocated Group
£m £m £m £m
276.3 212.0 - 488.3
Revenue
Segment result before depreciation, amortisation and non-underlying items and 61.0 47.3 (16.8) 91.5
discontinued operations
Depreciation (15.8) (4.6) - (20.4)
Amortisation (0.2) (1.3) - (1.5)
Segmental underlying operating profit 45.0 41.4 (16.8) 69.6
Amortisation of acquired intangibles (1.2) (0.8) - (2.0)
Non-underlying items 2.8 (3.2) (10.6) (11.0)
Segmental operating profit 46.6 37.4 (27.4) 56.6
3. ALTERNATIVE PERFORMANCE MEASURES
The principal alternative performance measures ("APMs") presented are the
underlying measures of earnings which exclude exceptional items, for example
relating to acquisitions and disposals, restructuring costs, impairment
charges, defined benefit pension buy-in/buy-out costs and legal costs, gain or
loss on the movement on the fair value of derivative financial instruments,
and the amortisation of acquired intangibles. The directors believe that these
APMs assist with the comparability of information between reporting periods.
The term underlying is not defined under IFRS and may not be comparable with
similarly titled measures used by other companies.
Reconciliation from underlying to statutory performance:
2025 2024
Underlying Non-underlying Underlying Non-underlying
performance items Total performance items Total
£m £m £m £m £m £m
Continuing operations
Revenue 497.5 - 497.5 488.3 - 488.3
Operating profit/(loss) 73.5 (0.1) 73.4 69.6 (13.0) 56.6
Finance expense (5.7) - (5.7) (4.8) - (4.8)
Profit/(loss) before tax 67.8 (0.1) 67.7 64.8 (13.0) 51.8
Taxation (14.2) (0.2) (14.4) (12.0) 1.7 (10.3)
Profit/(loss) after tax 53.6 (0.3) 53.3 52.8 (11.3) 41.5
Discontinued operations
Loss after tax from discontinued operations (2.3) (2.8) (5.1) (0.1) (1.9) (2.0)
Total profit/(loss) after tax 51.3 (3.1) 48.2 52.7 (13.2) 39.5
Earnings per ordinary share
Continuing operations
Basic 19.8p 19.7p 19.3p 15.2p
Diluted 19.4p 19.3p 18.9p 14.9p
Continuing operations and discontinued operations
Basic 18.9p 17.8p 19.3p 14.5p
Diluted 18.6p 17.5p 18.9p 14.1p
Breakdown of non-underlying items:
2025 2024
£m £m
Gain/(loss) on movements in the fair value of derivative financial instruments 7.3 (2.0)
Acquisition related expenses (3.0) (3.4)
Defined benefit pension buy-in and buy-out transaction (0.4) (7.5)
Change in senior management positions - (1.2)
Business restructuring (2.5) -
Decrease in legal and disposal provisions 0.2 3.1
Impact of non-underlying items on EBITDA 1.6 (11.0)
Intangible amortisation arising from business combinations (1.7) (2.0)
Impact of non-underlying items on profit before tax (0.1) (13.0)
Tax impact of non-underlying items (0.2) 1.7
Impact of non-underlying items on continuing profit after tax (0.3) (11.3)
Non-underlying discontinued operations after tax (2.8) (1.9)
Impact of non-underlying items on profit after tax (3.1) (13.2)
Underlying profit after tax 51.3 52.7
Statutory profit after tax 48.2 39.5
Derivative financial instruments
Included in non-underlying items is a £7.3m gain (2024: £2.0m loss) on the
movement in fair value of derivative financial instruments. This is excluded
from underlying earnings to ensure the recognition of the gain or loss on the
derivative matches the timing of the underlying transaction.
Acquisition related expenses
Included in non-underlying items is £3.0m (2024: £3.4m) of
acquisition-related expenses. This includes £2.2m (2024: £3.2m) relating to
deferred consideration contingent on continued employment of the former owners
of Geollect, which has been accounted for as equity-settled share-based
payments under IFRS 2 Share-based Payments, and on continued employment of the
former owners of Landguard, which has been accounted for as remuneration under
IFRS 3 Business Combinations. We have classified this cost as a non-underlying
item as it is a non-recurring cost relating to acquisitions. The remaining
expense of £0.8m (2024: £0.2m) primarily includes professional fees incurred
in relation to the Group's mergers and acquisitions activity during the year.
The acquisition-related expenses are not reflective of the underlying costs of
the Group and therefore, in order to provide an explanation of results that is
not distorted by the costs of a business being acquired rather than
organically developed, these costs have been excluded from the underlying
measures.
Defined benefit pension buy-in and buy-out transaction
Included in non-underlying items is an expense of £0.4m (2024: £7.5m). This
comprises the settlement loss following the buy-in transaction of £nil (2024:
£7.0m), as well as ongoing costs of £0.4m (2024: £0.5m) incurred in
relation to the buy-in process which will eventually conclude with a buy-out
of the scheme. The buy-in and buy-out transaction is considered a
non-recurring event by nature and the expense relating to it is material in
size; therefore, these costs have been excluded from the underlying measures.
Business restructuring
Included in non-underlying items are costs of £2.5m (2024: £nil) relating to
business restructuring. During the period the Group took mitigating action to
match Roke's cost base with current demand, and integrating the Futures
business unit within the Defence business unit. As such, these costs are not
reflective of the underlying costs of the Group and have been excluded from
the underlying measures.
Legal and disposal provisions
Included in non-underlying items is a £0.2m (2024: £3.1m) release of legal
and disposal provisions relating to the 2018 incident at our UK
Countermeasures facility in Salisbury.
Amortisation of acquired intangibles
Included in non-underlying items is the amortisation charge arising from
business combinations of £1.7m (2024: £2.0m). Amortisation of acquired
intangibles arising from business combinations is associated with acquisition
accounting under IFRS 3 Business Combinations. IFRS requires intangibles to be
recognised on acquisition that would not have been capitalised had the
business grown organically under Chemring's ownership. As such, these costs
are not reflective of the underlying costs of the Group and therefore, in
order to provide an explanation of results that is not distorted by the
history of business units being acquired rather than organically developed,
have been excluded from the underlying measures.
Tax
The tax impact of non-underlying items comprises a £0.2m charge (2024: £1.7m
credit) on the above non-underlying items.
We present the underlying effective tax rate for the Group, excluding
non-underlying items, that is comparable over time. This is the taxation
expense for the Group, excluding any non-underlying tax charge or credit, as a
percentage of underlying profit before taxation.
Net debt
A reconciliation and analysis of net debt is presented in notes 7 and 8. This
APM allows management to monitor the indebtedness of the Group.
Discontinued operations
Further details on the results of discontinued operations are presented in
note 4.
4. DISCONTINUED OPERATIONS AND HELD FOR SALE
Total losses from discontinued operations for the year to 31 October 2025 were
£5.1m (2024: £2.0m). Included in this balance are amounts relating to the
EHD business, Alloy Surfaces Company, Inc. ("Alloy") and other discontinued
operations. The EHD business includes the underlying loss of £0.3m (2024
£1.3m) and a non-underlying credit of £0.7m (2024: £5.2m), being the profit
from the sale of the EHD business during the year and a tax credit against
those non-underlying items of £1.3m (2024: £0.7m charge) (see below). Alloy
includes the underlying loss of £2.0m (2024: £1.2m profit) and a
non-underlying charge of £5.1m (2024: £nil) and associated tax credit of
£0.8m (2024: £nil) in relation to the divestment of the business (see
below). Other discontinued operations includes a £0.5m charge (2024: £6.4m)
relating to an increase in provisions for a previously disposed European
Munitions business.
2025 2024
Underlying Non-underlying £m Total £m Underlying Non-underlying £m Total £m
£m £m
EHD business
Revenue 0.8 - 0.8 1.8 - 1.8
Operating (loss)/profit (0.4) 0.7 0.3 (1.5) 5.2 3.7
Tax 0.1 1.3 1.4 0.2 (0.7) (0.5)
(0.3) 2.0 1.7 (1.3) 4.5 3.2
Alloy Surfaces Company, Inc.
Revenue 19.2 - 19.2 22.1 - 22.1
Operating (loss)/profit (2.4) (5.1) (7.5) 1.5 - 1.5
Tax 0.4 0.8 1.2 (0.3) - (0.3)
(2.0) (4.3) (6.3) 1.2 - 1.2
Other discontinued operations
Increase in provisions - (0.5) (0.5) - (6.4) (6.4)
Total loss from discontinued operations (2.3) (2.8) (5.1) (0.1) (1.9) (2.0)
The net cash outflow from operating activities was £2.3m (2024: £0.9m) and
the cash inflow from financing activities was £5.7m (2024: £0.2m outflow).
There were no cash flows from financing activities.
EHD business
In 2023, the decision was taken that the Explosive Hazard Detection ("EHD")
business would not continue to operate as a result of the US DoD's decision in
2022 to transition the HMDS Program of Record into sustainment earlier than
previously indicated. After evaluating the potential sustainment program it
was determined that in the short to medium term there was insufficient DoD
funding to make it economically viable for Chemring to continue to operate the
EHD business. Therefore, the business was abandoned and treated as a
discontinued operation.
During the year to 31 October 2024, and prior to the assets being physically
disposed of, the Group received an offer to purchase the EHD business and
subsequently it was sold on 22 May 2025. Up to the date of sale, the business
assets were preserved, and certain costs were incurred to safeguard these
assets in order to ensure that they were in a condition ready to sell. There
was also certain revenue related to the sale of spare parts for the service of
active units in operation which occurred up to the sale date, as disclosed in
the table above.
The Group completed the sale of its EHD business to Elta North America, Inc.
on 22 May 2025. Under the terms of the agreement, the Group received
consideration of $9.0m upon completion of the transaction. The profit on
disposal of £0.7m and associated tax credit of £1.3m have been treated as
non-underlying items in the year to 31 October 2025.
2025
£m
Consideration received or receivable:
Cash 6.6
Total disposal consideration 6.6
Net assets and liabilities disposed of (5.0)
Disposal costs (0.9)
Profit on disposal before tax 0.7
Income tax on loss on disposal 1.3
Profit on disposal after tax 2.0
The carrying amount of assets and liabilities as at the date of sale was:
22 May 2025
£m
Asset held for sale 5.0
Trade and other receivables -
Total assets 5.0
Trade and other payables -
Total liabilities -
Net assets 5.0
In the year to 31 October 2024, non-underlying items included a £4.5m credit
associated to the EHD business, being the reversal of an impairment of £5.8m
of the held for sale assets, a £0.6m charge for site rationalisation costs
and professional fees related to the sale, and a tax charge against those
non-underlying items of £0.7m.
Alloy Surfaces Company, Inc.
During the year to 31 October 2025, a strategic review of the Group's
Countermeasures & Energetics portfolio was conducted. The Board concluded
that the Alloy Surfaces Company, Inc. ("Alloy") business would be divested and
as such has been marketed for sale. Alloy has been treated as a discontinued
operation in 2025. Prior to the decision to divest the Alloy business, it was
presented as part of the Countermeasures & Energetics segment.
During the year, the business was marketed for sale and progress towards a
sale has been made. The disposal is expected to complete within the next 12
months.
At 31 October 2025, Alloy's disposal group comprised the following assets:
£m
Non-current assets
Goodwill 3.5
Development costs 1.0
Property, plant and equipment 4.3
Current assets
Inventories 1.5
Assets classified as held for sale 10.3
The disposal group assets have been measured at carrying amounts. This is
lower than the fair value less costs to sell.
The comparative income statement and cash flow information for the year ended
31 October 2024 has been re-presented on the basis of the classification of
the Alloy business as discontinued:
Reported Adjustments Re-presented
2024
£m
2024
£m £m
CONSOLIDATED INCOME STATEMENT
Continuing operations
Revenue 510.4 (22.1) 488.3
Operating profit 58.1 (1.5) 56.6
Finance expense (4.8) - (4.8)
Profit before tax 53.3 (1.5) 51.8
Taxation (10.6) 0.3 (10.3)
Profit after tax 42.7 (1.2) 41.5
Discontinued operations
Loss after tax (3.2) 1.2 (2.0)
Total profit after tax 39.5 - 39.5
CONSOLIDATED CASH FLOW STATEMENT
Continuing operations
Cashflows from operating activities 96.0 (2.1) 93.9
Discontinued operations
Cashflows from operating activities (3.0) 2.1 (0.9)
Total cash flows from operating activities 93.0 - 93.0
All adjustments related to underlying items.
5. EARNINGS PER SHARE
Earnings per share is based on the average number of shares in issue,
excluding own shares held, of 270,724,940 (2024: 272,875,033).
Diluted earnings per share has been calculated using a diluted average number
of shares in issue, excluding own shares held, of 276,057,896 (2024:
279,133,292).
The number of shares used in the calculations is as follows:
2025 2024
£m Basic EPS (Pence) Diluted EPS (Pence) £m Basic EPS (Pence) Diluted EPS (Pence)
Underlying profit after tax 53.6 19.8 19.4 52.8 19.3 18.9
Non-underlying items (0.3) (11.3)
Profit from continuing operations 53.3 19.7 19.3 41.5 15.2 14.9
Loss from discontinued operations (5.1) (1.9) (1.8) (2.0) (0.7) (0.8)
Total profit after tax 48.2 17.8 17.5 39.5 14.5 14.1
6. CASH GENERATED FROM OPERATING ACTIVITIES
2025 2024
£m £m
Operating profit from continuing operations 73.4 56.6
Amortisation of development costs 1.5 1.2
Amortisation of intangible assets arising from business combinations 1.7 2.0
Amortisation of software 0.8 -
Amortisation of patents and licenses - 0.3
Loss on disposal of non-current assets 0.2 1.7
Depreciation of property, plant and equipment 22.8 20.4
Non-underlying items (1.7) 11.0
Share-based payment expense 5.1 5.8
Operating cash flows before movements in working capital 103.8 98.9
Increase in inventories (23.7) (28.3)
Increase in trade and other receivables (19.9) (15.9)
Increase in trade and other payables 51.8 39.3
Increase in provisions 0.2 -
Operating cash flow from continuing underlying operations 112.2 93.9
Discontinued operations:
Operating cash flow from discontinued underlying operations (0.5) 0.6
Cash impact of non-underlying items from discontinued operations (2.8) (1.5)
Net cash outflow from discontinued operations (3.3) (0.9)
7. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
2025 2024
£m £m
Increase/(decrease)in cash and cash equivalents 42.2 (3.9)
Increase in debt and lease financing due to cash flows (70.8) (26.6)
Increase in net debt resulting from cash flows (28.6) (30.5)
Effect of foreign exchange rate changes 0.6 (0.3)
Acquired debt (0.4) -
New leases entered into, lease interest and other non-cash movements (6.9) (7.2)
Amortisation of debt finance costs (0.9) (0.4)
Movement in net debt (36.2) (38.4)
Net debt at beginning of the year (52.8) (14.4)
Net debt at end of the year (89.0) (52.8)
8. ANALYSIS OF NET DEBT
As at Cash Non-cash changes Exchange As at
1 Nov flows rate effects 31 Oct
2024 2025
£m £m £m £m £m
Cash and cash equivalents (including bank overdrafts) 2.0 42.2 - 0.6 44.8
Debt due within one year - (26.7) - - (26.7)
Debt due after one year (43.7) (46.9) (0.9) - (91.5)
Preference shares (0.1) - - - (0.1)
(41.8) (31.4) (0.9) 0.6 (73.5)
Lease liabilities (11.0) 2.8 (7.2) (0.1) (15.5)
(52.8) (28.6) (8.1) 0.5 (89.0)
The Group has a rolling credit facility which comprises a £180m facility
which runs until December 2028, providing significant committed short and
medium-term funding with three one-year options to extend further to December
2031. In addition, we have a US$20m swingline overdraft facility for use in
the US. The Group also has a four-year UK Export Finance facility of £80.0m,
with a three year amortising repayment schedule.
9. CASH AND CASH EQUIVALENTS
Bank balances and cash comprise cash held by the Group with an original
maturity of three months or less. The carrying amount of these assets
approximates to their fair value.
The Group has a UK Cash Pooling Arrangement ("UKCPA") for its sterling
accounts, which do not meet the requirement to be settled net, therefore
presented by the cash position within cash and cash equivalents on the balance
sheet. The Group also has a US overdraft facility which, until July 2025, was
part of a daily sweeping arrangement and therefore had a legal right to net to
a single US account. The US overdraft facility is therefore excluded from the
cash and cash equivalents on the balance sheet as at 31 October 2025, but was
included at 31 October 2024. Both of these facilities form an integral part of
cash management.
For the purposes of the statement of cash flows, cash and cash equivalents
amounts to £44.8m (2024: £2.0m). This differs to the balance sheet value of
£65.3m due to the inclusion of the UKCPA bank borrowing overdraft position
and the US overdraft within one year totalling £20.5m.
10. DIVIDEND
2025 2024
£m £m
Dividends paid on ordinary shares of 1p each
Final dividend of 5.2p per share for the year ended 31 October 2024 (4.6p per 14.2 12.5
share for the year ended 31 October 2023)
Interim dividend of 2.7p per share for the year ended 31 October 2025(2.6p per 7.3 7.1
share for the year ended 31 October 2024)
Total dividends 21.5 19.6
Subject to approval at the Annual General Meeting, the final dividend of 5.3p
per ordinary share will be paid on 10 April 2026 to all shareholders
registered at the close of business on 20 March 2026. The estimated cash value
of this dividend is £14.5m, although the final payment may be lower as a
result of the impact of share buybacks. The total dividend for the year will
therefore be 8.0p (2024: 7.8p) per ordinary share. As the final dividend is
subject to approval by the shareholders at the Annual General Meeting, it has
not been included as a liability in the financial statements for the year
ended 31 October 2025.
The cumulative preference shares carry an entitlement to a dividend at the
rate of 7p per share per annum which was paid in equal instalments on 30 April
2025 and 31 October 2025.
11. EXCHANGE RATES
The following exchange rates applied during the year:
Average rate Closing rate Average rate Closing rate
2025 2025 2024 2024
US dollar 1.31 1.32 1.27 1.29
AU dollar 2.03 2.01 1.95 1.96
Norwegian krone 13.75 13.29 13.69 14.18
For the year ended 31 October 2025 a 10% weakening of Sterling against the US
dollar, AU dollar and Norwegian krone would have increased reported revenue by
£22.8m (2024: £20.1m) and reported underlying operating profit by £3.9m
(2024: £1.1m).
12. CONTINGENT LIABILITIES
The Group is, from time to time, party to legal proceedings and claims, and is
involved in correspondence relating to potential claims, which arise in the
ordinary course of business. Provision is made for any amounts that the
directors reasonably consider may become payable. The Group believes that any
significant liability in respect of guarantee and performance bond
arrangements, and legal proceedings and claims not already provided for, is
remote.
13. EVENTS AFTER THE BALANCE SHEET DATE
There were no events after the balance sheet date that require disclosure.
14. RELATED PARTY TRANSACTIONS
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed. The
directors of the Company had no material transactions with the Company during
the year, other than in connection with their service agreements.
15. 2025 ANNUAL REPORT AND ACCOUNTS
The annual report and accounts for the year ended 31 October 2025 will be
posted on the Company's website, www.chemring.co (http://www.chemring.co) m,
on 9 December 2025 and a copy will be posted to shareholders, as required, in
advance of the Company's Annual General Meeting on 20 February 2026.
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