Growing
momentum
and ambition
Chemring Group PLC
Annual report and accounts 2024

STRATEGIC ROADMAP
CONTENTS
STRATEGIC REPORT
1 2024 performance
2 What we do
4 Sustainability overview
6 Our purpose in action
8 Chairman’s statement
10 Investment case
12 Group Chief Executive’s review
18 Market overview
20 Strategy
24 Key performance indicators
28 Business model
30 Focus on Countermeasures & Energetics
34 Focus on Sensors & Information
38 Section 172 statement
39 Stakeholder engagement
42 Introduction to sustainability
46 Health and safety
48 Environment
52 Task Force on Climate-related Financial Disclosures (“TCFD”)report
61 Our people
66 Ethics and business conduct
68 Financial review
72 Risk management
74 Principal risks and uncertainties
83 Viability statement and going concern
84 Non-financial and sustainability information statement
GOVERNANCE
86 Chairman’s introduction togovernance
88 Board of directors
90 Corporate governance report
100 Audit Committee report
104 Nomination Committee report
106 Directors’ remuneration report
134 Directors’ report
FINANCIAL STATEMENTS
138 Consolidated income statement
139 Consolidated statement of comprehensiveincome
140 Consolidated statement of changesin equity
141 Consolidated balance sheet
142 Consolidated cash flow statement
143 Notes to the Group financial statements
169 Parent company balance sheet
170 Parent company statement of comprehensiveincome
170 Parent company statement of changes inequity
171 Notes to the parent company financialstatements
175 Accounting policies
182 Independent auditor’s report tothe members of Chemring GroupPLC
188 Five-year record
OTHER INFORMATION
189 Corporate information andwebsite
190 Other information
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.
GROW ACCELERATE PROTECT
OUR STRATEGIC IMPERATIVES
SAFETY
EXCELLENCE INNOVATION
OUR AMBITION
To increase annual revenue to c.£1bn by 2030
OUR ESG PILLARS
> READ MORE ON PAGES PAGES 42 TO 67
HEALTH
AND SAFETY
ENVIRONMENT
PEOPLE
ETHICS AND
BUSINESS CONDUCT
OUR VALUES
> READ MORE ON PAGES 20 TO 23

FINANCIAL HIGHLIGHTS
KEY ACHIEVEMENTS
- 2024 was in line with the Board’s initial expectations despite H1 headwinds
> Revenue growth of 8%, driven by strong performance at Roke, up 17%,
and growth in our specialist Energetic materials businesses, up 12%,
offset by a weaker year for Countermeasures
> Underlying operating profit margin of 13.9% (2023: 14.6%) primarily
reflecting the impact of operational challenges at our Tennessee
countermeasures business in the year
> Improved cash conversion of 102% (2023: 90%) with continued focus
onworking capital
- A record order book of £1,038m, the highest in Chemring’s history,
providing excellent medium-term revenue coverage
- Awarded c.£90m of grant funding to support capex investment to increase
the capacity of our Norwegian site, amid unprecedented levels of demand
for its products
- Strategy to increase overall investment in our Energetics capacity expansion
plan from £120m to £200m, excluding grant funding
- Good progress made on capital projects to date, with c.£70m of capex
spent in total during the year, and customers increasingly moving to
long-term partnering agreements
- Net debt was £52.8m (2023: £14.4m), given c.£70m investment in capex
and a further £28.1m on the share buyback. Net debt to underlying EBITDA
of0.56 times (2023: 0.16 times) below internal target of <1.5 times
- Proposed final dividend per share of 5.2p, up 13%, giving a total dividend
of7.8p (2.5 times cover)
- The Board’s expectations for 2025 are unchanged, with a similar H2 weighting.
Approximately 77% (2023: 79%) of expected 2025 revenue is already covered
by the order book, with unprecedented cover in Countermeasures & Energetics
for 2026 and 2027 at 81% and 52% respectively
* 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 £39.5m (2023: £5.4m). For references to constant
currency equivalents of reported numbers please refer to page 68 for further
explanation and for calculation of underlying cash conversion please refer to page27.
2024 PERFORMANCE
UNDERLYING CASH
CONVERSION*
102%
(2023: 90%)
Continued strong cash conversion,
with an average of 101% on a rolling
36-month basis (2023: 101%),
driven by a continued focus on
working capital disciplines.
ORDER INTAKE
£673m
(2023: £756m)
Decrease in order intake represents
the impact of multi-year orders
received in the prior year.
OUTLOOK
The record order book supports a strong medium-term outlook across the
majority of our businesses. The expansion in our Energetics businesses is
expected to come online in 2026 and 2027, resulting in strong earnings
growth. We will continue to balance short-term performance with longer-
term growth.
REVENUE
£510.4m
(+8%) (+9.5% at
constantcurrency*)
Increase in revenue driven by strong
performance at Roke and growth in
niche Energetics businesses.
UNDERLYING OPERATING
PROFIT*
£71.1m
(+2.7%) (+3.6% at
constantcurrency*)
Reflects the strong operational
delivery at Roke together with
strong operational execution across
our Energetics businesses.
UNDERLYING DILUTED
EARNINGS PERSHARE*
19.3p
(2023: 20.0p)
Decrease reflects the higher
effective taxrate and finance costs
in the year.
STATUTORY OPER ATING
PROFIT
£58.1m
(+28.0%) (+29.4% at
constantcurrency*)
The difference to underlying
operating profit reflects the
non-underlying items which are
detailed in note 3.
GROUP
£1,038m
SENSORS & INFORMATION
£105m
COUNTERMEASURES & ENERGETICS
£933m
ORDER BOOK
2024 2024
2023 2023
2022 2022
£1,038m £105m
£922m £171m
£651m £154m
2024
2023
2022
£933m
£751m
£497m
> READ MORE ON PAGES 34 TO 37 > READ MORE ON PAGES 30 TO 33
Chemring Group PLC Annual report and accounts 2024 1
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OPERATIONAL MISSION
SUPPORT SERVICES
- Access and operational
cybercapabilities
- Technology insertion to accelerate
mission outcomes
SENSORS
- Broad range of IP for bio-security,
including bio-surveillance and
point-of-care diagnostics
- Expertise and know-how across the
complete lifecycle – from product
design to development and production
ACTIVE CYBER DEFENCE
- Deep knowledge in sensors,
communications, cyber and AI
- Trusted supplier to UK Government
and the world’s largest companies
AIR AND NAVAL
COUNTERMEASURES
- Global leader in countermeasures with
>65% market share
- We supply 85% of NATO air fleets
and 60% of NATO naval fleets
OPEN-SOURCE INTELLIGENCE
- Blending human expertise and machine
learning for faster and more informed
decision making
- UK leaders in open-source intelligence
technologies for geospatial applications
SPECIALITY MATERIALS
- World-leading producer of specialised
energetic materials
- Expertise in propellants for a
broadrange of aerospace and
defenceapplications
LAND ELECTRONIC WARFARE
(“EW”) SYSTEMS
- Leading provider of Cyber and
Electromagnetic Activities
(“CEMA”)technology
- 800+ engineers and scientists delivering
information advantage to clients
PRECISION
ENGINEEREDDEVICES
- We are a key supplier to NASA,
SpaceX and Martin-Baker
- We had over 230 parts on the Mars
Perseverance mission
We are a specialist manufacturing and technology
business creating market-leading innovative solutions
to meet our customers’ complex needs.
Using our extensive science and engineering expertise, we turn ideas into
reality, designing and developing critical solutions that protect and safeguard in
unpredictable environments in today’s increasingly unstable world.
UK
45%
In the UK we are well positioned to benefit from the increased demand for
propellants, intelligence and cyber-security solutions driven by the continued
ongoing conflict in Ukraine.
US
34%
Positive trends in the US are complemented by the growing demand for
ourcapabilities in other regions, especially in the missile and space domains.
Our portfolio of products and services in these areas is well aligned with
theneeds of our customers, who seek to enhance their defence and security
positions with technology-enabled solutions.
EUROPE
17%
In Europe, the continued instability from the ongoing Ukraine conflict is
driving unprecedented levels of long-term demand in the speciality energetic
materials market for our Norwegian business.
We continue to leverage our strong position in the European market,
wherewe collaborate with our partners on key programmes for NATO.
ASIA PACIFIC
4%
Regional instabilities, capability upgrades and technology advancements are
driving increased spend in the Asia Pacific region. Our Australian business
positions us to contribute towards meeting the defence requirements of
Australia and other countries in the region.
WHAT WE DO
We work with our customers globally to help
protect their people, assets and nations
We achieve this by innovating at every stage of the value chain, from research
and development (“R&D”) through to design, manufacture and in-service
support, working closely with our customers to deliver products, services and
solutions for mission-critical success.
Our customer base spans national defence organisations, security and law
enforcement agencies, as well as commercial markets such as space and transport.
We support our customers in more than fifty countries across the globe.
WHERE WE OPERATE
We provide technology solutions for defence,
national security and commercial markets across the
world from our home markets of the UK, the US,
Australia and Norway. The percentages show the
share of sales for each destination in the year ended
31 October 2024. Weare a NATO supplier,
contributing to the alliance’s collective defence
andsecurity goals.
OUR CORE CAPABILITIES ARE:
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SENSORS & INFORMATION
Innovation is core to solving our clients’ difficult problems.
With over 1,000 scientists, engineers and consultants, our Sensors &
Information sector continues to invest in technologies that safeguard and
protect in an uncertain world.
Operating across defence, national security, law enforcement and industrial
domains, we enable our clients to deliver competitive advantage, defend their
people, assets and information, and defeat their adversaries.
Our sensor technologies detect threats with a very high degree of confidence,
be they explosive, biological, radio or cyber.
Our Roke business draws on a 60-year heritage of innovation in sensors,
communications, active cyber defence, electronic warfare, software
engineering, data science, artificial intelligence and open-source intelligence
toinnovate and apply these technologies in new ways.
We operate across the whole lifecycle providing advice, research and
development, engineering, design and in-service support for our products
andservices.
REVENUE
£212.0m
(2023: £187.0m)
UNDERLYING OPERATING PROFIT
£41.4m
(2023: £34.2m)
2024
2023
2022
£41.4m
£34.2m
£25.4m
OUR TWO SECTORS:
REVENUE
£298.4m
(2023: £285.6m)
UNDERLYING OPERATING PROFIT
£46.5m
(2023: £50.5m)
2024
2023
2022
£46.5m
£50.5m
£48.9m
COUNTERMEASURES & ENERGETICS
Chemring is the world leader in the design, development and manufacture of
advanced expendable countermeasures for protecting air and sea platforms
against the growing threat of guided missiles.
We combine a deep understanding of platform signatures, missile seekers
andchemical formulations to develop new countermeasures to defeat
evolving threats.
Our niche, world-class Energetics portfolio produces high-reliability,
single-use devices that perform critical functions for the space, aerospace,
defence and industrial markets. We also manufacture specialist materials
including propellant and energetic materials that are used in a wide variety
ofapplications in the defence and civil markets.
Every day, our energetic products, services and experts assist customers,
including NASA and SpaceX, to achieve mission success. This ranges from
cutting-edge technology to enable our customers to launch rockets and
satellites into orbit, to the provision of aircraft safety systems including oxygen
mask deployment on commercial aircraft and ejector seats for aircrew egress.
UK MOD
©
Crown copyright 2023
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SUSTAINABILITY OVERVIEW
Continuing our commitment to a sustainable future
HEALTH AND SAFETY
PEOPLE
MAKING THE WORLD A SAFER PLACE
APPROACH
Our long-term success is improved
by productive engagement with all
stakeholders. Therefore, we value
aproactive and positive approach
tointeractions. We actively look for
and monitor the latest trends and
seek stakeholder input.
FOCUS
- Control of major accident hazards
- Injury prevention
- HSE risk management
- Occupational and process safety
ESG HIGHLIGHTS
- Total recordable injury frequency rate
decreased slightly to 0.69 (2023: 0.90)
which is an improvement on 2023 and still
below our annual limit of 1.0
- In FY24 the process safety event (“PSE”)
rate was 2.09 (2023: 2.87). This represents
66 fewer PSEs in FY24
- Zero injuries in connection with or arising
from energetic events
> READ MORE ON PAGES 46 TO 47
FOCUS
- Culture
- Diversity and inclusion
- Employee wellbeing and engagement
- Employee learning and development
ESG HIGHLIGHTS
- Employee engagement remains a high
priority with a weighted average positivity
score up at 72% in FY24
- Board diversity has remained at 44%/56%
female to male gender split (2023: 44%/56%)
> READ MORE ON PAGES 61 TO 65
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.
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.
> DISCOVER MORE ABOUT SUSTAINABILITY
ATCHEMRING.COM/SUSTAINABILITY/
COMMITTED-TO-A-SUSTAINABLE-FUTURE
At Chemring, we recognise our shared duty to
contribute toward a sustainable tomorrow. As a
global organisation it is our responsibility to protect
our planet and people, meet our customers’ essential
requirements, and make valuable contributions to the
communities where we do business.
Enhancing our sustainability practices is crucial in both current operations
andfuture planning, as we handle our environmental, social, and governance
(“ESG”) risks. Our leadership teams’ compensation and incentives are directly
linked to our sustainability objectives.
We acknowledge that our commitment to ESG objectives plays a crucial role
in attracting and retaining top-tier talent. Having dedicated, driven, capable,
and well-trained colleagues is essential to our continued success and to
constructing a sustainable organisation that ensures the pride of all
ourstakeholders.
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ENVIRONMENT
ETHICS AND BUSINESS CONDUCT
FOCUS
- Emissions reduction
- Waste generation and hazardous
materialsmanagement
- Energy usage
- Water consumption
ESG HIGHLIGHTS
- Market-based scope 1 and scope 2 GHG
emissions reduced by 13.0% (2023: 9.1%)
on higher revenue
- Market-based scope 1 and scope 2
emissions reduced by 18.0% (2023: 16.4%)
per £m of revenue
> READ MORE ON PAGES 48 TO 51
FOCUS
- Operational Framework and Code
ofConduct
- Compliance oversight and risk management
- Whistleblowing
- Anti-bribery and corruption
ESG HIGHLIGHTS
- Completion of training in the Chemring
Compliance Portal over 98% (2023: 88%)
- Updated Code of Conduct and Supplier
Code of Conduct issued in November 2024
> READ MORE ON PAGES 66 TO 67
VALUES
Our dedication to protection extends
beyond our customers, direct stakeholders
and communities. It impacts our environment,
society and the wider community, and is
supported by the values and behaviours
that drive us.
SAFETY
We place safety at the heart of
everything we do
EXCELLENCE
We are focused on ensuring we
consistently meet high standards in
all that we do
INNOVATION
We create world-class solutions and
develop world-class thinking
* The use by Chemring Group PLC of any MSCI ESG Research LLC or its affiliates (“MSCI”) data, and the use of MSCI logos, trademarks, service marks or index names herein, do
not constitute a sponsorship, endorsement, recommendation or promotion of Chemring Group PLC by MSCI. MSCI services and data are the property of MSCI or its information
providers, and are provided as-is and without guarantee. MSCI names and logos are trademarks or service marks of MSCI.
PROGRESS IN 2024
Chemring’s purpose is to help make the world a safer place. The escalation
oftensions around the world have reinstated the vital role that the defence
and security industry plays in supporting peace, democracy and freedom in
the western world. We believe that global stability is crucial for sustainable
development, and we are proud of the contribution that Chemring makes.
We are also committed to advancing our own sustainability agenda,
andinparticular our ESG-related risks.
> READ MORE ON PAGES 42 TO 65
Chemring Group PLC continues to
maintain an MSCI ESG Rating
ofAAA*
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BRINGING HAZARDS TO LIFE FOR SAFETY
Safety is at the heart of everything we do at Chemring. Across our
organisation our goal is zero harm, not as a statistical target but as
amoral imperative. We call this our Journey to Zero Harm, which
willbeachieved by establishing a strong proactive safety culture.
Last year, we launched our Fundamental Safety Principles as part
ofourJourney to Zero Harm. These principles are the minimum
expectations concerning people, plant, processes and organisation.
Theyapply toeveryone working for or on a Chemring controlled site,
and everyoneisexpected to understand and apply these rules within
theirworking environment.
ILLUSTRATED SAFETY SCENARIOS
The core aim of the Fundamental Safety Principles is to create a culture
in which people feel empowered to stop others if they feel something
isunsafe. The key to this is providing safety training and engaging
communications materials tailored to issues at Chemring.To do this,
wehave created a series of targeted safety scenarios using illustrations.
The safety scenarios are based on actual events that have occurred
orhave been reported to prevent incidents. The scenarios are
usedinposters or in situations such as training or toolbox talks.
Theyhave been created dynamically, and visually demonstrate how
anunsafecondition can lead to an unsafe act, a near miss and,
ultimately,an accident.
These illustrated scenarios are refreshed regularly and displayed and
used across all Chemring locations to share learnings and highlight
hazard hot spots.
ILLUSTRATED SAFETY SCENARIOS
OUR PURPOSE IN ACTION
Every day our people live and breathe our values
At the heart of our business are our core values of
Safety, Excellence and Innovation.
SAFETY
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CHEMRING RECOGNISED AT THE PLC AWARDS
Earlier this year, Chemring was recognised at the annual PLC Awards
inLondon for the second time in four years. This time, winning Tech
Business of the Year, having previously won the Transformation of
theYear award. This second award was a testament to our focus on
continuous improvement and excellence in the technology sector.
The Tech Business of the Year award was introduced at the PLC Awards
to acknowledge the emergence of tech companies driving economic
growth and reshaping how people communicate, consume information,
shop, socialise and work.
As the award winner, we demonstrated how we have developed and
harnessed technology to produce sound commercial and financial success.
We were also recognised for our focus on building shareholder value by
embracing sustained, robust ESG practices, which were scrutinised as
part of the nomination process.
The PLC Awards, founded in 1987, are usually held in March every year.
They are open to all companies listed on the Main Market of the London
Stock Exchange, colloquially known as the “plc club”.
It’s fantastic that all the hard work and dedication of Chemring colleagues
across the organisation has been recognised in this way.
SQUAD GAMES – SCALING THE USE OF ROBOTS
The innovation team at Roke is exploring the future of autonomy
andhow to scale the use of robots.
One area the team is researching is how to operate robots at scale.
Many organisations work with one or two robots, but real operational
environments in the future will need hundreds of robots working
collaboratively to solve complex problems. Roke is looking at how to
usea combination of different robots, which we call a squad, to solve
agreater problem.
They consider scale in terms of numbers, autonomy, co-operation and
system complexity. They face the challenge of integrating different robot
types, managing their readiness, and reducing the cost of manufacture and
repair. The team proposes using cheaper, commoditised robots that can
be reconfigured for different roles and deployed intelligently. They also
aim to automate some simple tasks, such as charging, to reduce the
required human management.
The question of autonomy and how to balance human control and
robot interaction are also addressed. We want robots to do things on
their own and interact with humans. But it’s the human that still makes
the key decisions.
This is a huge avenue of growth, and the team has been doing things that
noone has done before with this research. The advancement of robotics
demands collective effort, and Roke is actively inviting other researchers and
policymakers to join in this stage of robotic operations and development.
EXCELLENCE INNOVATION
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INTRODUCTION
I joined the Board with effect from 1 October 2024 and became Chairman of the Board
on 1 December 2024. As such the financial year under review was before I took on the
role of Chairman. I am delighted to have joined Chemring, succeeding Carl-Peter Forster
as Chairman, and I look forward to working with the Board, Michael Ord and the leadership
team to support the next exciting stage in the Company’s development. In solving critical
problems to help make the world a safer and better place, Chemring has a clear purpose.
Together with its strong culture and innovative products and services it is clearly well
placed for future growth.
Over the past few months I have taken the opportunity to visit a number of our
manufacturing operations across the UK and Norway. I have been encouraged by
theGroup’s diverse offerings, the strength of its market positions, and the quality
andinvestment being made in many of our facilities.
But most of all, I have been impressed by the calibre of our people and the depth of
technical capability within our workforce. Underpinning the passion and commitment
that I have seen is a strong culture of safety with a collective focus on protecting our
people, our customers and the communities in which we operate. Safety underpins
allthat we do and must remain our first priority. As a Board we will continue to drive
further investment and improvement in this area, reducing the risk of harm to our
people and automating our processes wherever possible.
Our commitment to zero harm must be matched by a relentless focus on delivery,
ensuring that we meet our customers’ expectations, delivering high-quality products
and services on time and in full, whilst simultaneously anticipating and investing in their
future needs. Optimising the significant commercial opportunities presented by such a
strong market outlook will require ongoing investment in both capability and capacity.
Inorder to drive further improvements in quality and delivery we will continue to invest
in both our infrastructure and people, and in doing so we will grow revenue and deliver
increasing value to all our stakeholders.
The past year has seen continued conflict and geopolitical tension in many regions
oftheworld, all of which has once again reinforced the crucial role the defence and
security industry plays in maintaining peace and global stability. Defence budgets continue
to grow and this has created significant opportunities for the Group as our customers
look to restore and enhance their defence and national security capabilities. Increasing
demand for our technology-driven solutions, and a resurgent demand for more traditional
defence capabilities, resulted in strong order intake and an order book at year end that
was the highest in the Group’s history. None of this would be possible without the
commitment and dedication of our people and on behalf of the Board, I wish to
acknowledge and thank them for their professionalism and support.
Looking ahead, the global defence market’s future appears increasingly robust, with
expectations for strong and sustained growth over at least the next decade. Visibility
offuture earnings is underpinned by the urgent need for governments to invest in the
defence industrial base, security and innovation to meet the astonishing rate of change
that we are seeing in today’s conflicts. This visibility, together with the support of grant
funding and our customers’ desire to move to long-term partnering agreements, gives us
the confidence to invest further in capacity and capability, reinforcing Chemring’s position
as a key supplier to NATO, and positioning the Group well for the future.
STRATEGY
Chemring is a technology-differentiated Group operating in niche markets withhigh
barriers to entry. We have a clear and relevant 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.
Our Countermeasures & Energetics sector strategy is operationally driven. Set against the
background of Russia’s invasion of Ukraine in February 2022 and the broader deteriorated
geopolitical environment, we are seeing unparalleled demand for our specialist capabilities
in energetics. As a Board we have approved investment to expand our manufacturing
capacities in Norway, the US and the UK to respond to our customers’ elevated and
urgent requirements, facilitated by grant funding. In Countermeasures, where we expect
robust but steady demand for our air and naval countermeasures over the next five years,
even in the absence of force deployment, we will continue to advance modernisation and
automation across our facilities. Additionally, we promote technologysharing and
enhanced manufacturing excellence throughout the Group whenever possible.
> READ MORE ON PAGES 30 TO 33
The Sensors & Information sector is an area of major strategic focus for the Group.
Ourcapabilities are highly relevant to customer investment priorities as they address
agrowing and diversifying threat. We will continue to grow our advanced product
andservice offerings in sensors, electronic warfare, cyber and AI, where our customer
intimacy, mission understanding and integration capabilities position us well to deliver
superior value to our defence, national security and other customers.
> READ MORE ON PAGES 34 TO 37
Chemring is committed to building a strong and sustainable company. Going forward we
will continue to focus on developing our people and infrastructure to deliver future growth.
We are committed to a rigorous focus on safety and environmental sustainability and
tofurther enhancing our strong track record in operational performance and execution.
Ourvision for the future is 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.
Tony Wood
Chairman
“ This has been another year of solid
performance across the Group. Growing
demand for both our technology-driven
solutions and the resurgent demand for
traditional defence capabilities have
resulted in an order book at year end that
is the highest in the Group’s history. As we
adapt to an increasingly volatile and unstable
world, the critical role that Chemring plays
in support of our customers has never
been more important and I am delighted
tohave taken over the Chair at such an
exciting time for the Group.”
CHAIRMAN’S STATEMENT
Delivering continued progress
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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. The Board believes 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facilitates appropriate decision making at all levels of our organisation.
Whilst consolidating in a calculative safety culture, we have continued with the deployment
of our Asset Integrity Management Maintenance Systems and have commenced our
assurance activity regarding our Electrostatic Discharge Protocols. During 2024 we
continued our focus on the “people” element of our strategy by assuring the deployment
of the Fundamental Safety Principles with significant focus on every employee’s duty to
Stop, Warn, Inform, Manage. These themes will remain our priority throughout 2025.
In addition, we introduced a new environmental data platform in 2024, to better assess
the environmental impacts of our operations and performance against the targets that
were set in2022 in order to support our wider ESG commitment. Improving our sustainability
performance plays a key role in the way we both run our businesses today and plan for
the future. Further details on this can be found in the sustainability section of this report.
> READ MORE ON PAGES 46 TO 51
PEOPLE AND OUR COMMUNITY
Our people are our most valuable resource, and it’s through their expertise and
commitment that we can continue to fulfil our commitments to our communities,
customers and end users. By investing in our workforce, we’re cultivating the talent
necessary to achieve our strategic goals and further grow our Company.
Central to our ethos regarding our workforce is promoting a values-based culture
where every employee can prosper. Our goal is to enable a workplace where everyone
can excel, fostered by engaging interactions, clear expectations and exceptional leadership
at every level. Our core values of Safety, Excellence and Innovation are not just words
but integral to our strategy, and form the foundation of our workplace culture, guiding
our every action and decision.
Our steadfast dedication to diversity, equity and inclusion (“DE&I”) is a cornerstone of
our efforts. We are committed to enhancing our Company’s diversity and creating an
inclusive space for all team members. A shared objective within our Group is to increase
the gender ratio in senior management roles to at least 33% female and 67% male by
2027, and as of 2024 our split was 31% female to 69% male. I’m proud to chair a board
which leads by example, with a gender split of 44% female to 56% male, a testament to
our commitment to DE&I.
True inclusion demands hearing from every member of our workforce. Beyond regular
methods like our local engagement and listening tools and active local Employee Resource
Groups, the Board engages directly with employees. Laurie Bowen, Non-Executive
Director and Remuneration Committee Chair, is tasked with employee engagement for
the Board. For the fourth consecutive year, Laurie has connected with team members
across the Company, focusing on segments experiencing change and transformation.
Visiting Roke, Chemring Energetic Devices in Chicago, Chemring Countermeasures in
Philadelphia and Chemring Countermeasures in Salisbury, she explored theheadwinds
and tailwinds associated with organisational change and was encouraged tohear of how
the ambitious vision for our companies is being translated into our colleagues’ day-to-day
experiences. These encounters provided invaluable perspectives for the leadership
teams and Board to consider and act upon.
> READ MORE ON PAGES 61 TO 65
GOVERNANCE AND ETHICS
In recent years significant effort has been placed on strengthening the governance and
ethics across the Group, 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.
Chemring remains committed to conducting its business in an ethical and responsible manner
at all times, and in full compliance with all applicable laws and regulations. We will continue to
strengthen our policies and procedures to ensure that the Group’s governance remains fit for
purpose. The bedrock of our governance is our Code of Conduct and our Operational
Framework, both of which bind our purpose, values, behaviour, policies and procedures,
andprovide the necessary governance to enable us to operate in a safe, consistent and
accountable way. Our ESG Committee, which meets regularly throughout the year and is
chaired by the Chief Executive, 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 90 of this report.
Good governance and ethical behaviour underpin our evolving sustainability agenda and
ensure that we operate safely, responsibly and in compliance with applicable legislation
in all of the jurisdictions in which we operate.
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 2024
of 5.2p (2023: 4.6p) per ordinary share. With the interim dividend of 2.6p per share
(2023: 2.3p), this results in a total dividend of 7.8p (2023: 6.9p) per share, an increase of
13% on the prior year. If approved, the final dividend will be paid on 11 April 2025 to
shareholders on the register on 21 March 2025.
SHARE BUYBACK PROGRAMME
On 1 August 2023 the Group announced that it had commenced a share buyback
programme of up to £50m. The sole purpose of the buyback programme was to reduce
the Company’s share capital and the ordinary shares purchased under the programme
were cancelled. Originally intended to end on 31 July 2024, the programme was subsequently
extended to 17 December 2024. Since its inception the buyback programme has
returned £37m to shareholders. The Board believe that the £13m remaining under the
programme can be better deployed in support of ongoing operations and has therefore
decided that the programme will not be renewed. The current buyback programme will
therefore lapse on 17 December 2024.
BOARD OF DIRECTORS
Carl-Peter Forster retired as a director of Chemring on 30 November 2024, having
been appointed Chairman on 1 July 2016. During Carl-Peter’s tenure the Group has
transitioned through a period of significant transformation, both operationally and
financially, building a stronger, higher-quality business. The investments made in both
culture and infrastructure during this time have positioned the Group well for future
growth, and he deserves the Group’s gratitude for his leadership and commitment over
the past eight and a half years.
I joined the Board on 1 October 2024 as an independent non-executive director and
Chairman-designate, and succeeded Carl-Peter Forster as Chairman on 1 December 2024.
James Mortensen joined the Group on 1 November 2023 and, following a handover period
and the publication of the Group’s results for the year ended 31 October 2023, took up
his role as Chief Financial Officer on 1 January 2024. At this point Andrew Lewis stood
down from the Board, and he left Chemring on 19 January 2024. James previously held
various senior roles at Smiths Group PLC, the FTSE 100 diversified engineering business,
including having been Chief Financial Officer of the Smiths Medical division.
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 2025 performance remains in line with market expectations,
with a similar weighting towards the second half. The Group order book as at 31 October 2024
was £1,038m, of which £413m is currently expected to be recognised as revenue in
2025, giving 77% order cover, which provides excellent visibility for the full year. This
leaves £625m of the order book to be delivered in 2026 and beyond, which provides
approximately 81% of 2026 and 52% of 2027 expected revenue cover in
Countermeasures & Energetics.
The Group’s longer-term growth prospects are strong, underpinned by robust activity
levels, our leading technological offerings, the calibre of our people, high barriers to
entry, and the investments we continue to make in our strong, high-quality business.
With customers needing to re-equip and modernise their defence capabilities providing
increased visibility, and with a robust strategy, the Group maintains its ambition to
increase its annual revenue to c.£1bn by 2030.
The Board is therefore confident that Chemring will continue to deliver both robust
organic and inorganic growth, balancing near-term performance with longer-term
growth and value creation.
Tony Wood
Chairman
17 December 2024
Chemring Group PLC Annual report and accounts 2024 9
Strategic report Governance Financial statements

STRONG GROWTH IN ROKE’S NATIONAL SECURITY
ANDDEFENCEMARKETS HAS SEEN IT DOUBLE IN SIZE
OVERTHEPASTFIVE YEARS
VISIBILITY OF FUTURE EARNINGS – STRUCTURAL GROWTH
UNDERPINNED BY THE NEED FOR INVESTMENT IN THE DEFENCE
INDUSTRIAL BASE, SECURITY AND INNOVATION
STRONG BUSINESS MODEL – WELL POSITIONED IN NICHE,
HIGH-MARGIN AND GROWING MARKETS
Roke’s consulting, technology and R&D capabilities are experiencing strong
growth, driven principally by ever-increasing demand for information
advantage solutions in the defence and national security markets.
The Group’s capabilities are well aligned to both the US and UK Governments’
emphasis on cyber, electronic warfare (“EW”), artificial intelligence, data science,
autonomy, open source intelligence (“OSINT”) and secure networks. This
validates our Sensors & Information sector strategy, and should increase
theopportunity space for Roke to deploy its market-leading technologies.
Opportunities exist to expand and accelerate Roke’s capabilities and offerings,
both through acquisitions and exploiting opportunities in adjacent markets
and territories.
Roke has delivered double-digit revenue growth in each of the past five years.
Our ambition is to grow Roke’s annual revenue to a minimum of £250m by2028.
Increasing geopolitical tension around the world is driving a fundamental
replenishment and rearmament upcycle which is expected to last for at
leastthe next decade. This has driven the Group’s order book to the highest
level in its history (£1.04bn as at 31 October 2024) which extends out
beyond 2030.
This visibility, together with the support of grant funding and our customers’
desire to move to long-term partnering agreements, gives us the confidence
to invest further in capacity and capability, reinforcing Chemring’s position
asa key supplier to NATO, and positioning the Group well for the future.
We now have the ambition to increase annual revenue to c.£1bn by 2030.
Against the background of growing defence budgets, particularly in the US
and Europe, Chemring is well positioned in niche segments of the defence,
national security and space markets which, over time, have the opportunity
tooutperform their broader sectors.
We enjoy sole source or market-leading positions across our diversified
portfolio placing us at the heart of our customers’ critical needs. These
include advanced sensors, intelligence, electronic warfare and software
engineering, as well as airborne and naval countermeasures.
We are also well placed to benefit from resurgent demand for more
traditional defence capabilities, including in the space and missiles markets
where we are a key supplier of energetic materials and mission-critical
specialist devices.
Chemring delivers profitable growth by operating
inmarkets where we have differentiators, such as
intellectual property, niche technology and high
barriers to entry.
We continually review our portfolio to ensure that we maintain sustainable
niche positions where technical and qualification barriers to entry enable
highmargins. These, along with strong and enduring customer relationships,
provide us with a strong platform for future growth. We will achieve our
growth by total commitment to our enduring purpose, which is to
relentlesslyinnovate to protect our customers.
INVESTMENT CASE
Investing in sustainable performance and growth
Chemring Group PLC Annual report and accounts 202410
Strategic report Governance Financial statements

Chemring has a robust balance sheet and strong ongoing operating cash
generation, providing a platform for future investment in the business, both
organic and inorganic, and sustainable, growing dividend payments. This has
been supplemented further by securing an £80m Export Finance backed loan
in the year, bringing total accessible funding to £246m.
Capital investment of >£200m over the previous five years has enabled the
Group to increase automation, enhance safety and drive margin improvement.
Strong market demand has presented a significant opportunity to expand
capacity and capitalise on increased long-term demand across the three
Energetics businesses. A three-year £200m investment programme, subsidised
by £90m of grant funding, will increase revenue by £100m p.a. andoperating
profit by £30m p.a. in 2028.
The focus on building a strong and deployable balance sheet has provided
increased optionality. Beyond organic opportunities we have a disciplined
approach to M&A with a focus on incremental bolt-on acquisitions that
complement existing capabilities.
The Group has communicated certain medium-term financial objectives,
whichhave been rolled forward at each set of results.
- Targeting mid-single-digit revenue growth in the near term,
accelerating to low-double-digit growth as new capacity comes online.
£1bnannual revenue ambition by 2030.
- Targeting mid-teen return on sales in the medium term.
Marginshave progressed from 10.4% in FY18 to 13.9% in FY24.
- Improving cash flow. Across the last three years, underlying operating
cash conversion has been 101% of underlying EBITDA, demonstrating the
improvement in business practices is permanent and sustainable.
- Targeting <1.5x leverage. Net debt is expected to remain elevated
overthe next three years as the £200m investment in increased Energetics
capacity is completed, but will then decrease rapidly once the additional
capacity comes online.
Chemring is focused on building a financially sustainable and robust Group.
These actions provide strong foundations for future growth.
MEDIUM-TERM FINANCIAL OBJECTIVES THAT BALANCE
NEAR-TERM PERFORMANCE WITH LONGER-TERM GROWTH
AND VALUECREATION
BALANCE SHEET STRENGTH – ENABLING THE GROUP
TOTAKEADVANTAGE OF SIGNIFICANT ORGANIC AND
INORGANIC OPPORTUNITIES
ESG – COMMITTED TO BUILDING A STRONG,
INCLUSIVEANDSUSTAINABLE COMPANY
At Chemring we firmly believe that stability is at the heart of sustainability
and that the defence industry has a critical role to play in making the world
asafer place, now and for future generations. We have set ambitious
targetsto meet our ESG agenda and are improving our disclosure and
performance year-on-year.
- 13.0% reduction in scope 1 and market-based scope 2 emissions from
ourFY21 baseline
- Board of directors now 44% female
- Senior leaders are 31% female
- AAA ESG Rating by MSCI, top 3% of the Aerospace and Defence sector
> DISCOVER MORE ABOUT INVESTING AT
CHEMRING.COM/INVESTORS
ORDER BOOK – GROWTH OVER THE LAST FIVE YEARS (£m)
FY23
FY24
FY22
FY21
FY20
£922m
£1,038m
£651m
£501m
£476m
Chemring Group PLC Annual report and accounts 2024 11
Strategic report Governance Financial statements

GROUP CHIEF EXECUTIVE’S REVIEW
Creating sustainable value and opportunity
for all our stakeholders
Michael Ord
Group Chief Executive
INTRODUCTION
I am pleased to report that 2024 has been another year of positive
performance across the Group. In this, the 50th anniversary of the Group’s
admission to the London Stock Exchange, a number of other significant
milestones have been achieved including a record closing order book of
£1.04bn, the highest in Chemring’s history.
The elevated levels of geopolitical tensions characterised by the continuing
Russia-Ukraine war, the renewed armed conflict between Israel and
Hamas-led militant groups in the Middle East, and an increasingly assertive
China are driving defence and national security budget increases of differing
levels. These uncertainties are also contributing to a strengthening of
international alliances, with existing and new NATO members responding
tothe Ukraine crisis which is now in its third calendar year. Demand for
Chemring’s products and services has never been higher, nor has the
needtoensure that we meet and exceed our customers’ critical needs.
Thecommitment and professionalism of our people this year has once
againbeenoutstanding and I thank them for their dedication and hard
workthroughout the year.
Geopolitical tensions continue to drive a fundamental rearmament upcycle
which is expected to last for at least the next decade. This visibility, together
with the support of grant funding and our customers’ desire to move to
long-term partnering agreements, gives us the confidence to invest further
incapacity and capability, reinforcing Chemring’s position as a key supplier
toNATO, and positioning the Group well for the future.
2024 PERFORMANCE
It is pleasing to report a solid set of results for the financial year despite a
number of operational headwinds within our US Countermeasures business,
which impacted our performance in the first half of the year. This outturn
continues to demonstrate good progress against our strategic goal of
balancing short-term performance with longer-term value creation.
Revenue was up 8% to £510.4m (2023: £472.6m), underlying operating profit
was up 2.7% to £71.1m (2023: £69.2m) and underlying profit before tax was
down 2.4% to £66.3m (2023: £67.9m). Underlying diluted earnings per share
was down 3.5% to 19.3p (2023: 20.0p).
The underlying operating profit of £71.1m (2023: £69.2m) resulted in an
underlying operating margin of 13.9% (2023: 14.6%). The Group margin has
fallen, primarily reflecting the impact of operational challenges at our Tennessee
Countermeasures business in the year, and the lower margin legacy US
Government contract that impacted the year.
At a statutory level, statutory operating profit was £58.1m (2023: £45.4m)
and after statutory finance expenses of £4.8m (2023: £1.3m), statutory profit
before tax was £53.3m (2023: £44.1m). The statutory profit after tax from
continuing operations was £42.7m (2023: £37.7m) giving a statutory basic
earnings per share from continuing operations of 15.7p (2023: 13.4p).
A fundamental characteristic of the increased threat environment and of
current conflicts, notably Russia’s invasion of Ukraine, 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.
“ This has been a year of heightened activity
and progress across the Group as we have
reacted to growing demand for our products
and services, both technology-driven
solutions and a resurgent demand for
traditional defence capabilities. Changing
customer spending priorities in the face of
increased global uncertainty and competition
have resulted in the order book being at
itshighest levelin our history, giving us
astrong and sustainable platform for
futuregrowth.”
Chemring Group PLC Annual report and accounts 202412
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In Roke’s defence markets, the increasing importance of Cyber and Electromagnetic
Activity (“CEMA”) in today’s threat environment has led to a growing number
of enquiries for Roke’s suite of world-leading EW products. A notable highlight
during the year was further wins in the area of EW with awards received
from customers in Sweden, Lithuania, Latvia, the United Arab Emirates and
Japan. The order for ten Resolve EW systems from Japan is Roke’s first into
theEast Asia region, securing a high-quality reference customer. Roke has a
significant (>£300m) five-year international sales pipeline for EW products as
customers increase focus on CEMA.
Roke’s expertise in the field of EW was further demonstrated in September
2024 when Roke was announced as one of four UK organisations to have
been selected for research funding in the first AUKUS Innovation Challenge.
The trilateral AUKUS Pillar 2 EW Challenge called for proposals to identify
electromagnetic spectrum technology solutions to help give the AUKUS
nations a strategic edge in targeting and to provide protection against
adversarial electromagnetic-targeting capabilities.
During the year Roke also received a £10m increase to the Project ZODIAC
MVP award received in September 2023. ZODIAC is the backbone of the
British Army’s Land ISTAR Programme which will deliver an integrated ISTAR
system to transform how the Army undertakes data-led decision making to
gain operational advantage. In total, Roke’s ZODIAC programme contract
awards now stand at £51m with the programme currently completing in
FY25. Future phases of Zodiac could be in excess of £100m, presenting a
significant opportunity to Roke as the incumbent supplier.
Roke has continued to cement its position as a key strategic partner to the
UK’s national security agencies, further enhancing this key high barrier to
entry value stream. Despite Government spending headwinds multiple
awards, valued at c.£50m, were received from the national security community.
Roke’s new Intelligence business area has made good progress in building
aposition in the fast growing, embryonic, opportunity-rich open source
intelligence (“OSINT”) market. Roke’s unique approach to this market
integrates human expertise and intelligence tradecraft with cutting-edge
technology including AI and machine learning. Roke’s capabilities and technologies
are combining to create a highly differentiated intelligence offering, and while
the initial domain focus is on geospatial intelligence (“GEOINT”) to commercial
and naval clients with a requirement for maritime domain awareness, strong
potential exists to cross-sell this capability to other Roke customers.
With strong positions in markets with high barriers to entry and where
customers have unique profiles, we reiterate our ambition to organically
growRoke’s revenues to greater than £250m per annum by 2028, while
maintaining strong margin performance. We will also continue to actively
explore opportunities to expand and accelerate the Sensors & Information
sector capabilities and offerings, both by leveraging opportunities in adjacent
markets and through further bolt-on acquisitions. However, any acquisition
must meet a strict set of criteria, enhance shareholder value and fit in with
our wider growth plans.
£510m
£473m
Revenue
+8%
2024
2023
CAPITAL ALLOCATION
POLICY
INVEST IN THE BUSINESS
- £200m capex investment in our Energetics businesses to capitalise
onunprecedented demand
- Delivering incremental revenue of £100m and operating profit of £30m per
annum, full year effect from FY28
- Continual capex investment to increase automation, enhance safety and drive
margin improvement
FOCUSED M&A
- Focus on incremental bolt-on acquisitions that complement existing capabilities and
accelerate growth in customer priority areas – in particular Roke and US space and
missiles – while maintaining a disciplined approach to our evaluation criteria
- Disciplined approach, healthy pipeline of opportunity
- Sale of Explosive Hazard Detection business subject to CFIUS approval
ORDINARY DIVIDENDS
- Key part of total shareholder return
- Dividend cover target of c.2.5 times underlying EPS met, and will be maintained
- Dividend growth of 13.0% in 2024
SURPLUS CAPITAL RETURNED TO SHAREHOLDERS
- Share buyback programme has returned £37m since inception
In the US, and following last year’s decision to exit the Explosive Hazard
Detection business, 2024 has been a transitional period for our US Sensors
business as we focus on our biological detection capabilities. Deliveries under
the full rate production phase of the Enhanced Maritime Biological Detection
System (“EMBD”) Program of Record have continued as planned. This fully
automated sensor to rapidly detect, collect, sample and identify airborne
biological warfare agents is supporting the US Navy. In April 2024, we received
a fourth option quantity exercised under the sole source $99m Indefinite
Delivery/Indefinite Quantity contract valued at $15m, with deliveries expected
to be made in 2025.
On the Joint Biological Tactical Detection Systems (“JBTDS”) program,
havingbeen awarded a Low Rate Initial Production (“LRIP”) contract in
September 2023, material procurement and production gathered pace
throughout the year with all deliveries under this LRIP contract being made
within the year. We continue to support the customer as they progress through
testing and acceptance, with the expectation of a full rate production contract
being awarded in FY26.
Chemring’s experience and expertise in fielding biological agent detectors
forits US DoD customers provide a strong platform from which to pursue
opportunities in other existing and adjacent markets, such as homeland security.
In a post-pandemic and contested world, governments are becoming increasingly
concerned by the risks of both naturally occurring and engineered biological
threats. Advances in synthetic biology now give our national adversaries the
capability to deliberately engineer organisms to create hazards and cause harm.
We continue to work with our customers, including the US Department of
Homeland Security, to create a point-of-need capability that isable to provide
rapidly adaptable, cost-effective and high-performance testing of bio-warfare
and infectious disease threats.
Chemring Group PLC Annual report and accounts 2024 13
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2024 PERFORMANCE continued
In 2024 the focus for our Countermeasures & Energetics sector was
tocontinue strengthening and protecting our niche, world-leading positions
byinvesting in the expansion of our manufacturing capacity, continuously
improving our technological and operational base, and working closely with
our customers in the development of new solutions to meet emerging needs.
Order intake in the year remained high at £523m (2023:£541m), driven by
multi-year orders received across the sector.
The increasingly positive market conditions for our Energetics businesses,
reflected in our order intake and record order book, have presented a strong
organic growth opportunity to expand capacity at these sites. In June 2024
we announced the decision to increase the previously announced capital
investment programme from £120m to £200m, which we expect to increase
revenue by £100m per annum and operating profit by £30m per annum in
2028. In addition to this, we announced that our Norwegian business had
been awarded grant funding of £90m in support of its capacity expansion
projects, meaning that the net investment required by the Group will now
be£110m in total.
Our Norwegian-based subsidiary, Chemring Nobel, had another year of
record performance and signed a number of long-term partnering agreements
with its key customers. In June 2024, a 15-year partnering agreement was
signed with Northrop Grumman for the supply of HMX energetic material
used in its missile programmes. As part of this agreement, Chemring Nobel
also received a delivery order valued at $83m, for the supply of HMX. Deliveries
under this order will commence in 2026 and will be made over the following
three years. Chemring Nobel finished the year with the highest order book in
their history. In November 2024 Chemring Nobel signed a 12-year framework
agreement with Diehl Defence for the supply of MCX energetic material.
Aspart of this agreement, Chemring Nobel received an initial purchase order
for the delivery of MCX, valued at €231m. Deliveries under this order will
commence in 2027 and will be made over the following five years. The company
is exploring options to perform the blending stage of the manufacturing
process in Germany.
GROUP CHIEF EXECUTIVE’S REVIEW continued
Creating sustainable value and opportunity for all our stakeholders continued
Our Scottish facility also received a number of notable contract awards
during the year. The business also made excellent progress in the construction
of its new propellants manufacturing facility. Concrete pours have been
completed on most buildings with steelwork and frames also installed.
Thisnew facility will provide increased capacity and throughput in a safe
andmodern manufacturing environment.
In the US, we have seen growing demand for precision engineered devices for
space and missile applications, with our Chicago business, Chemring Energetic
Devices (“CED”), receiving a significant level of orders in the year. In January 2024,
and in response to growing customer demand, CED acquired an additional
45,000 sq. ft. facility adjacent to its existing site. The new facility, which commenced
operations in April 2024, significantly enhances CED’s ability to maintain
continuous flow manufacturing operations which is essential in delivering
against customer programme requirements, and is a key enabler of its future
growth ambitions.
In April, CED successfully completed qualification testing for the Blue Origin
Standard Initiator and is now the sole provider for this device. This initiator
will be common to all Blue Origin spacecraft including the upcoming New
Glenn launch vehicle. CED closed the financial year with a record order book
which is in excess of $200m (2023: $165m). In November 2024 CED received
an order valued at $106m for the delivery of critical components used on an
undisclosed missile programme for the US DoD, further enhancing its record
order book.
In Countermeasures order intake was £175m (2023: £183m). We have continued
to see steady customer demand from across our portfolio, maintaining our
position as the world leader inthedesign, development and manufacture of
advanced expendable countermeasures. Notable contract awards at Chemring
Countermeasures UK (“CCM UK”) included a £36m order for Typhoon
countermeasures, a £16m order from the UK MOD, and an £8m order from
MBDA USA for a new naval infra-red decoy. This was the first US production
order that CCM UK had received in over ten years, and contributed to the
business having a record order book at year end. Chemring Australia also
secured a $31m contract for the supply of MJU-68/B infra-red countermeasures
used on theF-35 Joint Strike Fighter.
Chemring Group PLC Annual report and accounts 202414
Strategic report Governance Financial statements

The Countermeasures sector saw a greater weighting of its trading performance
and cash generation to the second half of 2024, following the operational
challenges experienced at our Tennessee Countermeasures business, Kilgore
Flares, where production was disrupted due to adverse weather conditions
and delays in the ramp-up of its automated facility. The underlying operating
profit margin was also adversely affected by deliveries made on a legacy
contract from 2016 for the supply of countermeasures to the US DoD.
Having previously been expected to complete in the second half of the
financial year, the customer has now exercised an option to extend the
duration of this contract, which will now conclude in the first half of FY25.
The future focus of the Countermeasures & Energetics segment remains on
maintaining and growing the Group’s market-leading positions, in particular
inthe growing markets for propellants and precision engineered energetic
devices, and in countermeasures where we see undiminishing demand for
ourair and naval decoy products, even in the absence of force deployment.
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, as they view Chemring Nobel as the producer in Europe and
North America that can establish increased production the fastest. This
co-funded feasibility study, which is expected to be concluded in early 2025,
will investigate the geographic location, infrastructure requirements and
environmental considerations of building a new production facility. The study
will also consider the role and the levels of any financial contribution made by
the Norwegian Government.
Alongside these investments, in expanding our capacity we will 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.
The Group’s order book at 31 October 2024 was £1.04bn (2023: £922m),
ofwhich approximately £413m is scheduled for delivery during 2025, representing
cover of approximately 77% (2023: 79%) of expected 2025 revenue. On a
constant currency basis, using the 2023 closing exchange rates, the order
book would be £1.07bn. The increase since 31 October 2023 is attributable
to strong order intake across the Countermeasures & Energetics sector.
This leaves £625m of the order book to be delivered in 2026 and beyond.
Atthis stage, this provides approximately 81% of 2026 and 52% of 2027
expected revenue cover in Countermeasures & Energetics.
Net debt at the year end was £52.8m (2023: £14.4m), the increase since
31October 2023 being largely driven by £28.1m share buyback, growth in
dividends of £2.3m, capital investment of £69.6m offset by strong operating
cash generation. Strong underlying operating cash inflow of £96.0m (2023: £80.0m)
represented 102% (2023: 90%) of underlying EBITDA. Our three-year rolling
average cash conversion has been 101% (2023: 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, 2024 has seen us make further progress as we
proactively manage our sustainability agenda. Focus areas included health
andsafety, diversity and inclusion, 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 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 0.69, which shows a decrease when compared to last year’s
0.90 and is still below our annual limit of 1.0. Most injuries were either caused
by slips, trips and falls, or were musculoskeletal in nature. From 1 November 2024
our annual limit will reduce to 0.90.
Over the last five 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 the year have taken further steps to reduce
these to a level as low as is reasonably practicable. To help reduce our residual
risks the implementation of a common computerised maintenance management
system continues to be rolled out across our Countermeasures & Energetics
sector, improving management and accountability for safety-critical assets. In
addition, our Electrostatic Discharge (“ESD”) Protocol deployment has been
assessed as part of the Lineof Defence 2 (“LOD2”) assurance programme.
It should be noted that for the second year running there have been no
injuries associated with energetic events.
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HEALTH AND SAFETY continued
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 for and the contributory causal factors to
incidents 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 whilst considering
further automation.
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 2022 to our
Operational Assurance Statement process continue to help the businesses
focus on compliance with the HSE Framework, which in turn provides useful
insights when planning the LOD2 audits.
GROUP CHIEF EXECUTIVE’S REVIEW continued
Creating sustainable value and opportunity for all our stakeholders continued
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. This year we invited back a team of
third party experts to review our progress. The review will conclude and will be
presented to the Board in the first half of 2025. I am pleased tosay that as a
Group of companies we achieved our 2024 ambition of demonstrating we
have systems and processes that generate data-informed discussions and
decision making at all levels, otherwise known as a calculative culture. 2025
will be spent consolidating, whilst understanding our road map to a proactive
safety culture.
ENVIRONMENT
In 2024 we made further progress on our journey to becoming net zero for
scope 1 and scope 2 emissions by2035, achieving a 13.0% reduction in scope
1 and scope 2 market-based GHG emissions (2023: 9.1%). A key challenge for
the Group’s ESG Committee is to manage our ESG-related risks – balancing
boththe near and longer-term targets that were set in 2021 with the need
tocontinually look for ways in which we can improve further.
In addition to reporting in line with the Task Force on Climate-related Financial
Disclosures (“TCFD”), the Group has committed to further improve its
non-mandatory disclosure and completed its third CDP submission this year.
By translating the TCFD recommendations and pillars into actual disclosure
questions and a standardised annual format, CDP provides investors and
disclosers with a unique platform where the TCFD framework can be
brought into real-world practice in a comparable and consistent way.
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As our disclosure increases, so has the need to ensure that the data that
wereport to the market is accurate. We have now put in place an auditable
framework for our emissions reduction activities, with external subject
matter experts appointed to verify the data and to report to the Group’s
Audit Committee. In addition, this year we have introduced a new environmental
data platform to better assess the environmental impacts ofour operations.
We continue to share best practice from all the above through the
TechnicalSafety Committee, Technical Learning Group and our quarterly
“Shared Learning” events.
CULTURE
At Chemring, our ambitious objectives drive our desire to invest in our
people. Ensuring we have the best talent, with the appropriate skills, in the
right roles is crucial for creating a safe, healthy and inclusive workplace that
ensures today’s performance and tomorrow’s successes.
We are committed to fostering a culture rooted in our values. Our values of
Safety, Excellence and Innovation guide our thinking and decision making and
are integral across the entire organisation. Our “Global Voice” establishes the
overall framework and standards, while our “Local Accent” ensures relevance
and impact within each business unit, acknowledging the distinct cultural traits
of every region we operate in.
The narrative of 2024 has been characterised by our ambition to grow,
accelerate and protect, creating a stronger Chemring over the coming years.
We’ve refined our approach to talent management, resourcing and development
initiatives this year to support the evolution of our workforce for present
andfuture needs.
We continue to embrace technology to work efficiently and collaboratively
and consider our working practices with a “digital first” approach. The
Aspire@Chemring programme, aimed at developing future senior leaders,
graduated its second cohort of 52 colleagues across the globe. We continue
to evolve our programmes like Aspire@Chemring to ensure they deliver on
our participant needs, with 2024 focusing on their own bespoke individual
career journeys. Additionally, utilising technology for education and online
collaboration significantly decreases the environmental impact of our
programmes, aligning with our commitment to lower emissions as part
ofourESG initiatives.
The external talent landscape continues to evolve, with the expectations
oftalent joining the organisation to receive a “personalised” employee experience.
This has challenged us to be ever more focused on listening and understanding
what our workforce is thinking and feeling to be engaged and perform at
theirbest.
Our employee engagement strategies heavily emphasise listening to all
colleagues to better enable their success at Chemring. In 2024 we moved
tolocal listening technologies to ensure that the “Local Accent” is prioritised,
understood and actioned. In addition, employee resource groups and town
hall meetings continue to offer channels for everyone to express themselves
and feel heard. Feedback from all of these channels informs our business
decisions and actions.
Listening is similarly central to our diversity, equity and inclusion (“DE&I”)
agenda. Input from employees guides improvements across all DE&I facets,
including gender, ethnicity and neurodiversity, which we recognise as critical
components of innovation for our products and services. I’m also proud of
our involvement in and commitment to both the UK Women In Defence and
the Defence Women’s Network this year which signals our commitment to
improving gender diversity in the Defence sector.
As we reflect on a strong 2024, our commitment remains steadfast in
continuing to develop and mature the employee experience for all our
colleagues in 2025 and beyond.
CONCLUSION
I am delighted with the financial and operational progress that continues
tobemade across the Group as we continue to build a strong, high quality
andtechnology-focused business.
This has been another year of solid progress across the Group. We maintain
our relentless focus on living our shared values of Safety, Excellence and
Innovation, and in doing so we are driving our collective purpose: delivering
innovative protective technologies to help make the world a safer place.
Withmarket-leading technologies and services that are critical to our
customers, our niche market positions and our strong balance sheet,
Iremainconfident that we will continue to grow in the future.
Michael Ord
Group Chief Executive
17 December 2024
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MARKET OVERVIEW
Changing market dynamics
Chemring is an international technology company, and we maintain a significant
organisational presence across the US, the UK, Europe and Australia.
The threat environment remains increasingly complex, with heightened geopolitical
tensions and risks of global conflict. Russia’s invasion of Ukraine, the Israel-Hamas
conflict elevating tensions in the Middle East, China’s expanding military power, and
the increasing asymmetric influence of Iran and the Democratic People’s Republic of
Korea (“North Korea”) all contribute to the challenge. Against this heightened threat
environment, the role of multi-lateral organisations such as the North Atlantic Treaty
Organization (“NATO”) and the European Union (“EU”) is highly significant.
The Russia-Ukraine conflict has specifically refocused attention on the broad spectrum
of defence capabilities relevant to a significant peer conflict. It has also led to a drive for
modernisation and replenishment of NATO military assets, including those provided to
Ukraine. It is also becoming clear that governments across Europe are concerned about
the scale of the defence industrial base and its ability to act as a strategic deterrent.
Thishas resulted in European nations re-evaluating their defence budgets and strategies
to ensure they are prepared for these contemporary security issues.
China’s ambitious defence modernisation programme is generating requirements
forincreasingly cutting-edge solutions to protect against a broad spectrum of threat.
Thisis not only in the traditional domains of land, sea and air but also in space,
andincreasingly cyberspace.
The Group’s diverse and specialised capabilities position it well to assist our customers
in addressing these uncertainties.
TOTAL SPEND
US$916bn
Source: SIPRI
TOTAL SPEND
£63bn
Source: SIPRI
US UK
OUR POSITION
Our US-based Energetics business has a leading position in the design, development
andsupply of sophisticated, pyrotechnic devices for the rapidly growing missile and
space markets. These devices are critical elements of larger integrated systems
providingdefence and dissuasion to the threat posed by an increasingly assertive China.
Meanwhile, our US Countermeasures business is the leading provider of expendable
infra-red (“IR”) pyrotechnic decoys, providing platform protection.
Our US Sensors business is now solely focused on the bio-security market, and is the
largest supplier of sensors providing tactical biological threat information at the point
ofneed to the US DoD. Roke USA continues to execute a campaign to innovate and
integrate Roke UK’s disruptive land electronic warfare (“EW”) technologies to address
the US’s mission-critical requirements, aligning with US DoD strategy.
MARKET TRENDS
The US remains the largest defence market globally, with the 2025 Presidential Defense
Budget request hitting a record high of US$849.8bn. This budget, shaped broadly by the
priorities of defending the nation and strengthening relationships with like-minded partners
and allies, also includes a significant commitment to Research, Development, Test and
Evaluation (“RDT&E”), with US$143.2bn allocated for new technology investments.
OUR CHALLENGES AND OPPORTUNITIES
The US emphasis on strengthening its defence and national security technology
infrastructure to meet defence requirements presents opportunities for us to leverage
Group-wide capabilities and technologies in areas where the customer is seeking a
technology advantage. These include launch systems, hypersonics, EW, sensors, biotechnology,
artificial intelligence (“AI”), cyber and quantum computing. The F-35 Lightning II military
jet is the world’s largest defence programme, and our contribution to this core air
platform’s countermeasures suite confirms our leadership position in this capability area.
OUR POSITION
Our UK Energetics business is the sole source supplier of various land, air and naval
propellants and pyro-mechanical devices. It holds critical through-life programme positions
in a number of high-demand capability areas including complex missile systems. Likewise,
our UK Countermeasures business maintains its international leadership position in
protecting air and naval forces from guided missile threats, through the design, development
and supply of radio frequency (“RF”) and infra-red (“IR”) pyrotechnic decoys.
In the UK, our Roke business unit leverages its in-depth, full lifecycle expertise in
cyber-security, professional intelligence, sensors, communications, land electronic
warfare (“EW”), artificial intelligence (“AI”) and machine learning to support national
security and defence customers. Additionally, private and public sector organisations are
increasingly working with Roke as technology partners using the business’ experience in
intelligent, data-driven, digital solutions to enhance their operational effectiveness.
MARKET TRENDS
The UK’s defence spending in 2023 is estimated to have been 2.3% of GDP, amounting
to £54.2bn for the fiscal year 2023-2024. It is anticipated to rise by 4.5% in real terms to
£57.1bn for 2024-2025.
In July 2024, the UK Government initiated the Strategic Defence Review (“SDR”),
adeepand detailed assessment of the British military’s current state, including its
resources. The SDR aims to define the capability requirements across all military
domains and prioritise a “NATO first” strategy within the UK’s defence agenda.
The review is set to conclude in the first half of 2025 and will provide a strategic
roadmap to meeting the goal of dedicating 2.5% of GDP to defence. It will also look
toenhance national security.
OUR CHALLENGES AND OPPORTUNITIES
The UK MOD accounts for c.19% of Group revenues, and it is an important partner for
developing and qualifying new products and solutions, and for expanding and sustaining
sovereign UK industrial capabilities.
The Group’s strengths are well aligned to supporting the UK customer with the key
challenges identified in the terms of reference for SDR 2024-2025. It can be anticipated
that the SDR will enlarge the opportunity space for the capabilities of our Roke and UK
Energetics businesses in particular.
Finally, as the sole source supplier of countermeasures to the UK’s F-35 Lightning II fleet,
Chemring is well placed to benefit from the plans for the procurement of an additional 27
aircraft in “Tranche 2”, aimed at enhancing the UK’s carrier-enabled power projection
capability and increasing the fleet to 74 aircraft by 2033, with funding for this phase
secured under an approved option.
2022
2023
2021
2020
US$861bn
US$916bn
US$806bn
US$778bn
2022
2023
2021
2020
£53bn
£63bn
£48bn
£46bn
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TOTAL SPEND
AU$50bn
Source: SIPRI
EUROPE
OUR POSITION
Chemring has successfully provided its niche capabilities to several European customers,
including Germany, France, Italy and Spain. Additionally, our Norwegian-based
Energetics business supplies speciality materials to many leading prime contractors
across, and beyond, the region and is playing an increasingly prominent role in the
ongoing European defence industrial dialogue regarding capacity expansion to address
the more threatening geostrategic environment.
MARKET TRENDS
The Russia-Ukraine war has brought large-scale conflict to Europe, and European
military expenditure is now approaching Cold War levels. This increased defence spend
is accompanied by significant efforts to ramp up the continent’s defence industrial base.
23 out of 32 NATO members now meet the 2% of GDP target for defence spending,
double the number from 2020, and the most ever number of members to meet this target.
France will reach the NATO 2% GDP target in 2024 with a budget of €47.2bn, which it
will steadily increase under the seven-year military planning law. Germany will reach the
same NATO target over the next three years – the first time since the end of the Cold
War. Moreover, across the alliance members defence spending rose 18% – the largest
increase for several decades.
Regardless of EU defence spending reaching a record €345bn in 2023, capability gaps
remain, with ammunition supplies and intelligence, surveillance and reconnaissance
(“ISTAR”) capabilities both priority areas for investment. To address these and other
challenges, a new, first-ever European Defence Industrial Strategy, which sets out a clear,
long-term vision to achieve defence industrial readiness in the EU, has been developed.
The EU is proposing to devote €1.5bn to incentivise execution of this strategy, as well as
the €500m Act in Support of Ammunition Production (“ASAP”) programme to stimulate
industrial capabilities.
The Norwegian Government sees the production of specialist energetic materials as its
most crucial military-industrial contribution to Ukraine and allied needs. They recognise
our significance as a supplier of this capability and are co-financing a joint feasibility study
to assess the development of a new production facility for Chemring Nobel.
OUR CHALLENGES AND OPPORTUNITIES
The outlook for the European market is positive, with increased demand for defence
capabilities across all domains. We see long-term strong demand for our niche capabilities
as countries invest to safeguard their national interests and re-equip Ukraine. The Group
remains committed to supporting the requirements of European allies.
2022
2023
2021
2020
AU$47bn
AU$50bn
AU$46bn
AU$41bn
TOTAL SPEND
US$437bn
Source: SIPRI
AUSTRALIA
OUR POSITION
Chemring’s in-country capabilities are built on the Group’s crucial role in the F-35 Lightning II
international countermeasures supply chain. Chemring Australia plays an important role
in the nation’s industrial base and operates a cutting-edge manufacturing facility for
airborne countermeasures.
MARKET TRENDS
In 2024, the Australian Government issued both the National Defence Strategy (“NDS”)
and the Integrated Investment Program (“IIP”). Both documents are critical components
of Australian defence planning and accompany the earlier 2023 Defence Strategic Review
(“DSR”). For FY24/25 the consolidated budget figure for the Department of Defence
(Australia) and the Australian Signals Directorate is set to rise to AU$55.7bn – an
increase of 6.3% from the previous year.
The Advanced Capabilities Pillar (“Pillar II”) of the AUKUS trilateral co-operation agreement
between Australia, the UK and the US aims todeepen co-operation on a range of
advanced security and defence capabilities – including joint research and development
and acquisition of advanced cyber, AI,autonomy, quantum, undersea, hypersonic and
counter-hypersonic, EW, innovation, and information sharing capabilities.
Co-operation under AUKUS Pillar II has the potential to strengthen the partner nations’
industrial bases, streamline information sharing and accelerate technology collaboration.
OUR CHALLENGES AND OPPORTUNITIES
Chemring’s industrial footprint in all three AUKUS nations makes it well placed to
respond to appropriate opportunities ensuing from the pact, as well as other
prospective bi-lateral and tri-lateral co-operative efforts.
2022
2023
2021
2020
US$381bn
US$437bn
US$335bn
US$327bn
UK 37%
US 45%
Europe 14%
Asia Pacific 3%
Middle East and rest of the world 1%
GLOBAL SALES
% of Chemring’s global sales (2020–2024)
Chemring Group PLC Annual report and accounts 2024 19
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STRATEGY
Focusing on our strategic imperatives
GROW AND PROTECT
Key to our strategic imperative to grow the Company are our investments
to increase capacity in our three Energetics businesses, and our investments
in Roke’s portfolio of products, services and intellectual property.
Our Norwegian Energetics business, Chemring Nobel, which supplies
speciality energetic materials to an international customer base, is operating
atfull capacity. In parallel it is delivering expansion programmes which, when
complete, will increase site productive capacity by about 275%. Chemring
Nobel has also been awarded grants totalling £90m bythe European
Commission and the Government of Norway in order to increase production.
For our US Energetics business in Chicago, Chemring Energetics Devices
(“CED”), the acquisition and expansion into an adjacent facility has been a key
enabler to delivering against increased customer programme requirements
and contributing to our growth ambitions. The acquisition is completed, the
new facility is fitted out, andoperations are delivering to plan.
We are also constructing a new propellants manufacturing facility at our
UKEnergetics business in Scotland. This new facility will provide increased
capacity and throughput in a safe, modern manufacturing environment.
Finally, driven by the global threat environment, our Roke business is seeing
a significant increase in demand for its technology-enabled solutions in active
cyber defence, operational mission support and EW capabilities. We are
investing in innovation and solution development across these growing
segments of the national security and defence markets based on our in-depth
understanding of our customers’ mission need and modernisation priorities.
ACCELERATE
As evidenced by our acquisitions of Cubica and Geollect, we will pursue
bolt-on acquisitions where they provide an opportunity to accelerate our
overall growth strategy. We have a pipeline of near and long-term acquisition
candidates in core, or near-adjacent, capability areas for both Roke and
Chemring Energetic Devices’ US space and missiles business areas.
OUR STRATEGIC FRAMEWORK
We have evolved our strategic framework toreflect the prevailing market dynamics and enhanced
opportunity enjoyed bytheGroup.
OUR VALUES:
GROW
Invest in people, technology and increased
capacity to drive organic growth
ACCELERATE
Accelerate growth with bolt-on acquisitions
PROTECT
Strengthen our world-leading positions
through increased modernisation and
innovation
OUR STRATEGIC AMBITION:
To increase 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 increasing our annual revenue to c. £1bn by 2030.
SAFETY
EXCELLENCE INNOVATION
OUR STRATEGIC IMPERATIVES
Our strategy is based on the following three pillars:
STRATEGY IN ACTION
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We are driving organic growth through investing in
our people, in technology and in increasing capacity.
We will continue to focus on growing segments
ofthe defence and national security market based
onour in-depth understanding of our customers’
mission requirements and modernisation priorities.
Our investment in innovation and solution development
will be targeted on areas where we are already
seeing positive demand signals from our customers.
Macro-level defence budgets are increasing as the global security situation
continues to decline. This is driving growing demand for our distinctive offerings
as our customers’ strategic context continues to evolve. Demand forenergetic
capabilities is at an unparalleled level as current events reconfirm the continued
relevance of solutions for us in a traditional battlefield environment. We are
investing in capacity expansion across our Energetics sites in response to this
strong organic growth opportunity.
Across the Group we are also responding to strong demand for multi-domain
capabilities particularly those in Cyber and Electromagnetic Activitities (“CEMA”),
artificial intelligence, autonomous systems and space.
INVESTING TO GROW
Across Chemring, we are continually looking at how best to invest to
strengthen and grow our focused, world-leading positions. Following
Russia’s invasion of Ukraine in February 2022, we have seen unprecedented
levels of demand for our specialist energetic capabilities. As such, we
areinvesting to modernise and expand our manufacturing capacity to
respond to our customers’ needs including in the US at our Chicago site.
Chemring Energetic Devices (“CED”) is experiencing significant growth
across its market segments. This is evidenced by its record order book
at the end of 2024 and the $106m order for the delivery of critical
components used on an undisclosed missile programme for the US
DoD that was received in early November 2024.
In January 2024, and in response to this growing customer demand,
CED acquired an additional 45,000 sq. ft. facility adjacent to its existing
site. The new facility, which commenced operations in April 2024,
significantly enhances CED’s ability to maintain continuous flow manufacturing
operations, which is essential in delivering against customer programme
requirements, and is a key enabler of its futuregrowth ambitions.
The combined investment budget for the new building, including the
reconfiguration of the existing building and the addition of new equipment,
is approximately $12m – a significant investment in support of rapid growth.
The new building offers 10,000 sq. ft. of office space and around 35,000
sq. ft. of manufacturing space. By moving several departments to the
new building, and reorganising the existing facilities, this offers the opportunity
to expand the footprint ofevery single department. This will allow CED
to significantly increase the capacity ofeach of the different market segments
to align with the substantial growth in every one of those segments.
Over time, the existing spaces will be reorganised to optimise product
flow through the facility and eliminate many of the historical queue
areas. Concurrently, several construction projects will also be undertaken
to expand the energetic-rated manufacturing areas.
STRATEGY IN ACTION
GROW
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STRATEGY continued
Focusing on our strategic imperatives continued
We will invest in value-enhancing acquisitions to
accelerate growth and have a pipeline of bolt-on
acquisitions with a focus on core, and near-adjacent,
markets for our Roke and US Energetics businesses.
For Roke, our acquisition targets are technology-focused companies or firms
that will allow us to pursue larger and broader opportunities with our
national security and defence customers. We have a range of near and
long-term acquisition candidates across the various Roke business areas,
including targets with advanced capabilities and providing scaling
opportunities.
In the US, we will look for targets that generate shareholder value by
enablingthe Group to access a greater portion of the space and missile
markets. The Group is already well positioned in these markets, and we are
evaluating acquisition targets in, and beyond, our Energetics-focused core.
ROKE LAUNCHES NEW INTELLIGENCESERVICE
Roke has launched Roke Intelligence, a suite of open source intelligence
capabilities that integrates the expertise of intelligence professionals with
cutting-edge technologies. This new business unit is dedicated to redefining
global standards in commercially outsourced professional intelligence.
The demand comes from a dynamic global risk environment, where
companies are looking for the most robust and integrated toolkits that
enable them to make faster and more accurate decisions.
Roke Intelligence offers three core capabilities:
- Geollect, Roke’s transformational solution providing state-of-the-art
geospatial analytics and situational awareness;
- Infosight, our information operations platform that provides detailed
knowledge and situational awareness about events in a defined
environment; and
- Intelligence Services, harnessing industry-leading intelligence tradecraft
expertise, fused with cutting-edge technology, to deliver simple
answers to the most complex questions.
By integrating the expertise and tradecraft of intelligence professionals
with cutting-edge technology – including AI, machine learning and data
analytics – Roke Intelligence empowers clients with actionable insights,
more informed decision making, and a vital competitive advantage in a
dynamic global risk environment.
ACCELERATE
STRATEGY IN ACTION
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We are investing to protect and strengthen our sole
source and market-leading positions through increased
modernisation and automation. A rigorous focus on
safety, operational excellence, and the development
of new products that meet our customers’ continuously
evolving critical needs is at the heart of this imperative.
We ensure we are on a continuous strategic journey by innovating at every
stage of the value chain, from research and development through to design,
manufacture and in-service support, working closely with our customers to
deliver products, services and solutions for mission-critical success. In doing
so, our strategic imperative, ‘protect’, touches every stage of our product life
cycle and internal processes.
CHEMRING FAST TRACKS DELIVERY WITH
RAPIDPROTOTYPING
As a leading manufacturer of infra-red and radio frequency countermeasures
for the protection of air, sea and land platforms, Chemring Countermeasures
UK (“CCM UK”) operates in a highly competitive and dynamic market,
where customers demand high quality, innovation and responsiveness.
To meet these challenges, CCM UK has adopted rapid prototyping
techniques that enable faster and more efficient product development
and testing. By using 3D printing, laser cutting and CNC machining, the
company can produce parts and components within hours instead of
weeks, reducing costs and lead times.
One example of the benefits of rapid prototyping is the improvement
ofa chaff cube product, which is used to create radar decoys for
aircraft. The old product was a small plastic cube that had to be
manually inserted into a dispenser. The new product is a larger metal
cube that can be pressed in bulk and loaded automatically. The new
product has better performance, durability and safety, and it can be
delivered more quickly and reliably to customers.
Rapid prototyping has enabled CCM UK to enhance its competitive
edge and customer satisfaction, while fulfilling its mission of saving lives
and ensuring security.
STRATEGY IN ACTION
PROTECT
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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
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.
2024 PERFORMANCE
There were no energetic events causing harm or
injury in 2024 or 2023.
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.
2024 PERFORMANCE
As we journey towards our goal of zero harm we
need a workforce that is fully engaged and proactive
in reporting unsafe actions and conditions. One
measure is the reporting of near misses, providing
us with the opportunity to learn and prevent
accidents from happening. Itisvery encouraging
therefore to see we have maintained a high level
of near miss reporting thisyear.
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.
2024 PERFORMANCE
We had 20 employee injuries this year, compared
to 21 last year. This resulted in a slight decrease in
our recordable injury rate, from 0.90 to 0.69,
which remains below our limit of 1.0. From 1
November 2024, our limit will reduce to 0.90.
There were no fatalities or serious injuries during
the year.
20242024
20232023
204,711
214,907
2024
2023
0.69
0.90
NUMBER OF ENERGETIC EVENTS
CAUSING HARM ORINJURY
0
NUMBER OF NEAR MISSAND
POTENTIAL HAZARD REPORTS
4,711
TOTAL RECORDABLE INJURIES
NUMBER
20
FREQUENCY RATE
0.69
2024
2023 Nil
Nil
1 2 3
Chemring Group PLC Annual report and accounts 202424
Strategic report Governance Financial statements

ORDERS REVENUE
Order intake is measured at expected sales value
and represents the last 12 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.
2024 PERFORMANCE
Order intake across the Group remained strong, despite a decrease of 11% to £673m (2023: £756m).
Customers in the Energetics businesses continue to place multi-year orders, whereas in Sensors & Information,
customers are placing annual orders.
The order book was up 12.6% to £1,038m (2023: £922m), with £413m currently due as revenue in FY25,
approximately 77% coverage of FY25 targeted revenue.
ORDER INTAKE
GROUP
£673m
ORDER BOOK
GROUP
£1,038m
REVENUE
GROUP
£510m
2024
2023
£673m
£756m
2024
2023
2024
2023
£1,038m
£922m
4 5 6
£510m
£473m
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.
2024 PERFORMANCE
Group revenue was in line with our expectations,
with strong performance at Roke, steady growth
in Countermeasures & Energetics offset by a
foreign currency headwind.
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.
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KEY PERFORMANCE INDICATORS continued
Measuring ourprogress continued
13.9%
14.6%
UNDERLYING OPERATING
MARGIN GROUP
13.9%
UNDERLYING OPERATING
PROFIT GROUP
£71.1m
UNDERLYING DILUTED
EARNINGS PER SHARE
19.3p
WORKING CAPITAL
GROUP
£88.3m
20.0p
19.3p £88.3m
£82.3m
2024
2023
£71.1m
£69.2m
7 8 9
UNDERLYING OPERATING
PROFIT AND MARGIN
UNDERLYING EARNINGS
PER SHARE
WORKING CAPITAL
AND INVENTORY
2024
2023
2024
2023
2024
2023
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 provides a consistent
year-on-year measure of the trading performance
of the Group’s operations. A focus on operating
margin allows the impact of changes in revenue
and cost base to be monitored, enabling
comparisons to be made of management
performance and trading effectiveness.
2024 PERFORMANCE
The underlying operating profit increased by
2.7%during the year. The changes in margin of
each sector reflect the market conditions, volume
changes and performance improvement actions,
as set out in this strategic report.
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.
2024 PERFORMANCE
Underlying EPS decreased by 3.5% in 2024, driven
by increased underlying operating profit offset by
higher tax and interest charges.
Working capital is defined as inventories, trade
and other receivables, less trade and other
payables excluding payroll-related and other
liabilities totalling £33.2m (2023: £30.3m).
WHY IS IT A KPI?
Efficiently turning profit into cash demands
adegree of control over working capital.
2024 PERFORMANCE
Working capital as a percentage of revenue
wasflat at 17% (2023: 17%), demonstrating the
continued effective management of working capital.
“ This has been a year of heightened activity and progress across the Group as we
have reacted to growing demand for our products and services. With a record
order book and significant investment in expansion, the Group remains well
placed to maintain sustainable performance and growth.”
Michael Ord
Group Chief Executive
Chemring Group PLC Annual report and accounts 202426
Strategic report Governance Financial statements

CONVERSION OF UNDERLYING EBITDA
INTO UNDERLYING OPERATING CASH
102%
102%
90%
INVENTORY
GROUP
£127.1m
NET DEBT:
UNDERLYING EBITDA
0.56x
UNDERLYING OPERATING
CASH FLOW
£96.0m
0.16x
0.56x
£80.0m
£96.0m£127.1m
£101.7m
11 1210
NET DEBT AND
CASH FLOW
2024 2024 2024
2024
2023 2023 2023
2023
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.
2024 PERFORMANCE
Inventory increased, as customers paid to secure
their supply chains as their programmes ramped
up in Countermeasures & Energetics and the
Group has in turn secured materials to fulfil the
short-term order book.
Measured as net debt divided by underlying
EBITDA for the previous 12 months.
WHY IS IT A KPI?
This is a measure of leverage within the business
and is a banking covenant.
2024 PERFORMANCE
This has increased in 2024, as net debt has
increased with the continued investment in
Energetics expansion.
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.
2024 PERFORMANCE
Operating cash conversion again exceeded 100%
as our focus on the effective management of
working capital was maintained.
Chemring Group PLC Annual report and accounts 2024 27
Strategic report Governance Financial statements

PROVIDING
MISSION-CRITICAL
SOLUTIONS
Our people globally work on
highly engineered mission-critical
devices and solutions that have
towork the first time, every time.
Whether on the battlefield with
our electronic warfare products
or our space initiators launching
specialist space missions, we are
atrusted supplier with a heritage
in niche market segments.
MAINTAINING HIGH-HAZARD
ENGINEERING
ENVIRONMENTS
Safety is at the heart of everything
we do. Our licences to operate
our high-hazard engineering
facilities provide the basis on
which we constantly innovate,
develop and build core
components and products to
protect sovereign nations’ war
fighters, sailors and soldiers.
These facilities are located
worldwide in the UK, the US,
Australia, and Norway.
PARTNERING IN
SOLE-SOURCE AND
LONG-TERM AGREEMENTS
We are a trusted partner with a
unique diverse range of capabilities
and facilities. Weare often designed
in and qualified on aparticular
platform, which means over
60%of our revenues are
sole source.
As our customer programmes are
ramping, they are looking to secure
long-term agreements for supply,
so that we can meet their future
and growing demands.
INVESTING IN A
SUSTAINABLE FUTURE
We have a long-term investment
programme to increase our
automation, enhance safety, and
improve quality. Sustainability
remains at the core of our operations,
with constant checks, reviews,
andmanagement of our
environmental impacts.
We have invested significantly
across the Group this year alone,
with our capacity expansion projects
in Norway, Scotland and the US.
These projects will increase
production and provide new
state-of-the-art facilities to ensure
our people are as safe as possible.
We constantly strive for operational
excellence and drive innovation for
our customers to counter ongoing
and ever changing threats.
SAFETY
Safety is our top priority in all that wedo.
- We ensure safe operations and effective
riskmanagement.
- We promote best safety practices throughout
our operations and beyond.
- We are committed to minimising our
environmental impact.
EXCELLENCE
We strive to consistently meet high
standards in every aspect of our work.
- A culture of continuous improvement is
central to our approach.
- We are dedicated to maintaining and
achieving operational excellence.
- We honour our commitments and always
deliver on our promises.
INNOVATION
We develop innovative solutions to address
our customers’ challenges.
- We foster imaginative thinking and
innovative solutions.
- We collaborate to transform ideas into
advanced technologies and solutions.
- We value teamwork and the sharing
ofexperience.
WE DO THIS BY
OUR VALUES
BUSINESS MODEL
Protecting people, assets and nations
Chemring Group PLC Annual report and accounts 202428
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We acknowledge the significant and lasting effects of climate change, and its growing impact on our markets. We are actively working to reduce our
impact on the environment and enhance resilience to climate and other nature-related risks. Our efforts focus on managing energy consumption and
waste, and understanding their impact on our sites and operations.
> READ MORE ON PAGES 48 TO 51
INVESTMENT
In the past year, we invested £75.4m in property,
plant and equipment. Additionally, we invested
£131.3m in product development, with £114.0m
of that customer-funded. We are also executing
on a £200m capacity expansion plan through
2028 to meet rising demand in the Energetics
market, which is expected to generate an
additional £100m in annual revenue.
INVESTMENT
£206.7m
(2023: £152.1m)
CASH FLOW
Our aim is to convert 100% of underlying
EBITDA to underlying operating cash flow over
the medium term, acknowledging potential timing
differences at individual period ends and the cash
requirements the expansion will require. In 2024,
the conversion ratio was 102%, and the average
underlying cash conversion of underlying EBITDA
on a rolling 36-month basis was 101% (2023: 101%).
This demonstrates strong operating cash generation
and effective working capital management.
UNDERLYING CASH CONVERSION
102%
(2023: 90%)
DIVIDENDS
For the year ended 31 October 2024, our
dividend is proposed to be 7.8p per share
(2023:6.9p), an increase of 13.0% on the prior
year, pending approval of the final dividend at
theAnnual General Meeting.
DIVIDENDS
7.8p
(+13.0%)
CUSTOMERS
Our customers include governments, prime
contractors and other commercial businesses.
Weprovide innovative solutions to satisfy
theirrequirements.
INVESTORS
By effectively executing our Group strategy, we aim
to generate returns for ourshareholders through
capital appreciation and a progressive dividend.
EMPLOYEES
The expertise and skills of our employees are
crucial to fulfilling customer needs. We offer
development opportunities and ensure a safe,
engaging and rewarding working environment
forall of our people.
SUPPLIERS
We cultivate strong relationships with our
suppliers, partnering to deliver innovative
solutions and supporting them through our
procurement of their goods and services.
COMMUNITIES
We positively impact local communities by
actively contributing to economic growth
andproviding high value jobs.
GOVERNMENTS
We pay taxes in the jurisdictions where we
operate, supporting public infrastructure and
services such as healthcare, education, transport
systems, and law enforcement.
CLIMATE CHANGE
VALUE WE DELIVER
> READ MORE ABOUT OUR STAKEHOLDERS ON PAGES 38 TO 41
Chemring Group PLC Annual report and accounts 2024 29
Strategic report Governance Financial statements

FOCUS ON
Countermeasures & Energetics
REVENUE
£298.4m
(2023: £285.6m)
UNDERLYING OPERATING PROFIT
£46.5m
(2023: £50.5m)
ORDER BOOK
£933m
(2023: £751m)
UNDERLYING OPERATING MARGIN
15.6%
(2023: 17.7%)
STATUTORY OPERATING PROFIT
£48.1m
(2023: £48.8m)
KEY FACTS
In our Countermeasures & Energetics sector,
wehave deep technical expertise in high-hazard
manufacturing and precision engineering. 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, propellant and high-quality explosive materials. These are used to
perform critical functions for the space, aerospace, defence and industrial
markets including heavy-lift space launches, satellite deployment, long-range
strike missiles, aircrew egress and aircraft safetysystems.
STRATEGY
Our Countermeasures & Energetics sector strategy is aligned to the
significant growth opportunities that we are seeing in the market, and
weareinvesting to strengthen and expand our world-leading positions.
Set against the background of Russia’s invasion of Ukraine in February 2022
and the broader increased threat environment, we are seeing unparalleled
demand for our specialist capabilities in Energetics, with customers prioritising
significant elements of their defence spend to enhance and replenish their
munition and complex weapon stockpiles. We have initiated a significant
investment programme to expand our manufacturing capacities in Norway,
the US and the UK to respond to our customers’ elevated and urgent
demands, assisted by significant grant funding.
In Countermeasures, where we expect robust but steady demand for our air
and naval countermeasures over the next five years, even in the absence of
force deployment, we will continue to advance modernisation and automation
across our facilities. Additionally, we promote technology sharing and enhanced
manufacturing excellence throughout the Group whenever possible.
Chemring Group PLC Annual report and accounts 202430
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MARKETS
The elevated levels of geopolitical tensions characterised by the continuing
Russia-Ukraine war, the conflict between Israel and Hamas-led militant
groups in the Middle East, and an increasingly assertive China are driving
defence and national security budget increases of differing levels. These
uncertainties are also contributing to a strengthening of international alliances,
with existing and new NATO members responding to the Ukraine crisis, which
is now in its third calendar year.
The outlook for the global defence market is therefore increasingly robust,
with strong growth predicted over the next decade. European military
expenditure is at Cold War levels and we are now seeing governments’
announcements of budget increases manifesting into new orders. This increased
defence spend is accompanied by significant efforts to ramp up the continent’s
defence industrial base. Twenty three out of thirty two NATO members now
meet the 2% of GDP target for defence spending – double the number from
2020, and the highest ever number of members to meet this target.
Despite the increase in budgets, capability gaps remain, with ammunition
supplies and long-range strike capabilities remaining priority areas for investment
in both the US and Europe. To address these and other challenges, a new,
first-ever European Defence Industrial Strategy, which sets out a clear,
long-term vision to achieve defence industrial readiness in the EU, has been
developed. The EU is proposing to devote €1.5bn to incentivise execution of
this strategy, as well as the €500m Act in Support of Ammunition Production
(“ASAP”) programme to stimulate industrialcapabilities.
Against this backdrop we are seeing increased long-term demand levels
forour differentiated Countermeasures & Energetics capabilities. This is
particularly prevalent in our three leading Energetics businesses, where we
areseeing unprecedented demand levels for speciality energetic materials
andenergetic propulsion devices, and where Chemring is a key supplier
toNATO. Increasingly, customers are signing long-term contracts in order
tosecure supply and this improved visibility is enabling greater focus on our
investment into manufacturing capacity, efficiency and product research
&development. Long-term demand and associated funding are expected
toremain robust.
Chemring continues to hold a leadership position in the addressable air
countermeasures market. Demand in the Countermeasures sector over the
next five years is primarily being driven by US and international requirements,
coupled with new technologies being developed in the UK that will be shared
across the Group’s businesses. Sole source positions on several products and
platforms in conjunction with high barriers to entry are evidenced by our
strong order book. Demand for the F-35 Lightning II stealth multi-role combat
aircraft continues to be strong, and our contribution to this advanced platform’s
countermeasures suite confirms our leadership position in this capability area.
PERFORMANCE
Order intake for 2024 remained strong at £523m (2023: £541m).
In the Energetics sector, we continue to see increased levels of activity and
demand in the devices, propellants and energetic materials markets as customers
re‐evaluate their operational usage and stockpile requirements associated
with traditional defence capabilities. As a result, our three niche Energetics
businesses, which design and manufacture high precision engineered devices
and specialist materials, have continued to see strong customer demand, with
order intake at £348m (2023: £358m).
Our Norwegian-based subsidiary, Chemring Nobel, had another year
ofrecord performance and signed a number of long-term partnering
agreements with its key customers. In June 2024 a 15-year partnering
agreement was signed with Northrop Grumman for the supply of HMX
energetic material used in its missile programmes. As part of this agreement,
Chemring Nobel received an initial delivery order, valued at $83m, forthe
supply of HMX. Deliveries under this order will commence in 2026and will
be made over the following three years.
In November 2024, Chemring Nobel signed a 12-year framework agreement
with Diehl Defence for the supply of MCX energetic material. As part of this
agreement, Chemring Nobel received an initial purchase order for the delivery
of MCX, valued at €231m. Deliveries under this order will commence in 2027
and will be made over the following five years. The company is exploring options
to perform the blending stage of the manufacturing process in Germany.
Chemring Energetics, Scotland - September 2023 Chemring Energetics, Scotland - September 2024
Chemring Group PLC Annual report and accounts 2024 31
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FOCUS ON continued
Countermeasures & Energetics continued
PERFORMANCE continued
Our Scottish facility also received a number of notable contract awards
during the year. The business also made excellent progress in the construction
of its new propellants manufacturing facility. Concrete pours have been
completed on most buildings, with steelwork and frames also installed.
Thisnew facility will provide increased capacity and throughput in a safe
andmodern manufacturing environment.
In the US, we have seen growing demand for precision engineered devices for
space and missile applications, with our Chicago business, Chemring Energetic
Devices (“CED”), receiving a significant level of orders in the year. These included
an order from the United Launch Alliance to develop initiators and an order
from Boeing in relation tothe Harpoon missile programme, with the combined
value of these two latter orders totalling over $20m. In April, CED successfully
completed qualification testing for the Blue Origin Standard Initiator and is
now the sole provider ofthis device. This initiator will be common to all
BlueOrigin spacecraft, including the upcoming New Glenn launch vehicle.
In January 2024, and in response to growing customer demand, CED acquired
an additional 45,000 sq. ft. facility adjacent to its existing site. The new facility,
which commenced operations in April 2024, significantly enhances CED’s
ability to maintain continuous flow manufacturing operations, which is essential
in delivering against customer programme requirements and is a key enabler
of its future growth ambitions. CED closed the financial year with a record
order book, which is in excess of $200m (2023: $165m). In November 2024
CED received an order valued at $106m for the delivery of critical components
used on an undisclosed missile programme for the US DoD, further enhancing
this record order book.
This strong performance demonstrates the value that our customers place
onChemring’s niche products and the strong demand that we expect over
the coming years. This was further illustrated when in March, the Group
received notification that the European Commission had granted £57m of
funding to our Norwegian subsidiary, Chemring Nobel, in support of boosting
defence production in Europe. Further funding of £32m was also received
from the Government of Norway to boost capacity and production at the site.
In Countermeasures, we have continued to see steady customer demand
from across our portfolio, maintaining our position as the world leader in the
design, development and manufacture of advanced expendable countermeasures.
Order intake was £175m (2023: £183m). Notable contract awards at Chemring
Countermeasures UK (“CCM UK”) included a £36m order from BAE Systems,
a £16m order from the UK MOD, and an £8m order from MBDA USA for a
new naval infra-red decoy. This was the first US production order that CCM
UK had received in over ten years, and contributed to the business having
ayear-end order book of greater than £200m, the highest in its history.
Chemring Australia also secured a $31m contract for the supply of MJU-68/B
infra-red countermeasures used on the F-35 Joint Strike Fighter.
The Countermeasures sector saw a greater weighting of its trading performance
and cash generation to the second half of 2024, following the operational
challenges experienced at our Tennessee Countermeasures business, where
production was disrupted due to adverse weather conditions and there were
delays in the ramp up of its automated facility. The underlying operating profit
margin was also adversely affected by deliveries made on a legacy contract
from 2016 for the supply of countermeasures to the US DoD. Having previously
been expected to complete in the second half of the financial year, the customer
has now exercised an option to extend the duration of this contract, which
will now conclude in the first half of FY25.
PURPOSE IN ACTION
INVESTING IN ADDITIONAL CAPACITY
This year, Chemring Nobel (“CHN”) was awarded c.£90m in grants
from the European Commission and the Government of Norway.
The €67m (£57m) funding from the European Commission aims to
boost defence production within Europe. It is part of the Act in Support
of Ammunition Production (“ASAP”) programme, which is a response
to the European Council’s call to urgently deliver ammunition and
missiles to Ukraine and help member states refill their stocks.
In addition to the funding from the European Commission, CHN also
received a further grant of NOK 428m (£32m) from the Government
ofNorway. This co-financing will boost capacity and production at CHN
and significantly strengthen Norwegian production capacity for critical
defence products.
CHN Managing Director, Helge Husby, said: “The financial support we
have received will play an important role in the planned increase in our
production capacity. The funds will also contribute to a more sustainable
business with modern technology to reduce our environmental footprint.
Locally, it also ensures more forward-looking jobs at the Hurum-peninsula.
The support will assist Ukraine with its defence needs and strengthen
Norway’s and NATO’s preparedness in the future.”
Both grants support Chemring’s decision to invest in more than doubling
the capacity of our facility over the medium term and reinforce CHN’s
position as a key strategic supplier to NATO.
Chemring Group PLC Annual report and accounts 202432
Strategic report Governance Financial statements

PURPOSE IN ACTION
Revenue for Countermeasures & Energetics was up by 4% to £298.4m
(2023:£285.6m). The sector reported an underlying operating profit
of£46.5m (2023: £50.5m) as underlying operating margin decreased to
15.6%(2023: 17.7%), reflecting the impact of operational challenges at
ourTennessee Countermeasures business. On a constant currency basis
revenue would have been up 7% to £304.5m and operating profit would
havebeen down 6% to £47.3m.
The statutory operating profit for the year was £48.1m (2023: £48.8m).
OPPORTUNITIES AND OUTLOOK
The Countermeasures & Energetics segment’s focus remains on maintaining
and growing the Group’s market-leading positions, in particular in the growing
markets for propellants and precision engineered energetic devices, and in
countermeasures where we see undiminishing demand for our air and naval
decoy products, even in the absence of force deployment. Our focus on seeking
to achieve appropriate margins, mindful of financial constraints from our customers,
will continue.
The Group’s specialist propellant and devices businesses in Scotland and Chicago
are increasingly securing long-term contracts with customers, supporting
greater short and medium-term visibility and providing a framework for
long-term planning and investment decisions. Similarly, demand for high-quality
energetic materials has enabled our Norwegian business to work proactively
with its customer base on establishing long-term contracting models,
providing significantly improved visibility.
The increasingly positive market conditions for our Energetics businesses,
reflected in our order intake and record order book, have presented a strong
organic growth opportunity to expand capacity at these sites. In 2023, we
announced a three-year £120m investment programme through to 2026
tocapitalise on this long-term demand. As the strong market conditions
havecontinued, we announced the decision in June to increase the capital
investment programme from £120m to £200m, which we expect to increase
revenue by £100m per annum and operating profit by £30m per annum from
2028. In addition to this, we announced that our Norwegian business had
been awarded grant funding of £90m in support of its capacity expansion
projects, meaning that the net investment required by the Group will now
be£110m in total.
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, as they view Chemring Nobel as the producer in Europe and
North America that can establish increased production the fastest. This
co-funded feasibility study, which is expected to be concluded in early 2025,
will investigate the geographic location, infrastructure requirements and
environmental considerations of building a new production facility. The study
will also consider the role and the levels of any financial contribution made
bythe Norwegian Government.
Alongside these investments in expanding our capacities we will 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.
The Countermeasures & Energetics order book at 31 October 2024 was up
24% to £933m (2023: £751m). The increase compared to the 2023 year-end
closing order book is largely attributable to the strong order intake across
theEnergetics businesses, whose customers are increasingly placing multi-year
orders. Of the 31 October 2024 order book, approximately £323m is currently
expected to be delivered in 2025, representing 97% coverage ofexpected
2025 revenue and approximately 81% of 2026 and 52% of 2027revenue.
CHEMRING’S MISSION-CRITICAL ROLE IN THE US
NATIONAL SECURITY SPACE LAUNCH PROGRAMME
Earlier this year, US space launch companies vied to be selected to launch
some of the country’s most sensitive military and intelligence satellites into
space over the next decade. In this multi-billion-dollar programme, the
USDepartment of Defense chose Jeff Bezos’ Blue Origin, Elon Musk’s
SpaceX, and the Boeing-Lockheed joint venture, United Launch Alliance
(“ULA”), as the three contenders which can now compete for national
security space missions.
Chemring Energetic Devices (“CED”) provides mission-critical devices for
space launches and payloads.
This most recent procurement programme by the Pentagon focuses on
launch providers and their launch platforms. These platforms are sending
the largest payloads into space to some of the most distant orbits. Over
the next three years, SpaceX, ULA and Blue Origin will be the only three
launch companies that can bid on these upcoming launches, which will
service the most challenging and hardest-to-reach orbits.
CED already has current business and strong relationships with all three
big providers. It provides well over 100 different devices and energetic
items that make launches possible.
CED has a long history of working with NASA, going back to the
Apollomissions. CED remains the only NASA Standard Initiator
(“NSI”)manufacturer in the world.
> DISCOVER MORE ABOUT COUNTERMEASURES &
ENERGETICS AT CHEMRING.COM/WHAT-WE-DO/
COUNTERMEASURES-AND-ENERGETICS
Chemring Group PLC Annual report and accounts 2024 33
Strategic report Governance Financial statements

FOCUS ON continued
Sensors &Information
In our Sensors & Information sector we are a leading
supplier of consulting and technology services, trusted
by government and industrial partners worldwide to
solve the most technically challenging defence and
security-critical issues.
Our products include core technologies for detecting, intercepting and jamming
electronic communications, next-generation intelligence, surveillance, target
acquisition and reconnaissance (“ISTAR”) capability for the modern battlefield,
and world-leading systems for detecting biological agents. Operating across
defence, national security, law enforcement and commercial domains, the
Sensors & Information sector is constantly innovating to enable customers
todeliver competitive advantage and to defend their people, assetsand information.
REVENUE
£212.0m
(2023: £187.0m)
UNDERLYING OPERATING PROFIT
£41.4m
(2023: £34.2m)
ORDER BOOK
£105m
(2023: £171m)
UNDERLYING OPERATING MARGIN
19.5%
(2023: 18.3%)
STATUTORY OPERATING PROFIT
£37.4m
(2023: £10.7m)
KEY FACTS
STRATEGY
The Sensors & Information sector is an area of major strategic focus for the
Group. Our capabilities are highly relevant to customer investment priorities
as they address a growing and diversifying threat. We will continue to grow
our advanced product and service offerings, in sensors, communications,
cyber and AI, where our customer intimacy, mission understanding and
integration capabilities position us well to deliver superior value to our
defence, national security and other customers.
The Group’s specialist consulting and technology services business, Roke,
operates in growing cyber and digital services markets. Investing in attracting
and retaining the best technical talent, together with continued geographic
expansion in the UK to follow our customers’ missions, is key to long-term
profitable growth in this area. We also continue to actively explore opportunities
to expand and accelerate Roke’s capability offerings to drive medium and
long-term growth, including leveraging opportunities in adjacent markets
andterritories. In the short term this will require continued operating
expense investment across the Roke business.
Driven by the global threat environment, our Roke business is seeing a
significant increase in demand for its technology-enabled solutions in active
cyber defence, operational mission support, electronic warfare (“EW”) and
intelligence capabilities. We will continue to invest in innovation and solution
development across these growing segments of the national security and
defence markets based on our in-depth understanding of our customers’
mission needs and modernisation priorities.
Adjacent to our organic growth plans, we will continue to explore inorganic
bolt-on opportunities to further accelerate growth. Roke’s acquisition targets
are technology-focused capabilities or businesses that will allow us to pursue
larger and broader opportunities with our national security and defence
customers. We have a pipeline of near and long-term acquisition candidates
incore, or near-adjacent, capability areas for Roke.
MARKETS
An increasingly unstable geopolitical environment has seen increased defence
investment across a range of allies, including many European members of
NATO, as countries seek the capabilities required to deter and defeat peer-level
adversaries. In this context, genuine partnerships and alliances, suchas Five
Eyes, AUKUS and NATO, have become a critical element of the geopolitical
landscape, with greater co-operation and alignment between allies essential.
The US remains the largest defence market globally, with the 2025
Presidential Defense Budget request hitting a record high of US$849.8bn.
Thisbudget, shaped broadly by the priorities of defending the nation and
strengthening relationships with like-minded partners and allies, also includes
a significant commitment to Research, Development, Test and Evaluation
(“RDT&E”), with US$143.2bn allocated for new technology investments.
TheGroup’s differentiated capabilities in active cyber, space, hypersonic and
advanced weapons, EW and bio-security/surveillance give us the opportunity
to compete in this large and growing market.
In the UK, investment is ongoing to enhance national resilience, through
reinforced supply chains and expanded industrial capacity. Simultaneously,
theUK defence customer continues its mission to support Ukraine. The UK’s
defence spending in 2023 is estimated to have been 2.3% of GDP, amounting
to £54.2bn for the fiscal year 2023-2024. It is anticipated to rise by 4.5% in
real terms to £57.1bn for 2024-2025.
Chemring Group PLC Annual report and accounts 202434
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In July 2024, the UK Government initiated the Strategic Defence Review
(“SDR”), a deep and detailed assessment of the British military’s current state,
including its resources. The SDR aims to define the capability requirements
across all military domains and prioritise a “NATO first” strategy within the
UK’s defence agenda. The review is set to conclude in the first half of 2025
and will provide a strategic roadmap to meeting the goal of dedicating 2.5%
ofGDP to defence. It will also look to enhance national security. The British
Army has adeclared intent to use technology to double lethality by 2027
andRoke’s domestic defence programmes sit at the heart of this initiative.
The Russia-Ukraine war has brought large-scale conflict to Europe, and
European military expenditure is now at Cold War levels. Among the twenty
three NATO members which now meet the target for defence spending,
France will reach the 2% GDP target in 2024 with a budget of €47.2bn, which
it will steadily increase under the seven-year military planning law. Germany
will reach the same NATO target over the next three years – the first time
since the end of the Cold War. Moreover, across the Alliance members
defence spending rose 18% – the largest increase for several decades.
Regardless of EU defence spending reaching a record €345bn in 2023,
capability gaps remain, with ISTAR capabilities all priority areas for investment.
To address these and other challenges, a new, first-ever European Defence
Industrial Strategy which sets out a clear, long-term vision to achieve defence
industrial readiness in the EU has been developed. The EU is proposing to
devote €1.5bn to incentivise execution of this strategy.
ROKE LAUNCHES AGILE COUNTER-UAS
A dynamic, portable and deployable system dedicated to helping military
and civilian organisations tackle the growing and evolving threat posed
by Unmanned Air Systems (“UAS”).
Roke Agile Counter-UAS offers a two-pronged defence to meet the
rapidly evolving threat to people, assets and infrastructure. The scalable
and flexible solution includes: a standalone C-UAS sensor system,
RapidEO; and a pioneering open-architecture, interoperable fusion and
autonomy engine.
Roke’s AI-powered RapidEO sensor system is a dynamic all-in-one
solution for detecting and confirming UAS threats. Portable, lightweight
and requiring limited power supply, RapidEO can be deployed at scale to
protect vehicles, buildings and people. Its unique sensing agility allows it
to protect against swarms and multi-axis attacks even in cluttered environments,
raising the alarm and allowing decision makers to respond quickly.
For networked and multi-sensor applications, Roke’s open-architecture
fusion andautonomy engine, is fully interoperable and allows users to
integrate their choice of sensor mix to best address a specific challenge.
This brings a new level of flexible capability to the market and is unlike
other closed and stove-piped solutions.
Critically, as the UAS threat evolves and sensor technology advances,
decision makers are not locked in – our solution allows users to adapt
deployment more quickly than with other solutions to dominate the new
threat. This works with a range of sensors from Roke’s ecosystem of
technology partners.
PURPOSE IN ACTION
> DISCOVER MORE ABOUT SENSORS &
INFORMATION AT CHEMRING.COM/
WHAT-WE-DO/SENSORS-AND-INFORMATION
Chemring Group PLC Annual report and accounts 2024 35
Strategic report Governance Financial statements

PERFORMANCE
Order intake in the year was down 31% to £149.7m (2023: £215m). This was driven
by a 28% decrease in Roke’s order intake as customers returned to an annual
order cycle rather than the multi-year awards that were placed following the
COVID-19 pandemic and the order for Joint Biological Tactical Detection Systems
(“JBTDS”) Low Rate Initial Production (“LRIP”) being in the prior year comparator.
Roke “pass-through” impact
2024
£m
2023
£m Change
Order intake
Products and services 115 156 (26)%
Pass-through 16 27 (41)%
As reported 131 183 (28)%
Revenue
Products and services 157 128 23%
Pass-through 28 32 (13)%
As reported 185 160 16%
Revenue for Sensors & Information increased by 13% to £212.0m
(2023:£187.0m) and underlying operating profit increased by 21% to
£41.4m(2023: £34.2m), as underlying operating margin increased to 19.5%
(2023: 18.3%). This was driven by the increased products and services
revenue at Roke and lower margin dilutive “pass-through” revenue as shown
in the table above. Adjusting for the “pass-through” revenue, the Sensors &
Information underlying profit margin would have been 22.5% (2023: 22.1%).
On a constant currency basis revenue would have risen 14% to £212.8m
andunderlying operating profit would have increased by 21% to £41.5m.
In the UK, the markets for Electronic Warfare (“EW”), cyber and AI capabilities,
in which Roke is aleading participant, have remained buoyant in the year. As
shown above, Roke has delivered strong growth in revenue with double-digit
growth in underlying operating profit and has maintained strong margins
despite increased investment in people, infrastructure and product development.
A fundamental characteristic of the increased threat environment and of
recent conflicts, notably Russia’s invasion of Ukraine, 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.
In Roke’s defence markets, the increasing importance of Cyber and Electromagnetic
Activity (“CEMA”) in today’s threat environment has led to a growing number
of enquiries for Roke’s suite of world-leading EW products. A notable highlight
during the year was further wins in the area of EW with awards received
from customers in Sweden, Lithuania, Latvia, the United Arab Emirates and
Japan. The order for ten Resolve EW systems from Japan is Roke’s first into
the East Asia region, securing a high-quality reference customer. Roke has a
significant (>£300 million) five-year international sales pipeline for EW products
as customers increase focus on CEMA.
Roke’s expertise in the field of EW was further demonstrated in September
2024 when Roke was announced as one of four UK organisations to have
been selected for research funding in the first AUKUS Innovation Challenge.
The trilateral AUKUS Pillar 2 EW Challenge called for proposals to identify
electromagnetic spectrum technology solutions to help give the AUKUS
nations a strategic edge in targeting and to provide protection against
adversarial electromagnetic-targeting capabilities.
During the year Roke also received a £10m increase to the Project ZODIAC
MVP award received in September 2023. ZODIAC is the backbone of the
British Army’s Land ISTAR Programme which will deliver an integrated ISTAR
system to transform how the Army undertakes data-led decision making to
gain operational advantage. In total, Roke’s ZODIAC programme contract
awards now stand at £51m with the programme currently completing in
FY25. Future phases of Zodiac could be in excess of £100m, presenting a
significant opportunity to Roke as the incumbent supplier.
Roke has continued to cement its position as a key strategic partner to the
UK’s national security agencies, further enhancing this key high barrier to
entry value stream. Despite Government spending headwinds multiple
awards, valued at c.£50m, were received from the national security community.
Roke’s new Intelligence business area has made good progress in building
aposition in the fast growing, embryonic, opportunity-rich open source
intelligence (“OSINT”) market. Roke’s unique approach to this market
integrates human expertise and intelligence tradecraft with cutting-edge
technology including AI, machine learning and advanced sensors. Roke’s
capabilities and technologies are combining to create a highly differentiated
intelligence offering, and while the initial domain focus is on geospatial
intelligence (“GEOINT”) to commercial clients with a requirement for
maritime domain awareness, strong potential exists to cross-sell this
capabilityto other Roke customers.
Following last year’s decision to exit the Explosive Hazard Detection business,
2024 has been a transitional period for our US Sensors business as we focus
on our biological detection capabilities. Deliveries under the full rate production
phase of the Enhanced Maritime Biological Detection System (“EMBD”) Program
of Record have continued as planned. This fully-automated sensor to rapidly
detect, collect, identify and sample airborne biological warfare agents is
supporting the US Navy. In April 2024 we received a fourth option quantity
exercised under the sole source $99m Indefinite Delivery/ Indefinite Quantity
contract valued at $15m, with deliveries expected to be made in 2025.
On the JBTDS programme, having been awarded a LRIP contract in
September 2023, material procurement and production gathered pace
throughout the year with all major deliverables under the JBTDS LRIP
contract having been completed. We continue to support the customer
asthey progress through testing and acceptance, with the expectation
ofaFull Rate Production contract being awarded in 2026.
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. As a key supplier of biological detection equipment
to the US DoD, we are well placed to help customer in this area.
FOCUS ON continued
Sensors &Information continued
Chemring Group PLC Annual report and accounts 202436
Strategic report Governance Financial statements

PURPOSE IN ACTION
ROKE HELPS ANGLIAN WATER @ONE ALLIANCE
PARTNERSHIP TO ENHANCE WATER QUALITY MONITORING
Roke was approached by the Anglian Water @one Alliance partnership
to develop a conceptual solution in one of the industry’s most challenging
areas – introducing intelligent digital solutions to harness the value of
data for insightful decision making.
The @one Alliance is a partnership consisting of multiple companies
each providing specialised knowledge, allowing it to deliver complex projects
in the most efficient way, reducing the cost to Anglian Water’s customers.
In line with the @one Alliance digital aftercare solution maturity model,
Roke’s solution proved a novel application of remote sensing satellite
data to detect, locate and monitor pollution in a river and water bodies
around Anglian Water’s process and discharge point, effectively localising
pollutants at different points along the river, and estimating the concentrations
to mg/l without the deployment of ground sensors. Thisinnovative
solution provides the extraction of valuable insight from remote
satellites for a data-driven water quality monitoring system.
The work will lessen the need for physical interventions and, critically,
reduce Anglian Water’s carbon footprint when monitoring the
wastewater network inline with industry decarbonisation objectives.
Chemring’s experience and expertise in fielding biological agent detectors
foritsUS DoD customers provide a strong platform from which to pursue
opportunities in other existing and adjacent markets, such as homeland security.
Ina post-pandemic and contested world, governments are becoming increasingly
concerned by the risks of both naturally occurring and engineered biological
threats. Advances in synthetic biology now give our national adversaries the
capability to deliberately engineer organisms to create hazards and cause harm.
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
threatdetection.
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. During the year Roke expanded its
sites inGloucester and Manchester, continuing its strategy of building presence
alongside customers, academic partners and science and engineering talentpools.
With strong positions in markets with high barriers to entry and where
customers have unique profiles, we reiterate our ambition to organically grow
Roke’s revenue to greater than £250m per annum by 2028, while maintaining
strong margins. We will also continue to actively explore opportunities to
expand and accelerate the Sensors & Information sector capabilities and
offerings, both by leveraging opportunities in adjacent markets and through
further bolt-on acquisitions. 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 at 31 October 2024 was £105m
(2023: £171m), as customers moved to placing annual orders rather than the
multi-year contracts that we have seen in recent years. Of this, £101m is
expected to bedelivered in 2025, providing 48% cover of expected 2025
revenue. 2025 trading performance for Sensors & Information is expected to
show a continuation of the momentum seen in 2024, with continued growing
demand for Roke’s products and services. 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.
Chemring Group PLC Annual report and accounts 2024 37
Strategic report Governance Financial statements

SECTION 172 STATEMENT
Responding to our stakeholders’ needs
SECTION 172 FACTOR KEY EXAMPLES PAGE
CONSEQUENCES OF ANY DECISION IN THE LONG TERM
- Our purpose in action
- Investment case
- Business model
- Market overview
- Strategy
6
10
28
18
20
INTERESTS OF EMPLOYEES
- Our purpose in action
- Stakeholder engagement
- Health and safety
- Our people
6
38
46
61
FOSTERING BUSINESS RELATIONSHIPS WITH SUPPLIERS,
CUSTOMERS AND OTHERS
- Business model
- Stakeholder engagement
- Market overview
- Strategy
- Ethics and business conduct
28
38
18
20
66
IMPACT OF OPERATIONS ON THE COMMUNITY
ANDTHEENVIRONMENT
- Introduction to sustainability
- Health and safety
- Environment
- Task Force on Climate-related Financial Disclosures report
- Our people
42
46
48
52
61
MAINTAINING HIGH STANDARDS OF BUSINESS CONDUCT
- Ethics and business conduct
- Corporate governance report
66
90
ACTING FAIRLY BETWEEN MEMBERS
- Investment case
- Stakeholder engagement
- Corporate governance report
10
38
90
Section 172(1) of the Companies Act 2006 requires the directors to act in
the way they consider, in good faith, would most likely promote the success of
the Company for the benefit of its members as a whole. In doing so, section 172
requires the directors to have regard, amongst other matters, to:
- the likely consequences of any decision in the long term;
- the interests of the Company’s employees;
- the need to foster the Company’s business relationships with suppliers,
customers and others;
- the impact of the Company’s operations on the community and environment;
- the desirability of the Company maintaining a reputation for high standards
of business conduct; and
- the need to act fairly as between members of the Company.
In discharging our section 172 duties the directors have regard to the factors
set out above and any other factors which we consider relevant to the
decision being made. We acknowledge that every decision we make will not
always result in a positive outcome for all our stakeholders. However, by
considering the Company’s purpose, vision and values, together with our
strategic objectives and having a process in place for decision making, we
aimto ensure that our decisions are considered and proportionate.
Further details on how the Board operates and reflects stakeholder views in
its decision making are set out in the corporate governance report on pages
90 to 99. Further information on how the Board has had regard to section
172 matters during the year can also be found in the following sections of
theannual report:
Chemring Group PLC Annual report and accounts 202438
Strategic report Governance Financial statements

STAKEHOLDER ENGAGEMENT
WHY WE ENGAGE
Ensuring that we provide innovative solutions that meet our customers’
needs, efficiently and on time, is crucial to the delivery of our strategy
andthe long-term success of the business. Understanding our customers’
needs can only be achieved through regular interaction and collaboration.
HOW THE BUSINESS ENGAGES
- Regular meetings, teaming arrangements and engagement at all levels
ofour customers’ organisations
- Partnering with customers on a broad range of technology and product
development programmes and capability investment initiatives
- Participating in industry forums and working groups, and hosting
customer visits to our sites
- Attending and exhibiting at selected trade shows, which enables
high-level interaction and the opportunity to brief customers on key
product developments and other initiatives
HOW THE BOARD ENGAGES
- The Group Chief Executive and President of our US operations support
our businesses through regular interactions with senior customer
representatives, and provide feedback to the Board
- External market updates and customer views are obtained to support
the Board’s strategy review
- Our US Government Security Committee works closely with the US
Government to ensure that we operate in full compliance with our
Special Security Agreement and updates the Board on a regular basis
- Site visits enable the Board to develop a deeper understanding of our
products, technical capabilities and customer requirements
HOW WE MONITOR
- Order intake
- R&D expenditure
- Capital investment
OUTCOMES
- Customer-focused inputs into the Group strategy
- Innovation and investment driven by customer requirements
- Collaborative, strategic customer relationships
- Customer support and funding for investment in capabilities
- Improved customer satisfaction
WHY WE ENGAGE
Our people are at the heart of our business. They are critical to the
delivery of our strategy and the future growth of the business. We
recognise the importance of attracting, developing and retaining the best
talent, and the need to provide a safe and inclusive environment where
individuals can thrive.
HOW THE BUSINESS ENGAGES
- Regular all-hands meetings and team briefings
- Works councils, trade unions, representative bodies and employee
resource groups which support and connect people with shared
characteristics or interests
- Employee engagement tools enable employees to provide immediate
and anonymous feedback on developments within their businesses
- Publication of a monthly video blog by the Group Chief Executive,
regularly featuring other members of the senior leadership team
- Publication of regular company notices and the in-house magazine,
Chemring-I, which features news and events from across the Group
- Development programmes and succession planning
HOW THE BOARD ENGAGES
- Monthly reporting to the Board on health and safety matters
- Output from employment engagement initiatives is shared with the
Board and supplemented by periodic culture “check-ins” facilitated by
anexternal consultant
- Direct engagement with the Board’s nominated non-executive director,
Laurie Bowen, through meetings with employees from across the
business and at different levels of the organisation
- Board engagement with a wide range of employees during collective
andindividual site visits throughout the year
- The Board sets diversity targets and the Nomination Committee
reviews diversity initiatives, senior leadership succession plans and talent
development programmes
- Presentations from employees to the Board and its committees
HOW WE MONITOR
- People-related data including retention rates and diversity statistics
- Safety performance metrics
- CEO pay ratio
- External ESG ratings
- Whistleblowing reports
OUTCOMES
- Development of people strategy and related investment
- Safe, healthy and motivated workforce
- Focus on diversity and inclusion
- Improved employee retention
- Attractive proposition for potential new employees
CUSTOMERS EMPLOYEES
The Board recognises that positive interaction and collaboration with all our stakeholders is essential to the delivery of sustainable long-term value. Effective
engagement enables the Board to better understand our stakeholders’ views on material issues which may impact the business and helps to inform theBoard’s
decision making. We engage with a wide range of stakeholders at the Board level, at a Group level and within our business units. By understanding what matters to
our stakeholders we are able to take this into account when setting our strategy and planning our day-to-day business operations. The table below sets out how
we engage with our key stakeholders.
Chemring Group PLC Annual report and accounts 2024 39
Strategic report Governance Financial statements

STAKEHOLDER ENGAGEMENT continued
Responding to our stakeholders’ needs continued
WHY WE ENGAGE
The continued support of our shareholders is something that we value
greatly. We recognise the importance of providing all our shareholders
with regular updates on the Group’s operational and financial performance,
strategy and future prospects, and ensuring that shareholder views are
taken into consideration in relation to major developments in the business.
HOW THE BUSINESS ENGAGES
- Engagement with shareholders predominantly led by the Group
ChiefExecutive, the Chief Financial Officer and the Group Director
ofCorporate Affairs
- Publication of our interim and full year results statements, along with
regular trading updates throughout the year
- Sustainability report published on our website
- Face-to-face meetings or video calls following the publication of
anysignificant news update or at the request of the shareholder
- Engagement with proxy advisory bodies prior to general meetings
- Structured roadshows for our institutional investors following the
publication of the Group’s interim and full year results
- Our website provides financial, business and governance information
onthe Group and an alerts service enables subscribing shareholders
toreceive notification of corporate updates
HOW THE BOARD ENGAGES
- The Board receives feedback collated by our brokers and other financial
advisers from our institutional investors, in which their views can be
expressed on a non-attributable basis
- Our Annual General Meeting provides the opportunity for our private
shareholders to hear from and engage directly with the Board
- The Chairman, the Senior Independent Director and the Chair of
theRemuneration Committee meet with shareholders to discuss
specific matters
HOW WE MONITOR
- Earnings per share
- Dividends paid
- Total shareholder return
- ESG metrics
- External ESG ratings
- Voting results from Annual General Meetings
OUTCOMES
- Development of capital allocation and dividend policy
- Development of ESG strategy
- Supportive, long-term shareholder base
- Access to funding
SHAREHOLDERS
WHY WE ENGAGE
We rely on our suppliers to provide us with quality raw materials,
products and services. Constructive engagement ensures that our
suppliers are able to meet our high expectations on safety, quality, value,
delivery performance and ethical business conduct. We recognise that
prompt payment terms and strong supplier relationships are important
inbuilding a long-term, sustainable and supportive supply chain.
HOW THE BUSINESS ENGAGES
- Day-to-day interaction with suppliers by supply chain management
teams within our businesses
- Risk-based due diligence undertaken on suppliers and service providers
- Long-term agreements with our key suppliers, which provide visibility
onfuture requirements and enable us to agree performance targets to
drive continuous improvement
- All suppliers are issued with our Supplier Code of Conduct, which sets
out the standards of ethical business conduct that we expect of them
- Audits and credit monitoring undertaken for certain key suppliers
HOW THE BOARD ENGAGES
- Business continuity and supply chain dependency reviews included
within the internal audit programme
- Reports on supplier and service provider due diligence and compliance
reviewed by the ESG Committee
- Annual consideration and approval of the Modern Slavery Act Statement
HOW WE MONITOR
- Payments made within payment terms
- Statistics on issue of the Supplier Code of Conduct and inclusion of
suppliers and service providers in the Chemring Compliance Portal
- Regular credit checks of key suppliers
OUTCOMES
- Collaborative, long-term relationships
- Delivery of safe and reliable products and services to customers
- Appropriate working capital management
SUPPLIERS
Chemring Group PLC Annual report and accounts 202440
Strategic report Governance Financial statements

WHY WE ENGAGE
We recognise the important role that each of our businesses play in their
local communities, and we actively encourage our businesses to support
local initiatives and charitable causes. Equally, our businesses take pride
inthe contribution that they make to their local communities, both
asalocal employer and in the work they do to support good causes.
Wealso recognise the impact of our business on wider society and
ourresponsibility to contribute to a sustainable future for all.
HOW THE BUSINESS ENGAGES
- Our community investment policy sets out our commitment to support
selected charitable causes with a focus on the military and armed
services, STEM-related initiatives and those linked to the local
communities in which our businesses operate
- Each business has its own locally held charity budget and at a Group
level charitable donations are considered by the Executive Committee
- In addition to making cash donations, we also encourage and support
employees who undertake voluntary work in the local community
- Our people across the Group are involved with a number of educational
initiatives and as a business we have relationships with several universities,
whereby funding is provided for students’ research activities
- Sponsorship through the Horizons Bursary Scheme run by the Institution
of Engineering and Technology, which provides financial support during
degree study for students who have faced or continue to face adversity
whilst they study. These students are all studying STEM degree courses
which are relevant to the disciplines required within Chemring
- Social clubs and hosting events for employees, their families
andlocalorganisations
- Implementation of environmental and carbon reduction initiatives
HOW THE BOARD ENGAGES
- Development of ESG strategy, objectives and targets subject to
Boardoversight
- The ESG Committee, chaired by the Group Chief Executive, reports
regularly tothe Board on ESG-related matters
- ESG-related targets included in the senior leadership annual bonus plan
andlong-term incentive plan
HOW WE MONITOR
- Charitable donations
- Environmental performance indicators
- External ESG ratings
OUTCOMES
- Development of ESG strategy
- Informed communities
- Contribution to local businesses and employment
- Contribution to wider society
- Sustainable business operations
WHY WE ENGAGE
Our businesses operate in highly regulated environments, and we need to
ensure that we maintain our licences to operate and continue to run our
businesses in full compliance with all laws and regulations. We also need
to keep ahead of planned regulatory developments which may impact our
operations in future.
HOW THE BUSINESS ENGAGES
- Maintenance of a regular dialogue with contacts within governments
andat our regulators
- Participation in industry working groups and trade representative bodies
- Consultation with local governing bodies on planned business
developments and investments
HOW THE BOARD ENGAGES
- Board oversight of our Code of Conduct, our Operational Framework
and the associated assurance processes ensures our businesses are
meeting governmental and regulatory requirements
- Interaction with the US Board’s Government Security Committee
provides assurance to the Board that the business is operating in
accordance with our Special Security Agreement
HOW WE MONITOR
- Regulatory changes
- Compliance statistics
- Safety-related capital investment
OUTCOMES
- Ethical and compliant business conduct
- Trusted supplier to government customers
- Government support for proposed acquisitions and investments
- Sustainable business operations
COMMUNITIES AND THE ENVIRONMENT GOVERNING BODIES AND REGULATORS
Chemring Group PLC Annual report and accounts 2024 41
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INTRODUCTION TO SUSTAINABILITY
Continuing our commitment to a sustainable future
“ Chemring is committed to
operating its business responsibly
and creating long-term sustainable
value. Our Group-wide approach
isbased on safe, ethical and
values-driven practices at all times.”
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.
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.
Both enhancing and ensuring our sustainability efforts are transparent and
accurate is crucial in our current operations and future planning, particularly
in managing ESG risks. We understand the growing importance of our ESG
standing in attracting and keeping top-tier talent. Having engaged, driven,
capable and well-trained staff is essential to our future ambition.
As we advance our sustainability strategy, we are dedicated to clear policies
and promoting a culture where individuals take responsibility for their own
ethical actions. This extends beyond us being a reliable partner and maintaining
our own high standards to ensuring our suppliers also meet these expectations.
OUR APPROACH TO SUSTAINABILITY
A proactive and involved stance on corporate responsibility and sustainability
is key to Chemring’s enduring success. Our approach is focused around the
following key areas:
- health and safety;
- environment;
- people;
- ethics and business conduct; and
- governance.
Our approach to corporate responsibility and sustainability is embedded
within the business units and all senior leaders have specific objectives inthe
areas identified within their annual incentive plans.
PROGRESS IN 2024
Chemring’s purpose is to help make the world a safer place. The escalation
oftensions around the world, have reinstated the vital role that the defence
and security industry plays in supporting peace, democracy and freedom in
the western world. We believe that global stability is crucial for sustainable
development, and we are proud of Chemring’s contribution. We are also
committed to advancing our sustainability agenda and engaging our
ESG-related risks. In 2022, our efforts in this area were recognised externally
as MSCI gave us a rating of AAA, and this was reconfirmed in 2024, putting
us in the top 3% of the Aerospace and Defence sector.
ESG is integrated into our daily operations and long-term planning.
AcrosstheGroup, it continues to be proactively managed through our
ESGCommittee, is discussed as a standing agenda item at the Group
Executive Committee meeting and included in the monthly reports of all our
business units.
The majority of our businesses have well-established and fully-developed
environmental management systems and have undertaken numerous local
initiatives and projects to improve sustainability and reduce environmental
impacts from our operations. All of our businesses have implemented
energy-related projects or initiatives, with over 80% completing one or more
projects this year. These projects ranged from improvements and upgrading
of heating, cooling, manufacturing processes, lighting and insulation systems
throughout the business, to enhancements in the electrification of processes,
equipment and vehicles.
In 2024, we deployed a new environmental data collection and reporting
system. With the rollout of this upgraded software solution, we have further
improved the accuracy and transparency of our environmental sustainability
data. This has allowed us tofocus more on waste management at our sites,
resulting in 86% of all ourwaste being diverted from landfills or incineration.
Michael Ord
Group Chief Executive and
Chairman of the ESG Committee
Chemring Group PLC Annual report and accounts 202442
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In 2021, we outlined our intention to target net zero for scope 1 and 2
emissions by 2030. Following Russia’s invasion of Ukraine in February 2022
and in response to rising geopolitical tensions and customer demand, in 2024
we took the decision to invest £200m in our three Energetics manufacturing
facilities in Scotland, Chicago and Norway. This investment will significantly
increase capacity and production at all three sites. Consequently, our previous
ambition to be net zero by 2030 no longer aligns with the future size and
scale of our operations. We have therefore revised our target and adjusted
our ambition to achieve net zero by 2035.
In 2024, we continued to make good progress. For our environmental
ambitions, we aim to reduce our overall scope 1 and scope 2 market-based
greenhouse gas (“GHG”) emissions by 10% year on year. We have now
reduced our scope 1 and scope 2 market-based GHG emissions by 30%
against our restated 2021 base year emission figures.
As part of our wider sustainability strategy, two of our businesses joined the
JOSCAR programme this year. JOSCAR Zero is a pioneering decarbonisation
programme developed by Hellios Information. JOSCAR Zero collects, measures
and identifies how carbon emissions can be reduced across supply chains.
Thisinitiative empowers companies to systematically reduce their carbon
footprint, implement sustainable practices and work towards net zero
carbonoperations. JOSCAR Zero was developed in response to the
Government’s pledge to a 100% reduction of greenhouse gas emissions by
2050, marking a significant milestone in the defence, aerospace and security
industry’s ongoing commitment to achieving net zero by 2050.
With increased disclosure, accuracy in data reporting is crucial. Wecontinue
to have an auditable framework for emissions reduction, verifiedby external
experts and reported to the Audit Committee.
The Board and the ESG Committee have focused on actively managing the
sustainability agenda to meet the targets set in 2021. They continuously
review the progress and methods used to achieve these targets. In 2024, an
addition to the capital expenditure programme reviews was introduced,
ensuring that environmental challenges and targets are considered at the
beginning of the investment to support sustainable future operations.
Furthermore, we have continued our work on our Climate Transition Plan
inline with the current Transition Plan Task Force (“TPT”) guidance.
Chemring is committed to ensuring that we are able to attract and develop
an appropriately diverse workforce. Chemring strives for diversity on a broad
basis including gender, age, background, education, disability, neurodiversity
and nationality (within the constraints of our regulatory requirements) and
this diversity brings a more agile, engaged and higher-performing workforce.
We see a diverse workforce as a key enabler for continuing to innovate our
products and services for our customers.
TOTAL MARKET-BASED SCOPE 1 AND 2 EMISSIONS
CO
2
e emissions (tonnes)
FY23
FY24
FY22
FY21
17,430
15,161
19,175
21,646
The Board has played an active role in supporting our diversity, equity and
inclusion (“DE&I”) activity with Board members taking part in various
employee round-table discussions and networking events. Laurie Bowen,
non-executive director and Remuneration Committee Chair, is tasked with
employee engagement for the Board. For thefourth consecutive year, Laurie
has connected with colleagues across theGroup, at a variety of levels and in
differing roles, focusing on business units experiencing change and transformation.
Laurie was able to hear directly from these groups their views on working at
Chemring, as well asbeing able to share with them the work of the Board.
The groups identified specific opportunities to improve, which were openly
and constructively communicated and summarised to the leadership team
foraction as part of their local employee engagement action planning process.
Our local business diversity Employee Resource Groups (“ERGs”) are helping
us to understand “what good looks like” in many areas of the inclusion
agenda; one size does not fit all.
To cultivate a diverse and broad workforce, we tap into various internal and
external talent pipelines. We recruit from a wide array of external channels,
targeting direct hires for critical areas in the business, as well as aspiring
professionals early in their career journey. In 2024, we also partnered with
organisations such as Women in Defence and attended the Defence
Women’s Network Conference to meet potential talent looking for roles
inour industry.
Chemring Group PLC Annual report and accounts 2024 43
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INTRODUCTION TO SUSTAINABILITY continued
Continuing our commitment toasustainable future continued
PROGRESS IN 2024 continued
Our workforce is the driver of our success, and we aim to put the employee
experience at the forefront of our decision making. Our external talent
markets remain extremely competitive and therefore the engagement and
retention of our workforce is a people imperative. Listening to all colleagues
is essential to understand what is important to our workforce, and since this
will differ across our global organisation, in 2024, we moved to using local
listening tools and technologies to ensure they gathered the specific “Local
Accent”. This enables the tools used locally to be tailored to the local cultures,
contexts, environments and working practices, and ensures that the action
taken is effective and impactful to that employee group.
Our ESG strategy over the current and future years will seek to identify those
areas where our activities can have most impact. Plans are now in place to
continue this journey, and to ensure that we meet the growing disclosure
requirements of our stakeholders and demonstrate our ability to successfully
address ESG-related issues.
We will also continue to work with our advisers and shareholders to identify
how we can constructively feed into and inform the debate on the future of
ESG reporting and the creation of a common set of standards against which
we can be measured. Chemring is now a business whose evolving purpose
isinnovating to protect, and with that we are focused on protecting our
customers, people, platforms, missions and information.
As a business we remain fully committed to building a sustainable company
ofwhich all our stakeholders can be proud, both now and in the future.
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OUR SUSTAINABILITY GOALS
SUSTAINABILITY OBJECTIVES
SUPPORTIVE ACTIONS
ANDACTIVITY
FURTHER
INFORMATION
ENVIRONMENTAL
Respecting and protecting
our planet by actively
seeking ways to reduce
our environmental impact
- Reduce our impact on the environment and build resilience
to climate change by focusing on energy, waste and water,
and by understanding the impact of global climate change
on our operations
- Challenge our business unit leaders to improve operational,
resource and energy efficiency and to minimise
environmental impact
- Invest in support of product development and production
techniques that meet our customers’ needs and support
their environmental goals
- Chemring will be net zero by 2035 (scope 1
and scope 2 market-based)
- Chemring is working towards being a scope
3 net zero organisation by 2050 and is
committed to supporting its value chain
- We will reduce our total direct (scope 1) and
indirect (scope 2) GHG emissions year-on-year
- We will continue to focus our efforts on
reducing energy consumption and on
embracing green technology
- We will target zero waste to landfill by 2030
> ENVIRONMENT ON
PAGES 48 TO 51
SOCIAL
The safety, wellbeing
anddevelopment of our
people is at the heart of
ourbusiness
- Maintain the highest standards of safety and the wellbeing
of our workforce
- Ensure that, in support of our wider commitment to ethnic
and gender diversity, our workforce represents the
diversity of the local communities we operate in
- Implement effective policies and procedures and continually
invest in support of operational excellence and the
development of our people
- Promote inclusion and diversity at all levels
- Promote fair employment and skills development
- We will set a recordable injury frequency
rate limit of below 0.90 in line with upper
quartile benchmark performance
- We will continue to reduce the risk of
high-hazard events
- We will increase the proportion of women
in all senior management positions across the
business to 33% by 2027
> HEALTH AND SAFETY
ON PAGES 46 TO 47
> OUR PEOPLE ON PAGES
61 TO 65
GOVERNANCE
Conducting business in an
ethical andresponsible
manner at all times
- Operate with integrity and transparency and to the highest
ethical standards across all our businesses
- Ensure the highest standards of product safety and comply
with all relevant standards
- Promote a culture where everyone does the right thing
andtakes personal responsibility for their actions
- Actively seek to increase representation of ethnicity
andgender on our Board, within our leadership teams
andacross all our localities
- Protect information security and data privacy
- Maintain prudent and responsible financial and tax planning
and management
- We will aim to maintain compliance with the
UK Listing Rules on gender and ethnic
diversity on the Board
- All Chemring employees and third parties
acting on our behalf must comply with the
Chemring Code of Conduct, wherever they
are located in the world
> ETHICS AND BUSINESS
CONDUCT ON PAGES 66
TO 67
GOAL DESCRIPTION
Good health andwellbeing Ensure healthy lives and promote wellbeing for all at all ages
Gender equality Achieve gender equality and empower all women and girls
Affordable and cleanenergy Ensure access to affordable, reliable, sustainable and modern energy for all
Decent work and economicgrowth
Promote sustained, inclusive and sustainable economic growth, full and productive employment
and decent work for all
Reduced inequalities Reduce inequality within and among countries
Responsible consumption and production Ensure sustainable consumption and production patterns
Climate action Take urgent action to combat climate change and its impacts
Peace, justice and stronginstitutions
Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build
effective, accountable and inclusive institutions at all levels
Chemring Group PLC Annual report and accounts 2024 45
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HEALTH AND SAFETY
Establishing a strong health and safety culture
Our goal is zero harm, not as a statistical target but
as a moral imperative, which will be achieved by
establishing a strong proactive safety culture.
POLICIES AND PRACTICES
The Board recognises that the highest levels of safety are required to protect
employees, product users and the general public. The Board believes 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. The Group
Chief Executive has overall responsibility for health, safety and environmental
(“HSE”) matters across the Group.
The Group HSE Director reports directly to the Group Chief Executive
andis responsible for the ongoing development and assurance of the Group’s
health, safety and environment strategy, known as our Journey to Zero Harm.
The Group HSE Director is a member of the Executive Committee and reports
on the performance of all businesses against agreed HSE limits andobjectives.
The Group Chief Executive reports monthly to the Board on all key HSE KPIs.
The Board requires that all businesses systematically manage their health and
safety hazards, set objectives and monitor progress by regular measurement,
audit and review. Each managing director is responsible for the implementation,
management and ongoing compliance of health and safety within their business,
and for providing adequate resources to satisfy the Board’s requirements.
Allmanaging directors have health, safety and environmental-related
objectives incorporated within their annual incentive plan.
Managers and supervisors in the Group’s businesses are required to ensure
compliance with procedures, and to provide leadership and commitment to
promote and embed a solid calculative culture. The Board emphasises the
importance of individual responsibility for health and safety at all levels of the
organisation, and expects employees to report all hazards, to be involved in
implementing solutions and to adhere to the Fundamental Safety Principles,
which are underpinned by local rules and procedures.
A key element in the continuous improvement of health and safety management
is collaboration at all levels, resulting in the sharing of best practice and
lessons learnt from incidents across the Group’s businesses and the wider
industry. Accidents, incidents and near misses are investigated, with actions
generated to prevent recurrence.
CONTROL OF MAJOR ACCIDENT HAZARDS
Our Countermeasures & Energetics businesses are required to manage
majoraccident hazards which are governed by stringent legislation within
theirrespective operating countries. Over the last five years, we have implemented
several processes to enhance our focus in this area by ensuring we design,
maintain and operate with integrity. We continue to invest in modern
processes and technology to remove our employees from exposure to
energetic hazards. During the design of these processes we have placed
morescrutiny on the application of process hazard analysis.
In 2019, we mandated that all Countermeasures & Energetics businesses
would need to conduct regular reviews to identify the potential for major
process safety events. The reviews are based on a “stress test” that addresses
the following questions:
- Have potential major accident hazards been identified?
- Are there effective controls in place to prevent and contain a major event?
- Are these controls being actively monitored?
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
the year have taken further steps to reduce these to a level as low as is reasonably
practicable. To help reduce our residual risks, the implementation of a common
computerised maintenance management system continues across our
Countermeasures & Energetics sector, improving management of,and
accountability for, safety-critical assets.
We continue to share best practice through the Technical Safety Committee,
the Technical Learning Group and our quarterly “Shared Learning” events.
INJURY PREVENTION
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 the root causes of our incidents and the contributory causal
factors, 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, and identified slips, trips and falls as
areas requiring continued focus. The relevant businesses continue to manage
these risks whilst considering further automation.
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 annually to ensure compliance, with high-priority non-compliances
reported and monitored at Executive Committee level. The changes made in
2022 to our Operational Assurance Statement process continue tohelp the
businesses focus on compliance with the HSE Framework, which in turn
provides useful insights when planning the Line of Defence 2 (“LOD2”) audits.
ACHIEVEMENTS
This year has seen a continued focus on developing the group into a solid
calculative organisation, ensuring our systems drive data-informed
discussions anddecision making at all levels, with particular focus on:
- control of major accident hazards;
- injury reduction; and
- HSE risk management.
Actions taken in delivering the HSE plan included:
- continued roll out of asset integrity management systems;
- assurance reviews confirming the implementation of the electrostatic
discharge protocols; and
- assurance reviews confirming the deployment of the Fundamental Safety
Principles supported by the Leadership Guide and the provision of training.
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OUR HSE PERFORMANCE
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. This year, we invited back a team of
third party experts to review our progress. The results were presented to
the Board in December 2024 and confirmed we had established a solid
calculative safety culture across the group. As a Group of companies we are
pleased that we achieved our 2024 ambition of demonstrating we have systems
and processes that generate data-informed discussions and decision making at
all levels otherwise known as a calculative safety culture. 2025 will be spent
consolidating, whilst understanding our roadmap to becoming proactive.
OCCUPATIONAL SAFETY
Our total recordable injury frequency (“TRIF”) rate is 0.69, a decrease when
compared to last year and at the end of 2024 was remaining below our annual
limit of 1.0. From 1 November 2024, our annual limit has reduced to 0.90.
Most injuries were caused by slips, trips and falls, or were musculoskeletal
innature.
We focus not only on actual injuries but also hazards and near miss events.
We therefore place an emphasis on near miss and hazard reporting as a
leading indicator of our maturing safety culture. This year, we had 3,090
occupational safety near miss and hazard reports, compared to 3,097 in
2023. We had a total of 14 high-potential (“HIPO”) incidents compared
to12last year. The increase in HIPO incidents has been due to increased
contractor activity in support of our expansion programmes. We are embedding
the learning from these incidents into the organisation through quarterly
Shared Learning reviews with all business leaders and increased use of Safety
Alerts,not only to share incident learning but also to promote good practice.
PROCESS SAFETY
In addition to our reactive metrics, we also measure process safety near
missevents, with a total of 1,408 recorded in 2024 compared to 1,559 in
theprevious year. Near miss reporting is crucial if we are to understand
andprevent incidents, which is why we encourage all our employees to Stop,
Warn and Inform so we can Manage any emerging risks. The slight decrease
in near miss reporting is still representative of a healthy reporting culture
given the reduction in level 2 and 3 process safety events (“PSEs”). During
2024, we continued to consolidate the reporting of our leading indicator for
PSEs, which are categorised as level 1, 2 and 3, with 3 being the event with
the most serious potential. We set a limit of below 2.0 for PSEs at level 2 and
3per 100 production employees. This year we exceeded our PSE limit of 2.0
with a PSE rate of 2.09 but were able to demonstrate a significant decrease
when compared to 2.87 in 2023. Having reviewed the data, we believe this is
down to improved reporting and a better understanding of upset conditions,
and higher levels of data assurance with PSE events reviewed on a regular
basis. It should be noted that for the second year running there have been
noinjuries associated with energetic events.
HSE STRATEGY FORWARD OUTLOOK
In the first half of 2024, we continued to focus on maturing the plant and
process elements of our strategy through the continued delivery of key
programmes such as the Asset Integrity Management Maintenance Systems
and Electrostatic Discharge (“ESD”) Protocols. Towards the end of the year,
we continued our focus on the people element of our strategy by further
embedding our Fundamental Safety Principles, with significant focus on every
employee’s duty to Stop, Warn, Inform, Manage (“SWIM”). These themes
willremain our priority throughout 2025.
Our progress against this strategy will be reported in the next annual report
and accounts.
PURPOSE IN ACTION
SAFE AND READY TO OPERATE PROCEDURES
In 2023, we launched the Fundamental Safety Principles as part of our
organisation-wide Journey to Zero Harm and we continue to embed
these acrossthe organisation.
Operator awareness of critical control points (“CCPs”) and risk
assessment (“RA”) for manufacturing processes is integral to maintaining
safety in high-hazard operations. Chemring Countermeasures UK has
introduced a Safe and Ready toOperate (“SARTO”) procedure to
support this.
SARTO is a one-page startup check sheet that requires the operator to
read theirRA daily. It has two pre-filled boxes with a selected hazard
and one of the controls in place for the hazard. It then asks the operator
to confirm the control isin place and in good working order. It also asks
the operator to choose one hazard and a corresponding control and
write it into the blank third box. Theoperator then checks against this
to confirm it is in place and understood.
On top of the RA control check, the SARTO form also has a bay layout
with an icon showing where standard CCPs are. The operator checks
against these and ticks the icon if the control is present and in good
working order.
How has this helped?
One occurrence that really stands out is when an operator, who
wouldn’t usually speak up in a crowd, had the confidence to
approachthe Manufacturing Cell Leader identifying a potential issue
andpausing operations.
Chemring Group PLC Annual report and accounts 2024 47
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ENVIRONMENT
Continuing to reduce our environmental impact
Our goal of zero harm goes beyond the management
of safety. We are committed to environmental
sustainability, both globally and in our local communities,
and reducing our environmentalimpact.
OUR COMMITMENT
In 2021, we committed to reduce our total direct and indirect greenhouse gas
(“GHG”) emissions year-on-year. In this report we include information on our
climate-related risks and opportunities in alignment with the recommendations
of the Task Force on Climate-related Financial Disclosures (“TCFD”). We have
made good progress on our goals, with an overall 30.0% reduction in scope 1
and market-based scope 2 emissions from our 2021 figures, and we have achieved
a13.0% year-on-year reduction in 2024. We continue to make our Carbon
Disclosure Project (“CDP”) submissions and we have developed the quality
and range of scope 3 carbon emission data that we report on, with a clear
path to reporting all material scope 3 emissions. This work is overseen
byourESG Committee with regular progress reports to the Board.
We have adjusted our GHG emission net zero target to reflect evolving
circumstances and while the target date has shifted, our commitment and
ambition to ensure we meet our net zero target remains steadfast. This
adjustment allows us to strengthen our strategy and ensure a realistic, achievable
and transparent GHG emission reduction in line with our adjusted timeline
of2035.
INTRODUCTION
Our environmental performance information is presented in accordance
withthe Streamlined Energy and Carbon Reporting (“SECR”) Guidance
(March 2019), as specified under the Companies Act 2006 (Strategic Report
and Directors’ Report) Regulations 2013. Data is presented for our financial
year, from 1 November through to 31 October, and includes information on
significant environmental aspects: energy consumption; associated GHG emissions;
freshwater use; and waste generation. Our GHG emissions calculations are
undertaken in accordance with the GHG Protocol Corporate Accounting and
Reporting Standard as outlined in our basis of reporting document; this can
be found on the Group’s website at www.chemring.com/basisofreporting24.
OUR APPROACH
We are actively seeking ways to reduce our impact on the environment
andbuild resilience to climate change by focusing on energy and waste,
andunderstanding the impact of global climate change on our operations.
Thesefocus areas are periodically reviewed by our ESG Committee and are
expanded on each year in line with broader sustainability goals and reporting
guidelines. In 2024, we completed the implementation of anew corporate
sustainability software solution, to aid our business units in measuring and
recording their GHG emissions. The new platform supports the business units
with various capabilities that help ensure increased accuracy of our GHG
emission data across scopes 1,2 and 3.
OUR STRATEGY
- Our strategy is to reduce our global GHG emissions through improving
efficiency to reduce consumption and waste.
- Scope 1 associated emissions are being addressed through the adoption
ofgreen fuels and upgrading of facilities and equipment to be more efficient
or to use alternative greener energy sources.
- Scope 2 associated emissions are being addressed by implementing energy
efficient practices and upgrading facilities to aid in energy efficiency. We are
also using certified renewable energy through the acquisition of verified
Renewable Energy Guarantees of Origin, Guarantees of Origin and
Renewable Energy Certificates.
- Scope 3 emissions tracking continues to be developed and explored to ensure
we have a clear understanding of these emissions, so that we can plan a clear
and effective route to becoming a net zero organisation by 2050.
REPORTING
As per our 2023 basis of reporting, Chemring uses a fixed base year (2021),
which is a reference point with which current emissions can be compared.
Inorder to maintain consistency between data sets, base year emissions are
recalculated when structural changes occur in the Group that materially
change our tCO
2
e figures, such as acquisitions or divestments. As such, we
have restated the 2021 base year figures, which has resulted in total scope 1
and 2 market-based emissions increasing to 21,646 tCO
2
e (previously published
at 20,684 tCO
2
e) and this figure has been reassured by ERM CVS, an independent
third party organisation. All references to 2021 base year figures in the annual
report refer to restated figures.
From 1 November 2024, we will be transitioning from a fixed base year
methodology for reduction target and calculation to a rolling base year
methodology.
CLIMATE CHANGE RESILIENCE
We recognise that climate change has the potential to have an impact on our
operations, having experienced flooding from a severe weather event at our
Tennessee facility in 2018 and wildfires in areas surrounding our Australia
operations in 2019. In 2024, we have further developed our climate-related
scenario analysis to ensure our scenarios are accurate and up to date with the
latest data. To this end we have a significantly more detailed TCFD report this
year. We are regularly reviewing the physical and transition risks of global
climate change on our operations and supply chain.
ENERGY USE AND ASSOCIATED GHG EMISSIONS
Each year we review and update our carbon reduction plans in all our
businesses to aid achieving our target of becoming a net zero organisation
forscope 1 and scope 2 market-based GHG emissions by 2035.
Location Scope 1
Scope 2
(location-based)
Scope 2
(market-based)
UK operations 83.4% 19.5% 0.4%
US operations 12.6% 68.3% 89.8%
Norway operations 2.6% 4.0% 9.8%
Australia operations 1.4% 8.2% 0.0%
100.0% 100.0% 100.0%
In 2024, we achieved a 13.0% reduction in scope 1 and scope 2 market-based
GHG emissions, from 17,430 tCO
2
e in 2023 to 15,161 tCO
2
e in 2024.
Location-based emissions have decreased by 8.4% in 2024, compared to
2023. When normalised for gross revenue, market-based scope 1 and 2
emissions reduced 18.0%, from 36.2 tCO
2
e to 29.7 tCO
2
e per £m of revenue.
IMPROVEMENTS IN 2024
1) Reclaimed refrigerant used where possible to reduce CO
2
e emissions
toatmosphere.
2) Removal of LPG heating systems estimated to save 200 tCO
2
e
emissions per annum and save 168 MWh of energy through the
installation of new efficient electric heating system.
3) General upgrade to buildings and refurbishment to improve energy
efficiency for heating and lighting at multiple locations reducing energy
use and CO
2
e emissions.
4) LED lighting replacement ongoing across the organisation.
5) Passive infra-red sensor (“PIR”) light controller installation ongoing
across the organisation.
6) Steam line insulation lagging replacement project is ongoing and will
reduce energy use and CO
2
e emissions.
7) Continued HVAC systems upgrades will reduce energy use and
CO
2
eemissions.
Chemring Group PLC Annual report and accounts 202448
Strategic report Governance Financial statements

2024 2023
UK
US, Norway,
Australia
Group
total UK
US, Norway,
Australia
Group
total
Scope 1 emissions – continuing operations
Combustion of fuel in any premises, machinery or equipment operated,
owned or controlled by the Group
CO
2
e (tonnes)
Gas 4,488 371 4,859 4,807 485 5,292
Heating oil 429 — 429 1,070 460 1,530
Bio fuels 2 — 2 2 — 2
Diesel 6 163 169 — — —
Kero 707 — 707 — — —
LPG 32 66 98 49 186 235
Fuels consumed by Group-owned and leased vehicles, excluding business
travel and employee commuting
CO
2
e (tonnes)
Diesel 102 23 125 73 76 149
LPG — — — — 25 25
Petroleum 3 191 194 2 217 219
The operation or control of any manufacturing process by the Group
CO
2
e (tonnes)
On-site waste incineration 25 133 158 23 225 248
Refrigerants discharged 74 224 298 2 211 213
Total scope 1 emissions CO
2
e (tonnes) 5,868 1,171 7,039 6,028 1,885 7,913
Scope 2 emissions – continuing operations
Total emissions CO
2
e (tonnes)
Electricity – location-based 2,655 10,984 13,639 2,483 12,174 14,657
Electricity – market-based 35 8,087 8,122 — 9,517 9,517
Total scope 1 and 2 emissions – continuing operations
Location-based CO
2
e (tonnes) 8,523 12,155 20,678 8,511 14,059 22,570
Market-based CO
2
e (tonnes) 5,903 9,258 15,161 6,028 11,402 17,430
Total energy consumption (MWh) 43,464 84,268 127,732 44,581 86,151 130,732
We engaged ERM CVS to provide independent limited assurance of our 2021 total scope 1 and 2 market-based and our 2024 total scope 1 and total scope 2
location-based GHG emissions data as well as total scope 2 market-based GHG emissions data. Their Independent Assurance Report can be found on pages 14
to 15 of our sustainability report 2024. The basis of reporting document can be found on the Group’s website at www.chemring.com/basisofreporting24.
2024 2023
Total scope 1 and scope 2 emissions CO
2
e (tonnes) – location-based 20,678 22,570
Total scope 1 and scope 2 emissions CO
2
e (tonnes) – market-based 15,161 17,430
Group revenue (£m) 510.4 481.9
Total CO
2
e (tonnes) per £m of revenue – location-based 40.5 46.8
Total CO
2
e (tonnes) per £m of revenue – market-based 29.7 36.2
ENERGY EFFICIENCY
In 2024, we continued the move to electrification of our operations and improved the energy efficiency of our operations with a 11.6% reduction of non-
electrical energy coming from fossil fuels compared to 2023. We also made good progress in ensuring our electrical energy usage came from certified renewable
energy sources, with an increase from 70% in 2023 to 78% in 2024.
Electrical Energy UK US Norway Australia Total
Electricity 13,352 25,423 53,153 1,711 93,639
Renewable electricity 13,257 7,200 50,496 1,711 72,664
Percentage of electricity from renewable sources 99% 28% 95% 100% 78%
Total energy usage MWh 43,464 28,315 53,910 2,043 127,732
Chemring Group PLC Annual report and accounts 2024 49
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SCOPE 3 CARBON EMISSIONS DATA COLLECTION
This year, we have expanded the collection of a subset of scope 3 emissions
incategories 1,3,4,5,6, and 7:
- Category 1 Purchased goods and services; currently we collect data for
water supply only.
- Category 3 Energy and fuel-related activities.
- Category 4 Upstream transportation and distribution.
- Category 5 Waste generated in operations and waste disposal.
- Category 6 Business travel.
- Category 7 Employee commuting.
Category
Tonnes CO
2
e
UK
Tonnes CO
2
e
US, Norway,
Australia
Tonnes CO
2
e
Group total
1 Water supply 16 14 30
3 Energy and fuel-related activities 988 2,912 3,900
4 Upstream transportation
anddistribution 4,380 63 4,443
5 Waste generated in operations
and waste disposal 21 252 273
6 Business travel 603 164 767
7 Employee commuting 617 1,454 2,071
We are reviewing the following categories and expect to start data collection
during FY25:
Category Coverage
1 Purchased goods and services Global
2 Capital goods Global
ENVIRONMENT continued
Continuing to reduce our environmental impact continued
PURPOSE IN ACTION
CHEMRING COUNTERMEASURES USA ACHIEVES 85%
LANDFILL AVOIDANCE
In 2023, the team at Chemring Countermeasures USA (“CCM USA”) in
Toone, Tennessee, reached an 85% landfill diversion rate. This exceeds their
target of 75% landfill avoidance, largely due to the efforts of Willie Thomas,
Environmental Manager, and his “Green Team”. This means that 85% of the
non-specialised waste generated at the site is now being diverted away
fromlandfill to be reused, repurposed or recycled.
Over the past 12 months, CCM USA has undergone a significant
transformation in terms of waste management with the support of Doxicom
Global, a waste management consultancy based in Jackson, Tennessee.
Where there was once a waste compactor and a fleet of 32 8-yard skips,
ordumpsters, there are now just two 8-yard skips at the Toone facility for
the remaining 15% of waste. The other 85% of waste that would have gone
to landfill is now diverted to be reused, repurposed or recycled.
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WATER CONSUMPTION
In 2024, we used a total of 941,294m
3
of freshwater. This is an increase from 2023 of 34,670m
3
; however, this increase in water use is due to increased
production in Norway and Australia. The UK and US business units have made a significant combined reduction of 22.7% from 2023 usage through improved
leak detection and the repair of water pipes.
None of our operations are in water-stressed regions as defined by the United Nations. Our Australian facility continues to collect and use rainwater that falls
onthe site for facility needs.
2024 2023
UK
US, Norway,
Australia
Group
total UK
US, Norway,
Australia
Group
total
Freshwater (m
3
)
Freshwater use 170,866 770,428 941,294 236,288 670,336 906,624
WASTE GENERATION
In 2024, to improve reporting accuracy and transparency we implemented a new recording system for waste collection. As a result, we have captured more data
around our waste stream. This has resulted in an increase in our reported waste production across the business units. Of our waste production, only 14% was
either sent to landfill or for incineration. This is a 21.3% reduction from 2023.
2024 2023
UK
US, Norway,
Australia
Group
total UK
US, Norway,
Australia
Group
total
Waste (tonnes)
Recycled, non-hazardous 2,188 290 2,478 134 333 467
Recycled, hazardous 126 1,889 2,015 40 1,271 1,311
Not recycled, non-hazardous 4 387 391 176 335 511
Not recycled, hazardous 10 352 362 117 359 476
Total waste (tonnes) 2,328 2,918 5,246 467 2,298 2,765
At our Countermeasures & Energetics businesses, we generate unique waste which is often best managed by destroying it at on-site treatment facilities.
With respect to waste management there are two priority areas: the reduction of waste generation and the reduction of waste sent to landfill. Tohelp improve
in these areas we are engaging with our end destinations of waste to ensure it is processed and treated by the best available method to ensure as little as
possible goes to non-beneficial landfill. We aim to update our waste reduction plans as more detailed data from this engagement becomes available.
LAND QUALITY
Our facility in Chicago, US, is located on a site which has “superfund” status under the US contaminated land regime. The business continues to work with
consultants and the regulatory authorities to ensure that its legal obligations in relation to this matter are fully satisfied.
During the year, we incurred costs in connection with environmental remediation of the sites of the munitions businesses formerly owned by the Group in
Belgium and Italy inaccordance with the terms of sale of those businesses. The Group increased its provision by £6.4m in relation to environmental remediation
for the site of the business formerly owned in Italy following progress in developing a remediation plan for submission to the local regulator. This is included
within disposal provisions of £14.6m as at 31 October 2024. The Group also carries a £3.3m (2023: £3.5m) provision in respect of other environmental liabilities,
which the Board considers to be adequate (see note 24).
Chemring Group PLC Annual report and accounts 2024 51
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TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (“TCFD”) REPORT
The Task Force on Climate-related Financial
Disclosures (“TCFD”) establishes a number of
recommendations for disclosing clear, comparable
and consistent information about the risks and
opportunities presented by climate change.
The Board notes the recommendations in relation to the mandatory
disclosures of climate-related financial risk arising from Listing Rule 9.8.6(8)
and has concluded that the business strategy is of Intermediate Resilience
given the mitigations already implemented and planned.
We consider our disclosure to be consistent with the Climate-related
Financial Disclosures (“CFD”) and all the TCFD Recommendations and
Recommended Disclosures including section C of the 2021 TCFD Annex
entitled “Guidance for All Sectors” and section E of the TCFD Annex
entitled“Supplemental Guidance for Non-Financial Groups” excluding
fullcompleteness of scope 3 emissions (we currently report several
categories in scope 3 but not all). We are continuing to embed the relevant
capabilities across the organisation to track and disclose the complete data
sets and metrics. In 2025, we will continue to develop our reporting of all
scope3categories.
Our statement to meet these requirements, providing information on the
governance of climate-related issues, integration with overall risk management,
strategy in managing climate-related issues and opportunities, and metrics to
measure progress towards our targets, is set out on the following pages.
We are developing our Net Zero Transition Plan in line with the latest
industry guidance from the Transition Plan Taskforce (“TPT”). It is important
to highlight that the guidance is still evolving and our industry is ever changing
to align with global climate change goals and commitments. As such, our Net
Zero Transition Plan is not finalised and we will continue to build and refine it
to ensure that it fully addresses the latest industry guidance. We intend to
share our Transition Plan in our annual report in 2025. We will update the
Net Zero Transition Plan every three years and report progress on our
climate targets annually through our annual report.
GOVERNANCE
BOARD OVERSIGHT OF
CLIMATE-RELATED RISKS
AND OPPORTUNITIES
The Board is responsible for overseeing climate-related risks and opportunities in delivering the Group’s strategy and
running the Group’s operations. The Group Chief Executive is the Board director responsible for sustainability across the
Group which includes climate-related risks and opportunities. The Board reviews the Group risk register as a scheduled
agenda item every six months, in which both physical and transitional climate-related-risks and opportunities are considered.
Progress of our decarbonisation strategy is embedded within our senior executives’ remuneration.
The ESG Committee ensures that appropriate climate and environmental systems are in place and incentives are set
asnecessary to aid the reduction in the Group’s environmental impact. Other elements, including associated action plans,
capital expenditure and budgeting and financial planning related to targets, are overseen and reviewed by the Board.
> FURTHERDETAILINCLUDEDONPAGE90
During 2024, the Board and the ESG Committee continued to receive updates on the development of our net zero
targets, aiming for scope 1 and 2 by 2035 and scope 3 by 2050. They also reviewed initiatives to increase the usage of
green energy sources, reduce energy consumption and enhance energy efficiency, alongside improvements in the
Group’s capability to monitor and measure carbon emissions, with a focus on better data quality and transparency for
reporting.
The Board recognises that to meet our net zero goals we need to have a more robust and developed system to ensure
accurate data collection and monitoring, as well as strong working relationships with our supply chain.
> FURTHERDETAILONPAGES48TO51
MANAGEMENT’S
ROLEINASSESSING
ANDMANAGING
CLIMATE-RELATED RISKS
ANDOPPORTUNITIES
The Group ESG Committee (consisting of members of the Group’s Executive Committee) facilitates and ensures a
centralised approach to sustainability across all our businesses. The Committee is chaired by the Group Chief Executive
and has oversight of all the Group’s ESG-related activity including that of assessing and managing climate-related risks
andopportunities.
> FURTHERINFORMATIONONOURGOVERNANCESTRUCTURECANBEFOUNDONPAGE90
The Group Chief Executive, informed by the ESG Committee, is responsible for ensuring that the Board is updated
regularly on all key matters including the impact of climate-related issues. Members of the ESG Committee are informed
through their respective departments on matters relevant to climate-related issues.
Executive directors and members of the senior leadership team within the Group are incentivised to achieve the Group’s
carbon reduction targets through their annual bonus and long-term incentive plan as detailed in the directors’
remuneration report.
The organisational structure is further detailed opposite, highlighting the reporting process from local business units to
the Board, ensuring that climate-related risks are effectively communicated and managed.
Chemring Group PLC Annual report and accounts 202452
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STRATEGY
CLIMATE-RELATED RISKS AND OPPORTUNITIES IDENTIFIED OVER THE SHORT, MEDIUM AND LONG TERM
MANAGEMENT’S
ROLEINASSESSING
ANDMANAGING
CLIMATE-RELATED RISKS
ANDOPPORTUNITIES
THE CLIMATE-RELATED
RISKS AND OPPORTUNITIES
IDENTIFIED OVER THE
SHORT, MEDIUM AND
LONG TERM
The risks and opportunities associated with climate are reflected in our strategy and plans, and we strive for continuous
improvement to reflect our purpose, our growth strategy, the external landscape and the expectations of our stakeholders.
Climate risks and opportunities, covering both physical and transitional aspects of climate change, were considered during
the year.
Associated time horizons were established as follows:
Transition risk is categorised into short term (0 to 2 years), medium term (2 to 5 years) and long term (5 to 30 years).
This framework is designed to align with our internal strategic and financial planning processes, with the short term
covering the immediate budget period, the medium term encompassing the remaining detailed financial planning period,
and the long term extending beyond these periods. This approach reflects an understanding that climate-related issues
often manifest over the medium and longer terms, particularly in terms of their impact on our assets and infrastructure.
Physical risk is classified into short term (up to 2030), medium term (up to 2050) and long term (up to 2100). These time
horizons correspond with the scenario analysis conducted for physical risks and are different from the time frames we
use for evaluating transition risks, given that significant physical climate risks are not expected to emerge until after 2030
due to the gradual onset of climate impacts.
THE BOARD
The Board oversees climate-related risks and opportunities affecting the Group, incorporating these considerations into the overall
strategy, including climate-related expenditures and investments. Certain responsibilities are delegated to Board committees.
Meets at least eight times a year
ENVIRONMENTAL, SOCIAL &
GOVERNANCECOMMITTEE
Oversees the Group’s ESG performance, monitors executive
progress in strategically addressing climate transition risks
andensures alignment with objectives and targets.
Meets at least three times a year
GROUP HEALTH, SAFETY &
ENVIRONMENTDIRECTOR
Responsible for environmental strategy and assurance, including
climate-related aspects and the decarbonisation strategy. A key
member of the Executive Committee and ESG Committee,
providing regular updates on the environmental and net zero
programme. Oversees the Environmental Policy, outlining the
commitment to addressing environmental impacts, including
climate-related issues.
BUSINESS UNIT
The local business units support the implementation
oftheGroup’s ESG strategy including the management of climate
change risk andareresponsible for the day-to-day compliance.
SUSTAINABILITY COMMITTEE
Co-ordinates the advancement of decarbonisation ambitions,
comprising functional representatives, business leads and
environmental specialists. This group reports to the Group
Health, Safety & Environment Director.
THE BOARD DELEGATES SPECIFIC ESG, INCLUDING CLIMATE CHANGE, OVERSIGHT TO ITS COMMITTEES
RISK MANAGEMENT
COMMITTEE
Oversees the implementation
of the risk management policy
and framework; identifies the
principal risks to which the
Group is exposed; monitors
risk mitigation plans;
andmaintains the Group
riskregister.
Meets quarterly
EXECUTIVE
COMMITTEE
Manages climate-related risks
and opportunities, driving the
decarbonisation strategy
across the business and value
chain as part of the integrated
business planning process.
Meets bi-monthly
NOMINATION
COMMITTEE
Manages succession planning,
ensuring future skills for both
executive and non-executive
Board members, with a focus
on climate-related expertise.
Meets at least three times a
year
REMUNERATION
COMMITTEE
Determines the remuneration
policy, incorporating
long-term incentive plan
(“LTIP”) performance
conditions related to climate
change and other
ESGmatters.
Meets at least two times a
year
INFORMING
INFORMING
INFORMING
REPORTING
REPORTING
REPORTING
Chemring Group PLC Annual report and accounts 2024 53
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TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (“TCFD”) REPORT continued
THE IMPACT OF
CLIMATE-RELATED RISKS
AND OPPORTUNITIES ON
CHEMRING’S BUSINESSES,
STRATEGY AND
FINANCIAL PLANNING
From this analysis, we have identified key risks and opportunities with potential material financial impacts. The Group is
committed to managing regulatory, reputational and market risks related to climate change, which are integrated into our
financial planning processes. Our capital allocation considers capex for climate initiatives, ensuring alignment with our
sustainability objectives and transition process. Climate-related issues can influence both revenues and costs, and we
continuously assess their effects on our operations and long-term strategies. This assessment guides our sustainability
strategy and aligns our financial planning with our climate objectives, enabling us to effectively respond to emerging risks
and take advantage of opportunities during the transition to a low-carbon economy.
We have set net zero targets that drive efficiency, innovation and collaboration across the Group. Recognising that our
supply chain emissions will be significantly larger than scope 1 and 2 emissions, we aim to monitor and collaborate with
suppliers to reduce scope 3 emissions by 2050.
Our strategy to reduce carbon emissions encompasses material climate-related risks and opportunities that have the
potential to impact our business model and strategy over the short, medium and long term taking into consideration
ourassets and infrastructure.
In the short to medium-term, the resources allocated for achieving our net zero commitment are integrated into our
ongoing operational budgets and planned capital expenditures. While some projects set for the medium and long term
may fall outside our current capital expenditure framework and will necessitate additional funding, which we have yet
tofinalise, we are confident that our immediate actions to lower emissions will align with our strategic goals.
This approach reflects our commitment to ensuring that climate-related considerations are integrated into our financial
planning processes, prioritising risks and opportunities in a way that accounts for their interconnected nature and
supports Chemring’s long-term value creation.
Details of the principal risks and uncertainties which could have a material impact on the Group’s business model,
strategy, future performance or reputation, of which climate change has been identified as a risk, are covered in the
principal risks and uncertainties section on pages 76 to 82.
> CLIMATE-RELATEDRISKSANDOPPORTUNITIESAREOUTLINEDINMOREDETAILONPAGES55TO59
THE RESILIENCE OF
CHEMRING’S STRATEGY,
TAKING INTO
CONSIDERATION
DIFFERENT CLIMATE-
RELATED SCENARIOS,
INCLUDING A 2°C OR
LOWER SCENARIO
The Group uses climate-related scenario analysis to improve understanding of the behaviour of certain risks given
different climate outcomes. In 2024, we revisited our scenario analyses and updated our public climate-related scenarios
which we deem to be reliable and related to our business operations to aid our understanding of the business’ resilience
to climate change. The scenarios are as follows:
Physical scenarios Transition scenarios
- RCP 2.6
2
, a stringent mitigation scenario, where
globaltemperature rise is less than 2°C relative to the
pre-industrial period (1850-1900) by 2100.
- RCP 8.5
2
, an extreme physical risk scenario, where
globaltemperatures rise between 4.1 and 4.8°C by 2100.
- Net Zero 2050 (“NZE”)¹, outlining a pathway for the global
energy sector to achieve net zero CO
2
emissions by 2050,
which limits the global temperature rises to 1.5°C by2100,
with 50% probability.
- Stated Policies (“STEPS”)¹, outlining a combination
ofphysical and transition risk impacts as temperatures
riseby2.6°C by 2100, with 50% probability.
Scenarios have been supplemented with additional sources that are specific to each risk to inform assumptions included
in projections. The Group continues to refine its approach to quantitative aspects of this modelling and will report
further information as this develops.
Assumptions have been made as part of this scenario analysis:
- Chemring will have the same business activities that are in place today, which means impacts should be considered
inthecontext of the current financial performance, prices and operational locations.
- Impacts are assumed to occur without the Company responding with any mitigation actions, which would reduce
theimpact of risks.
- The analysis considered each risk and scenario in isolation, when in practice they may occur in parallel as part
ofawider set of potential global impacts.
- Carbon pricing was informed by the World Energy Outlook 2024 report from the International Energy Agency (“IEA”).
> RESULTSOFTHESCENARIOANALYSISAREOUTLINEDONPAGE57
1. IEA (2024), World Energy Outlook, IEA, Paris, www.iea.org/reports/world-energy-outlook-2024.
2. IPCC, 2014: Climate Change 2014: Synthesis Report. Contribution of Working Groups I, II and Ill to the Fifth Assessment Report of the Intergovernmental Panel on
ClimateChange.
STRATEGY continued
CLIMATE-RELATED RISKS AND OPPORTUNITIES IDENTIFIED OVER THE SHORT, MEDIUM AND LONG TERM continued
Chemring Group PLC Annual report and accounts 202454
Strategic report Governance Financial statements

RISK MANAGEMENT
ALL BUSINESS UNITS ARE REQUIRED TO ASSESS RISK IN RELATION TO THE DELIVERY OF THEIR STRATEGY AND OBJECTIVES, WITH
CLIMATE-RELATED RISKS FORMING PART OF THIS CONSIDERATION
CHEMRING’S
PROCESSESFOR
IDENTIFYING
ANDASSESSING
CLIMATE-RELATED RISKS
Current and emerging climate-related risks and opportunities are considered, whether they arise within the Group’s
operations or within the value chain, including existing and emerging regulations. In 2024, climate risks and opportunities
relevant to the Group were reviewed with the aid of external consultants. The Munich Re Location Risk Intelligence
Toolhas been used to assess current and potential future physical climate-related risks facing the Group’s sites and key
suppliers. We have assessed potential physical risks, both acute and chronic, at all Group sites. The financial impact of
each site was considered to determine the materiality of identified risks to specific sites. These risks and opportunities
were then refined through consultation with key Chemring personnel.
Risks and opportunities were assessed in line with the Group’s methodology to assess principal risks. A probability
andimpact matrix defines the likelihood of the risk, based on historical evidence or experience of similar consequences
materialising. The likelihood categories are classified as Very Unlikely, Unlikely, About as Likely as Not, Likely, Very Likely,
or Virtually Certain. The magnitude of impact is classified as Low, Medium-Low, Medium, Medium-High or High, and,
where possible, a single figure estimate for the financial impact was calculated. In addition, the Group’s overall resilience
was evaluated based on its capacity to withstand and recover from potential climate-related risks. The Group’s resilience
is rated as Basic, Intermediate, Advanced or Exemplary.
CHEMRING’S PROCESSES
FOR MANAGING CLIMATE-
RELATED RISKS
Once each climate-related risk and opportunity was identified, the Group sought to quantify the financial impact, the
appropriate strategic response and the cost of implementing the mitigations. This process includes considering the
long-term impacts arising from the risks identified on our products and services. This in turn helped to determine the
materiality, allowing the Group to prioritise resources to manage its most significant climate-related impacts, determine
the best management response or highlight areas requiring further investigation. All of the Group’s climate change risks
and opportunities are covered by existing or planned mitigation and adaptation strategies. Further detail is set out in the
principal risk and uncertainties section on pages 76 to 82.
PROCESSES FOR
IDENTIFYING, ASSESSING
AND MANAGING
CLIMATE-RELATED RISKS
INTEGRATED INTO
CHEMRING’S OVERALL
RISK MANAGEMENT
Climate is considered as a Group principal risk alongside the risks identified in the wider risk management process.
Thisensures climate-related risks are integrated into the Group’s overall enterprise risk management framework.
The management of each business is responsible for the identification, management and reporting of local risks,
inaccordance with the Group’s risk management framework.
The Risk Management Committee meets quarterly and, utilising the input from the business risk registers and the
USriskregister, identifies those principal risks which are material to the Group as a whole. The climate-related risks were
reviewed by the Board during the financial year.
Chemring Group PLC Annual report and accounts 2024 55
Strategic report Governance Financial statements

TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (“TCFD”) REPORT continued
RISK MANAGEMENT continued
ALL BUSINESS UNITS ARE REQUIRED TO ASSESS RISK IN RELATION TO THE DELIVERY OF THEIR STRATEGY AND OBJECTIVES, WITH
CLIMATE-RELATED RISKS FORMING PART OF THIS CONSIDERATION continued
RATING SYSTEM FOR IMPACT RATING SYSTEM FOR
LIKELIHOOD
RESILIENCE RATING
LOW IMPACT
Climate-related risks or opportunities expected tohave
minimal impact on financial performance, resilience,
reputation or strategic direction. Limited financial
consequences, manageable disruptions or low exposure.
MEDIUM-LOW IMPACT
Minor risks or opportunities with small financial consequences
or operational challenges that are easily addressed. Minimal
effect on resilience, reputation or strategy.
MEDIUM IMPACT
Risks or opportunities that could noticeably affect financial
performance, resilience, reputation or strategy. May lead to
moderate financial consequences or disruptions. Medium-impact
opportunities can contribute meaningfully to Chemring’s
performance.
MEDIUM-HIGH IMPACT
Risks or opportunities that could significantly impact financial
performance, resilience, reputation or strategy. May result in
substantial financial consequences or operational disruptions.
Medium-high opportunities can drive strategicimprovements.
HIGH IMPACT
Major risks or opportunities posing a substantial threat or
benefit to financial performance, resilience, reputation or
strategy. May cause severe financial consequences or
disruptions. High-impact opportunities could transform
Chemring’s strategy and performance.
VERY UNLIKELY
Extremely low probability that the
risk oropportunity will ever occur.
UNLIKELY
The risk or opportunity is
theoretically possible, but with a
low probability and/or no record of
having occurred in the industry.
ABOUT AS LIKELY AS NOT
Foreseeable risk or opportunity,
neutralprobability.
LIKELY
Risk or opportunity is probable
and/or has occurred more than
once in the industry.
VERY LIKELY
Risk or opportunity has occurred
or has a strong probability of
occurring and/or there has been a
history of occurrence within
theindustry.
VIRTUALLY CERTAIN
Risk or opportunity expected to
occur and/or is common within
theindustry.
BASIC RESILIENCE
Limited formalised resilience strategies, reactive
approach to challenges, and basic contingency
planning of climate-related risks and opportunities,
with limited integration into overall financial strategy.
INTERMEDIATE RESILIENCE
Defined resilience strategies addressing key risks,
proactive measures in place, and a moderate level
ofintegration with business operations, with a clear
assessment of climate impacts on the business and
integration into strategic planning.
ADVANCED RESILIENCE
Robust resilience strategies incorporating comprehensive
risk assessments, proactive adaptation strategies,
andstrong integration with overall business strategies
and a deep understanding of climate-related risks
and opportunities, well integrated into financial
decision-making processes, and a commitment to
continuous improvement in line with evolving standards.
EXEMPLARY RESILIENCE
Industry-leading resilience strategies, transparency,
comprehensive scenario analysis, proactive adaptation
strategies, and a demonstrated commitment to
driving positive climate impacts with continuous
improvement, innovation in risk management, and
acompany-wide culture that prioritises adaptability
and anticipates emerging challenges. Setting a
benchmark for best practices in TCFD reporting.
CLIMATE-RELATED RISKS
Risk type Description Mitigation
RISK: EXTREME WEATHER EVENTS
Physical
Acute
Extreme weather events resulting from tornados,
hail,flood, lightning and storms, etc. will be intensified
by climate change, having the potential to impact
Chemring’s operations, the effects of which are felt
bytheir communities on an economic and social level.
Extreme weather events can cause disruption to
supply chains across the globe as well as physical
damage to Chemring’s facilities and could result in
disruption to production and product delivery and
impact overall revenue. Such events also endanger
Chemring’s personnel, who are a fundamental priority
to protect.
Current risks associated with hail, tornados, lightning
and flooding are localised to Chemring’s US sites.
Projections indicate that the risk of flooding is expected
to stay consistent under both RCP 2.6 and RCP 8.5
scenarios through to 2100. Storm risks are primarily
localised to UK sites, where they are expected to have
a low impact on operations.
Operations identified as at risk of flooding from extreme
weather events have undergone drainage improvements and
stormwater management upgrades. Across key sites, permeation
basins and improved drainage systems have been implemented
to manage stormwater more effectively and reduce flood risks.
The Company is also evaluating energy supply to facilities
potentially affected by extreme weather, aiming to implement
backup power systems for safe shutdowns in case of power
loss. All sites operate emergency generators.
Weather monitoring and forecast updates support thunderstorm
procedures and the use of lightning protection systems, including
lightning rods and warning systems, across high-risk locations to
protect infrastructure and minimise disruptions.
Wind speed monitoring at burn grounds helps mitigate
riskby ensuring safe operating conditions, protecting both
personnel and infrastructure.
Chemring business units manage supply issues related to
unforeseen environmental risks by assessing supply chain
sustainability and ensuring alternative suppliers for key parts
and services are available.
No strategic change required, continued monitoring and
analysis as per normal operations.
Area:
Own operations/
Upstream
Primary potential
financial impact:
Loss of revenue
Time horizon:
Short-term
Likelihood:
VeryLikely
Magnitude ofimpact:
Medium-Low
Resilience rating:
Intermediate
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Risk type Description Mitigation
RISK: EXTREME TEMPERATURE FLUCTUATIONS
Physical
Chronic
Extreme temperature fluctuations, including heat
stress and cold stress, have the potential to disrupt
Chemring’s operations. These conditions can impair
people-driven processes and strain infrastructure like
cooling systems and burn grounds. These impacts
could result in delays to production and delivery.
Temperature extremes also pose risks to employee
safety, with protecting personnel being a top priority.
Cold stress remains a current challenge, with
infrastructure damage leading to site closures,
butfuture risks are primarily centred on increasing
heat stress. Current cold stress risks are associated
with Chemring’s US and Norway sites. Future projections
indicate a decreased risk as cold stress is a progressively
declining hazard under both RCP 2.6 and 8.5. Heat
stress risks are presently based in the US, with projections
under RCP 2.6 indicating this risk will remain stable.
However, under the more severe RCP 8.5 scenario,
this risk is expected to extend to Chemring’s Australia
site by 2100.
Sites vulnerable to extreme temperature fluctuations
haveintroduced a range of mitigations to protect critical
infrastructure, maintain operational continuity and prioritise
employee safety.
For cold stress, measures include enhanced pipe insulation,
temperature-controlled storage and heat-traced external
piping. Routine inspections are conducted to address
cold-vulnerable equipment.
To manage heat stress, HVAC upgrades are underway to
meet rising cooling demands. Burn ground operations are
restricted during extreme heat or low-humidity conditions,
reducing associated risks. Regular burn ground maintenance
and vegetation control are conducted at key sites.
No strategic change required, continued monitoring
andanalysis as per normal operations.
Area:
Ownoperations
Primary potential
financial impact:
Loss of revenue
Time horizon:
Short-term (cold),
short to long-term
(heat)
Likelihood:
Very Likely
Magnitude ofimpact:
Low
Resilience rating:
Intermediate
RISK: PRECIPITATION STRESS
Physical
Chronic
Precipitation stress risk can disrupt supply chains and
impact overall operational efficiency. Increased rainfall
can lead to flooding, causing physical damage to
facilities and hindering production capabilities.
Precipitation stress can also affect transportation
routes, resulting in production and product
deliverydisruption.
Current precipitation stress risks are associated with
Chemring’s US sites. Future projections show that
under RCP 8.5, this risk will spread to the UK, while
under RCP 2.6, the risk remains steady in the US.
Sites vulnerable to flash flooding have undergone drainage
improvements and stormwater management upgrades
tomanage heavy rainfall and reduce risks associated with
increased precipitation. In the UK, rainwater interception
and soakaway systems are in place to divert water from
keyfacilities.
A climate change action plan is being developed to identify
and address risks from natural hazards, including measures
toprevent, correct and mitigate impacts related to
increasedrainfall.
Chemring business units manage supply issues related to
unforeseen environmental risks by assessing supply chain
sustainability and ensuring alternative suppliers for key parts
and services are available.
No strategic change required, continued monitoring
andanalysis as per normal operations.
Area:
Ownoperations/
Upstream
Primary potential
financial impact:
Loss of reputation,
market share and
revenue
Time horizon:
Short to long-term
Likelihood:
Very Likely
Magnitude ofimpact:
Medium-Low
Resilience rating:
Intermediate
WILDFIRES
Wildfires are not considered a risk at the Group level, but we acknowledge the potential for low-impact incidents at our Australia site. We have launched
anenhanced vegetation management programme to trim and remove potential wildfire hazards around our Australian operations. We are also aware of local
mitigation efforts, such as planned burns.
OVERALL PHYSICAL RISK IMPACTS SPLIT BY GEOGRAPHIC REGION AND SCENARIO ANALYSED
Operational location
Scenario Australia Norway UK North America Upstream Downstream
RCP 2.6
RCP 8.5
Low impact
Medium impact
High impact
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TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (“TCFD”) REPORT continued
CLIMATE-RELATED RISKS continued
Risk type Description Mitigation
RISK: SHIFT TO LOW-CARBON TECHNOLOGIES
Transition
Technology
Climate-related requirements are changing in key customer
procurement contracts; Chemring may face challenges
inupgrading its capability development, transferring
newtechnologies and maintaining efficient
manufacturingprocess.
Adopting low-carbon technologies will likely require
significant capital expenditure to upgrade production
facilities and integrate green technologies. There is also
the potential for contract loss if Chemring is unable
tomeet sustainability requirements. The disposal or
write-off of older assets may further increase costs,
andthe need for workforce retraining could
impactoperations.
Under the NZE scenario, Chemring will need to accelerate
investment in low-carbon technologies by 2035 to remain
competitive, focusing on green manufacturing and energy
efficiency. The STEPS scenario allows for a more gradual
transition, reducing the pressure on short-term capital
investment while maintaining ongoing operations.
Chemring is actively monitoring government and
customerpriorities regarding technology roadmaps and
climate-related procurement standards. The Group is
involved in an industry working group to address these
requirements and has developed a long-term transition
plan to achieve net zero emissions by 2050.
Additionally, close relationships with customers are
maintained to facilitate effective risk management
andlong-term planning.
Future procurement decisions may focus on the
sustainability of a supplier’s business operations,
forwhich Chemring has an internal transitional plan
forbecoming a net zero organisation by 2050.
No strategic change required, continued monitoring
andanalysis as per normal operations.
Area:
Own operations/
Downstream
Primary potential
financial impact:
Higher capex
expenditure, loss
ofrevenue
Time horizon:
Medium to long-term
Likelihood:
About as Likely as Not
Magnitude ofimpact:
Low
Resilience rating:
Intermediate
RISK: EXPOSURE TO LITIGATION
Transition
Legal
Chemring faces increasing risks of litigation related
toenvironmental non-compliance or failure to meet
emissions targets as regulation tightens. There is also
thepossibility of legal action from stakeholders if the
Group’s environmental practices are perceived as
inadequate or harmful.
Litigation could result in significant financial penalties and
legal costs. There is also a risk of reputational damage
that could harm relationships with key customers and
stakeholders. Any disruptions caused by legal action
mayaffect ongoing operations and contract fulfilment.
Under the NZE scenario, the risk of litigation is
higherinthe short term due to stricter regulatory
enforcement aimed at accelerating the energy transition.
Over time, compliance measures are expected to reduce
this risk. In the STEPS scenario, regulatory changes are
more gradual, resulting in lower short-term litigation
risks, but with potential longer-term exposure as
regulations continue to evolve in response to energy
security and emissionstargets.
Chemring conducts regular HSE audits and emissions
monitoring to ensure compliance with relevant standards.
Enhanced tracking systems are in place for accurate
reporting of environmental data, and employee training
and environmental awareness initiatives reinforce
adherence to regulations.
By maintaining a strong governance framework and
continually updating its environmental policies, Chemring
seeks to minimise the risk of litigation. Transparent reporting
and sustainability practices are key to mitigating
reputational risks.
No strategic change required, continued monitoring
andanalysis as per normal operations.
Area:
Ownoperations/
Upstream
Primary potential
financial impact:
Increase in costs,
lossof reputation
Time horizon:
Short to medium-term
Likelihood:
About as Likely as Not
Magnitude of impact:
Low
Resilience rating:
Intermediate
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CLIMATE-RELATED OPPORTUNITIES
Opportunity
type Description Opportunity
OPPORTUNITY: RESOURCE EFFICIENCY
Resource
efficiency
Improvements in both product and energy efficiency will
help reduce waste, operational costs and CO
2
e emissions
across Chemring’s facilities.
Efficiency efforts focus on using the best available
technology for operations and continuous monitoring
and maintenance of facilities. Initiatives such as upgrading
building facilities and implementing LED lighting retrofits
reduce direct energy costs, with further efficiency plans
in place for future savings.
In the NZE scenario, Chemring’s commitment to
resource efficiency aligns with stricter sustainability
targets, providing a strategic advantage as customers
increasingly favour suppliers demonstrating strong
resource efficiency. Under the STEPS scenario, while the
pressure to implement energy-efficient initiatives may be
lower due to less stringent policy changes, Chemring can
still capitalise on cost savings and operational improvements.
Chemring sees opportunities for future expansion or
development to incorporate energy-efficient methods
like heat pumps, advanced HVAC systems and
LEDlighting.
This opportunity is largely unaffected by external
policyshifts, as financial savings from resource efficiency
improvements are already planned andunderway.
No strategic change required, continued monitoring
andanalysis as per normal operations.
Primary potential
financial impact:
Reduction in cost
Time horizon:
Shortto medium-term
Likelihood:
Likely
Magnitude of impact:
Low
Resilience rating:
Intermediate
OPPORTUNITY: LOW-EMISSIONS ENERGY
Energy
source
With the growing availability and decreasing cost
ofrenewable energy, Chemring can benefit from
procuring renewable energy for its sites.
This would reduce both the Group’s exposure tovolatile
fossil fuel prices and its greenhouse gas emissions. By
shifting away from fossil fuels, Chemring lowers its sensitivity
to carbon pricing and improves its sustainability profile.
In the NZE scenario, transitioning to renewable energy
isessential for meeting global decarbonisation goals
by2050, and Chemring’s strategic shift to renewable
sources will safeguard against rising carbon costs. In the
STEPS scenario, while the transition to renewables may
be more gradual, Chemring’s plans will still yield benefits
in terms of cost reduction and emissions management,
enabling the Group to adapt effectively to changing
market conditions.
The carbon price (US$/tCO₂e) is projected to increase
asfollows:
Scenario 2030 2040 2050
STEPS 126 126 126
NZE 2050 140 205 250
Difference 11% 63% 98%
Chemring has a significant opportunity to prioritise the
procurement of renewable energy sources, such as solar
and wind power, throughout its operations. Byfocusing
on on-site renewable energy generation, Chemring can
reduce operational costs and enhance sustainability.
Future developments will emphasise theimplementation
of renewable solutions and energy-efficient technologies,
including heat pumps and advanced insulation, to further
decrease overall energy consumption and support the
Group’s long-term business goals.
By adopting an internal carbon price, the Group
canassign a monetary value to its greenhouse gas
emissions. This will enable better integration of these
costs into investment decisions and daily operations,
while also promoting the use of on-site renewable
energy generation whereappropriate.
Strategic change required incorporating an internal
carbon price assigns a monetary value to greenhouse
gas emissions, empowering business units to integratethis
cost into investment decisions and dailyoperations.
Primary potential
financial impact:
Reduction in cost
Time horizon:
Short to medium-term
Likelihood:
Very Likely
Magnitude of impact:
Low
Resilience rating:
Basic
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TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (“TCFD”) REPORT continued
METRICS AND TARGETS
METRICS USED TO ASSESS CLIMATE-RELATED RISKS AND OPPORTUNITIES IN LINE WITH CHEMRING’S STRATEGY AND RISK
MANAGEMENT PROCESS WITH CLIMATE-RELATED RISKS FORMING PART OF THIS CONSIDERATION
METRICS USED
TOASSESSCLIMATE-
RELATED RISKS AND
OPPORTUNITIES INLINE
WITH STRATEGY AND RISK
MANAGEMENT PROCESS
Chemring uses a range of metrics to assess climate-related risks and opportunities, aligned with its strategy and risk
management process. These metrics cover GHG emissions (scopes 1, 2, and relevant scope 3), energy consumption,
water use and waste generation.
Executive remuneration is tied to achieving carbon reduction goals through annual bonuses and the long-term incentive
plan, ensuring accountability for climate performance.
The Group reports energy consumption and GHG emissions according to the GHG Protocol and SECR, tracking KPIs
like energy efficiency and emissions intensity.
Climate scenario analysis informs Chemring’s strategy, with supporting metrics integrated into risk management and
strategic planning to monitor its business environment.
Further environmental metrics, including freshwater use and waste, are disclosed on pages 48 to 51. Chemring continually
improves data accuracy, reporting and tracking, with historical trends and forward-looking projections provided for
long-term planning.
SCOPE 1, 2 AND, IF
APPROPRIATE, 3 GHG
EMISSIONS AND THE
RELATED RISKS
Chemring monitors and reports scope 1 and 2 GHG emissions in line with the GHG Protocol. Scope 1 emissions are
primarily from natural gas used in manufacturing and heating, while scope 2 comes from purchased electricity. Relevant
scope 3 emissions are tracked, with further expansion planned as part of our commitment to improving scope 3 data
collection and reporting.
In 2024, Chemring reduced market-based scope 1 and 2 emissions from 17,430 tCO
2
e in 2023 to 15,161 tCO
2
e, driven
byenergy efficiency initiatives, facility upgrades, and increased use of renewable electricity via REGO and REC certificates.
Scope 3 emissions data will continue to evolve as data collection improves, with key categories outlined in the report
onpage50.
CHEMRING’S TARGETS
FOR MANAGING CLIMATE-
RELATED RISKS AND
OPPORTUNITIES AND
PERFORMANCE
AGAINSTTARGETS
Chemring has set ambitious climate targets, committing to net zero scope 1 and 2 emissions by 2035 (market based)
andnet zero by 2050. These targets align with the Group’s sustainability strategy and global climate goals.
Year-on-year reduction targets for scope 1 and 2 emissions are supported by efficiency measures, green fuel adoption
and increased renewable energy usage. Chemring tracks progress through intensity ratios, such as tCO
2
e per £1m of
revenue, reporting a 18.0% reduction in emissions intensity in 2024, from 36.2 tCO
2
e per £1m of revenue to 29.7tCO
2
e.
To further reduce its environmental impact, Chemring is implementing initiatives like upgrading heating and lighting
systems, replacing traditional lighting with LED technology, and trialling electric vehicles. Progress is regularly reviewed
bythe ESG Committee and reported to the Board.
Chemring’s long-term targets meet regulatory requirements and market expectations, positioning the Group to capitalise
on opportunities in the transition to a low-carbon economy. Performance against these targets is monitored with clear
KPIs, and methodologies for calculating these targets are outlined in the Group’s reporting framework.
> EMISSIONSTARGETSFORTHEGROUPAREOUTLINEDONPAGE45
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OUR PEOPLE
Investing to grow
At Chemring, our people are at the heart of
everything we do and are key to our organisation’s
growth strategy. We invest in our people at all levels,
across every location and function. This focus ensures
we have the right people enabled to perform and
support our growth plans.
Our talent markets continue to be challenging, with the expectations
ofcolleagues to have a best-in-class employee experience at Chemring.
Although inflationary pressures are easing across our key markets, the cost
ofliving challenge remains for our colleagues. We pay competitively andoffer
purposeful and impactful careers which support our customers and theend
users of our products and services.
CHEMRING CULTURE
We are proud of our values-based culture and the areas of Safety, Excellence
and Innovation are the focus of everything we do. As a group of companies
we leverage value through embracing what ties us together and respecting
what differentiates us. Our principle of Global Voice, Local Accent defines
theapproach to investing in our people to bring the best of our corporate
programmes whilst ensuring our business units bring their local unique
customs and practices to engage and empower the workforce.
OUR POPULATION
Our business units each have an individual focus on the skills and talent they
need, as well as a clear understanding of their local talent markets, and, with
that, a focus on building a truly diverse workforce. Chemring strives for
diversity on a broad basis including gender, age, background, education,
disability, neurodiversity and nationality (within the constraints of our
regulatory requirements) and this diversity brings a more agile, engaged
andhigher-performing workforce.
OUR OVERALL PEOPLE APPROACH IS FOCUSED ON FIVE KEY AREAS:
1.
Having the right people
ready toperform
2.
An understanding of our
talent pipelines
3.
Clear leadership and
capability development
programmes
4.
A focus on the engagement
and retention of ourpeople
5.
An underpinning of
diversity, equity & inclusion
in everything wedo through
our culture at Chemring
DIVERSITY, EQUITY & INCLUSION
LEADERSHIP
ANDCAPABILITY
DEVELOPMENT
CULTURE,
ENGAGEMENT
ANDRETENTION
TALENT
PIPELINES
LOCAL BUSINESS
IMPERATIVES
Employ, perform,
engage, retain
RISK REGISTER AND STRATEGY
Gender diversity is one measure that we monitor throughout our population
and programmes. Our total global population in 2024 was:
TOTAL POPULATION:
2023
2024
Male 1,857 71%
Female 751 29%
Male 2,004 72%
Female 782 28%
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OUR POPULATION continued
We benchmark our external local talent markets and work continuously
toseek ways to attract, engage and retain a diverse workforce.
As we continue to grow as an organisation, we also continue to focus on
creating a best-in-class employee experience through our people strategy.
2024 has seen a number of new “digital first” HR tools launched across the
Group to modernise and improve the efficiency of our approach, from
employee-centric HR information systems to localised employee listening
tools getting to the heart of what’s important to our colleagues. We also
continue to look at ways to leverage the ever-evolving Microsoft 365 platform
as a way to improve how people collaborate and get work done for our
“online” colleagues.
PURPOSE IN ACTION
ENHANCING EMPLOYEE WELLBEING AT CHEMRING
In 2024, Chemring embarked on a mission to improve employee wellbeing,
recognising its critical role in fostering a productive and engaged workforce.
The initiative aimed to address various aspects of employee health, including
mental, physical and emotional wellbeing.
During World Wellbeing Week in June, our Countermeasures and Energetics
businesses in the UK held bake sales in support of local charities. Not only are
these events a great social opportunity to get colleagues together and enjoy
some cake and conversation, they also offer the chance to raise some
essential funds for others in need.
Colleagues in our Roke business chose to set gruelling exercise goals of
cycling, walking and running 1,000km which have led to permanent and
healthy changes in lifestyle. One colleague commented: “I ride into work at
least twice a week, spend way more time outside, and I am fitter than I’ve
ever been. I still haven’t felt the need to replace my car!”
Overall, the initiative not only enhanced employee satisfaction but also
demonstrates Chemring’s commitment to supporting the wellbeing of
itsworkforce.
OUR TALENT PIPELINES
To cultivate a diverse and broad workforce, we tap into various internal and
external talent pipelines. We recruit from a wide array of external channels,
targeting direct hires for critical areas in the Group, as well as aspiring
professionals early in their career journey. Moreover, we adopt new strategies
to develop talent streams in unconventional areas, like through the Roke
Academy, which offers individuals from diverse professional backgrounds the
opportunity to learn skills that are vital for our future needs. In 2024, we
partnered with organisations such as Women in Defence and attended the
Defence Women’s Network Conference to meet potential talent looking for
roles in our industry.
We evolved our early careers UK programme in 2024 to create two streams
focusing more explicitly on our two sectors. This change has allowed each
programme to focus on its unique sector-specific story and develop skillsets
in line with its organisational plans.
Our focus on talent also extends to supporting the pipelines of talent moving
through our organisation. Our talent assessment activities are centred around
the need to plan and develop to solve today’s challenges and tomorrow’s
opportunities. We actively seek ways to create opportunities for our talent
togain those experiences before they are needed.
Our talent programme, Aspire@Chemring, launched in May 2022 and its
second cohort graduated in August this year. Aspire@Chemring is designed
to connect a global cohort of future senior leaders and provide experiences
designed to open their perspectives to future roles as Leaders of People or
Leaders of Subject Matter Expertise (“SME”).
We aim to collaborate with industry peers and governmental bodies to enhance
the skills and movement of professionals into our organisation. As an active
member of the Ministry of Defence led Defence Suppliers Forum, we are
helping to shape solutions to the sector-wide challenge of bringing diverse
STEM talent into the sector, one that we are all facing.
In the UK, we have worked with the Institute of Engineering and Technology
(“IET”) for the past five years, providing scholarships to students from
underprivileged backgrounds, enabling educational opportunities otherwise
inaccessible. This variety in background introduces unique viewpoints within
Chemring, which is evident when our IET scholarship recipients engage in
summer internships and from those who have been successful in securing
full-time roles with Chemring at graduation.
LEADERSHIP AND CAPABILITY DEVELOPMENT
Our focus on internal talent is as important as identifying and securing
external talent. We offer development opportunities for all colleagues,
notonly to ensure we have the right skills, in the right place, at the right
time,butto engage our workforce with meaningful and impactful careers.
We see development as a strategic enabler for meeting our business and
customer commitments, and it continues to serve our growth plans by ensuring
we can develop our internal talent as well as seeking external talent. We use
Performance Conversations as a tool to align personal career aspirations to
business objectives and as a way to understand and engage withour colleagues
and their individual aspirations.
We continue to run our established group development programmes,
whichinclude our two-year early careers programme, our supervisor
focusedLeading Our People programme, and our talent development
programme, Aspire@Chemring. Aspire@Chemring graduated its second
cohort of 52 global talent in 2024, creating new networks and inspiring
ourfuture senior leaders.
In the UK, we continue to utilise the Apprenticeship Levy to maximise
apprentice development opportunities at the entry, middle and senior
levels,covering specialist skillsets and functional competency.
OUR PEOPLE continued
Investing to grow continued
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PURPOSE IN ACTION
APPRENTICE OF THE YEAR AWARD
Aaron McEvoy, a Chemring apprentice, has been recognised for his outstanding
achievements by winning two awards. Firstly, the Engineering Apprentice of the
Year at the Portsmouth Engineering Training Association (PETA) AZ Awards.
PETA is dedicated to addressing skills shortages in the engineering industry
around Portsmouth. Secondly, Aaron scooped up the prize for Engineering/
Manufacturing Apprentice of the Year at the Portsmouth News and Chichester
Observer awards in October. Sponsored by The Royal Navy. The awards
recognise the best and brightest apprentices, mentors, training providers
andemployers from across the Portsmouth and Chichester area.
Aaron, a level 3 engineering technician apprentice at Chemring
Countermeasures UK (CCM UK), was among five finalists for the award.
Aaron chose an apprenticeship for its practical learning opportunities and
hasgained extensive knowledge in engineering processes and principles.
Chemring’s apprenticeship opportunities offer insight into the unique nature
of our products, which save lives, provides a variety of work and learning
opportunities. Aaron has benefited from the experience and qualifications
ofhis colleagues and has had the chance to travel and see products tested.
Aaron has found Chemring to be a great learning environment. His career
goals include achieving further qualifications and becoming a Production
Engineer, with a keen interest in automation and robotics. Our early careers
professionals are a key talent segment for Chemring, and we are proud to
behelping shape our leadership of the future.
ENGAGEMENT AND RETENTION
Our workforce is the driver of our success, and we aim to put the employee
experience at the forefront of our decision making. Our external talent
markets remain extremely competitive and therefore the engagement
andretention of our workforce is a people imperative.
Listening to all colleagues is essential to understand what’s important to our
workforce, and since this will differ across our global organisation, in 2024,
wemoved to using local listening tools and technologies to ensure they
gathered the specific “Local Accent”. This enables the tools used locally to be
tailored to the local cultures, contexts, environments and working practices,
and ensures that the action taken is effective and impactful to that employee
group. We therefore no longer have a single consolidated employee positivity
metric for the Group, instead prioritising each business unit’s individual positivity
scores, with the majority of positivity results in the 73-75% range, reflecting
the local relevance of opportunities each business has to continuously improve.
Furthermore there are many ways in which our colleagues are engaged with
individually, from one-to-one performance conversations to works councils
and Employee Resource Groups (“ERGs”). In many of our businesses,
leadership make themselves available through all-hands town hall meetings
inwhich any colleague can raise questions.
Laurie Bowen, non-executive director and Remuneration Committee Chair,
istasked with employee engagement for the Board. For the fourth consecutive
year, Laurie has connected with colleagues across the Group, at a variety of
levels and in differing roles, focusing on business units experiencing change
and transformation. Visiting Roke, Chemring Energetic Devices in Chicago,
Chemring Countermeasures in Philadelphia and Chemring Countermeasures
in Salisbury, she explored how their business’ respective organisational change
was going and was encouraged to hear of how the ambitious vision for our
companies is being translated into our colleagues’ day-to-day experiences.
Areas of feedback in 2024 included the acknowledgement of local leadership
teams’ efforts to involve and engage the workforce in the changes in the
businesses, whilst highlighting the challenges of communications keeping up
with the rapid pace of change. Safety remains a top priority in the eyes of
ourcolleagues who speak up when they identify improvement opportunities,
which has extended beyond physical safety into the wellbeing agenda in 2024.
Laurie also heard of the maturing of our standards and processes in line with
our business growth, to ensure our operational efficiency serves our business
targets and ambitions. The groups identified specific opportunities to improve,
which were openly and constructively communicated, and summarised to the
leadership teams for action as part of their local employee engagement action
planning process. Thanks to this feedback, our local leadership teams at these
locations can ensure that employee feedback informs and supports their
growth agendas. Employee feedback remains a key channel for insights into
how we can shapeChemring’s employee engagement priorities both at a
local level andGrouplevel.
Our local business ERGs are helping us to understand “whatgood looks like”
in many areas of the inclusion agenda; one size doesnot fitall.
This approach is how we focus on developing our culture so that it serves
ourcolleagues and our customers. We work to the principle of embracing
what ties us together and respecting what differentiates us. Our value-driven
culture is based on our values of Safety, Excellence and Innovation and is the
foundation all our businesses work to.
DEVELOPING OUR PEOPLE
48
Apprenticeships
active in 2024
70
Graduates and
apprentices took
part in early careers
development in
the UK
52
Future senior leaders
graduated from the
second cohort of
Aspire@Chemring,
our global virtual
talent development
programme
Chemring Group PLC Annual report and accounts 2024 63
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DIVERSITY, EQUITY AND INCLUSION (“DE&I”)
DE&I continues to be a lens through which we consider all our people decisions.
We have continued our focus of 2023 into 2024 to mature our processes,
driving improvements to our gender balance in senior management positions.
We believe that it is important to include all members of senior management
who influence the day-to-day employee experience and lead our culture.
Ourdefinition of this population is what we monitor to ensure that all these
senior leadership positions continue to be developed towards a more gender
balanced and inclusive population.
We define senior management positions as Executive/Senior Leadership,
direct reports to Executive/Senior Leadership (if in a leadership role) and key
positions holding a senior position or role of influence in the organisation,
with a 2027 target of at least 33% female and 67% male.
PURPOSE IN ACTION
CHEMRING’S COMMITMENT TO GENDER DIVERSITY
INDEFENCE
Chemring is dedicated to fostering a vibrant mix of backgrounds, experiences
and perspectives to drive innovation and continuous improvement.
Recognising the importance of gender diversity in the engineering and defence
sectors, Chemring signed the UK Women in Defence Charter in 2024.
The Charter aims to improve gender balance in the UK defence sector by
committing to four key actions. These include assigning a senior executive
responsible for gender inclusion, setting internal targets for gender diversity
insenior management, publishing annual progress reports, and linking senior
executives’ pay to gender inclusion targets.
Currently, women hold 24% of UK Defence sector jobs and 12% of positions
in the UK Armed Forces. By signing the Charter, Chemring joins over 90 UK
organisations committed to improving gender balance in the sector.
Additionally, Chemring directly supports our customers’ gender focus
through sponsorship of the MoD Defence Women’s Network Conference,
an annual event focused on breaking down gender inequality barriers and
promoting diversity and inclusion. 14 of our female colleagues were able to
attend this year to hear perspectives and share insights with this important
defence network.
Our organisation grew in 2024 and talent challenges in the external market
have had a minor impact on our gender split which is 31% female and 69%
male. Our growth is challenging us to think differently about how we can
continue to develop our gender diversity within the organisation. Weremain
on target to meet our 2027 goals as well as continuing to deliver gender
diversity in our growing workforce.
We recognise that Chemring has a role to influence the external talent
market where possible to ensure a strong gender balanced pipeline is grown.
In 2024, we are proud to have signed the UK Women In Defence Charter
and attended the Defence Women’s Network Conference, which signals
ourcommitment to improving gender diversity in the defence sector.
In 2023, we added the requirement for DE&I to be considered within our
five-year planning activities, which we have continued in 2024. Gender is not
the only focus of our efforts. Chemring strives for diversity on a broad basis
including gender, age, background, education, disability, neurodiversity and
ethnicity (within the constraints of our regulatory requirements). This is an
area where we continue to develop both globally and locally and which will
be central to our success in the coming years.
We continue to focus on ethnicity at the various levels within our organisation,
as a way of ensuring our workforce is reflective of the communities we are
situated in and operate within. Our reporting on ethnic diversity at Chemring
is set out in the table below.
Asian
%
Black
%
Mixed race
%
White
%
Other
*
%
Senior managers 2.7 0.9 — 96.4 —
Mid-level managers 1.5 8.0 0.4 87.5 2.6
All other employees 4.0 11.7 2.1 78.9 3.3
* Including Hispanic, NHOPI and Native American.
OUR COMMUNITIES
Chemring takes its commitment to enhancing social value seriously,
bothatthe local and national level in the regions we operate within.
With a geographically diverse group of businesses, the “Local Accent”
element which balances our “Global Voice” is of great importance to us.
Nomore so than in how our businesses represent and integrate into the local
communities of which we form a part. All of our workforces have strong local
ties to the community, and we see numerous charity and volunteering efforts
from our workforce which serve those communities.
The education sector is another area of focus, with the opportunity to provide
STEM sponsorship and support in local schools and colleges. Our IET bursary
sponsorship further targets socially and economically deprived students to try
and create a more level, diverse and inclusive STEMpipeline. Investing in this
community today helps us to build a broader and more diverse pool of talent
to join the engineering and defence sectors in years to come.
In addition, we partner with charities that directly support those who are
endusers of our products and services. We honour the service that they
have given through the support of events such as “Ride with a Veteran”
andthrough our support of veteran networks like the US Marine Corps
charity, Marine Toys for Tots Foundation.
OUR PEOPLE continued
Investing to grow continued
Chemring Group PLC Annual report and accounts 202464
Strategic report Governance Financial statements

EXECUTIVE COMMITTEE
SENIOR MANAGEMENT POSITIONS
Male 87%
Female 13%
Male 87%
Female 13%
2024
2023
Male 79%
Female 21%
Male 79%
Female 21%
TOTAL GRADUATES AND APPRENTICES
Male 56%
Female 44%
Male 69%
Female 31%
Male 56%
Female 44%
Male 68%
Female 32%
BOARD OF DIRECTORS
2024
2024
2024
2023
COLLEAGUES INVOLVED IN LEADERSHIP DEVELOPMENT
PROGRAMMES IN 2024
Male 70%
Female 30%
Male 70%
Female 30%
2024
2023
2023
2023
LISTENING TO OUR PEOPLE
7
New bespoke and
localised listening
tools deployed across
Chemring to get
tothe heart of
whatmatters to
ourcolleagues
72%
Weighted average
positivity score
across these local
listening tools
>1,700
Colleagues regularly
providing feedback
through our
listeningtools
Chemring Group PLC Annual report and accounts 2024 65
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ETHICS AND BUSINESS CONDUCT
Always doing the right thing
Chemring is committed to conducting its business
inan ethical and responsible manner at all times,
andin full compliance with all applicable laws
andregulations.
OUR APPROACH
We are committed to promoting a culture within Chemring where everyone
does the right thing and takes personal responsibility for their actions.
OurOperational Framework and Code of Conduct set out the standards
ofbusiness conduct and behaviours that we expect of all our businesses,
ouremployees and all third parties who act on our behalf. We require all
employees and third parties who act on our behalf to conduct business
honestly and with integrity, and to take personal responsibility for ensuring
that our commitment to sound and ethical business conduct is delivered.
ESG COMMITTEE
The Board has established an ESG Committee, which has oversight of
theGroup’s environmental, social and governance policies and objectives.
TheESG Committee is chaired by the Group Chief Executive, with the
othermembers being the Chief Financial Officer, the Group Legal Director
&Company Secretary, the President of our US operations, the Group HSE
Director, the Group Director of Corporate Affairs, the US General Counsel,
the US Vice President HSE, the Group Financial Controller and the Group
Sustainability Lead. The ESG Committee has oversight of the Group’s ethical
business conduct and compliance framework, including our anti-bribery
processes. It monitors the implementation of the framework across the
Group and recommends areas for improvement.
The Committee met three times during the year. At every meeting the
Committee reviews and monitors compliance with our anti-bribery processes
and other key compliance policies. During the year the Committee also reviewed:
- the deferral of our net zero scope 1 and 2 emissions target from
2030to2035 following the decisions taken over the last two years to
significantly increase production capacity and establish new facilities in
ourEnergetics businesses;
- performance against HSE and people-related targets;
- the annual Operational Assurance Statements completed by the businesses
for the period from 1 July 2022 to 30 September 2023;
- metrics on the due diligence and appointment of third party sales partners;
- statistics on the completion of compliance training;
- approvals granted under our policy on sales to customers located in higher
risk territories; and
- its terms of reference.
The Group Chief Executive reports to the Board on the Committee’s
activities following each meeting.
OPERATIONAL FRAMEWORK
Our Operational Framework incorporates a broad range of more than
thirty-fivepolicies and procedures which have been adopted by all our businesses.
The Operational Framework implements a robust governance and
compliance framework to enable us to operate in a safe, consistent
andaccountable way.
The leaders of each of our businesses are required to ensure that:
- every employee, at every level of the organisation has access to and
understands the requirements of the Operational Framework;
- appropriate training and monitoring processes are in place to ensure
properimplementation of the Operational Framework; and
- local procedures and processes are adopted to implement the
requirementsof the Operational Framework.
The Operational Framework was updated and reissued in November 2024.
All our Operational Framework policies and procedures and associated
training material are hosted on the Chemring Compliance Portal. This innovative
online system allows us to issue new and updated policies and training to
employees across the Group, targeted to their specific roles, and enables
usto monitor completion of mandatory training on a timely basis.
Our governance framework also includes a requirement for all businesses
tocomplete an Operational Assurance Statement on an annual basis,
providing a detailed assessment of their compliance with the Operational
Framework. The output from the operational assurance process enables
usto drive continuous improvement in our governance and compliance
framework, including the identification of additional training requirements
forour employees. It also allows us to monitor and address the evolution
ofanumber of the key risks we face, and provides valuable input to our
internal audit programme.
CODE OF CONDUCT
Our Code of Conduct, which sits alongside our Operational Framework,
embraces our fundamental values of Safety, Excellence and Innovation.
Itprovides direction to all employees on legal, ethical and risk issues that
theymay encounter in their day-to-day activities.
All employees and all third parties who act on the Group’s behalf are required
to comply with our standards of behaviour and business conduct, asset out
within the Code, and applicable laws and regulations in all the countries in
which we operate. All employees, current and new, are provided with a copy
of the Code of Conduct and asked to confirm that they will adhere to its standards.
The Code is reproduced in Norwegian for our employees in Norway. The Code
was updated and reissued in November 2024.
Scenario-based training modules on the Code are provided to employees
during the year through the Chemring Compliance Portal.
> DISCOVER MORE ABOUT OURCODE OF CONDUCT
ATCHEMRING.COM/CODEOFCONDUCT
Operational
assurance
process
Identification of
risksand areas
of improvement
Continuous
improvements to
theOperational
Framework
Implementation
ofnew procedures
andtraining
programmes
Internal audit
review and
consideration
of findings
Chemring Group PLC Annual report and accounts 202466
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WHISTLEBLOWING
Our Chemring culture embraces transparency and openness, and we encourage
all employees to speak up if they have any concerns. We have a whistleblowing
policy and associated procedures in place which enable all employees to raise
concerns, in confidence, about possible improprieties or wrongdoing within
the business, without fear of reprisal or retaliation. Employees are able to
raise issues by contacting our 24-hour ethics reporting service by phone
oremail or by accessing an external website. All issues reported are taken
seriously and investigated appropriately in a confidential manner. Third
partiesmay also access our ethics reporting services.
Our internal procedures on the handling of whistleblowing reports are designed
to ensure that all reports made, whether through the external service or through
other internal channels, are dealt with in a proper and consistent manner, with
appropriate oversight from the UK and US legal departments. Training is provided
to members of our leadership teams on how to identify whistleblowing reports
which may emanate through less obvious channels and how to engage with
employees who make whistleblowing reports.
ANTI-BRIBERY AND CORRUPTION
The Group has well-established anti-corruption policies, which are included
within our Operational Framework. Specifically, these cover bribery and
corruption, conflicts of interest, gifts and hospitality, and facilitation payments.
A number of other policies within the Operational Framework also address
bribery and corruption risks in areas such as finance, political donations and
lobbying, charitable donations and offset.
The Group has adopted a policy on sales to customers located in higher risk
territories, which requires our businesses to prepare a risk mitigation plan for
any proposed transaction in a territory rated less than 50 on Transparency
International’s Corruption Perceptions Index. This plan is required to address
both bribery and corruption risks and broader risks which may be
encountered in doing business in such territories.
Our detailed anti-corruption procedures are incorporated within our Bribery
Act Compliance Manual (“BACM”), which is updated on a regular basis, and
includes requirements for:
- each business to routinely conduct informed bribery risk assessments as
part of normal operating procedures, to determine the nature and extent
of the Group’s exposure to potential internal and external risks of bribery
and corruption on its behalf by persons associated with it;
- approval of the appointment of all sales partners and other third party
advisers, which in all circumstances requires the completion of risk-based
due diligence, appropriate management approvals, use of standard form
contracts, and ongoing monitoring and review;
- risk-based anti-corruption due diligence processes for the engagement
ofservice providers and suppliers;
- regular mandatory training on BACM and its application to their respective
roles for management, supervisors and all employees working within
commercial, sales and marketing, finance and human resource functions
orin customer-facing roles;
- approval of the giving and receiving of reasonable, proportionate and
appropriate gifts and hospitality in the normal course of business; and
- proper identification, disclosure and management of potential or actual
conflicts of interest.
A BACM “Pocket Guide” is issued to all employees across the Group, which
provides an overview of our anti-corruption policies and the requirements
ofthe detailed manual.
All businesses are required to complete a BACM Compliance Certificate on
an annual basis, confirming that all policies and procedures within BACM have
been complied with and providing supporting information to demonstrate
compliance. BACM Compliance Certificates are reviewed by the ESG Committee
following each submission.
We recognise that the appointment of third party sales partners in our routes
to market can present particular bribery and corruption risks, and we therefore
implement enhanced anti-corruption procedures for the engagement of sales
partners where there is a genuine business need by mandating:
- restrictions on the number of sales partners to be engaged in each territory;
- the preparation of a full business case to justify the appointment of all new
third party sales partners, including a two-stage bribery risk assessment
incorporating the requisite level of risk-based due diligence, which must be
approved by the Group Chief Executive before the sales partner is appointed;
- due diligence reports from external consultants for higher risk appointments;
- a full periodic reappointment process for all retained sales partners, including
recommissioning of the appropriate risk-based due diligence and resubmission
of a full business case for approval by the Group Chief Executive; and
- increased reporting requirements for all payments made to third party sales
partners and higher risk service providers.
The review and approval processes for our third party sales partners are
automated through the Chemring Compliance Portal, which enables us to
adopt a consistent approach to the application of our due diligence and
approval processes across the Group. Due diligence processes for the third
party service providers and higher risk suppliers engaged by our non-US
businesses are also managed in the Chemring Compliance Portal. The US
businesses have adopted a similar automated system in the US for their
service providers and higher risk suppliers.
The Chemring Compliance Portal also incorporates a module for employees
to seek approval online prior to giving or receiving gifts and hospitality or
making charitable donations on behalf of the business.
Selected third party sales partners are subject to an independent audit
byanexternal consultant. These audits provide additional assurance
onthesuitability of our sales partners and help to further strengthen
ouranti-bribery and corruption processes.
Compliance with BACM procedures continues to be a core aspect of our
internal audit programme. BACM compliance audits were completed at
fourbusinesses during the year.
HUMAN RIGHTS
The Group is committed to respecting human rights in the countries in
whichwe do business. Our Code of Conduct and other applicable policies
under the Operational Framework support our commitment to ensuring,
asfar as we are able, that there is no slavery or human trafficking in any
partof our business or in our supply chain. All suppliers are provided with
acopy of our Supplier Code of Conduct, which requires them to adhere to
our ethical standards and expectations, including in relation to human rights.
We do not knowingly support or do business with any suppliers which are
involved in slavery.
> A STATEMENT OF THE GROUP’S COMPLIANCE WITH THE MODERN
SLAVERY ACT 2015 CAN BE FOUND ON THE GROUP’S WEBSITE AT
WWW.CHEMRING.COM
We fully adhere to all relevant government guidelines designed to ensure
thatour products are not knowingly incorporated into weapons, or other
equipment, used for the purposes of terrorism, international repression or
the abuse of human rights.
Chemring Group PLC Annual report and accounts 2024 67
Strategic report Governance Financial statements

INTRODUCTION
We have continued to deliver against the Board’s expectations, balancing
short-term performance with long-term growth. Chemring continues to play
a vital role supplying mission-critical products and services, as demonstrated
by the highest order book in Chemring’s history.
GROUP FINANCIAL PERFORMANCE
Order intake for 2024 remained strong at £673m(2023: £756m). Demand
inour niche Energetics businesses continued, where order intake was
£348m(2023: £358m). Sensors & Information total order intake was £150m
(2023:£215m) where the prior year benefited from multi-year awards.
FINANCIAL REVIEW
New record order book, strong cash generation,
funding further investment to increase capacity
Revenue was up 8% to £510.4m (2023: £472.6m) reflecting significant growth
in Roke and improved operational execution delivering strong outputin our
niche Energetics businesses.
On a constant currency basis the Group’s revenue was up 9% to £517.3m
(2023: £472.6m), underlying operating profit was up 4% to £71.7m
(2023:£69.2m) and underlying diluted earnings per share was down 3%
to19.5p (2023: 20.0p). 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, Australian dollar
and Norwegian krone have all weakened against sterling. A summary of the
impact of the exchange rate movements on the key metrics at a Group and
sector level is shown in the table below.
At constant currency As reported
2024 2024 2023
£m Change £m Change £m
Group
Order intake 682.2 (9.8)% 672.8 (11.1)% 756.4
Order book 1,072.5 16.4% 1,037.8 12.6% 921.6
Revenue 517.3 9.5% 510.4 8.0% 472.6
Underlying EBITDA 94.8 7.1% 93.7 5.9% 88.5
Underlying operating profit 71.7 3.6% 71.1 2.7% 69.2
Underlying earnings per share 19.5 (2.5)% 19.3 (3.5)% 20.0
Sensors & Information
Order intake 150.1 (30.3)% 149.7 (30.5)% 215.4
Order book 106.7 (37.5)% 105.5 (38.2)% 170.6
Revenue 212.8 13.8% 212.0 13.3% 187.0
Underlying EBITDA 47.4 23.1% 47.3 22.9% 38.5
Underlying operating profit 41.5 21.3% 41.4 21.1% 34.2
Countermeasures & Energetics
Order intake 532.1 (1.6)% 523.1 (3.3)% 541.0
Order book 965.8 28.6% 932.3 24.1% 751.0
Revenue 304.5 6.6% 298.4 4.5% 285.6
Underlying EBITDA 64.3 (1.8)% 63.2 (3.5)% 65.5
Underlying operating profit 47.3 (6.3)% 46.5 (7.9)% 50.5
James Mortensen
Chief Financial Officer
“ We’ve made solid progress in the year,
andthe record order book gives us great
momentum as we build for the future.”
Chemring Group PLC Annual report and accounts 202468
Strategic report Governance Financial statements

GROUP FINANCIAL POSITION
Capital expenditure
The continued improvement in market conditions for our Energetics businesses,
reflected in the order intake and order book, has presented a strong organic
growth opportunity to expand capacity at these sites in parallel with the
planned modernisation to capitalise on the long-term demand we are seeing.
As announced at the half year, the Board approved anincrease to our three-year
capital investment programme from £120m to £200m, which, when completed,
is expected to increase revenue by £100m per annum and operating profit by
£30m per annum in 2028. In addition to this, in March 2024 we announced
that our Norwegian business had been awarded grant funding of £90m in
support of its capacity expansion projects, of which £19.7m had been received
by the year end, meaning that the net investment required by the Group will
now be £110m in total.
In the year £64.8m (2023: £32.7m) was spent on property, plant and
equipment which includes the above-mentioned programmes as well
asongoing capital investment to continually enhance safety and
operationalperformance.
Capital allocation
Our disciplined approach to capital allocation prioritises organic and inorganic
investment, a growing and sustainable dividend, other returns to shareholders
and a prudent approach to leverage.
We continue to recognise that dividends are an important component of
total shareholder returns. The dividend for 2024, subject to approval at
theAGM, was 7.8p (2023: 6.9p). The Board is pleased to have achieved
theobjective of a sustainable dividend cover of c.2.5 times underlying EPS,
whichwill continue subject to maintaining a strong financial position.
In 2023 we announced the details of a share buyback programme to repurchase
up to £50m of our own shares. We have cumulatively returned a total of
£37m to shareholders against this programme through October 2024.
TheBoard has not extended the programme beyond 17 December 2024
andso any unspent amounts will not be utilised.
The Group’s net debt at 31 October 2024 was £52.8m (2023: £14.4m),
representing a net debt to underlying EBITDA ratio of 0.56x (2023: 0.16x).
Underlying operating activities generated cash of £96.0m (2023: £80.0m)
andstatutory operating activities generated cash of £90.5m (2023: £75.2m).
Underlying cash conversion was 102% (2023: 90%) of underlying EBITDA,
and an average of 101% on a rolling 36-month basis (2023: 101%).
UNDERLYING DILUTED EPS (PENCE)
FY22
18.5p
FY23
20.0p
FY24
19.3p
FY21
14.3p
FY20
11.8p
The underlying operating profit of £71.1m (2023: £69.2m) resulted in an
underlying operating margin of 13.9% (2023: 14.6%). The Group margin
hasfallen primarily reflecting the impact of operational challenges at our
Tennessee countermeasures business, and the lower margin legacy
USgovernment contract that impacted the year.
Total finance expense has increased to £4.8m (2023: £1.3m) reflecting the
continued investment in our niche Energetics businesses combined with
higher interest rates versus the comparative period.
Statutory operating profit was £58.1m (2023: £45.4m) and after statutory
finance expenses of £4.8m (2023: £1.3m), statutory profit before tax was
£53.3m (2023: £44.1m). The statutory profit after tax from continuing
operations was £42.7m (2023: £37.7m) giving a statutory basic earnings
pershare from continuing operations of 15.7p (2023: 13.4p).
A reconciliation of underlying to statutory profit measures is provided in note
3. The non-underlying costs relate to the amortisation of acquired intangibles,
change of senior management, defined benefit pension buy-in and buy-out
transaction costs, releases of legal and disposal provisions, costs relating to
acquisitions, loss on the movement in the fair value of derivative financial
instruments and tax credit associated with these.
TAX
The underlying tax charge totalled £12.3m (2023: £10.2m) on an underlying
profit before tax of £66.3m (2023: £67.9m). The effective tax rate on
underlying profit before tax for the year was a charge of 18.6% (2023: 15.0%).
The Group effective tax rate increased, reflecting the full year effect of the
increase in the UK corporation tax rate and an increased weighting of UK
profit. The statutory tax charge totalled £10.6m (2023: £6.4m) on a statutory
profit before tax of £53.3m (2023: £44.1m).
EARNINGS PER SHARE FROM CONTINUING OPERATIONS
Underlying basic earnings per share from continuing operations was 19.8p
(2023: 20.5p) and diluted underlying earnings per share from continuing
operations was 19.3p (2023: 20.0p). Statutory basic earnings per share was
15.7p (2023: 13.4p) and statutory diluted earnings per share was 15.3p
(2023:13.1p).
WORKING CAPITAL
Working capital was £88.3m (2023: £82.3m), an increase of £6.0m.
Asapercentage of revenue, working capital has remaining stable at 17%
(2023:17%). We continued with our focus on commercial contracting,
inventory levels and cash management. Year-end trade receivable days
of15(2023: 16) and trade payable days of 30 (2023: 18) demonstrate that
working capital has been managed in a balanced and sustainable manner.
FY22
£59.4m
FY23
£69.2m
FY24
£71.1m
FY21
£49.2m
FY20
£43.2m
UNDERLYING OPERATING PROFIT (£m)
Chemring Group PLC Annual report and accounts 2024 69
Strategic report Governance Financial statements

RESEARCH AND DEVELOPMENT
R&D expenditure was £131.3m (2023: £113.6m). Continued investment in
R&D is a key aspect of the Group’s strategy, and levels of internally-funded
R&D are expected to be maintained as investment in product development
continues, particularly within Sensors & Information. An analysis of R&D
expenditure is set out below:
2024 2023
£m £m
Customer-funded R&D 114.0 102.0
Internally-funded R&D:
– expensed to the income statement 14.2 10.1
– capitalised 3.1 1.5
CONSTANT CURRENCY
2024
£m
2023
£m
Growth
%
Revenue (as reported) 510.4 472.6 8.0%
Effect of using prior period
foreignexchangerates 6.9
Revenue at constant currency 517.3 472.6 9.5%
Underlying operating profit
(asreported) 71.1 69.2 2.7%
Effect of using prior period
foreignexchangerates 0.6
Underlying operating profit
at constant currency 71.7 69.2 3.6%
THREE-YEAR ROLLING CASH CONVERSION
101%
(2023: 101%)
ORDER BOOK
£1,038m
(2023: £922m)
DEBT FACILITIES
The Group’s principal debt facilities comprise a £150m revolving credit facility
up to December 2025, of which £130m has been extended to December
2026. The revolving credit facility was established in July 2021 with a syndicate
of six banks. In addition, we have a US$20m swingline overdraft facility for use
in the US. In October 2024, the Group entered into a UK Export Finance
Export Development Guarantee facility led by Barclays PLC for up to £80m.
This is a four-year, arm’s length facility with a one-year draw down period and
a three-year amortising repayment schedule. It is to be used to support the UK
investments primarily in our niche Energetics business in Scotland but also at
Roke and our UK Countermeasures business. As at 31 October 2024, this
facility was undrawn. The Group had £157.4m (2023: £142.9m) of undrawn
borrowing facilities at the year end. The Group issubject to two key financial
covenants, which are tested quarterly. These covenants relate to the leverage
ratio between underlying EBITDA and net debt, and the interest cover ratio
between underlying EBITDA and finance costs. The calculation of these ratios
involves the translation of non-sterling denominated debt using average, rates
of exchange, rather than closing, TheGroup was in compliance with the
covenants throughout the year.
RETIREMENT BENEFIT OBLIGATIONS
On 28 November 2023 the trustees of the Chemring Group Staff Pension
Scheme (“the Scheme”) entered into a buy-in contract with an insurer,
Pension Insurance Corporation (“PIC”). The Group has made payments
tothe Scheme of £3.0m to date and expects to pay c.£1.1m over the next
yearas a contribution to the buy-in premium, to provide funding for the
rectification of certain members’ benefits and to meet the costs associated
with the initial buy-in and eventual buy-out of the Scheme. On completion
ofthe full buy-out of the Scheme, the defined benefit assets and matching
defined benefit liabilities will be derecognised from the Group balance sheet.
The surplus on the Group’s defined benefit pension scheme was £0.1m
(2023:£5.9m), measured in accordance with IAS 19 (Revised) Employee Benefits.
UNDERLYING CASH CONVERSION (%)
100%
FY22
110%
FY23
90%
FY24
101%
FY21
105%
FY20
110%
FINANCIAL REVIEW continued
New record order book, strong cash generation,
fundingfurtherinvestmenttoincreasecapacity continued
Chemring Group PLC Annual report and accounts 202470
Strategic report Governance Financial statements

ALTERNATIVE PERFORMANCE MEASURES (“APMS”)
In the analysis of the Group’s financial performance and position, operating results and cash flows, APMs are presented to provide readers with additional
information. The principal APMs presented are underlying measures of earnings including underlying operating profit, underlying profit before tax, underlying
profit after tax, underlying EBITDA, underlying earnings per share, underlying operating cash flow and underlying cash conversion. In addition, EBITDA, net debt,
underlying operating profit and revenue on a constant currency basis are presented which are also considered to be non-IFRS measures. These measures are
consistent with information regularly reviewed by management to run the business, including for planning, budgeting and reporting purposes and for its internal
assessment of the operational performance of individual businesses.
A reconciliation of underlying measures to statutory measures is provided below:
2024 2023
Underlying
Non-
underlying Statutory Underlying
Non-
underlying Statutory
Group – continuing operations:
EBITDA (£m) 93.7 (11.0) 82.7 88.5 (20.8) 67.7
Operating profit (£m) 71.1 (13.0) 58.1 69.2 (23.8) 45.4
Profit before tax (£m) 66.3 (13.0) 53.3 67.9 (23.8) 44.1
Tax charge (£m) (12.3) 1.7 (10.6) (10.2) 3.8 (6.4)
Profit after tax (£m) 54.0 (11.3) 42.7 57.7 (20.0) 37.7
Basic earnings per share (pence) 19.8 (4.1) 15.7 20.5 (7.1) 13.4
Diluted earnings per share (pence) 19.3 (4.0) 15.3 20.0 (6.9) 13.1
Group – discontinued operations:
Loss after tax (£m) (1.3) (1.9) (3.2) (0.9) (31.4) (32.3)
Sectors – continuing operations:
Sensors & Information EBITDA (£m) 47.3 (3.2) 44.1 38.5 (22.2) 16.3
Sensors & Information operating profit (£m) 41.4 (4.0) 37.4 34.2 (23.5) 10.7
Countermeasures & Energetics EBITDA (£m) 63.2 2.8 66.0 65.5 — 65.5
Countermeasures & Energetics operating profit (£m) 46.5 1.6 48.1 50.5 (1.7) 48.8
We present a measure of constant currency revenue and operating
profit.This is calculated by translating our results for the year ended
31October 2024 at the average exchange rates for the comparative
yearended 31 October 2023.
The Group manages its finance costs and tax on a central or regional basis
and therefore the Board believes the use of underlying operating profit or
EBITDA is an effective way of monitoring the performance of operating
businesses. The strategic report includes both statutory and adjusted
measures, the latter of which, in management’s view, reflect how the business
is managed and measured on a day-to-day basis. Our APMs and KPIs are
aligned to our strategy and together are used to measure the performance of
our business and form the basis of the performance measures for
remuneration. Adjusted results exclude certain items because, if included,
these items could distort the understanding of our performance for the year
and the comparability between the periods.
Management considers non-underlying items to be:
- amortisation of acquired intangibles;
- discontinued operations;
- exceptional items, for example relating to acquisitions and disposals,
restructuring costs, impairment charges, defined benefit pension buy-in/
buy-out costs and legal costs;
- gains or losses on the movement in the fair value of derivative financial
instruments; and
- the tax impact of all of the above.
Our use of APMs is consistent with the prior year and we provide comparatives
alongside all current year figures. The directors believe that these APMs assist
with the comparability of information between reporting periods and 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. All profit and earnings
per share figures in this strategic report relate to underlying business performance
(as defined above) unless otherwise stated. Further details are provided in note 3.
The adjustments comprise items impacting EBITDA:
- loss on the movement in the fair value of derivative financial instruments
of£2.0m (2023: £1.4m gain);
- costs relating to acquisitions, including deferred consideration treated
asanexpense under IFRS 2, of £3.4m (2023: £3.7m);
- defined benefit pension buy-in/buy-out of £7.5m (2023: £nil);
- change of senior management positions of £1.2m (2023: £nil);
- impairment of Chemical Detection assets of £nil (2023: £18.5m);
- release of disposal provisions £nil (2023: £3.2m);
- release of legal provision in relation to the 2018 incident at Chemring
Countermeasures UK of £3.1m (2023: £nil);
Items impacting profit before tax:
- amortisation of acquired intangibles of £2.0m (2023: £3.0m);
Items impacting continuing profit after tax:
- tax impact of the adjustments above: £1.7m credit (2023: £3.8m credit);
Items relating to discontinued operations:
- discontinued operations in respect of the Explosive Hazard Detection
(“EHD”) business in Sensors & Information, net of tax, credit of £4.5m
(2023: £31.4m charge) which includes an impairment of goodwill and other
assets; and
- an increase in disposal provision relating to a discontinued operation of
£6.4m (2023: £nil).
James Mortensen
Chief Financial Officer
17 December 2024
Chemring Group PLC Annual report and accounts 2024 71
Strategic report Governance Financial statements

RISK MANAGEMENT
Effective risk management
We continue to manage key risks to ensure
theeffective delivery of the Group strategy.
RISK MANAGEMENT ORGANISATION
The Board is responsible for determining the nature and extent of risks it is
willing to accept in delivering the Group’s strategy and running the Group’s
operations, and ensuring that risk is effectively managed across the Group.
The Board regularly reviews the Group risk register and considers whether
the Risk Management Committee has appropriately identified the principal
risks to which the Group is exposed.
The Audit Committee is responsible for reviewing and monitoring the
effectiveness of the Group’s internal control framework, including financial,
operational and reporting controls, and its risk management systems.
TheAudit Committee also reviews the effectiveness of the Group’s
internalaudit arrangements.
The Risk Management Committee is responsible for overseeing the
implementation of the Group’s risk management framework and for
identifying the principal risks to which the Group is exposed, monitoring
keymitigation plans and maintaining the Group risk register. The Risk
Management Committee also reviews risks at the business unit level
andconsiders input from the US Risk Management Committee, which
hasbeenconstituted to oversee risk within the US operations.
The current members of the Risk Management Committee are:
- Michael Ord (Group Chief Executive);
- Greg Moore (US President);
- Sarah Ellard (Group Legal Director & Company Secretary);
- Steve Hawkins (US Vice President, HSE);
- Steve Messam (Group HSE Director);
- James Mortensen (Chief Financial Officer);
- Rupert Pittman (Group Director of Corporate Affairs); and
- Olivia Wardlaw (Internal Audit Manager).
RISK MANAGEMENT POLICY AND FRAMEWORK
The Group’s risk management policy sets out the Group’s approach to risk
management, including its risk appetite; the framework for assessing, managing
and monitoring risk within the business; and the key roles and responsibilities
for the oversight and implementation of the Group’s risk management
systems and controls.
The Group’s risk management framework draws fundamentally from the
“Three Lines of Defence Methodology”, with the “First Line” being day-to-day
management of risk and maintenance of effective control procedures at individual
businesses. The “Second Line” comprises a range of risk management and
control functions established at the corporate management level, which are
designed to enhance and monitor the First Line.
The “ThirdLine” comprises the Group’s internal audit function, which reports
directly to the Audit Committee, and assurance and audit reviews by external
auditors, specialist consultants and regulators.
APPROACH TO RISK MANAGEMENT
The management of each business is responsible for the identification, management
and reporting of local risks, in accordance with the Group’s risk management
framework. The management of each business is also responsible for the
maintenance of business risk registers and the implementation of mitigation plans.
Each business is required to maintain a risk register identifying their key risks.
The risk registers include an analysis of the likelihood and impact of each risk,
before and after mitigation actions are taken to manage the risk, together
with details of the mitigation plans and progress against them. Each risk is
allocated an owner, who has responsibility for managing the risk.
The business risk registers are updated quarterly and are reviewed in detail
bythe Group Chief Executive, the Chief Financial Officer, the US President
and other members of the Executive Committee at quarterly business review
meetings with each of the businesses. The US Risk Management Committee
reviews the risk registers for the US businesses, considers US corporate-level
risks and maintains a consolidated US risk register.
The Risk Management Committee meets at least three times a year and, utilising
the input from the business risk registers and the US risk register, identifies
those principal risks which are material to the Group as a whole. The Risk
Management Committee also considers corporate-level risks and emerging
risks, as referenced below. These risks are collated on the Group risk register,
together with details of the applicable mitigation plans and risk owners.
The Group has implemented an Operational Framework, incorporating a
broadrange of policies and procedures which are required to be adopted by
allbusinesses. An annual operational assurance process is a fundamental part
of the Operational Framework and provides an assessment of compliance
with the Operational Framework policies across the Group. The output of
the operational assurance process provides additional visibility on risks across
the Group and is utilised by the Risk Management Committee as a further
input to the Group risk register. The operational assurance process also
provides assurance to the Board that the Group’s internal systems and
controls are operating effectively.
The full Group risk register is reviewed by the Board on a half-yearly basis
and key individual risks are reviewed at every Board meeting.
THE BOARD
- Overall responsibility
forrisk management
- Determines the Group’s
riskappetite
- Reviews the Group
riskregister
RISK MANAGEMENT
COMMITTEE
- Oversees the
implementation
oftheGroup’s risk
management framework
- Monitors compliance
withthe Group’s internal
controlsystems
- Maintains the Group
riskregister
BUSINESS
MANAGEMENT
- Responsible for the
implementation of the
Group’s risk management
framework at the
operational level
- Maintain business
unitriskregisters and
provideinput to the Risk
Management Committee
- Responsible for compliance
with internal controls
AUDIT COMMITTEE
- Reviews the
effectivenessof the
Group’s risk management
framework and systems
of internalcontrol
- Oversees the
effectiveness of the
Group’s internal audit
arrangements
KEY ROLES AND RESPONSIBILITIES FOR THE GROUP’S RISK MANAGEMENT STRATEGY
Chemring Group PLC Annual report and accounts 202472
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KEY AREAS OF FOCUS DURING THE YEAR
During the past year, we have continued to enhance our risk management
systems, with specific focus in the following areas:
- We continued to promote our Fundamental Safety Principles and our
SWIM (“Stop, Warn, Inform and Manage”) process. We have continued
toimprove on the shared learning of findings from all significant incidents.
- We have further enhanced our HSE data collection and implemented a
newenvironmental performance data collection and reporting system.
- We have taken steps to further reduce the risk of personnel exposure
during process safety events, and trialled and adopted a new performance
metric to drive improvements in this area.
- We have engaged additional external resource and established internal
steering committees to ensure the successful delivery of our key capital
investment programmes.
- Additional IT and cyber-security standards have been implemented, and
wehave partnered with industry-leading managed detection and response
providers to monitor our systems, networks and the dark web in order to
respond to cyber threats on a 24/7 basis. Learnings from regulatory audits
have been shared and improvement actions implemented across the Group.
We have continued to evolve and test our cyber incident response plans.
- We have reviewed our succession and talent management programmes
toaddress our key people-related risks.
- We have updated our assessment of key climate change risks and opportunities.
- Our internal audit programme has continued to incorporate thematic
reviews in key risk areas.
PRINCIPAL RISKS
In 2024, we recategorised our principal risks to focus on four areas.
Wenowcategorise our risks as strategic, operational, legal and governance,
or business related.
>DETAILSOFTHEPRINCIPALRISKSARESETOUTONPAGES74TO82
EMERGING RISKS
The UK Corporate Governance Code requires the Board to undertake a
robust assessment of the emerging risks that may impact the Group in the
future. This requirement has been reflected in the Group’s risk management
processes and emerging risks are considered by the Risk Management
Committee when compiling the Group risk register.
Emerging risks are identified through discussions with both external and
internal subject matter experts and other stakeholders, including customers
and regulators, and through horizon scanning of future developments in areas
relevant to the Group’s business operations.
Certain emerging risks relating to future technological, regulatory, financial
and macro-economic changes are reflected on the Group risk register and
mitigation plans implemented accordingly. However, other emerging risks
havealso been identified, where we are still endeavouring to determine the
potential impact on the Group.
RISK REVIEW
The Board conducts an annual review of the effectiveness of the Group’s
systems of internal control and risk management systems. As part of this
review the Board considers:
- the operational and financial reports received from the executive
management throughout the year;
- the Group risk register, and the mitigation actions being taken to manage key risks;
- output from the operational assurance process; and
- internal audit reports and reports from the other assurance processes in
place across the Group.
The Board confirms that there is an ongoing process for identifying, evaluating
and managing the principal risks faced by the business, and that robust
systems of internal control and risk management were in place throughout
the year under review and have remained in place up to the date of approval
of these financial statements.
The Board acknowledges, however, that the internal control systems can only
provide reasonable, not absolute, assurance against mismanagement or loss
ofthe Group’s assets. The Board therefore continues to take steps to embed
internal control and risk management further into the operations of the Group,
and to address any areas for potential improvement which come tothe
attention of management and the Board.
The Board assessed the principal and emerging risks to which the Group is
exposed as part of its half-yearly review of the Group risk register. The Board
considered whether all applicable risks had been adequately captured in the
Group risk register and whether the requisite progress had been made on the
mitigation actions to address significant risks. The Board also reviewed its risk
appetite for the principal risks to which the Group is exposed.
A
A
B
K
K
L
L
H
H
F
F
G
G
D
D
C
B
J
J
I
I
E
E
C
Low
IMPACT
Medium High
Low Medium
LIKELIHOOD
High
Occupational and process safety
Environmental laws andregulations
Climate change
Market
Political
Contracts
Technology
Financial
Operational
People
Cyber-security
Compliance and corruption
The heat map below illustrates the relative inherent and residual positioning
of our principal risks from an impact and likelihood perspective.
RISK HEAT MAP
Chemring Group PLC Annual report and accounts 2024 73
Strategic report Governance Financial statements

As our businesses continue to evolve, so does the risk landscape in which they operate. The table
below summarises the changes to the Group’s principal risks and uncertainties during the year,
identifies whether the trend in the risk profile from the Group’s perspective increased, decreased
or remained stable, and provides an indication of the future outlook.
PRINCIPALRISK/
UNCERTAINTY
WHAT HAS CHANGED AND THE FUTURE OUTLOOK
A Occupational and
process safety
During the year, the level of reporting and the standard of investigation for process upset conditions continued to improve and we continued
to put in place mitigations to reduce the likelihood of an energetic event occurring. In addition, we have further strengthened our asset
integrity programme and continued to drive improvements through the sharing of learnings from significant incidents. We also continue
toinvest in new automated production systems and improve process controls for our legacy operations.
Our total recordable injury frequency rate reduced to 0.69 in 2024, compared to 0.90 in 2023, and remained below our Group limit of 1.0.
This reflected a reduction in the number of recordable injuries from 21 in 2023 to 20 in 2024, despite the growth in the business. Most
injuries were caused by slips, trips or falls, or were musculoskeletal in nature. There were no injuries sustained from energetic ignitions during
the year or in the prior year.
For 2025, we have introduced an additional personnel exposure metric in order to track process safety events involving potential personnel
exposure and reduce their occurrence. We hope to see further improvements in process safety in 2025 as we continue with our capital
investment and asset integrity programmes. The limit for the total recordable injury frequency rate will be reduced from 1.0 to 0.9 in 2025.
B Environmental
laws and
regulations
Environmental risks continue to increase with the increased focus on climate change and the environmental impact of our businesses.
As part of our ESG strategy, we have implemented a more centralised approach to the management of our environmental performance,
recognising that minimising our environmental impact and addressing climate change-related risks is becoming increasingly important. We
continue to improve our reporting capabilities to help us effectively monitor the environmental impact of our businesses and to identify
priorities for investment and allocation of resources. During the year, we implemented a new environmental performance data collection
and reporting system, which will facilitate the collection of our scope 3 emissions data going forward.
The ESG Committee is responsible for oversight of the Group’s ESG programmes and monitoring of progress against the Group’s
ESG-related strategic objectives.
The sale or closure of several sites during recent years has reduced the Group’s overall exposure to environmental risks. However, we
retain a financial liability for environmental remediation of certain sites formerly owned by the Group, most notably those occupied by
the divested munitions businesses in Belgium and Italy. The risks and mitigations associated with these exposures continue to be
monitored and managed.
Over the last year, regulatory authorities in Europe and the US have further increased their focus on the risks associated with pre- and
polyfluoroalkyl substances (“PFAS”) and the open burning of energetic waste. We continue to monitor developments in these areas and
the potential implications for our manufacturing facilities.
C Climate change
We continue to review and monitor the climate change-related risks most likely to impact the Group’s operations, further details of
which are set out on pages 48 and 56. Climate change-related risks and the potential impact of changed weather patterns on our
operations are identified as principal risks on the Group risk register and are monitored by the ESG Committee.
At the business unit level, our businesses have in place local risk registers and business continuity plans, which help to identify and mitigate
potential risks associated with flooding, storms, wildfires and changes to weather patterns. The businesses continue to undertake scenario
planning as part of their business continuity plans to identify potential risks and the mitigations which might be put in place.
D Market
Ongoing conflicts, particularly in Ukraine and the Middle East, continue to shape the threat environment, with a resurgence in demand for
classical kinematic capabilities, alongside growing information advantage and intelligence requirements. However, economic pressures may
continue to place defence spend under pressure.
E Political
Political tensions across the world continue to increase the risk of disruption in our non-NATO markets.
We continue to focus our business development and sales and marketing activities on our home markets and their allied countries.
Wewill continue to engage with the new administrations in the UK and the US.
F Contracts
The implementation of the Operational Framework has significantly increased our visibility on commercial and contracting practices
across the Group, and is enabling us to manage contractual risk exposures more effectively.
G Technology
Innovation is one of our core values and our technology-led development programmes continue to be a significant area of focus.
In 2024, Roke continued to see strong growth in its R&D service activities. Roke continues to focus on capturing opportunities for its
capabilities across all sectors.
Chemring Sensors & Electronic Systems in the US continues to develop its innovative biological detection systems, which can identify
threats more rapidly and cost effectively than existing solutions.
Chemring Energetic Devices in the US continues to develop innovative technologies for commercial space launch applications.
We also continue to embrace technology to improve our operations and manufacturing processes.
PRINCIPAL RISKS AND UNCERTAINTIES
Risk management in action
Chemring Group PLC Annual report and accounts 202474
Strategic report Governance Financial statements

PRINCIPALRISK/
UNCERTAINTY
WHAT HAS CHANGED AND THE FUTURE OUTLOOK
H Financial
The Group’s revolving credit facilities extend to December 2026, and the Group secured an additional loan facility supported by UK
Export Finance.
Our bank covenant of net debt: EBITDA was 0.56x at the year end, well within the covenant limit of 3.0x. Our bank covenant of interest
cover was 15.28x, well within the covenant limit of 4.0x.
The risks associated with funding of the legacy UK defined benefit pension scheme are now significantly mitigated, following completion of
the initial buy-in transaction with Pensions Insurance Corporation. On completion of the full buy-out of the scheme, which is expected to
take place in 2026/27, the defined benefit assets and matching defined benefit liabilities will be derecognised from the Group balance sheet.
Significant grant funding was secured to support the capital expansion plans at our Energetics facility in Norway during the year.
I Operational
We continue to invest in plant automation and modernisation of facilities across the Group to mitigate a range of operational and safety
risks. We have also implemented a Group-wide asset integrity programme to improve the resilience of our operations.
Steering committees have been established and additional external resource has been engaged to assist with the project management
ofthe capital expansion projects at our Energetics facility in Norway.
J People
Resourcing continues to present a challenge for a number of our businesses, particularly in parts of the US where buoyant demand in the
employment market makes it more difficult to recruit and retain employees. We also continue to face shortages of engineers and skilled
maintenance personnel.
We continued to make good progress on delivery of our development initiatives, with the second cohort of 52 employees having
completed the Aspire@Chemring programme and over 70 employees having participated in our early careers programme.
We continue to focus on communications using a wide range of formal and informal channels, both at the corporate level and within
individual businesses.
New employee engagement systems were implemented at a number of our businesses during the year, which will enable us to monitor
employee sentiment more effectively and provide employees with an opportunity to give feedback on changes as they occur.
We remain on track to increase our gender ratio of females in senior management roles to at least 33% by 2027, with 31% of senior
management positions held by females at the end of 2024. This will continue to be an area of focus as the Group grows.
K Cyber-security
While we have an ongoing programme to address IT and cyber-security risks, the threats in this area are increasingly more sophisticated,
relentless and adaptive. We continuously assess and evolve our cyber-security programme to detect and respond to threats and vulnerabilities.
We consider the risk associated with cyber-security as two discrete risks – one associated with cyber-security compliance and the other
relating to our cyber incident response preparedness, which enables us to monitor mitigation actions for both risks more effectively.
Further significant progress was made towards achieving compliance with the Chemring Cyber-Security Standard at a number of
businesses during the year. The Group requires all businesses to implement a set of controls, based on cyber-security best practices,
which are designed to promote good cyber hygiene and safeguard information.
L Compliance
andcorruption
The Operational Framework and the associated operational assurance process continue to ensure that we effectively manage legal and
compliance risks across the Group.
Our Group-wide online compliance system, the Chemring Compliance Portal, is fully embedded within the businesses. The portal hosts our
Operational Framework policies and associated training material, and the system also helps to automate our anti-bribery processes.
The strategic risks associated with compliance with our Special Security Agreement with the US Government remain stable.
CHANGEINRISKPROFILEDURINGTHEYEAR
Increasing
Stable
Decreasing
Chemring Group PLC Annual report and accounts 2024 75
Strategic report Governance Financial statements

HEALTH, SAFETY AND ENVIRONMENT RISKS
A.OCCUPATIONALANDPROCESSSAFETY
Risk and potential impacts Mitigationactions/factors
The Group’s operations involve energetic materials that,
by their nature, have inherent safety risks.
- Incidents may occur which could result in harm to
employees, the temporary shutdown of facilities
orother disruption to manufacturing processes.
- The Group may be exposed to financial loss, regulatory
action and potential liabilities for workplace injuries
and fatalities.
Example key risk indicators:
- Total recordable injury frequency rate.
- Number of process safety events including those
thatresult in personnel exposure.
- Number of near miss reports.
- Safety reinforced as a core value.
- Continued emphasis on the “Journey to Zero Harm”
and promotion of a culture which puts safety first and
encourages employees to take personal responsibility
for their actions.
- HSE Strategy and HSE Management System Framework
Standard fully implemented within the businesses.
- Robust major accident hazard analysis process to
identify, evaluate and mitigate significant process
safetyrisks, adopted across the Group.
- Asset integrity standard adopted.
- Group-wide standard on management of electrostatic
discharge hazards adopted.
- Incident investigation and crisis management
standardsadopted.
- Process established for Group-wide review of learnings
from significant incidents.
- Technical Safety Committee established.
- Fundamental Safety Principles issued to all employees.
- “Stop, Warn, Inform, Manage” campaign instigated to
ensure incidents are avoided and to prevent reoccurrence.
- Continued focus on near miss identification and reporting.
- Continued programme of capital investment in older
facilities to improve safety and reliability.
- Establishment of automated production facilities
whereappropriate.
> SEE ALSO: HEALTH AND SAFETY ON
PAGES46TO47
Inherent risk: High
Risk appetite: Low
Trend: Stable
Link to strategy:
G A P
Link to values:
S E I
B.ENVIRONMENTALLAWSANDREGULATIONS
Risk and potential impacts Mitigationactions/factors
The Group’s operations and ownership or use of real
property are subject to a number of federal, state and
local environmental laws and regulations. At certain
sites, currently or formerly owned or operated by the
Group, there is known or potential contamination for
which there is, or may be, a requirement to remediate
or provide resource restoration.
- The Group could incur substantial costs, including
remediation costs, resource restoration costs, fines
andpenalties, or be exposed to third party property
damage or personal injury claims, as a result of
liabilities associated with past practices or violations
ofenvironmental laws or non-compliance with
environmental permits.
Example key risk indicators:
- Carbon emissions.
- Energy and water utilisation.
- Volume of waste produced.
- Number of environmental incidents.
- Monitoring programmes established at certain sites
and appropriate financial provisions held.
- Environmental liability insurance procured for
certainrisks.
- Environmental consultants retained to manage
indemnification obligations for legacy site remediations.
- ESG and Environmental Committees established.
- Emerging environmental and regulatory risks
monitored by the RiskManagement Committee.
>SEEALSO:ENVIRONMENTONPAGES48TO
51,ANDTCFDREPORTONPAGES52TO60
Inherent risk: Medium
Risk appetite: Low
Trend: Increasing
Link to strategy:
G A P
Link to values:
S E I
PRINCIPAL RISKS AND UNCERTAINTIES continued
Principal risks and uncertainties
Details of the principal risks and uncertainties which could have a material impact on the Group’s
business model, strategy, future performance or reputation areset out below. The principal risks
are identified by the Risk Management Committee based on the likelihood of occurrence and the
potential impact onthe Group as a whole.
Chemring Group PLC Annual report and accounts 202476
Strategic report Governance Financial statements

C.CLIMATECHANGE
Risk and potential impacts Mitigationactions/factors
The Group’s operations and delivery of our strategy
could be impacted by climate change-related risks,
including those associated with wildfires, severe weather
events and new climate-related requirements in relation
to the Group’s manufacturing processes and products.
- Wildfires and severe weather events could result in
harm to employees, the temporary shutdown of
facilities or other disruption to manufacturing processes.
- The Group may be exposed to financial loss for
business interruption and/or increased expenditure
foradapting its production facilities and processes
toaddress climate change-related risks.
Example key risk indicators:
- Frequency of wildfires and severe weather events.
- New legislation.
- Additional measures have been implemented, such
ascutting back grassland close to manufacturing
operations, to mitigate the risk of wildfires.
- Drainage has been improved on certain sites to
mitigate the impact of potential flooding events.
- Carbon reduction plans and other environmental
performance targets have been established to reduce
the Group’s environmental impact.
- Close relationships are maintained with customers,
which should provide early insight into new environmental
requirements which are to be imposed by customers.
- Property damage and business interruption insurance
procured, and engagement undertaken with insurers
including visits to sites and claims scenario workshops.
>SEEALSO:ENVIRONMENTONPAGES48TO
51,ANDTCFDREPORTONPAGES52TO60
Inherent risk: Medium
Risk appetite: Low
Trend: Increasing
Link to strategy:
G A P
Link to values:
S E I
STRATEGIC RISKS
D.MARKET
Risk and potential impacts Mitigationactions/factors
Defence spending depends on a complex mix of
political considerations, fiscal constraints and the
requirements of the armed forces to address specific
threats and perform certain missions. Overall defence
spending may therefore be subject to significant yearly
fluctuations and there may also be downward pressure
on defence budgets in certain key programme areas.
The Group’s profits and cash flows are dependent, to
asignificant extent, on the timing of award of defence
contracts. In general, the majority of the Group’s contracts
are of a relatively short duration and, with the exception
of framework contracts with key customers, do not
cover multi-year requirements.
- The Group’s financial performance may be adversely
impacted by lower defence spending by itsmajor
customers, either generally or in relation
tocertainprogrammes.
- Short-term trading and cash constraints may impact
on the Group’s ability to invest in longer-term
technologies and capabilities.
- Unmitigated delays in the receipt of orders or cancellation
of existing contracts could affect the Group’s financial
performance. If the Group’s businesses are unable to
continue trading profitably during periods of lower
order intake, financial performance will deteriorate,
and assets may be impaired.
Example key risk indicators:
- Defence budget cuts.
- Reduction in order intake.
- Deterioration in profitability.
- Engagement with government customers regarding
thefuture direction of defence budgets and key
priorities, including the UK Government’s Strategic
Defence Review.
- Continual assessment of alignment of planned organic
growth strategies and technology roadmaps against
government priorities for future funding.
- Increased focus on the development of commercial
products and services.
- Focus on organisational development to ensure the
business is appropriately structured to meet current
and future needs, and to provide resilience in difficult
market conditions.
- Continued focus on order intake as a key
performanceindicator.
- Continued review of the Group’s portfolio and
inorganic growth opportunities.
- Pursuit of long-term, multi-year contracts with
majorcustomers wherever possible.
> SEE ALSO: MARKET OVERVIEW ON
PAGES18TO19
Inherent risk: Medium
Risk appetite: Low to
moderate
Trend: Increasing
Link to strategy:
G A P
Link to values:
S E I
Chemring Group PLC Annual report and accounts 2024 77
Strategic report Governance Financial statements

STRATEGIC RISKS continued
E.POLITICAL
Risk and potential impacts Mitigationactions/factors
Increasing political, social and economic uncertainty and
volatility may lead to changes in the political landscape.
Inaddition, there is a significant risk of political unrest and
changes in the political structure in certain non-NATO
countries to which the Group currently sells.
- The Group’s business in certain countries may be
adversely affected in a way that is material to the
Group’s financial position and the results of its operations.
- Political changes could impact future defence budgets
and priorities or the Group’s ability to export
products to certain countries.
Example key risk indicators:
- Political changes.
- Suspension/withdrawal of export licences.
- International sanctions.
- Reduction in order intake.
- Relationships maintained at political level in key
countries and with senior customer representatives.
- Financing arrangements implemented, including letters
of credit and advance payments, for contracts with
high-risk customers.
- Political risks insurance procured in certain circumstances.
- Continued focus on the development of commercial
business across the Group, particularly in key
hometerritories.
> SEE ALSO: MARKET OVERVIEW ON
PAGES18TO19
Inherent risk: Low
Risk appetite: Low to
moderate
Trend: Increasing
Link to strategy:
G A P
Link to values:
E I
F.CONTRACTS
Risk and potential impacts Mitigationactions/factors
The Group’s government contracts may be terminated at
any time and may contain other unfavourable provisions.
The Group may need to commit resources in advance
of contracts becoming fully effective, to ensure prompt
fulfilment of orders or to enable conditions precedent
to be met.
- The Group may suffer financial loss if its contracts are
terminated by customers, or a termination arising out
of the Group’s default may have an adverse effect on
its ability to compete for future contracts and orders.
- Unfavourable commercial contract terms may adversely
impact the Group’s working capital position, particularly
if the receipt of payments by the Group isdelayed.
Example key risk indicators:
- Number of contract claims/terminations.
- Increase in working capital.
- Delays in customer payments.
- Number of bonds or guarantees called.
- Relationships maintained at political level in key
countries and with senior customer representatives.
- The Commercial Policy within the Operational
Framework requires central approval for certain
contractual risk exposures.
- Commercial and contract risk management training
programme implemented.
- Advance and stage payments negotiated with
customers wherever possible, in order to improve
working capital management.
Inherent risk: Low
Risk appetite: Moderate
Trend: Stable
Link to strategy:
G A P
Link to values:
S E I
PRINCIPAL RISKS AND UNCERTAINTIES continued
Principal risks and uncertainties continued
Chemring Group PLC Annual report and accounts 202478
Strategic report Governance Financial statements

G.TECHNOLOGY
Risk and potential impacts Mitigationactions/factors
The Group may fail to maintain its position on key future
programmes due to issues with capability development,
technology transfer or cost-effective manufacture.
The Group needs to continually add new products to its
portfolio, through innovation and an emphasis on research
and development. New product development may be
subject to delays, or may fail to achieve the requisite
standards to satisfy volume manufacturing requirements and
the production of products against high reliability and safety
criteria to meet customer specifications.
- Failure to obtain production contracts on major
development programmes may significantly impact the
future performance and value of individual businesses.
- Failure to complete planned product development
andupgrades successfully may have financial and
reputational impacts, and may result in obsolescence
or loss of future business.
Example key risk indicators:
- Reduction in R&D expenditure.
- Delays in R&D programmes.
- Delays in qualification of products.
- Loss of production contracts.
- Emergence of new competitors and
disruptivetechnologies.
- Close relationships maintained with customers on all
key future programmes.
- New Product Development Policy and procedures
adopted, to align the approach to future technology
investment across the Group.
- Technology investments aligned with the five-year plan.
- Working groups established to drive and
co-ordinatetechnology growth in certain key
areaswithin Countermeasures & Energetics and
Sensors & Information.
Inherent risk: Medium
Risk appetite: Moderate
Trend: Stable
Link to strategy:
G A P
Link to values:
S E I
H.FINANCIAL
Risk and potential impacts Mitigationactions/factors
The Group is exposed to a range of financial risks, both
externally driven, such as fluctuations in foreign exchange
rates, and specific to the Group.
Specific financial risks could arise out of a disruption
tooperations; failure to deliver strategic objectives,
including planned investment; or customer-related
events, including defaults on the payment of debts.
As a result of a number of past events, the Group
isexposed to a number of contingent liabilities
whichmay or may not result in future cash outflows.
(Further details are contained in note 34 of the Group
financial statements).
- The Group may fail to comply with financing covenants
and be unable to meet debt repayments, leading
towithdrawal of funding or additional costs of
maintaining funding.
- Operational results may be impacted by unexpected
financial losses or increased costs.
Further details of the financial risks to which the Group
is potentially exposed, and details of mitigating factors
are set out in the financial review and note 22 of the
Group financial statements.
Example key risk indicators:
- Deterioration in bank covenants.
- Increase in net debt.
- Interest rate increases.
- Foreign exchange rate movements.
- Increase in bad debts.
- Increase in inflation.
- Committed banking facilities in place to
December2026and an additional loan facility
supportedby UK ExportFinance.
- Regular monitoring of actual and forecast
financingcovenants.
- Capital approval processes in place, requiring Board
approval for significant projects.
- Hedging policy applied for significant foreign transactions.
- Energy bought forward in the UK and Norway to
mitigate price volatilities.
- Advance payments and letters of credit required from
customers with a heightened payment risk.
- Government grant funding secured to support capital
expansion projects.
> SEE ALSO: FINANCIAL REVIEW ON
PAGES68TO71
Inherent risk: Low
Risk appetite: Moderate
Trend: Decreasing
Link to strategy:
G A P
Link to values:
E I
Chemring Group PLC Annual report and accounts 2024 79
Strategic report Governance Financial statements

STRATEGIC RISKS continued
I.OPERATIONAL
Risk and potential impacts Mitigationactions/factors
The Group’s manufacturing activities may be exposed
tobusiness continuity risks, arising from plant failures,
supplier interruptions, quality issues or large-scale
employee absences.
Planned new facility developments may be delayed
asaresult of operational issues.
- Interruptions to production and sales could result
infinancial loss, reputational damage and loss of
futurebusiness.
- A delay in completing new manufacturing facilities
could constrain capacity and limit future
businessgrowth.
Example key risk indicators:
- Number of process safety events including those that
result in personnel exposure.
- Reduction in right first time and on-time delivery rates.
- Increase in supplier-related delays.
- Increase in quality issues and customer complaints.
- Reduction in capital expenditure.
- Delays in commissioning of facilities.
- Major accident hazard analysis process and upset
condition management standard implemented across
the Group.
- Key performance indicators adopted, to provide
bettervisibility on operational performance and to
facilitate early identification of potential production
and quality issues.
- Advance purchases made of raw materials where
potential supply chain constraints are identified.
- Due diligence and credit checks undertaken on
keysuppliers.
- Business continuity plans established across the Group.
- Continued capital investment in legacy facilities to
improve safety and reliability.
- Asset integrity programme implemented.
- Detailed plans developed for all significant capital
investment projects, steering committees established,
and additional dedicated resources deployed to
oversee key projects.
- Business interruption risks insured where appropriate.
> SEE ALSO: GROUP CHIEF EXECUTIVE’S
REVIEWONPAGES12TO17,ANDHEALTH
ANDSAFETYONPAGES46TO47
Inherent risk: Medium
Risk appetite: Low to
moderate
Trend: Stable
Link to strategy:
G A P
Link to values:
S E I
J.PEOPLE
Risk and potential impacts Mitigationactions/factors
There is a risk that the market for talent in key areas of
expertise becomes more challenging. Allied to this there
is a risk of loss of key personnel.
As the shape of the Group’s business changes, and with
an increased focus in high-technology areas, the Group
may fail to build and retain an appropriate skill base to
facilitate successful competition in new markets and
product areas.
Employees may not be fully engaged with the Chemring
journey, purpose, products, customers and values.
- Failure to recruit sufficient suitably qualified personnel in
key areas of the business may result in the Group failing
to achieve its future growth aspirations.
- Failure to build and retain key skills will lead to a
reduction in the ability to innovate or to win and
deliver new contracts.
- If key personnel are not fully engaged with the business,
purpose, values and products, and are not appropriately
incentivised, the ability of the Group to retain them will
be compromised. This could result in loss of management
expertise and knowledge, and the Group’s operations
may suffer as a consequence.
Example key risk indicators:
- Diversity statistics.
- Increase in employee turnover.
- Number of unfilled vacancies.
- Employee sentiment scores.
- Chemring values of Safety, Excellence
andInnovationestablished.
- Development framework implemented across the
Group, focusing on developing management and
leadership skills and behaviours particularly amongst
our line manager and supervisor population.
- Ongoing review of capability requirements against
thebusiness strategy.
- Increased focus on DE&I.
- Employee engagement tools deployed across the Group.
- Talent framework and succession planning process
implemented and regularly reviewed by the Board.
- Incentive arrangements enhanced to encourage
collaboration and create a Group focus at senior level.
- Ongoing development of an Employee Value
Proposition and each business’s brand.
> SEE ALSO: OUR PEOPLE ON
PAGES61TO65
Inherent risk: Medium
Risk appetite: Low to
moderate
Trend: Stable
Link to strategy:
G A P
Link to values:
S E I
PRINCIPAL RISKS AND UNCERTAINTIES continued
Principal risks and uncertainties continued
Chemring Group PLC Annual report and accounts 202480
Strategic report Governance Financial statements

K.CYBER-SECURITY
Risk and potential impacts Mitigationactions/factors
Cyber-security and related risks are key emergent areas
ofcritical importance for all businesses, particularly for
those involved in the defence and national security sectors.
Threats can emanate from a wide variety of sources
andcould target various systems for a wide range of
purposes, making response particularly difficult.
The data and systems which need to be protected
include customer-classified or sensitive information,
commercially sensitive information, employee-related
data and safety-critical manufacturing systems.
- The Group may suffer from critical systems failures,
orits intellectual property, or that of its customers,
may fall into the hands of third parties.
- In addition to business interruption and financial loss,
the Group may suffer reputational damage, and its
business of providing cyber-security services to
customers may be irreparably damaged.
Example key risk indicators:
- Number of “phishing” emails reported.
- Number of system attacks and failures.
- Reports from external advisers on the threat environment.
- Decrease in confidence and integrity of data/information.
- Cyber risk assessments completed, and action
plansimplemented to counter the Group’s
identifiedmajorrisks.
- Security Committee established.
- Group-wide Cyber-Security Standard adopted
basedon the US NIST 800-171 standard and a
numberofcyber-security defence measures adopted,
encompassing, as appropriate to the nature of the
threat and sensitivity of data or systems being
protected, hardware, software, system, process
orpeople-based solutions.
- Where appropriate, government or commercial
accreditation of networks and systems obtained in
support of the overall cyber-security programme.
- IT and security systems review included within
theinternal audit programme.
- Cyber Incident Response Plan developed
andworkshops held.
- Cyber consultants engaged to provide ongoing
monitoring and expertise.
Inherent risk: Medium
Risk appetite: Low
Trend: Increasing
Link to strategy:
G A P
Link to values:
S E I
BUILDING OUR CYBER RESILIENCE
In today’s environment, staying at the forefront of cyber-security is
paramount. Managing risk, compliance and ongoing threats is a constant
operation, so cyber resilience is part of our risk management.
The cyber resilience programme consists of several components, but some
of the most important initial steps are around readiness.
At Chemring, cyber readiness includes ongoing education, communications
and testing on the importance of cyber-security and everyone’s role in
protecting the Company from threats.
Education
All employees must undertake regular cyber-security training via our Compliance
Portal. The training consists of e-learning materials that explain key themes
of cyber-security and usually finish with a small test to check learning.
PURPOSE IN ACTION
We also participate in Cyber-Security Awareness Month in October, taking
the opportunity to remind our colleagues of the key themes of our
cyber-security training and this year focusing on our main message of
“Think before you click”.
Cyber-security alerts
To ensure employees are current and up to date with our latest cyber risks,
we regularly publish alerts on the latest examples of attempted cyber attacks
so our employees are aware and understand the types of threats that exist.
One example was AI voice cloning, which involves using machine learning
algorithms to analyse patterns in an individual’s speech and then generate a
synthetic voice that closely mimics the original speaker’s tone, pitch, accent
and speaking style. These algorithms can create convincing sentences that
sound like specific people speaking or saying things they have not actually said.
In the email alert, we used the real example of a WhatsApp message that
looked like it had come from The Group Chief Executive Michael Ord. The
scammer had set up a fake WhatsApp profile using Michael’s image from
the Chemring website. The message asked the Chemring colleague if she
was available for a call and then left a voicemail, which sounded like it had
come from Michael. Thankfully, she thought the message seemed unusual
and saw that the number was not Michael’s usual contact number. She
reported the contact to Chemring’s IT team and deleted and blocked the
caller in WhatsApp.
Testing
To test our employees’ readiness and cyber resilience, we conduct regular
tests by sending an example phishing email and measuring the response.
Weanalyse the results, feed them back into our cyber security alerts,
andidentify individuals who may need additional education in this area.
Chemring Group PLC Annual report and accounts 2024 81
Strategic report Governance Financial statements

LEGAL AND COMPLIANCE RISKS
L.COMPLIANCEANDCORRUPTION
Risk and potential impacts Mitigationactions/factors
The Group operates in over 50 countries worldwide,
ina highly regulated environment, and is subject to the
applicable laws and regulations of each of these jurisdictions.
The Group must ensure that all its businesses, its
employees and third parties providing services on its
behalf comply with all relevant legal and regulatory
obligations. The nature of the Group’s operations could
expose it to government and regulatory investigations
relating to safety and the environment, import-export
controls, money laundering, false accounting, and
corruption or bribery.
The Group requires a significant number of permits,
licences and approvals to operate its business, which
may be subject to non-renewal or revocation.
- Non-compliance could result in administrative, civil
orcriminal liabilities, and could expose the Group
tofines, penalties, suspension or debarment, and
reputational damage.
- Loss of key operating permits and approvals could result in
temporary or permanent site closures, and loss of business.
Example key risk indicators:
- Regulatory intervention and penalties.
- Non-renewal/revocation of licences and permits.
- Breaches of policies.
- Non-completion of compliance training.
- Increase in whistleblowing reports.
- ESG Committee oversees compliance across the Group.
- Operational Framework in place, mandating compliance
with a range of policies and procedures covering a wide
range of legal and regulatory requirements.
- Operational assurance process established as part
ofthe Operational Framework.
- Central legal and compliance function assists and
monitors all Group businesses, supported by
dedicated internal legal resource in the US.
- Code of Conduct stipulates the standards of acceptable
business conduct required from all employees and third
parties acting on the Group’s behalf.
- Bribery Act Compliance Manual implemented,
incorporating robust anti-bribery policies and procedures.
- Policy adopted to manage risks associated with sales
to customers in higher risk territories.
> SEE ALSO: ETHICS AND BUSINESS CONDUCT
ONPAGES66AND67
Inherent risk: Medium
Risk appetite: Low
Trend: Decreasing
Link to strategy:
G A P
Link to values:
E I
PRINCIPAL RISKS AND UNCERTAINTIES continued
Principal risks and uncertainties continued
Chemring Group PLC Annual report and accounts 202482
Strategic report Governance Financial statements

VIABILITY STATEMENT AND GOING CONCERN
In accordance with provisions 30 and 31 of the UK Corporate Governance
Code, the Board is required to state whether it considers it appropriate to
adopt the going concern basis of accounting when preparing the financial
statements, and to undertake an assessment of the Group’s prospects and
consider whether there is a reasonable expectation that the Group will be
able to continue in operation and meets its liabilities as they fall due over the
period of the assessment.
GOING CONCERN
The Group’s business activities, key performance indicators, and principal
risks and uncertainties are set out within the strategic report on pages 1
to84.
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
2024 Covenant
Available facilities £245.6m
Undrawn committed borrowing facilities £157.4m
Leverage ratio 0.57x Less than 3x
Interest cover ratio 15.28x Greater than 4x
The revolving credit facility of £150m runs to December 2025, of which
£130m has been extended to December 2026. The Group also has a $20m
swingline overdraft facility for use in the US. In October 2024, the Group
entered into aUK Export Finance loan facility led by Barclays Bank PLC for up
to£80m. This is a four-year term, arm’s length facility with a one-year draw
down period and a three-year amortising repayment schedule. The Group
was in compliance with its covenants throughout the year.
Assessment of near-term prospects
As part of a regular assessment of the Group’s working capital and financing
position, the directors have prepared a detailed bottom-up two-year trading
budget and cash flow forecast for the period through to October 2026.
This has enabled the directors to assess going concern for a period of at least
12 months after the date of approval of the financial statements. This is in
addition to the Group’s longer-term strategic planning process. In assessing
the forecast, the directors have considered:
- trading risks presented by the current economic conditions in the defence
market, particularly in relation to government budgets and expenditure;
- the impact of macro-economic factors, particularly interest rates and
foreign exchange rates;
- the status of the Group’s existing financial arrangements and associated
covenant requirements;
- progress made in developing and implementing cost reduction programmes
and operational improvements;
- progress made on capital expansion projects for the Group’s Energetics
businesses including the provision of grant funding;
- the availability of mitigating actions should business activities fall behind
current expectations, including the deferral of discretionary overheads and
restricting cash flows; and
- the long-term nature of the Group’s business which, taken together with
the Group’s order book, provides a satisfactory level of confidence to the
Board in respect of trading.
Sensitivity analysis
Additional detailed sensitivity analysis has been performed on the forecasts to
consider the impact of severe, but plausible, reasonable worst case scenarios
on the covenant requirements. These scenarios, which sensitised the forecasts
for specific identified risks, modelled the reduction in anticipated levels of
underlying EBITDA and the associated increase in net debt. These scenarios
included significant delays to major contracts and considered the principal
risks and uncertainties discussed in the strategic report. These sensitised
scenarios show headroom on all covenant test dates for at least twelve
months after the date ofapproval of the financial statements.
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.
LONG-TERM VIABILITY
Assessment of long-term prospects
The directors have assessed the Group’s viability over the subsequent three
financial years to October 2027 based on the above assessment, combined
with the Group’s strategic planning process, which gives greater certainty
over the forecasting assumptions used. Based on this assessment, the directors
have a reasonable expectation that the Group will be able to continue in
operation and meet all its liabilities as they fall due up to October2027.
Assessment period
The directors have chosen the subsequent three financial years as the period
to assess viability to reflect the characteristics of the Group’s end markets
and their contracting arrangements. These range from multi-year contracts
with key customers to shorter-term orders, such as those awarded to Roke.
Principal risks
In considering our viability statement we have considered the principal risks
and uncertainties discussed in the strategic report and assessed the impact.
Those risks with the most significant potential financial impact included
occupational and process safety risks, operational risks and environmental
laws and regulations risks.
Sensitivity analysis
Sensitivity analyses were run to model the financial and operational impact
ofplausible downside scenarios of these risk events occurring individually
orin combination. These included the impacts of a deterioration in the
macro-economic environment including future government policy and
spending, underperformance in executing the Group’s strategy, failure
toachieve operational improvement and material movements in foreign
exchange rates.
Consideration was also given to the plausibility of the occurrence of other
individual events that in their own right could have a material impact on the
Group’s viability.
Confirmation of viability
Based on the consolidated financial impact of the sensitivity analyses and
associated mitigating internal controls and risk management actions that are
either now in place or could be implemented, the Board has a reasonable
expectation that the Group will be able to continue in operation and meet
itsliabilities as they fall due over the three year assessment period.
Chemring Group PLC Annual report and accounts 2024 83
Strategic report Governance Financial statements

NON-FINANCIAL AND SUSTAINABILITY INFORMATION STATEMENT
This section of the strategic report constitutes the Group’s non-financial andsustainability
information statement and addresses the requirements ofsections 414CA and 414CB of the
Companies Act 2006. The non-financial information is included within the various other sections
of the strategic reportand is cross-referenced below.
Our Code of Conduct provides direction to our employees on the standards of behaviour and business conduct which we expect from them. It sits alongside
our Operational Framework, which incorporates a wide range of policies and procedures to enable our businesses to comply with their legal obligations and
tooperate in a safe, consistent and accountable way.
> OUR CODE OF CONDUCT AND OUR KEY PUBLIC POLICIES ARE AVAILABLE ATWWW.CHEMRING.COM.
Reporting requirement Relevant policies which govern our approach Where to read more Page
Environmental matters - Group health, safety and environmental policy - Introduction to sustainability
- Environment
- TCFD report
42
48
52
Employees - People policy
- Group health, safety and environmental policy
- Directors’ remuneration policy
- Whistleblowing policy
- Code of Conduct
- Stakeholder engagement
- Our people
- Health and safety
- Ethics and business conduct
- Directors’ remuneration report
38
61
46
66
106
Social and
communitymatters
- Community investment policy
- Code of Conduct
- Our people
- Ethics and business conduct
61
66
Respect for human rights - Modern Slavery Act Statement
- People policy
- Supplier Code of Conduct
- Code of Conduct
- Our people
- Ethics and business conduct
61
66
Anti-bribery
andcorruption
- Anti-corruption policy
- Bribery Act Compliance Manual
- Policy on sales to customers located
inhigher-risk territories
- Offset policy
- Code of Conduct
- Ethics and business conduct 66
Business model - What we do
- Investment case
- Business model
- Market overview
- Strategy
2
10
28
18
20
Stakeholders - Stakeholder engagement
- Corporate governance report
38
90
Risk management - Risk management
- Principal risks and uncertainties
72
74
Non-financial key
performance indicators
- Key performance indicators
- Health and safety
- Environment
- Our people
24
46
48
61
Chemring Group PLC Annual report and accounts 202484
Strategic report Governance Financial statements

Strategic report Governance Financial statements
Governance
IN THIS SECTION:
86 Chairman’s introduction to governance
88 Board of directors
90 Corporate governance report
90 Board leadership and company purpose
95 Division of responsibilities
98 Composition, succession and evaluation
99 Audit, risk and internal control
100 Audit Committee report
104 Nomination Committee report
106 Directors’ remuneration report
106 Remuneration overview
110 Directors’ remuneration policy
119 2024 remuneration at a glance
121 Annual report on remuneration
127 Additional statutory information on remuneration arrangements
134 Directors’ report
Chemring Group PLC Annual report and accounts 2024 85

Strategic report Governance Financial statements
CHAIRMAN’S INTRODUCTION TO GOVERNANCE
Upholding the highest standards
ofcorporate governance
Tony Wood
Chairman
On behalf of the Board, I am pleased to present my first governance report as Chairman.
The report focuses on the Group’s governance structures, the work of theBoard and
itscommittees, and our compliance with the UK Corporate Governance Code 2018
(the“Code”) and other regulatory requirements. The report comprises thefollowing:
“ Our Operational Framework and
our Code of Conduct promote
aset of policies, practices and
behaviours which are fully
aligned with Chemring’s purpose,
values, vision and strategy.”
Board of directors
Corporate governance report
Audit Committee report
Nomination Committee report
Directors’ remuneration report
Directors’ report
BOARD COMPOSITION
In last year’s report, we announced that Carl-Peter Forster would retire from the Board
in early 2025, on completion of his third three-year term as Chairman. In late 2023,
asearch for his successor was initiated, which concluded with the announcement of my
appointment in June 2024. I joined the Board as an independent non-executive director
and Chairman-designate with effect from 1 October 2024 and succeeded Carl-Peter
asChairman on 1 December 2024, following his retirement on 30 November 2024.
Onbehalf of the Board, I would like to extend my thanks to Carl-Peter for his significant
contribution to the growth of the Group over the past eight and a half years and wish
him well for the future.
> FULL DETAILS OF THE SEARCH PROCESS FOR THE CHAIRMAN ARE SET
OUT ON PAGES 104 TO 105
We also announced in last year’s report that Andrew Davies would step down from
theBoard on completion of his third three-year term as an independent non-executive
director in 2025. Andrew will retire on 31 January 2025. The Board extends its thanks
to Andrew for his valuable contribution over the last eight and a half years.
Fiona MacAulay will succeed Andrew as the Senior Independent Director and following
Fiona’s appointment, we will comply fully with the Listing Rules relating to Board diversity.
PURPOSE, VALUES AND CULTURE
The Board recognises its role in establishing the purpose and values of the Group,
andembedding these throughout the organisation.
Our purpose at Chemring is to help make the world a safer place, which reflects the
critical role we play in the support of our customers as we adapt to an increasingly
volatile and unstable world. Across physical and digital environments, our exceptional
teams deliver innovative technologies and products to detect, defeat and counter
ever-changing threats. Our purpose and our core values of Safety, Excellence and
Innovation form the foundation for our strategy, our business and our organisation.
Examples of how we are living our values can be found on pages 6 and 7.
Our Code of Conduct reflects our purpose and our values, and sets out the standards
of behaviour and business conduct we expect of all employees and all third parties
acting on our behalf. It reinforces the culture, set by the Board, of always doing the
rightthing and taking personal responsibility for our actions. We firmly believe that
promoting a Chemring culture that embraces responsible behaviour will contribute
tothe long-term success of the business and will benefit all our stakeholders.
TheCodeof Conduct was updated and reissued in November 2024, and is
supplemented with ongoing scenario-based training.
GOVERNANCE AND OPERATIONAL FRAMEWORK
Our Operational Framework provides an enhanced governance framework to enable
usto operate in a safe, consistent and accountable way. Together with our Code
ofConduct, the Operational Framework promotes a set of policies, practices and
behaviours which are fully aligned with Chemring’s purpose, values, vision and strategy.
The Operational Framework was updated and reissued in November 2024.
Our ESG Committee, chaired by the Group Chief Executive, maintains oversight
ofourethical business conduct and compliance arrangements, and its activities reinforce
the importance of responsible behaviour at all levels of the organisation. The ESG
Committee reports to the Board on a regular basis and further details of its activities
during the year can be found on page 66.
STRATEGY
The delivery and further evolution of the Group’s strategy, which is articulated in my
statement on page 8 and in the strategy section on pages 20 to 23, continues to be one
of the principal areas of focus for the Board. In addition to our annual review of the
updated Group strategy and five-year plan in July, the Board addressed specific strategic
topics in a number of our meetings during the year. This regular drumbeat of strategic
discussions greatly enhances the Board’s understanding of the potential opportunities
available to our businesses and ensures that the requisite resources are allocated to
therealisation and optimisation of these opportunities.
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ENVIRONMENTAL, SOCIAL AND GOVERNANCE (“ESG”)
The Board recognises that long-term value creation can only be delivered through
safe,sustainable and responsible business operations. As referred to above, the Board
has established an ESG Committee to oversee the delivery of our ESG strategy
andimplementation of our ESG policies.
In 2021, we announced our commitment to reduce our market-based scope 1 and 2
emissions to net zero by 2030. Following the decisions taken over the last two years
tosignificantly increase production capacity and establish new facilities in our Energetics
businesses in order to meet continued strong market demand, we have concluded that
itis appropriate to defer our net zero target to 2035. We will, nevertheless, continue to
reduce our scope 1 and 2 emissions as quickly as we are able.
ESG-related objectives are included in the incentive arrangements for our leadership
teams and performance against agreed ESG targets is monitored by the Board at every
meeting. Further details on our ESG-related activities and the further progress made
inthe year can be found in the sustainability section on pages 42 to 45.
STAKEHOLDER ENGAGEMENT
In recognition of the requirement under the Code for the Board to establish a mechanism
for engaging directly with our employees, Laurie Bowen is designated as the non-executive
director with responsibility for employee engagement on behalf of the Board. Laurie
held a number of meetings with employees at all levels of the organisation at four of
ourbusinesses during the year, at which she shared with employees a perspective on
the Board’s priorities and provided an opportunity for them to ask questions of her.
Further details are provided later in the report. Feedback from these meetings has
continued to be positive, with employees welcoming the opportunity to meet with
anon-executive member of the Board and to be able toprovide honest feedback to
asenior member of the organisation outside of their direct line management. Insights
from these interactions, which are reported to theBoard following the engagement
sessions, continue to provide valuable input totheBoard’s deliberations.
We fully recognise our obligation to engage with and consider the impact of the Board’s
decisions on all our stakeholders. Further details on our approach can be found on
pages 38 to 41 and later in this report.
BOARD EFFECTIVENESS
During the year, the Board visited our sites in Chicago and Salisbury, in addition to
itsannual visit to Roke in Romsey. At each meeting, the Board received a presentation
from the business and met with employees.
The Board continues to maintain a strong relationship with our US Board, of which our
Group Chief Executive and Chief Financial Officer are members. The Board met with
the US Board during its visit to the US in April 2024 and received detailed briefings on
the US defence market and the US business operations.
Board site visits and related engagement activities are beneficial to aiding the Board’s
understanding of both the challenges and opportunities within our businesses, and we
will continue with our scheduled programme of site visits in 2025.
REMUNERATION
During the year, we undertook our triennial review of the directors’ remuneration
policy, which will be submitted to shareholders for approval at the Annual General
Meeting in February 2025. Further details are set out in the directors’ remuneration
report on pages 106 to 133.
BOARD EVALUATION
In accordance with the recommendations of the Code, the Board performance
evaluation was internally facilitated this year and further details are set out on page 98.
UPDATED UK CORPORATE GOVERNANCE CODE
An updated UK Corporate Governance Code was published by the Financial
ReportingCouncil in January 2024. The Group will be required to comply with the
updated Code with effect from 1 November 2025 (with the exception of Provision 29
– the declaration on the effectiveness of the risk management and internal control
framework – which will apply to the Group with effect from 1 November 2026)
andwewill continue to prepare for compliance over the course of the next year.
Tony Wood
Chairman
17 December 2024
COMPLIANCE WITH THE UK CORPORATEGOVERNANCECODE
In the year under review, the Company was required to apply the principles and
provisions of good governance set out in the UK Corporate Governance Code issued
in 2018 by the Financial Reporting Council. The Company was in compliance with the
provisions of the Code throughout the year ended 31 October 2024.
Further details on how the Company applied the principles of the Code during
theyear can be found as follows:
BOARD LEADERSHIP AND COMPANY PURPOSE
Long-term value and sustainability
Culture
Shareholder engagement
Employee engagement
Other stakeholder engagement
Conflicts of interest
90
90
94
94
93
95
DIVISION OF RESPONSIBILITIES
Role of the Chairman
Division of responsibilities
Non-executive directors
96
96
96
COMPOSITION, SUCCESSION AND EVALUATION
Appointments and succession planning
Skills, experience and knowledge
Length of service
Evaluation
Diversity
104-105
95
88-89
98
105
AUDIT, RISK AND INTERNAL CONTROL
Audit Committee
Integrity of financial statements
Fair, balanced and understandable
Internal controls and risk management
External auditor
Principal and emerging risks
100
101-102
102
72
102
74
REMUNERATION
Policies and practices
Alignment with purpose, values and long-term strategy
Independent judgement and discretion
106
111
106
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BOARD OF DIRECTORS
Diverse and experienced leadership
CHAIRMAN EXECUTIVE DIRECTORS
TONY WOOD
Chairman
N R
MICHAEL ORD
Group Chief Executive
JAMES MORTENSEN
Chief Financial Officer
SARAH ELLARD
Group Legal Director
&Company Secretary
Board length ofservice
(as at 17 December 2024):
0 years, 2 months
Board length ofservice
(as at 17 December 2024):
6 years, 6 months
Board length ofservice
(as at 17 December 2024):
1 year, 1 month
Board length ofservice
(as at 17 December 2024):
13 years, 3 months
Experience:
- Board experience at Chief
Executive level and in
non-executive positions
- Extensive international
experience in aerospace,
defence and engineering sectors
- Fellow of the Royal
Aeronautical Society and a
Fellow of the Association for
Project Management
Tony joined the Group as an
independent non-executive
director and Chairman-designate
on 1 October 2024 and was
appointed Chairman of the
Board on 1 December 2024.
Tony formerly held senior
leadership and executive
positions at Meggitt plc and
Rolls Royce, having started his
career at Dowty Group (now
part of Safran SA). He was also
a non-executive director and
President of ADS Group, Ltd,
the UK trade association for the
Aerospace, Defence, Security
and Space sector, before
stepping down in 2023.
Tony is a member of the
Boardof directors of Airbus
SE*, a member of the Board of
directors of National Grid plc*
and a member of the Board of
directors of AeroAccessories.
Experience:
- Extensive senior
management experience
inthe defence sector
- International experience
inbothservice and
manufacturing industries
Michael Ord was appointed
totheBoard on 1 June 2018
andappointed as Group
ChiefExecutive on 1 July 2018.
Michael is currently a
non-executive director
ofTTElectronics plc*.
Michael formerly held a number
ofsenior management roles
with BAE Systems including
Managing Director of their
Naval Ships and F-35 Joint
Strike Fighter businesses.
Priorto his 1996 move to
industry, he had a successful
career in the Royal Navy
serving for 12years inanumber
of engineering management roles.
An Aeronautical Systems
Engineering graduate and
aChartered Engineer,
Michaelhasalso completed
post-graduate management
studies at Manchester Business
School and is a graduate
ofHarvard Business School’s
Advanced Management
Programme. He is a member
ofthe Royal Aeronautical
Society. He previously served
as a trustee of The Education
and Training Foundation.
Experience:
- Extensive senior
managementexperience in
international technology and
manufacturing businesses
- Strategy and M&A experience
- Chartered Accountant
James Mortensen was appointed
to the Board on 1 November 2023
and was appointed as Chief Financial
Officer on 1 January 2024.
Prior to joining the Group,
James spent eight years at Smiths
Group, where he held a number
of senior roles including Group
Head of Corporate Development
and Chief Financial Officer of
Smiths Medical.
Prior to joining Smiths, James
spent eight years at Smith &
Nephew plc, where he held
various senior finance roles.
James started his career
inKPMG’s audit practice.
Experience:
- Legal, compliance and
governanceexpertise
- Chartered Secretary
Sarah Ellard was appointed
asGroup Legal Director on
7October 2011, having been
Group Company Secretary
since 1998.
Prior to joining the Group,
Sarah trained and worked
atErnst & Young LLP. She is
aFellow of the Chartered
Governance Institute.
COMMITTEE
MEMBERSHIP
A
Audit Committee
N
Nomination Committee
R
Remuneration Committee
Denotes Chair
LENGTH OF SERVICE
0–2 years (3)
3–4 years (1)
5+ years (5)
33%
11%
56%
* Designates a current public company appointment.
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NON-EXECUTIVE DIRECTORS
ALPNA AMAR
Non-Executive Director
A N
LAURIE BOWEN
Non-Executive Director
A N R
ANDREW DAVIES
Senior Independent
Non-Executive Director
A N R
STEPHEN KING
Non-Executive Director
A N R
FIONA MACAULAY
Non-Executive Director
A N R
Board length ofservice
(as at 17 December 2024):
1 year, 6 months
Board length ofservice
(as at 17 December 2024):
5 years, 5 months
Board length ofservice
(as at 17 December 2024):
8 years, 7 months
Board length ofservice
(as at 17 December 2024):
6 years, 1 month
Board length ofservice
(as at 17 December 2024):
4 years, 6 months
Experience:
- International experience
withinthe automotive and
construction sectors
- Chartered Accountant
Alpna Amar was appointed as
anindependent non-executive
director on13 June 2023.
Alpna is currently Corporate
Development Director of Kier
Group plc and is a member of Kier
Group’s Executive Committee. She
will take up an appointment as an
executive director of Senior plc* in
April 2025 and will become Chief
Financial Officer of Senior plc in
May 2025. Alpna has a wealth
ofcorporate, operational and
commercial finance, strategy,
M&Aandinvestor relations
experience in both corporate
andconsulting positions.
Prior to joining Kier Group, Alpna
held senior investor relations and
corporate development roles at
global automotive suppliers TI
FluidSystems plc and International
Automotive Components
GroupSA.
Experience:
- Board experience at Chief
Executive level
- International experience in
thetechnology sector
Laurie Bowen was appointed as
an independent non-executive
director on 1 August 2019 and
was appointed as Chair of the
Remuneration Committee on
4March 2020.
Laurie serves as a
non-executivedirector of SBA
Communications Corporation*.
She has over 30years of
leadership experience at large
multinational telecommunications
and technology companies including
Cable& Wireless Communications
plc, Tata Communications,
BTGroup plc and IBM. Most
recently she was Chief Executive
of Telecom Italia Sparkle in the
Americas, asubsidiary of the
international wholesale arm
ofTelecom Italia.
Laurie was previously a
non-executive director of
Ricardo plc and Transcom
Worldwide AB.
Experience:
- Board experience at
ChiefExecutivelevel
- Extensive knowledge of the
international defence industry
Andrew Davies was appointed
asan independent non-executive
director on17 May 2016 and was
appointed asSenior Independent
Director on1May 2020. He also
served as Chairman of the
Remuneration Committee
until4March 2020.
Andrew is currently Chief
Executive ofKier Group PLC*.
Hehas a wealth ofrelevant sector
experience, having served in
senior operational and strategic
roles at executive committee level
at BAE Systems plc for more
than14 years. He was formerly
ChiefExecutive of Wates
GroupLtd.
Andrew is due to retire from
theBoard on 31 January 2025.
Experience:
- Executive and non-executive
boardexperience in public
andprivatecompanies
- Chartered Accountant
Stephen King was appointed as
anindependent non-executive
director on1 December 2018
andas Chairmanof the Audit
Committee on1August 2019.
Stephen has a wealth of senior
level experience within the
industrial, engineering and
manufacturing sectors, including
anumber of executive and
non-executive roles. He is
currentlya non-executive
directorofKeller Group plc*.
Stephen retired as Group Finance
Director of Caledonia Investments
plc in 2018. He was previously
anon-executive director and
Chairman of the Audit and Risk
Committee at Signature Aviation
plc and TheWeir Group plc, and
a non-executive director and
SeniorIndependent Director
atTTElectronics plc.
Stephen was Finance Director at
De La Rue plc from 2003 to 2009,
and prior to that at Midlands
Electricity plc. A Chartered
Accountant, Stephen has also held
senior financial positions at Lucas
Industries plc and Seeboard plc,
and was a non-executive director
of Camelot plc.
Experience:
- Board experience at
ChiefExecutive level and
innon-executive positions
- International and
operationalexperience
inhigh-hazard industries
Fiona MacAulay was appointed
as an independent non-executive
director on 3June 2020.
Fiona is a non-executive
director ofFerrexpo plc*,
Costain Group PLC*, Dowlais
Group plc*. She was previously
Chair of IOG plc and a
non-executive director ofCoro
Energy Plc and EPIGroup Ltd.
Fiona previously held a number
of senior operational roles
within the oil and gas sector,
including a two-year appointment
as Chief Executive ofEcho
Energy plc in 2017.
Fiona will succeed Andrew
Davies asSenior Independent
Director on 1 February 2025.
* Designates a current public company appointment.
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Strategic report Governance Financial statements
CORPORATE GOVERNANCE REPORT
Board leadership andcompany purpose
GOVERNANCE FRAMEWORK
The Board is responsible for
ensuring leadership of the Group
through effective oversight and
review, with the aim of delivering
the long-term sustainable success
ofthe business. The Board discharges
some of its responsibilities directly
in accordance with the formal
schedule of matters reserved
toitfor approval, and discharges
others through Board committees
and the executive management.
The key responsibilities of the
Board, its committees and the
executive management are set
outopposite.
The terms of reference of the
Board committees are published
onthe Company’s website:
> WWW.CHEMRING.COM/
INVESTORS/CORPORATE-
GOVERNANCE
THE BOARD
Responsible for promoting the long-term sustainable success of the Group; directing its purpose, values and strategy;
oversight of financial and organisational control; ensuring that the Group’s businesses have appropriate and effective
internal control and risk management systems; and ensuring effective engagement with stakeholders.
THE GROUP CHIEF EXECUTIVE
Responsible for the leadership and day-to-day management of the business, and development and implementation
of the Group’s strategy.
EXECUTIVE COMMITTEE
Assists the Group Chief Executive with oversight of the delivery of the Group’s strategy; monitoring of the
operational and financial performance of the businesses; allocation of resources across the Group; management
ofrisk; and implementation of the Group’s Operational Framework and governance policies.
The Group Chief Executive chairs the Executive Committee, which has weekly update calls and meets formally
atleast four times a year. The members of the Committee are the executive directors, the President and
theChiefFinancial Officer of the Group’s US operations, the Group HSE Director, the Group Strategy
andCorporateDevelopment Director and the Group Director of Corporate Affairs. Full details of the
ExecutiveCommittee members can be found on the Group’s website:
> WWW.CHEMRING.COM
RISK MANAGEMENT COMMITTEE
Oversees the implementation of the risk management
policy and framework; identifies the principal risks to
which the Group is exposed; monitors risk mitigation
plans; and maintains the Group risk register.
ESG COMMITTEE
Oversees the implementation ofthe Group’s ESG
strategy; monitors progress against agreed ESG
targets; and identifies further ESG-related objectives.
AUDIT COMMITTEE
Monitors the integrity of the
financial statements, and the
effectiveness of the external
andinternal audit processes.
NOMINATION COMMITTEE
Evaluates the size, structure and
composition of the Board, and
oversees Board appointments.
REMUNERATION COMMITTEE
Sets and reviews the directors’
remuneration policy, and oversees
remuneration arrangements for
the senior leadership.
PURPOSE
Chemring’s purpose is to help make the world a
safer place. Across physical and digital environments,
our exceptional teams deliver innovative protective
technologies to detect, defeat and counter
ever-changing threats.
> FURTHER DETAILS ON OUR PURPOSE AND HOW IT LINKS TO OUR
STRATEGY AND VALUES CAN BE FOUND ON PAGES 6 AND 7
CULTURE AND VALUES
The Board is responsible for ensuring that the Company’s culture is aligned
with its purpose, values and strategy. We are committed to creating an
inclusive culture across Chemring, where everyone does the right thing
andtakes personal responsibility for their actions. This culture is promoted
through leadership and a strong “tone from the top” and is embedded
inourCode of Conduct and our Operational Framework, both of which
bindour purpose, values, behaviour, policies and procedures, and provide
thenecessary governance to enable us to operate in a safe, consistent
andaccountable way.
The Chairman is responsible for ensuring that the Board demonstrates
commitment to our values and culture by operating appropriately and
takingthe right actions on behalf of shareholders and other stakeholders.
TheGroup Chief Executive, supported by the Executive Committee and
thebusiness unit leadership teams, is responsible for ensuring that our
valuesand culture are fully embedded within all aspects of our operations.
> FURTHER DETAILS ON HOW OUR VALUES DRIVE BEHAVIOURS
ARESETOUT ON PAGES 28 AND 29
> SEE PAGE 100 AUDIT
COMMITTEE REPORT
> SEE PAGE 104 NOMINATION
COMMITTEE REPORT
> SEE PAGE 106 DIRECTORS’
REMUNERATION REPORT
> SEE PAGE 72
RISKMANAGEMENT
> SEE PAGES 42 TO 45 INTRODUCTION
TOSUSTAINABILITY ANDETHICS
ANDBUSINESS CONDUCT
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HOW THE BOARD ESTABLISHES AND MONITORS CULTURE
ESTABLISHMENT OF CULTURE MONITORING OF CULTURE
SAFETY
- HSE Policy, Management System Framework and strategy
- Focus on “Journey to Zero Harm” and drive towards a
proactive safety culture
- Fundamental Safety Principles
- “Stop, Warn, Inform, Manage” (“SWIM”) campaign
- Technical Safety Committee
- Regular reporting to the Board on safety performance against key
performance indicators, including near miss reporting rates
- The Board receives regular updates from the Group HSE Director
on progress against the HSE strategy, significant incidents and near
misses, and key findings of our HSE assurance processes
- The Board is briefed by independent external consultants on their
periodic review of the Group’s progress on developing a proactive
safety culture
EMPLOYEES
- Code of Conduct
- Monthly video-blog by the Group Chief Executive
andGroup-wide communication programme
- Diversity, equity and inclusion policy and initiatives
- Employee development programmes
- ESG Committee and inclusion of ESG objectives
inshortand long-term incentive arrangements
- Laurie Bowen, the designated non-executive director for employee
engagement, provides regular reports to the Board on her
discussions with employees at all levels of the organisation
- The Board receives regular updates on employee sentiment from
our various engagement tools, and undertakes periodic culture
“check-ins” facilitated by an external consultant
- Reporting to the Board on progress against established ESG targets
- Board site visits
GOVERNANCE
AND BUSINESS
CONDUCT
- Code of Conduct
- Operational Framework and operational assurance process
- ESG Committee and inclusion of governance-related
objectives in short-term incentive arrangements
- Chemring Compliance Portal
- Mandatory training programmes
- Whistleblowing policy and procedures
- The ESG Committee monitors ethical business conduct and
implementation of the Group’s compliance framework, and makes
recommendations to the Board on areas for future improvements
- The Group Legal Director regularly reports to the Board on
governance and compliance matters
- Review of compliance with key policies under the Operational
Framework is included within the internal audit programme
- The Group has a formal whistleblowing policy and procedures, and
the Board is provided with an overview of whistleblowing reports
received, related investigation findings and any remedial actions taken
INTERNAL
CONTROL
ANDRISK
MANAGEMENT
- Operational Framework and operational assurance process
- Group Finance Manual and internal control framework
- Audit Committee
- Risk Management Committee
- Risk Management Policy and Framework
- Internal audit programme
- The Audit Committee reviews internal audit reports produced
byour Internal Audit Manager and subject matter expert external
consultants, and the Board considers any significant issues arising
therefrom and any improvements required to our internal
controlsystems
- The Board reviews the Group’s risk register on a regular basis
andhas high-level oversight of mitigation plans implemented
forkeyrisks
- Operational assurance statements are required to be submitted
bythe businesses on an annual basis
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BOARD ACTIVITIES IN 2024
LEADERSHIP STRATEGY
- Reviewed the Company’s purpose, vision and values
- Visited businesses in Salisbury and Romsey in the UK and Chicago
intheUS
- Monitored culture through feedback on employee sentiment
measuredthrough our employee engagement tools
- Approved the appointment of the new Chairman
- Completed the annual Board performance evaluation
- Approved the updated five-year plan and strategy for the Group
- Engaged in reviews of organic and inorganic growth opportunities
acrossthe Group
- Reviewed key government customers’ plans for increasing defence
expenditure and the implications for the Group’s businesses
- Reviewed potential acquisition targets for Roke and Chemring
EnergeticDevices
- Reviewed priorities for capital and operational investment and approved
key investment programmes
- Received an update on the Group’s valuation from external advisers
FINANCIAL HEALTH, SAFETY, ENVIRONMENT AND SUSTAINABILITY
- Monitored performance of the businesses against the 2024 budget
- Approved the 2025/2026 budgets
- Approved the half year and full year results, and the annual report
andaccounts
- Approved the interim dividend and made a recommendation
toshareholders regarding the final dividend
- Approved a new term loan facility supported by UK Export Finance and
Barclays Bank PLC and an additional £100m of capacity for bonding,
standby letters of credit to support advanced payments.
- Reviewed the Group’s capital allocation policy and approved
theextensionof the share buyback programme to 17 December 2024
- Approved the Group’s tax strategy
- Regularly monitored health, safety and environmental key
performanceindicators and approved a new key performance indicator
relating to personnel exposure during process safety events
- Received briefings on significant incidents and high-potential near misses
- Agreed and reviewed progress against key health, safety
andenvironmentalobjectives
- Received regular updates from the ESG Committee
- Approved the Group’s approach to TCFD reporting and the management
of climate change risks
- Approved the deferral of the Group’s net zero scope 1 and 2 emissions
target from 2030 to 2035
- Approved the sustainability report
PEOPLE AND CULTURE GOVERNANCE, RISK AND REGULATORY
- Received regular reports from the Remuneration Committee
- Approved the directors’ remuneration policy for submission to
shareholders for approval at the Annual General Meeting in February 2025
- Considered feedback from Laurie Bowen, the non-executive director
designated to engage with employees on the Board’s behalf, on issues
raised with Mrs Bowen by employees
- Reviewed the Group’s talent framework, development programmes
andsuccession plans
- Received feedback on employee sentiment across the Group
- Reviewed the Group’s risk register and risk appetite for key risks and
completed the annual assessment of the Group’s internal control and risk
management systems
- Received regular updates from the Audit Committee and the
ESGCommittee
- Received updates on key legal issues and regulatory matters impacting
theGroup
- Reviewed the Group’s cyber-security arrangements
- Reviewed plans for the renewal of the US Special Security Agreement
in2025
- Received regular updates on significant whistleblowing reports
- Reviewed the Company’s compliance with the Code
- Reviewed and updated the Schedule of Matters Reserved for the Board
and associated delegated levels of authority
- Approved the Group’s Modern Slavery Act statement for 2024
SHAREHOLDERS
- Reviewed feedback from the results presentations and institutional investor meetings
- Received updates from brokers and other advisers and the Group Director of Corporate Affairs on current shareholder views on the Group
- Participated in a wide range of engagement meetings with current and potential new shareholders
CORPORATE GOVERNANCE REPORT continued
Board leadership andcompany purpose continued
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HOW THE BOARD CONSIDERS STAKEHOLDERS IN ITS DECISION MAKING
Section 172 (1) of the Companies Act 2006 requires the directors to act in the way they consider, in good faith, would most likely promote the success
ofthecompany for the benefit of its members as a whole. In doing so, section 172 requires the directors to have regard, amongst other matters, to the:
- likely consequences of any decision in the long term;
- interests of the company’s employees;
- need to foster the company’s business relationships with suppliers, customers and others;
- impact of the company’s operations on the community and environment;
- desirability of the company maintaining a reputation for high standards of business conduct; and
- need to act fairly as between members of the company.
The statement of compliance with section 172 is set out on pages 38 to 41, together with details of how the Board engages with stakeholders and how the Board
monitors stakeholder interests. Set out below are some specific examples of how the Board considered stakeholders in its decision making during the year.
STRATEGY DEVELOPMENT
- The Board continued to receive detailed briefings on the changing market dynamics in key defence markets, with particular focus on the shift in funding
priorities in the US in preparation for a peer-to-peer conflict, the increase in defence expenditure in Europe and the UK’s initiatives to strengthen its
sovereign capabilities in defence, and the implications for the Group’s future strategy.
- The Board receives updates from the Group Chief Executive on his regular interactions with the UK MOD and from the President of the US operations
onhis interactions with key US customers. In addition, the Board receives regular feedback from the businesses on the emerging technology requirements
oftheir principal customers and future budget allocations. These inputs are all reflected in the development of strategy, and decisions regarding investment
in operational capabilities and research and development.
- In developing the Group’s strategy, the Board continues to recognise the need for investment in people, processes and products to ensure that the
businesses can operate safely for the benefit of all stakeholders, and allocates resources accordingly.
- The Board also considers feedback from shareholders when reviewing strategy, particularly with regards to capital allocation and future growth plans.
INVESTMENT IN ROKE
- A significant level of both operational and capital investment continues to be allocated to Roke, which opened a new office in Gloucester during the year
toaccommodate over 75 staff and commenced planning for a new logistics and production facility to be established in Romsey. The business also continues
to invest in enhancing the value proposition for its workforce. In approving these investments, the Board considered how they would contribute to the
longer-term success of Roke and meet the needs of its customers, and the benefits that would be derived by customers and employees, particularly in
relation to workforce diversity and career development prospects.
CAPITAL INVESTMENT IN THE ENERGETICS BUSINESSES
- The Board approved an additional capital investment project at the Energetics business in Norway during the year, increasing the overall value of the capital
investment programme in the Energetics businesses from £120m to £200m. In reviewing and approving this additional investment, the Board considered
how it could satisfy the significantly increased capacity needs of customers, support sovereign capability requirements and create safer working conditions
for employees, whilst providing an appropriate return on investment for the Group’s shareholders. The Board also considered how theenvironmental
impact of new production facilities could be minimised and how changes in current and emerging environmental regulations would beaddressed.
IMPLEMENTATION OF ESG STRATEGY
- During the year, the Board continued to monitor progress against the ESG strategy adopted during 2021, with a particular focus on health, safety and
theenvironment, diversity and inclusion, reducing climate change impacts and employee wellbeing. This continues to drive investment in a number of areas,
from capital investment in upgraded new facilities to improve safety and reduce our environmental impact, to the establishment of development and
networking programmes focused on promoting diversity across the Group. In approving these ongoing investments, the Board has considered the impacts
on a wide range of stakeholders, including employees, customers, regulators and our local communities.
> FURTHER DETAILS ON OUR APPROACH TO ESG CAN BE FOUND ON PAGES 42 TO 60
EXECUTIVE REMUNERATION
- In agreeing the proposed new directors’ remuneration policy and reviewing the executive directors’ remuneration arrangements for the current financial
year, the Remuneration Committee assessed how they compared with remuneration arrangements for employees more broadly across the Group,
particularly with regards to salary increases, pension contributions and incentive arrangements.
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HOW THE BOARD CONSIDERS STAKEHOLDERS
IN ITS DECISION MAKING continued
EMPLOYEE ENGAGEMENT
Laurie Bowen is designated as the non-executive director for employee
engagement on behalf of the Board. Laurie held a number of meetings with
employees at all levels of the organisation within our UK and US businesses
during the year, at which she shared with employees a perspective on the
Board’s priorities and provided an opportunity for them to ask questions of
her. Whilst each meeting was different, due to the diversity ofthe businesses
and the range of employees who participated in the discussions, the following
topics were typically addressed at every meeting:
- the role of the Board and its responsibilities, and, where appropriate,
theinteraction between the UK and the US Boards;
- application of the Group’s values, particularly in relation to safety;
- leadership and vision;
- communication and employee engagement;
- relationships with customers and other stakeholders;
- collaboration within the Group; and
- resourcing, training and employee development.
Feedback from these meetings is provided to the Board and, where
appropriate, is considered in Board decision making. Laurie also provides
ahigh-level overview of the feedback received, on a non-attributable basis,
tothe leadership of the businesses involved. Further details on the key
themes arising during the year are set out on page 63.
During the Board visits to Chemring Energetic Devices in Chicago, Chemring
Countermeasures in Salisbury and Roke in Romsey, the Board members met
informally with members of the management teams and other employees.
These interactions provided an informal opportunity for open discussions
onthe operation of the Board and the Group’s strategic priorities, and
enabled employees to talk about the opportunities and challenges in their
own businesses.
The Group Chief Executive engages in regular discussion forums with
employees during routine visits to the businesses, and other directors
alsoengage with employees during individual site visits.
The Board is satisfied that its current mechanisms for engagement with employees,
including Laurie Bowen’s appointment as the designated non-executive
director for employee engagement, are effective, as evidenced by the
openness and quality of the discussions with employees. When combined
with the feedback on employee sentiment the Board receives through
employee engagement tools and periodic culture “check-ins”, theBoard is
confident that it receives meaningful input to its decision-making processes.
We will, however, continue to review the effectiveness of our approach to
engagement with employees and all our stakeholders on an ongoing basis.
> FURTHER DETAILS ON EMPLOYEE ENGAGEMENT MORE BROADLY
CANBE FOUND ON PAGE 63
SHAREHOLDER ENGAGEMENT AND THE ANNUAL
GENERALMEETING
The Company operates a structured investor relations programme, focused
largely around the half and full year results announcements in June and
December respectively. Meetings with shareholders are predominantly led
bythe Group Chief Executive, the Chief Financial Officer and the Group
Director of Corporate Affairs and typically focus on financial performance,
the Group’s strategy, capital allocation and ESG-related matters. In 2024,
meetings were held with fifty current and potential institutional shareholders
inthe UK, US and Canada.
The Board also receives reports from the Company’s advisers on feedback
received from existing and potential investors and analysts following meetings with
the executive directors. Investor sentiment is a key input intodevelopment of
the Group’s strategy.
The Chair of the Remuneration Committee engages with shareholders on
matters relating to executive remuneration from time to time. During the
year the Company’s larger institutional shareholders were consulted on the
proposed new directors’ remuneration policy which will be presented to
shareholders for approval at the Annual General Meeting in February 2025.
Further detail on how the Remuneration Committee responded to the
feedback received can be found in the directors’ remuneration report on
pages 106 to 109.
Our 2025 Annual General Meeting will be held on 26 February 2025 and
willbe held as a physical meeting in London. The Annual General Meeting
provides an opportunity for all shareholders to engage directly with the
Board. All directors are required to attend the meeting and make themselves
available to respond to questions from shareholders or address any concerns
raised by shareholders. In line with best practice, all substantial issues, including
the adoption of the annual report and financial statements, are proposed as
separate resolutions at the Annual General Meeting. In line with best practice
guidelines, voting is conducted by way of a poll, which allows allvotes to be
counted and not just those of shareholders who attend the meeting. Full details
of our Annual General Meeting are contained in the Notice of Meeting which
will be sent to shareholders in January 2025.
> FURTHER DETAILS ON THE BOARD’S ENGAGEMENT WITH
SHAREHOLDERS CAN BE FOUND ON PAGE 40
BOARD SITE VISITS
Site visits enable the Board to obtain a deeper understanding of the business
operations, establish relationships with the wider management team and
engage directly with employees. The Board receives a presentation from
management and views the facilities where safe to do so.
As referred to above, during the year the Board as a collective visited Chemring
Energetic Devices in Chicago in the US and Chemring Countermeasures in
Salisbury and Roke in Romsey, both in the UK. During each visit, the Board
received a presentation from the management on the business’ performance,
strategy, and key opportunities and challenges. The Board also participated
insite tours and reviewed the new facilities which hadbeen established in
thelast few years.
In addition, the Group Chief Executive, the Chief Financial Officer and the
Group Legal Director & Company Secretary made visits to most of the Group’s
businesses. As part of his induction programme, the Chairman visited Roke,
Chemring Countermeasures and Chemring Energetics in the UK and Chemring
Nobel in Norway. The Board next plans tovisit the US as a collective in
April2025.
CORPORATE GOVERNANCE REPORT continued
Board leadership andcompany purpose continued
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LEADERSHIP OF THE US BUSINESSES AND THE US BOARD
Our US Board is established under our Special Security Agreement (“SSA”)
with the US Government and includes three independent US directors
approved by the US Government. The SSA imposes certain restrictions
onthe degree of control and influence we can exert over our US businesses,
and it is imperative that we maintain a strong relationship with the US Board,
in order to ensure that we are fulfilling our own governance obligations.
TheGroup Chief Executive and the Chief Financial Officer are both members
of the US Board.
The President of our US operations joined one of our Board meetings during
the year. Our broader interaction with the US Board has increased inrecent
years, and the increased collaboration continues to prove beneficial from
both an operational and governance perspective. Our US Board collates and
provides valuable feedback from a range of both internal and external internal
stakeholders in the US, and this is a key input into the annual strategy review.
COMPOSITION OF THE BOARD AND INDEPENDENCE
The Board currently comprises three executive directors and six
non-executive directors (including the Chairman). The biographical details
ofindividual directors, including details of their other significant business
commitments, are set out on pages 88 and 89.
The Board considers that all the non-executive directors are independent
injudgement and character, and considered Tony Wood to be independent
on his appointment as Chairman.
The Board considers that the balance of executive and non-executive influence
on the Board is appropriate for the Company, taking into account itssize and
status, and serves to ensure that no single director or small group of directors
dominate the Board’s deliberations and decision making.
The roles of Chairman and Chief Executive are separate and clearly defined
inaccordance with the requirements of the Code, with the division of
responsibilities set out in writing and agreed by the Board.
TIME COMMITMENT OF DIRECTORS
The Board recognises the importance of ensuring that individual directors
have sufficient time available to discharge their duties effectively. Existing
commitments of prospective directors are carefully considered prior to
appointment and incumbent directors are required to notify the Chairman
or,in the case of the Chairman, the Senior Independent Director, if there
areany significant changes to their external commitments.
APPROVAL OF DIRECTORS’ EXTERNAL APPOINTMENTS
In accordance with the Code, all proposed new external appointments
ofdirectors require the approval of the Board. Stephen King’s appointment
asa non-executive director of Keller Group plc was approved by the Board
during the year and Alpna Amar’s appointment as an executive director and
Chief Financial Officer of Senior plc was approved subsequent to the year
end. In approving additional appointments, the Board seeks to satisfy itself
that the director concerned will continue to have the capacity to fulfil their
obligations to the Group following a proposed appointment.
Division of responsibilities
Manufacturing 8
Defence 5
Technology 5
International 9
Strategy 5
Marketing 5
Governance 5
NUMBER OF DIRECTORS WITH APPLICABLE SPECIFIC EXPERIENCE
CONFLICTS OF INTEREST
All directors have a duty under the Companies Act 2006 (the “2006 Act”)
toavoid a situation in which he or she has or can have a direct or indirect
interest that conflicts or may possibly conflict with the interests of the
Company. The Company’s Articles of Association include provisions for
dealing with directors’ conflicts of interest in accordance with the 2006 Act.
The Company has procedures in place to deal with situations where directors
may have any such conflicts, which require the Board to:
- consider each conflict situation separately on its particular facts;
- consider the conflict situation in conjunction with the rest of their duties
under the 2006 Act;
- keep records and Board minutes as to authorisations granted by directors
and the scope of any approvals given; and
- regularly review conflict authorisation.
EXPERIENCE OF THE BOARD
The members of the Board maintain the appropriate balance of experience
and knowledge of the business to enable them to discharge their duties
andresponsibilities effectively.
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BOARD ROLES AND RESPONSIBILITIES
The key responsibilities of the Board members are set out below.
CHAIRMAN
- Responsible for the leadership of the Board and ensuring its overall effectiveness in directing the Group
- Ensures that the Board is kept properly informed and is consulted in a timely manner on all decisions reserved to it
- Promotes a culture of openness and debate, and facilitates constructive relations between the executive and non-executive directors
- Ensures that the training and development needs of directors are identified
CHIEF EXECUTIVE
- Responsible for the leadership and day-to-day management of the business
- Develops strategy for Board approval and ensures that the agreed strategy is implemented successfully
- Presents the annual budget and five-year plan to the Board for approval and delivers agreed objectives
- Identifies new business opportunities, and potential acquisitions and disposals
- Manages the Group’s risk profile, including the management of health and safety
- Ensures that the Board is fully informed of all key matters
CHIEF FINANCIAL OFFICER
- Supports the Chief Executive in developing and implementing the global finance strategy
- Oversees the finance functions across the Group
- Ensures effective financial controls and financial reporting processes are in place
- Ensures the Group has adequate bank facilities and financial resources
SENIOR INDEPENDENT DIRECTOR
- Provides support to the Chairman and acts as a trusted sounding board
- Reviews the Chairman’s performance with the other non-executive directors
- Available to meet shareholders if they have concerns which cannot be resolved through the normal channels
NON-EXECUTIVE DIRECTORS
- Participate in the development of strategic objectives, provide constructive challenge and monitor the performance of executive management in achieving
theagreed objectives
- Monitor the Group’s financial performance
- Consider the integrity of the Group’s financial information, and whether the financial controls and risk management systems are robust and defensible
- Determine the appropriate remuneration policy for the executive directors
- Meet periodically with the Group’s senior management and visit operations
- Meet regularly without the executive directors being present
LEGAL DIRECTOR & COMPANY SECRETARY
- Oversees legal matters and compliance across the Group
- Secretary to the Board and its committees
- Under the direction of the Chairman, responsible for maintaining good information flows within the Board and its committees
- Develops Board and committee agendas, and collates and distributes papers
- Assists with the induction of new directors
- Keeps directors informed about changes to their duties and responsibilities
- Provides advice on legal, regulatory and corporate governance matters
CORPORATE GOVERNANCE REPORT continued
Division of responsibilities continued
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The following table shows the attendance of all directors who served during the year at the meetings of the Board and its committees:
Board member
Board
(8 scheduled
meetings)
Audit Committee
(5 scheduled
meetings)
Nomination
Committee
(3 scheduled
meetings)
Remuneration
Committee
(5 scheduled
meetings)
Tony Wood — — — —
Carl-Peter Forster 8(8) — — 5(5)
Alpna Amar 8(8) 5(5) 3(3) —
Laurie Bowen 8(8) 5(5) 3(3) 5(5)
Andrew Davies 8(8) 5(5) 3(3) 5(5)
Sarah Ellard 8(8) — — —
Stephen King 8(8) 5(5) 3(3) 5(5)
Andrew Lewis 2(2) — — —
Fiona MacAulay 8(8) 5(5) 3(3) 5(5)
James Mortensen 8(8) — — —
Michael Ord 8(8) — — —
The maximum number of meetings which each director could have attended is shown in brackets. All directors attended all scheduled Board meetings.
During the year, the Chairman met regularly with the non-executive directors without the executives being present.
BOARD MEETINGS AND ATTENDANCE
The Board convenes for scheduled meetings
atleast seven times a year. The Board receives
a report from the Executive Committee,
covering health and safety performance,
strategic development, operational and
financial performance, legal, people and
investor relations related issues, as a standing
agenda item at every scheduled meeting.
Members of the senior leadership team,
representatives of the US Board and external
advisers attend Board meetings by invitation,
as appropriate.
The Board aims to meet jointly with the
Group’s US Board, further details of which
areset out on page 95, at least once a year.
BOARD AND COMMITTEE MEETINGS
HELD DURING THE YEAR
Board
Audit
Nomination
Remuneration
4
3
2
1
0
November December January February March April May June July August September October
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BOARD APPOINTMENTS AND RE-ELECTION OF DIRECTORS
New appointments to the Board and its committees are made by the Board
on the recommendation of the Nomination Committee.
In accordance with the Company’s Articles of Association, all directors are
required to submit themselves for re-election at each Annual General Meeting.
The papers accompanying the Notice of Annual General Meeting include a
statement from the Chairman confirming that the performance ofeach
non-executive director seeking re-election at the meeting continues to be
effective and that each director continues to demonstrate commitment to
their role.
DIVERSITY
The Board recognises the importance of promoting diversity in its broadest
sense, both at the Board level and across the entire business, and we remain
committed to further improving diversity on the Board, the Executive
Committee and the wider senior leadership team.
> FURTHER DETAILS ON THE BOARD’S POLICY AND APPROACH TO
DIVERSITY ARE SET OUT IN THE NOMINATION COMMITTEE REPORT
ON PAGES 104 AND 105
INDUCTION, TRAINING AND DEVELOPMENT
An internal induction programme on the Group’s operations, and its strategic
and business plans, is provided for newly-appointed directors. Directors are
invited to meet key members of the senior management team at the earliest
opportunity, and site visits are arranged to facilitate their understanding
oftheGroup’s operations.
The Group Legal Director & Company Secretary also provides detailed
information on the operation of the Board and its committees, directors’
legalduties, and responsibilities on appointment.
Overview of induction programme provided to Tony Wood
Tony Wood joined the Board in October 2024. As part of his induction
programme, Tony spent time with the executive directors receiving a
detailed brief on the Group’s operations and met with members of the
Executive Committee to develop an understanding of their respective
areasof responsibility. Tony also met with the Group’s key professional
advisors. Tony has visited three of our sites in the UK and ourbusiness in
Norway to date. Ateach of the site visits, Tony was given a tour of the
facilities and received a presentation from the management on the business.
Tony’s induction programme will continue in 2025.
The Company meets the cost of appropriate external training for directors,
the requirement for which is kept under review by the Chairman.
Directors are continually updated on the Group’s businesses and the
mattersaffecting the markets in which they operate. The Group Legal
Director & Company Secretary updates the Board on a regular basis with
regards to regulatory changes affecting the directors and the Group’s
operations generally, and briefings are provided by the Group’s advisers
onkey developments in areas such as financial reporting and executive
remuneration practice.
INDEPENDENT ADVICE
All directors are entitled to take independent professional advice in furtherance
of their duties at the Company’s expense, should the need arise. No director
had reason to seek such advice during the year.
PERFORMANCE EVALUATION
The Board performance evaluation was externally facilitated in 2023 and an
internal evaluation was therefore conducted during the year following the
approach adopted in 2022.
Questionnaires covering the activities of the Board and its three main committees
were sent to each of the directors for completion. The questionnaires focused on:
- strategy development and implementation;
- the Group’s ESG plans and objectives;
- the Board’s role in setting and monitoring the Group’s purpose, culture
andvalues;
- stakeholder engagement;
- operation of the Board and its committees;
- the role of the Chair and effectiveness of meetings;
- the composition of the Board and its diversity;
- the Board’s oversight of risk management systems and internal controls; and
- areas in which the Board could improve its effectiveness.
The individual responses were collated and consolidated by the Group Legal
Director & Company Secretary into a report which was discussed with the
Chairman prior to sharing with the remainder of the Board. Specific comments
from directors were not attributed to individuals in order to provide full
transparency on the responses.
The evaluation confirmed that the Board is continuing to function effectively
overall and, with the most recent appointments, the balance of skills and
experience on the Board affords it a level of maturity in the way it conducts
itself. The evaluation identified several areas in which the Board could improve
its effectiveness and the Board therefore developed a set of goals for the
forthcoming year, with a focus in the following areas:
- appointment of a new non-executive director to replace Andrew Davies;
- successful execution of the Group’s various capacity expansion plans;
- continuing development of the Group’s longer-term ambition and
growthstrategy;
- increasing the strategic focus on the Group’s US businesses;
- continued focus on talent development and succession planning; and
- further increasing the level of interactions between the non-executive
directors outside of scheduled Board meetings.
In addition to the formal performance evaluation, the Chairman and
non-executive directors also reviewed the individual performance of
theexecutive directors as part of the annual remuneration review.
CORPORATE GOVERNANCE REPORT continued
Composition, succession and evaluation
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FINANCIAL AND BUSINESS REPORTING
The statement of directors’ responsibilities in respect of the financial
statements and accounting records maintained by the Company is set
outonpage 136.
Having taken all the matters considered by the Board and brought to the
attention of the Board during the year into account, the Board is satisfied
thatthe annual report and accounts for the year ended 31 October 2024,
taken as a whole, is fair, balanced and understandable. Furthermore, the
Board believes that the disclosures set out on pages 1 to 84 provide the
information necessary to assess the Company’s performance, business
modeland strategy.
RISK MANAGEMENT AND INTERNAL CONTROL
The Board is responsible for determining the nature and extent of the risks
that it is willing to take to achieve its strategic objectives. The Board is also
responsible for ensuring that the Group’s risk management and internal
control systems are effective across the businesses, and that appropriate
riskmitigation plans are in place. The Group’s internal control systems are
largely decentralised and operate on a discrete basis at each business. The
Operational Framework and associated policies covering financial and other
controls and risk management requirements set the minimum standards
required to be adopted by the businesses within their local systems.
The Board undertakes an annual review of the effectiveness of the Group’s
systems of internal control, including financial, operational and compliance
controls, and risk management systems. Further details of the review
undertaken during the financial year ended 31 October 2024 are set
outonpage 73.
OPERATIONAL FRAMEWORK
Our Operational Framework incorporates a broad range of policies and
procedures which have been adopted by all of our businesses, and provides
an enhanced governance structure to enable us to operate in a safe, consistent
and accountable way. As part of this enhanced governance structure, there is
a requirement for all businesses to complete a detailed Operational Assurance
Statement on an annual basis, providing an assessment of their compliance
with the Operational Framework.
The output from the operational assurance process provides assurance to
theBoard that our internal systems and controls are operating effectively,
andis an important input to our internal audit and risk management activities.
AUDIT
Details of the Group’s external and internal audit activities can be found
inthe Audit Committee report on pages 100 to 103.
LONG-TERM VIABILITY STATEMENT
The Code requires the Board to undertake an annual assessment of the
long-term viability of the Group, further details of which can be found
onpage 83.
Audit, risk and internal control
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AUDIT COMMITTEE REPORT
Providing assurance to the board
Stephen King
Chairman of the Audit Committee
INTRODUCTION
I am pleased to present my report as Chairman of the Audit Committee.
The Audit Committee continues to play a critical role in the governance
ofthe Group’s financial affairs, both through monitoring the integrity of
theGroup’s financial reporting and reviewing material financial reporting
judgements. The report provides an overview of the operation of the
Committee and its activities during the year. During the early part of the
financial year, the Committee was focused on matters relating to the 2023
financial statements, which were covered in detail in last year’s report.
Thisyear’s report focuses on the Committee’s activities in relation to the
2024 half year and full year results, and the external and internal audit
activities during 2024.
MEMBERSHIP OF THE AUDIT COMMITTEE
The Audit Committee was established by the Board and is responsible
formonitoring the integrity of the Group’s financial statements and the
effectiveness of the internal and external audit process.
All members of the Committee are independent non-executive directors,
and each brings a broad range of financial and business expertise. I have
previously served as the finance director of several FTSE listed companies,
and therefore possess recent and relevant financial experience. The Board
considers that the Committee members possess an appropriate level of
independence and offer a depth of financial and commercial experience
across various industries, in particular within the defence, technology and
manufacturing sectors. Further details of the Committee members’ skills
andexperience are shown on pages 88 and 89.
OPERATION OF THE COMMITTEE
The Committee’s full responsibilities are set out in its terms of reference,
which are available on the Company’s website. The Committee reviews its
terms of reference and its effectiveness annually and recommends to the
Board any changes required as a result of the review.
Meetings of the Committee are attended, at the invitation of the Chairman,
by the external auditor, the Chairman of the Board, the Group Chief Executive,
the Chief Financial Officer, the internal auditor and representatives from the
Group finance function. The Committee meets with the external and internal
auditors on a regular basis without the executive directors beingpresent.
TheGroup Legal Director & Company Secretary acts as secretary tothe
Committee and minutes of meetings are circulated to all Boardmembers.
> DETAILS OF ATTENDANCE OF MEMBERS OF THE COMMITTEE AT THE
FIVE MEETINGS HELD DURING THE YEAR ARE SHOWN ON PAGE 97
AUDIT COMMITTEE MEMBERS
Stephen King (Chairman)
Alpna Amar
Laurie Bowen
Andrew Davies
Fiona MacAulay
KEY RESPONSIBILITIES OF THE AUDIT COMMITTEE
- Monitoring the integrity of the Group’s financial statements and
anyformal announcements relating to the Group’s financial
performance,andreviewing the appropriateness of significant
financialreporting judgements
- Providing guidance to the Board in its consideration of whether the
annual report and accounts are fair, balanced and understandable
- Making recommendations on the appointment, reappointment
andtermsof engagement of the internal and external auditors
- Ensuring that an appropriate relationship between the Group and
theexternal auditor is maintained, and overseeing the provision
ofnon-audit services
- Reviewing and monitoring the external auditor’s independence,
objectivity and effectiveness
- Reviewing the effectiveness of the Group’s internal controls and
riskmanagement systems
- Considering the effectiveness of the Group’s internal audit function
andmonitoring internal audit activities
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FINANCIAL REPORTING
A summary of the significant issues considered in relation to the 2024
financial statements is set out below.
The Committee also reviewed the report issued by the FRC on their thematic
review of offsetting in financial statements and considered how the matters
raised had beenaddressed in the 2024 financial statements. In addition, the
Committee considered whether the Company had appropriately addressed
thefindings ofthe FRC’s annual review of corporate reporting, which was
published inSeptember 2024, in the 2024 financial statements.
SIGNIFICANT ISSUES CONSIDERED BY THE COMMITTEE
INRELATION TO THE FINANCIAL STATEMENTS
RECOVERABILITY OF GOODWILL, OTHER INTANGIBLE
ASSETS, AND THE PARENT COMPANY’S INVESTMENTS IN,
AND INTERGROUP RECEIVABLE BALANCES WITH, SUBSIDIARIES
The Committee considered the carrying value of goodwill, intangible
assets and the parent company’s investments in, and inter-group
receivable balances with, subsidiaries held on the balance sheet as at
30April 2024 and 31 October 2024, against the latest forecasts for the
businesses concerned and the future strategic plan for the Group.
CAPITALISED DEVELOPMENT COSTS
The Committee continued to monitor the level of development costs
capitalised during the year and the periods over which such costs are
tobeamortised. Detailed reviews of the Group’s most significant research
and development projects, and their associated capitalised development
costs, were undertaken by the Committee in April 2024 and September 2024.
REVENUE RECOGNITION
The Committee considered the revenue recognition requirements for
certain contracts that include transactions that should be accounted for
other than as revenue orexpenses based on their nature to ensure that
any such transactions were presented in accordance with the applicable
accounting standard. In the instance that this resulted in the acquisition of
assets on receipt of a government grant, transactions were accounted for
following the Group’s government grants accounting policy.
GOVERNMENT GRANTS
The Committee considered the accounting treatment for government
grants received in accordance with IAS 20 Government Grants.
NON-UNDERLYING ITEMS AND ALTERNATIVE
PERFORMANCE MEASURES
The Committee reviewed theuse of alternative performance measures
inthe interim results statement and the annual report. The Committee
concluded that theuseof alternative performance measures did enhance
a reader’s understanding of the accounts and that they were presented
ina fair, balanced and understandable manner.
The Chairman of the Committee meets regularly with the Chief Financial
Officer, the external audit lead partner and the internal auditor outside of
scheduled meetings.
The Committee is authorised to seek any information it requires from
anyemployee of the Group in order to perform its duties, and to obtain
anyoutside legal or other professional advice it requires at the Company’s expense.
THE COMMITTEE’S ACTIVITIES DURING THE YEAR
AREAS OF FOCUS MATTERS CONSIDERED
FINANCIAL
REPORTING
- Content of the Group’s interim and preliminary
results announcements and the annual report
and, in particular, whether the annual report
was fair, balanced and understandable
- Appropriateness and disclosure of accounting
policies and key judgements and estimates
- The presentation of alternative
performancemeasures
- The Group’s going concern status and
viabilitystatements
- The Group’s environmental performance
reporting and the related assurance review
completed by ERM
- Financial Reporting Council (“FRC”)
thematicreviews
RISK AND CONTROL
ENVIRONMENT
- Effectiveness of the Group’s systems
ofinternal control
- The Group’s business continuity
managementarrangements
EXTERNAL AUDIT
- Interim review and full year audit plans
- Effectiveness and independence of the
external auditor
- Non-audit services provided by the
externalauditor
- External auditor’s reports on the half year
and full year results, and consideration of
points raised by the auditor
- The FRC’s Audit Quality Review (“AQR”) in
relation to KPMG’s 2023audit of the Group
- Rotation of the Group’s external audit partner
INTERNAL AUDIT
- Internal audit strategy and plan
- Key findings of internal audits and progress
against actions arising
- Effectiveness of the internal audit programme
GOVERNANCE
- Succession planning for the Group
financefunction
The Committee relies on regular reports from the executive directors,
thewider management team, and the external and internal auditors in order
to discharge its responsibilities. The Committee is satisfied that it received
timely, sufficient and reliable information to enable it to fulfil its obligations
during the year.
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SIGNIFICANT ISSUES CONSIDERED BY THE COMMITTEE
INRELATION TO THE FINANCIAL STATEMENTS continued
The Committee is required to consider whether it is appropriate to adopt
the going concern basis when preparing the interim and full year results.
Inorder to satisfy itself that the Group has sufficient financial resources
toenable it to continue trading for the foreseeable future, the Committee
regularly reviews the adequacy of the Group’s financing facilities against future
funding requirements and working capital projections. Based on its review
ofthe Group’s forecasts during the year and discussions with the external
auditor, the Committee recommended to the Board the adoption of the
going concern basis for the preparation of the interim and full year results.
The Group is required to make a statement on its long-term viability in the
financial statements. The Committee considered the period over whichthe
Group’s viability would be assessed and, having concluded that athree-year
period was appropriate, the Committee undertook a review ofthe analysis
and projections which supported the viability assessment prior to its submission
to the Board. Further details on the assessment process andthe Group’s
long-term viability statement are set out in the strategic report on page 83.
Following the year end, the Committee reviewed the form and content
ofthe2024 annual report and accounts, and recommended to the Board
that, taken as a whole, the annual report and accounts should be considered
as fair, balanced and understandable. The Committee also concluded that
theannual report and accounts provides the information necessary to
assessthe Group’s position and performance, business model and strategy.
In making this assessment, the Committee considered:
IS THE REPORT FAIR?
- Is the narrative in the strategic report consistent with the
financialstatements?
- Have any significant matters been omitted?
IS THE REPORT BALANCED?
- Has equal weighting been given to both positive and negative aspects
ofperformance during the year?
- Is there an appropriate balance between the disclosure of
statutorymeasures of performance and alternative performance
measures (“APMs”)?
IS THE REPORT UNDERSTANDABLE?
- Is the presentation of performance clear, with consistent use
ofkeyperformance indicators?
- Is there clarity around the use of APMs?
AUDIT AND CORPORATE GOVERNANCE REFORMS
The FRC published an updated version of the UK Corporate Governance
Code (the “Code”) in January 2024. The new Code introduced a number
ofchanges, with the most significant relating to internal controls. For financial
years starting on or after 1 January 2026, boards are required to explain
intheir annual reports how they have monitored and reviewed the internal
control framework, make a declaration on its effectiveness and provide
adescription of any material controls that have not operated effectively.
TheCommittee is confident that the internal control framework introduced
by the Group in November 2022 will assist the Group in complying with
thisnew provision. The Committee will continue tomonitor developments
inthis area over the next year.
In the year under review, the Company was required to apply the Audit
Committees and the External Audit: Minimum Standard (the “Standard”),
which was published by the FRC in May 2023. The Company was in
compliance with the Standard throughout the year ended 31 October 2024.
EXTERNAL AUDIT
The Audit Committee is responsible for making recommendations to the
Board on the appointment, reappointment and removal of the Company’s
external auditor. The Committee also undertakes an annual assessment
oftheauditor’s independence and objectivity, taking into account relevant
professional and regulatory requirements and the relationship with the
auditor as a whole, including the provision of any non-audit services.
Audit effectiveness
The Committee assesses the effectiveness of the external auditor on an
ongoing basis, with particular reference to:
- the arrangements for ensuring the external auditor’s independence
andobjectivity;
- the external auditor’s fulfilment of the agreed audit plan and any variations
from the plan in terms of timing and scope;
- the quality of the resource engaged by the external auditor to fulfil the
auditplan;
- the robustness and perceptiveness of the auditor in their handling of the
keyaccounting and audit judgements, and their willingness to challenge
bothmanagement and the Committee;
- the effectiveness of co-ordination of the individual business unit audits
onaglobal basis;
- the content of the external auditor’s reports and internal
controlrecommendations;
- their proactivity in briefing the Committee on proposed regulatory changes
and the implications for the Group; and
- the feedback received on the conduct of the external audits from key
people involved in the audit process in the central finance function and
within the businesses.
During the year, the FRC’s AQR team reviewed KPMG’s audit of the Group’s
2023 financial statements, as part of its annual inspection of audit firms.
TheCommittee reviewed the final report from the AQR team and discussed
the report with KPMG, which noted several areas of good practice. The
Committee also reviewed the overall results of the 2023/24 assessment of
KPMG’s audits covering years ending between June 2022 and May 2023
undertaken by the FRC’s AQR team, and will continue to review these
assessments on an annualbasis.
There are no contractual or similar obligations to restrict the choice of
external auditor.
KPMG was appointed as the Group’s external auditor in March 2018, following
a competitive tender process, and continues to act as the external auditor for
the Group and its principal trading businesses. James Childs-Clarke, the lead
audit partner, completed his second year in the role this year. Mr Childs-Clarke
was previously the Director on the Group audit from 2018 and 2020, and
will therefore have completed five audits of the Group at the end of this year.
Following discussions with the Committee, it has been agreed that a new
audit partner, Kate Teal, will assume responsibility for the Group’s audit for
the 2025 financial year. Ms Teal has no prior connection with the Group audit
and is considered independent.
The audits of the Group’s US businesses are carried out by KPMG US under
a separate engagement letter in order to satisfy the requirements of our
Special Security Agreement with the US Government. KPMG’s UK and US
audit teams co-ordinate their work to ensure that the audit of the consolidated
Group results at the year end is completed efficiently. In order to facilitate
this, the annual audit plan continued to provide for planning work for the
2024 year-end reviews and audits of the US businesses to commence in the
first half year of the financial year, which enabled the Group audit to be completed
within the requisite timeframe following the year end.
AUDIT COMMITTEE REPORT continued
Providing assurance to the board continued
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Strategic report Governance Financial statements
Monahans (Sumer AuditCo Limited) is appointed as the external auditor
ofVigil AI Limited, one of the Group’s smaller subsidiaries which also has a
minority shareholder. Vigil AI Limited does not make a material contribution
to the Group’s results and, following discussions with the minority shareholder,
it was concluded that the audit would be more appropriately carried out by
asmaller firm. KPMG has confirmed that VigilAI Limited is immaterial to the
Group financial statements and as such doesnot require any reporting from
Monahans for that purpose.
The Committee did not ask KPMG to review any significant areas of concern,
outside of the normal audit process, during the year. The Committee did
request KPMG to undertake a more detailed review of the impairment
assessment relating to the goodwill held on the balance sheet for Kilgore
toensure that the key assumption regarding downtime in its automated
manufacturing facility was appropriate. KPMG were able to confirm that
thedowntime assumption was within an appropriate range.
No significant internal control failings or weaknesses were identified by KPMG
during the year, but KPMG did challenge management on the accounting
treatment of certain contracts including advance payments to ensure there
was no financing component and the accounting treatment of the buy-in of
the liabilities associated with the Group’s legacy UK defined benefit pension
scheme. In the normal manner, KPMG identified a small number of
uncorrected review misstatements as part of their half year review and
year-end audit. Having considered the representations made by KPMG,
theCommittee was satisfied that the Group had adopted an appropriate
approach in each case and that the impact of the misstatements identified
byKPMG was not material, either individually or in the aggregate.
The Committee reviewed KPMG’s overall effectiveness in fulfilling the
external audit during the year, having reflected on all the matters set out
above, and concluded that KPMG had conducted a comprehensive,
appropriate and effective audit.
The Committee has recommended to the Board that KPMG be reappointed
as the Group’s auditor at the 2025 Annual General Meeting.
The Company is in compliance with the provisions of The Statutory Audit
Services for Large Companies Market Investigation Order 2014.
Auditor independence
The Committee keeps under review the level of any non-audit services which
are provided by the external auditor, to ensure that this does not impair their
independence and objectivity.
The Committee has adopted a policy which states that the external auditor
should not be appointed to provide any non-audit services to the Group,
unless the Committee agrees that their appointment would be in the
bestinterests of the Company’s shareholders in particular circumstances
andwould not create any direct conflict with their role as external auditor.
Inapproving any such appointment, the Committee is also required
toconsider:
- whether the provision of the proposed services might compromise
theauditor’s independence or objectivity;
- whether the non-audit services will have a direct or material effect
ontheGroup’s audited financial statements;
- whether the skills and experience of the external auditor make it the
mostsuitable supplier of the non-audit services; and
- the level of fees proposed for the non-audit services relative to the audit fees.
The external auditor is required to provide the Committee with a written
confirmation of independence for all duly-approved engagements for
non-audit services.
The policy adopted by the Committee expressly prohibits the provision
ofcertain non-audit services by the external auditor, in line with regulatory
requirements and UK ethical guidance.
Details of the amounts paid to KPMG during the year for audit and non-audit
services are set out in note 4 to the Group financial statements. Total fees
of£0.1m were paid to KPMG during the year in respect of non-audit services,
which related to the review of the interim results, an audit report for Chemring
Nobel’s tax return as is required from the auditor under Norwegian tax law
and assurance support work for Chemring Nobel in connection with its grant
funding applications. The Committee concluded that neither the nature or
scope of these services gave rise to any concerns regarding the objectivity
orindependence of KPMG.
The Committee, in conjunction with the Chief Financial Officer, ensures that
the Group maintains relationships with a sufficient choice of appropriately
qualified alternative audit firms for the provision of non-audit services. Building
these relationships also ensures that the Group will have a reasonable choice
of other suitable external audit firms when it next tenders the external audit.
INTERNAL AUDIT
The Audit Committee is responsible for reviewing the work undertaken
bythe Group’s internal auditor, assessing the adequacy of the internal audit
resource, and recommending changes for increasing the scope of the internal
audit activities.
The Group’s internal audit programme incorporates a review of all sites
onatwo or three-year rotational basis and focuses on both financial and
non-financial controls and procedures. The Committee approves the annual
internal audit plan and receives regular reports from the internal auditor.
The Internal Audit Manager, who reports to the Chairman of the Audit
Committee, is responsible for conducting internal audits across the Group,
with the support of other suitably-qualified Group employees where appropriate.
This facilitates sharing of best practice across the Group and contributes to
the development of employees involved in the audits. The Internal Audit
Manager’s activities will continue to be supplemented in specialist areas,
suchas IT and cyber-security, with more focused assurance reviews by
external experts.
The internal audit plan for 2024 was developed following a detailed review
ofthe Group’s principal risks and included specific focus on:
- the key financial and operating controls within the business;
- IT and cyber-security governance and controls; and
- compliance with the Group’s Bribery Act Compliance Manual.
No significant internal control failings or weaknesses were identified during
the internal audits completed in the year.
The Internal Audit Manager also undertook specific reviews of the Group’s
risk management systems, business continuity management arrangements
andsupply chain management during the year.
An update on internal audit activities is presented to the Committee at each
meeting. The management of each business is responsible for implementing
the recommendations made by the internal audit function, and the Committee
reviews progress on a regular basis. Progress on addressing internal audit
findings is also reviewed by the Group Chief Executive and the Chief Financial
Officer in their quarterly reviews with each of the businesses.
The Committee reviews the Group’s approach to internal audit on an annual
basis to ensure that it remains fit for purpose and provides the requisite level
of assurance to the Committee.
Stephen King
Chairman of the Audit Committee
17 December 2024
Chemring Group PLC Annual report and accounts 2024 103

Strategic report Governance Financial statements
NOMINATION COMMITTEE REPORT
Providing guidance to the board
NOMINATION COMMITTEE MEMBERS
Tony Wood (appointed 1 October 2024 and Chairman from 1 December 2024)
Alpna Amar
Laurie Bowen
Andrew Davies
Carl-Peter Forster (member and Chairman to 30 November 2024)
Stephen King
Fiona MacAulay
Tony Wood
Chairman of the Nomination Committee
KEY RESPONSIBILITIES OF THE NOMINATION COMMITTEE
- Reviewing the structure, size and composition of the Board, and making
recommendations on appointments to the Board and its committees
- Reviewing the overall leadership needs of the organisation
- Oversight of the Group’s diversity policy
- Succession planning for the Board, the Executive Committee and
thewider leadership team
INTRODUCTION
I am pleased to present the Nomination Committee’s report for the year
ended 31 October 2024.
As announced in June 2024, I was appointed to the Board with effect
from1October 2024 and succeeded Carl-Peter Forster as Chairman on
1December 2024, following Carl-Peter’s retirement on 30 November 2024.
The recruitment of a new Chairman was a key activity for the Committee
during the year. The Committee also continued to focus on the development
of the Group’s diversity, equity and inclusion (“DE&I”) strategy and succession
planning for the Board and the wider leadership team.
MEMBERSHIP OF THE COMMITTEE
The Nomination Committee’s role is to ensure that the Board has the
appropriate balance of skills, knowledge and experience to operate effectively
and oversee the delivery of the Group’s strategy.
All members of the Committee are independent non-executive directors.
Ichair the Committee but will not do so where the Committee is dealing
with my own reappointment or my replacement as Chairman of the Board.
OPERATION OF THE COMMITTEE
The Committee’s responsibilities are set out in its terms of reference, which
are available on the Company’s website. The Committee reviews its terms
ofreference and its effectiveness annually and recommends to the Board
anychanges required as a result of the review.
Meetings of the Committee are attended, at the invitation of the Chairman,
by the Group Chief Executive when considered appropriate. Members of
theCommittee do not participate in any discussions relating to their own
reappointment or replacement. The Group Legal Director & Company
Secretary acts as secretary to the Committee and minutes of meetings
arecirculated to all Board members.
> DETAILS OF ATTENDANCE OF MEMBERS OF THE COMMITTEE AT THE
THREE MEETINGS HELD DURING THE YEAR ARE SHOWN ON PAGE 97
BOARD COMPOSITION
The Committee regularly reviews the composition and balance of the Board
and its committees, and considers the non-executive directors’ independence,
whether the balance of non-executive and executive directors remains
appropriate, and whether the Board has the requisite skills, knowledge
andexperience to oversee the delivery of the Group’s strategy.
As set out in last year’s report, James Mortensen was appointed to the Board
on 1 November 2023 and was appointed Chief Financial Officer with effect
from 1 January 2024.
Having nearly completed his third three-year term as a non-executive director,
Andrew Davies will not seek re-election at the next Annual General Meeting
and will step down from the Board on 31 January 2025. Fiona MacAulay will
succeed Andrew as the Senior Independent Director. We are considering
ourrequirements for an additional non-executive director to replace Andrew
and will progress the new appointment over the course ofthe next year.
The recently-completed Board performance evaluation, further details of
which are set out on page 98, considered the current composition of the
Board and concluded that, subject to the appointment of a suitable
non-executive director to replace Andrew Davies, no further changes
wererequired in the immediate future.
APPOINTMENTS TO THE BOARD
The Committee is responsible for reviewing and recommending new
appointments to the Board, and for considering the reappointment
ofcurrentdirectors.
With regards to the appointment of new directors to the Board, the Committee
has an established process to identify the attributes, skills, knowledge and experience
required of potential candidates. External recruitment consultants are engaged
to undertake a search and provide an initial long list of potential candidates,
which is reviewed by the Committee. Members of the Committee then meet
with short-listed candidates, before selecting a small number of preferred
candidates to meet with other members of the Board. The search for a new
Chairman, which resulted in my appointment, was conducted in this manner
and further details are set out below.
As set out in last year’s report, the Committee commenced planning for
therecruitment of a new Chairman in September 2023, recognising that
Carl-Peter Forster’s third three-year term as Chairman would expire in
May2025. It was agreed that Andrew Davies would lead the process as
Senior Independent Director and a sub-committee, comprising Andrew,
Fiona MacAulay and Michael Ord, was established to oversee the initial stages
of the process. Russell Reynolds, an independent executive search firm, were
appointed to conduct the search due to their knowledge of the Group and
prior experience in having recruited two non-executive directors and our
Chief Financial Officer. Russell Reynolds, who have no other connection with
the Group, are a signatory to the Voluntary Code of Conduct for Executive
Search Firms and have made a commitment to promote diversity. The
sub-committee and Russell Reynolds developed a detailed role specification
for the Chairman and identified the key attributes required of potential
candidates. Following detailed review by the sub-committee of an initial
long-list of candidates compiled by Russell Reynolds and with input from
Chemring Group PLC Annual report and accounts 2024104

Strategic report Governance Financial statements
other Board members, a short-list of four preferred candidates was identified.
Each of the candidates met with members of the sub-committee and three
ofthe candidates subsequently met the other members of the Board. After
detailed consideration, the Nomination Committee agreed to recommend
myappointment to the Board.
A similar approach will be adopted in relation to the search for
AndrewDavies’ successor.
Stephen King’s second three-year appointment as a non-executive director
expired in December 2024 and, after due consideration of his valuable
contribution to the Board and its committees, the Committee recommended
to the Board that Stephen be reappointed for a third three-year term.
DIVERSITY, EQUITY AND INCLUSION
DIVERSITY POLICY
The Committee recognises the importance of diversity, equity and
inclusion to the effective performance of the Board and to our wider
business operations. We are committed to promoting diversity across
the Group in all forms, including diversity of gender, race, age, disability,
neurodiversity, sexual orientation, education, social and cultural
background, and belief.
From an overall Group perspective, we have set a target of increasing the
proportion of females in all senior management positions across the businesses
to at least 33% by 2027. Various initiatives have been instigated to support
delivery of this target, including the provision of diversity and inclusion training
for all our senior leaders and the participants in our various development
programmes. A number of these activities continue to be supported by our
female Board members.
> FURTHER DETAILS OF THE PROGRESS MADE DURING THE YEAR
ARESETOUT ON PAGE 64
With regards to the Board, the Committee is cognisant of the diversity
targets set out in Listing Rule 9.8.6R(9). As referenced above, Andrew Davies,
the current Senior Independent Director, will step down from the Board as
anon-executive director on 31 January 2025 and it has been agreed that
Fiona MacAulay will succeed him as the Senior Independent Director.
Following Fiona’s appointment, the Group will meet all the diversity targets
inthe Listing Rule.
The charts below illustrate the gender identity or sex and ethnic background
of the Board and the Executive Committee as at 31 October 2024. Details
ofthe diversity of employees more widely across the Group are set out on
pages 64 and 65.
GENDER IDENTITY OR SEX OF THE BOARD AND EXECUTIVE COMMITTEE
Number of
Board members
Percentage of
the Board
Number of
senior positions
on the Board
(CEO, CFO,
SID and Chair)
Number on the
Executive Committee
Percentage of
Executive Committee
Men 6 60% 4 7 87%
Women 4 40% — 1 13%
Not specified/prefer not to say — — — — —
ETHNIC BACKGROUND OF THE BOARD AND EXECUTIVE COMMITTEE
Board member
Number of
Board members
Percentage of
the Board
Number of
senior positions
on the Board
(CEO, CFO,
SID and Chair)
Number on the
Executive Committee
Percentage of
Executive Committee
White British or other white (including minority-white groups) 9 90% 4 8 100%
Mixed/multiple ethnic groups — — — — —
Asian/Asian British 1 10% — — —
Black/African/Caribbean/Black British — — — — —
Other ethnic group, including Arab — — — — —
Not specified/prefer not to say — — — — —
SUCCESSION PLANNING
The Committee is responsible for promoting effective succession planning for
the Board and the Executive Committee, to ensure that the leadership of the
business remains aligned with the Group’s strategy.
During the year, an assessment of the succession plans for the key leadership
roles at the Group level and within the businesses, developed utilising the
Group’s established succession planning framework, was considered by the
Committee and the Board. The need for more diversity within the talent
pipeline continues to be recognised by the Committee and this remains a
keyfocus of our people and DE&I strategy. In 2025 we will refresh our key
development programmes to ensure that the selection criteria are appropriately
driving further gender diversity improvements in our talent pipeline.
The Committee is satisfied that appropriate succession plans are in place for
the Board and members of the Executive Committee covering emergency
replacements. Longer-term appointments will be considered on a case-by-case
basis, including internal candidates where available or external recruitment
where deemed more appropriate.
> FURTHER DETAILS ON OUR APPROACH TO SUCCESSION PLANNING
AND TALENT MANAGEMENT ARE SET OUT ON PAGES 62 TO 64
Tony Wood
Chairman of the Nomination Committee
17 December 2024
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Laurie Bowen
Chair of the Remuneration Committee
DIRECTORS’ REMUNERATION REPORT
Remuneration overview
REMUNERATION COMMITTEE MEMBERS
Laurie Bowen (Chair)
Andrew Davies
Carl-Peter Forster (retired 30 November 2024)
Stephen King
Fiona MacAulay
Tony Wood (appointed 1 October 2024)
MEMBERSHIP AND OPERATION OF THE
REMUNERATIONCOMMITTEE
The Remuneration Committee has been established by the Board and is
responsible for the remuneration of the executive directors, the Chairman
and the leadership team at the next level. All members of the Committee
are independent non-executive directors, save for Mr Wood who was
independent on appointment to the Board.
The Committee’s responsibilities are set out in its terms of reference,
which are available on the Company’s website.
Details of the attendance of members of the Committee at meetings
heldduring the year are shown on page 97. The Group Legal Director
&Company Secretary acts as secretary to the Committee and the Group
Chief Executive and Chief Financial Officer attend meetings by invitation,
but no executive director orother employee is present during discussions
relating directly to their own remuneration.
INTRODUCTION
The directors’ remuneration report for the year ended 31 October 2024 comprises:
- my annual report on the activities of the Remuneration Committee during
the year;
- the new directors’ remuneration policy which will be put to shareholders
forapproval at the Annual General Meeting on 26 February 2025;
- an overview of how the new policy will be implemented in 2025;
- the annual report on remuneration, which explains how the current
directors’ remuneration policy was implemented in 2024; and
- additional statutory information on remuneration arrangements.
THE REMUNERATION COMMITTEE’S ACTIVITIES DURING THE YEAR
During the year the Committee carried out its triennial review of the executive
directors’ remuneration policy, taking into account the Group’s investment and
growth strategy, developments in market practice, investor and proxy advisor
guidance for 2025, and also the growth in the size of Chemring since the
approval of the current policy at the Annual General Meeting in 2022.
As part of the review, the Committee engaged with our major shareholders
and the leading advisory agencies to explain and provide context for the proposed
changes to policy and implementation for 2025. The consultation process
involved a letter being sent to our fourteen largest institutional shareholders
who collectively own circa 50% of the Company’s shares, with theoffer of
meetings as necessary. The Committee received feedback from six institutional
investors, with four requesting additional background to the choice of performance
metrics and two requesting further details on the stretch in the proposed 2025
long-term incentive plan performance targets in light of the higher proposed
long-term incentive quantum. As Committee Chair, I provided the additional
information requested and note that the feedback was generally supportive of
the proposed revisions to our policy and its implementation for 2025. With
regard to the changes we did make to our original proposals, these included a
number of modest revisions relating to bonus deferral and malus and clawback
following the publication of the 2024 Investment Association guidelines.
These changes, along with details of an adjustment to our recently-appointed
Chief Financial Officer’s salary as a result of his performance and increased
experience in post, were then set out in a follow-up letter. Details of the
revisions to policy and implementation are summarised below and included
indetail within the following directors’ remuneration report. I have included
in the relevant sections in this report the context provided to investors on
the points raised during consultation.
As part of the policy review, the Committee also considered the cascade of
remuneration below Board and the structure of incentives taking into account
the markets we operate in and the businesses we compete against.
The new policy will be put to a shareholder vote at the 2025 Annual General
Meeting and, if approved, is intended to apply for a three-year period.
The table below summarises the Committee’s key activities and decisions
made during the year.
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SUMMARY OF MAJOR ACTIVITIES AND
DECISIONSOFTHECOMMITTEE IN 2024
SALARY
- 2024 salary reviews for the executive directors and
members of the senior leadership team
ANNUAL
BONUS
- Approval of the 2024 annual bonus plan financial targets
and strategic objectives for the executive directors
- Consideration of the 2024 annual bonus plan payments
PERFORMANCE
SHARE PLAN
(“PSP”)
- Consideration of vesting outcomes for PSP awards made
in 2021
- Approval of 2024 PSP awards and performance conditions
APPOINTMENTS
- Approval of the remuneration arrangements for the
newChairman
GOVERNANCE
AND POLICY
- Development of new directors’ remuneration policy and
consultation with shareholders on the proposed policy
PERFORMANCE FOR 2024 AND REMUNERATION OUTCOMES
We increased revenue by 8% on 2023 and underlying operating profit by 2.7%
(based on continuing operations). Statutory operating profit increased by 28.0%
and underlying cash conversion was 102%. Overall, the Group delivered a
strong performance and closed the year with a record order book.
Further progress has also been made in 2024 in relation to our sustainability
agenda, with our scope 1 and 2 emissions (market-based) reducing by a
further 13% during the year.
It is in this context that the Remuneration Committee has reviewed the
2024outturns.
Performance against the 2024 annual bonus and PSP targets is explained
inmore detail on pages 121 to 126 but in summary:
- Annual bonus:
The annual bonus for 2024 was subject to EPS, operating cash flow and
strategic objective measures. As a result of the continuing strong financial
performance of the Group during 2024, which resulted in EPS growth just
ahead of target and the stretch operating cash flow being exceeded, 51.3%
of the EPS metric and 100% of the operating cash flow metric will pay out.
The Committee carefully assessed the performance of the executive directors
against the common set of safety, people, governance, growth, strategic and
sustainability targets set at the beginning of the financial year and, as a result
of performance against the targets set, determined that 80% of the
maximum was payable.
Thetotal bonus payments for 2024 are therefore just under 77% of
maximum for each of the executive directors.
- PSP awards made on 15 December 2021 (subject to performance over the three
years ended 31 October 2024):
The PSP awards granted to the executive directors on 15 December 2021
were subject 50% to EPS targets, 30% to relative TSR targets and 20% to
targets on the reduction of scope 1 and scope 2 market-based emissions.
Based on strong EPS growth of 10.7% p.a. over the three-year performance
period, which exceeded the maximum target of 10% p.a., TSRperformance
over the same period, placing Chemring just below the upper quartile
versus the comparator group (ranking circa 98th out of the 353 FTSE All
Share companies excluding investment trusts), and 30% reduction in scope
1 and scope 2 emissions over the performance period, these awards will
vest at 97.63% of the maximum.
The Committee is satisfied the remuneration policy has operated as intended
in relation to performance and remuneration outcomes for 2024 and did not
use any discretion. The Committee considered the impact of the share buyback
programme announced in August 2023 and concluded that this did not impact
the extent of achievement against the targets detailed above given the level
ofout-performance achieved. In addition, in concluding that remuneration
payments overall and the policy have operated appropriately, the Committee
considered the bonuses payable across the Group, individual businesses’
performance and the relativities between employees and executive directors
in light of their roles and potential impact on the Group performance
(thisincluded considering pay ratios). The Committee noted the wider
stakeholder experience, in particular the Group’s TSR growth of 24% over
2024 and a total dividend of 7.8p in 2024, up 13% on the prior year.
BOARD CHANGES
In June 2024, we announced the appointment of Tony Wood as the
successorto Carl-Peter Forster as Chairman of the Board. Tony Wood joined
the Board on 1 October 2024 as an independent non-executive director and
Chairman-designate, and he became Chairman of the Board on 1 December 2024,
following Carl-Peter Forster’s retirement. His fee as Chairman is all inclusive
and has been set at £265,000, taking into account the expected time
commitment of the role and market rates for companies of a similar size
tothe Group at the time of appointment.
REMUNERATION POLICY REVIEW
During the year, the Committee spent time reviewing the remuneration
policy in the context of our current strategy and the growth of Chemring
over the last three years.
Since the last policy review, Chemring has firmly established its position as a
mid-sized FTSE 250 company, reflecting the sustained growth that has been
achieved over the last three years.
The outputs of the Group’s strategic initiatives over the past three years
havebeen substantial and include the expansion of our product, service and
capability offerings within Sensors & Information, significant investments within
the Countermeasures & Energetics businesses to modernise and expand our
manufacturing capacity, and the implementation of a share buyback programme.
This business progress has supported growth in revenue and profitability of
over 10% since 2021 and shareholder returns ofover 55%, significantly ahead
of the FTSE 250 Index as a whole.
The Group’s longer-term growth prospects are strong, underpinned by robust
activity levels, our leading technological offerings, our people, our niche market
positions and strong balance sheet, and the investments we continue to make
in our high-quality businesses. These foundations put in place under the
leadership of our current executive team support our refined investment and
growth strategy, which balances near-term performance with sustainable
longer-term value creation so we can continue to deliver on our core purpose.
The policy review concluded that our current policy is generally working
effectively and is well aligned with institutional investors’ “best practice”
expectations. As a result, we are not proposing substantial changes to the
current arrangements. However, as a result of our above market growth over
the past three years and our refined investment and growth strategy (as detailed
in our half year report in June), we are proposing a small number of changes
to better align executive remuneration with the current size of our business
and strategy, as well as making minor amendments to take account of the
guidance from leading proxy advisory bodies for 2025.
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REMUNERATION POLICY REVIEW continued
The main change to policy that we are proposing to make is an increase to
the long-term incentive opportunity to 175% of salary from 150% of salary
for all executive directors. This increase to quantum recognises the growth
inChemring’s size since the last policy review and will enable the Committee
to provide a market competitive remuneration opportunity to the executive
directors whilst also managing pay compression issues. The increased opportunity
results in total incentives weighted towards the long term, which is considered
appropriate given the Group’s long-term strategic view. There is no change to
the exceptional maximum limit of 200% of salary.
The Committee has also reviewed performance metrics and targets to ensure
alignment with strategy and to appropriately recognise the increased long-term
incentive quantum. As a result, cash conversion will be introduced as a
performance measure for the 2025 long-term incentive awards, given the
importance of effective management of working capital as the Group
continues to grow and the focus on cash generation during the investment
phase in our Energetics businesses. Further details of this measure are set
outbelow and in the implementation section.
In light of the updated Investment Association Principles of Remuneration,
wealso included flexibility to reduce (or remove) bonus deferral once an
executive director has met their minimum 200% of salary shareholding
requirement. For 2025 bonuses, executive directors who have met their
200% of salary share ownership requirement will have a reduced deferral
requirement from 40% of the total bonus to 20%. In determining this change
to policy, the Committee noted the current shareholdings of the executive
directors, excluding our Chief Financial Officer who recently joined the Board,
which were 203% of salary (as at 31 October 2024) for the Group Chief
Executive and 208% for the Group Legal Director & Company Secretary.
TheCommittee also noted the substantial weighting in our policy to long-term
performance, achieved through operating our long-term incentive plan,
thetwo-year holding period on vested long-term incentive plan shares,
andthe 200% of salary share ownership requirement. Other factors
considered included the broadening of our malus and clawback provisions (as
detailed below) and emerging FTSE 350 market practice in that where
companies are reducing bonus deferral once share ownership guidelines have
been met, this is typically by 50%. Given these factors, the Committee was
comfortable relaxing the bonus deferral requirements for 2025 once the
share ownership guidelines were met. With regard to clawback and malus,
the Committee has broadened the trigger events within our updated policy
(i.e. the circumstances when we are able to reduce or reclaim value from
incentive awards), which in future will also include the failure of risk
management and also the circumstance of the Committee treating a director
as a good leaver due to retirement but for the director to then take a new full
time executive role. These new trigger events will operate alongside the wider
comprehensive trigger events already included in our scheme documents (i.e.
misstatement of financial results, error in assessing performance, misconduct,
insolvency and reputational damage). These provisions are included in the
appropriate plan rules and/or grant documentation and so the Committee is
comfortable these changes are aligned with the good practice set out in the
updated Investment Association Principles of Remuneration.
IMPLEMENTATION OF THE NEW POLICY FOR 2025
Base salaries were reviewed as part of the policy review and increases will
bemade effective from 1 January 2025.
The Group Chief Executive and the Group Legal Director & Company
Secretary will each receive a cost-of-living related salary increase of 3.8%
ofsalary effective 1 January 2025. The rate of increase was in line with the
average of budgeted increases that were set by, and then agreed with, each
ofthe Group’s UK businesses for 2025.
The Chief Financial Officer was appointed to the Board on 1 January 2024.
His salary was set at a discount to his predecessor and the market rate for
the role given this was his first PLC Board role. As part of the review of his
salary, noting both his strong performance in post and his increased experience
as a PLC Chief Financial Officer, the Committee concluded that itwas appropriate
to make a one-off adjustment to reposition his salary. TheCommittee believes
that executive directors should receive a fair and appropriate level of remuneration
for their role and contribution to the business, and therefore considers it
appropriate for the Chief Financial Officer to be paid the market rate for his
role. As such, the Chief Financial Officer’s salary will be increased by a single
circa 8% increase, plus the 3.8% increase in line with the average for the UK
workforce, resulting in a salary of £415,000 effective 1 January 2025. This
salary positioning is considered to be at market for the role, taking into
account market data for similar sized FTSE 250 companies, and it is also
consistent with the salary of our former Chief Financial Officer at his date of
leaving, adjusted for the average 3.8% workforce-related budgeted increase.
Pension contributions for the executive directors will continue to be 7.5%
ofsalary, aligned with the majority practice across the UK workforce.
The annual bonus opportunity will continue to be 150% of salary for the
Group Chief Executive, and 125% of salary for the Chief Financial Officer
andthe Group Legal Director & Company Secretary. Performance measures
are unchanged for 2025, with 40% subject to EPS, 40% operating cash flow
and 20% common strategic objectives. The range of financial targets has been
set taking into account market conditions in the defence sector.
Long-term incentive awards will be granted over 175% of salary for each
ofthe executive directors. Performance measures have been re-weighted
toreflect the introduction of the operating cash conversion metric for 20% of
the award. The remainder of the award will be subject 40% to EPS, 20%
torelative TSR, and 20% to ESG metrics related to scope 1 and scope 2
emissions. These metrics, and their associated weightings, reflect the key areas
of focus for the next three-year period, being delivering profitable growth,
achieving operational efficiency and effective management of working capital
to support our investments, reducing our carbon footprint and delivering
shareholder returns. The range of financial targets and carbon reduction
targets has been set to be appropriately challenging taking into account the
increased quantum and, having had regard to internal plans, external market
expectations for the Group’s performance and forecast economic conditions
over the three-year performance period. The target ranges, to be tested over
the three-year period ending 30 October 2027, are as follows:
- EPS growth of between 5% p.a. (25% vests) and 10% p.a. (100% vests), with
vesting between performance points on a straight-line basis.
- TSR performance measured relative to the FTSE All Share Index
constituents (excluding investment trusts) with vesting from median (25%
vests) to upper quartile (100% vests), with vesting between performance
points on a straight-line basis.
- Average operating cash conversion of between 80% (25% vests) and 100%
(100% vests), with vesting between performance points on a straight-line basis.
- Reduction in scope 1 and scope 2 emissions (market-based) of between
15% (25% vests) and 25% (100% vests), with vesting between performance
points on a straight-line basis.
DIRECTORS’ REMUNERATION REPORT continued
Remuneration overview continued
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A discussion point during consultation was the degree of stretch in the range
of EPS targets in light of the higher quantum, given that the headline rate of
growth required for vesting was being set at the same rate as in prior year
awards. Having had regard to the significant increases in UK business taxation,
both corporation tax and national insurance, in addition to higher interest
costs as Chemring moves into a greater investment phase, this resulted in the
Committee considering the 5% to 10% p.a. range to be more demanding in
the current commercial context than in prior years. As part of its analysis,
the Committee noted that the higher tax and interest costs, as well as the
Government’s current fiscal plans which impact our business, mean that at
the current time there is limited potential for material vesting under the EPS
elements of the outstanding in-flight long-term incentive awards based on the
prevailing consensus expectations for our future performance (i.e. 5% to
10% p.a. has become significantly tougher in current market conditions).
With regard to the TSR targets, the choice of the FTSE All Share Index
(excluding investment trusts) as the preferred peer group is appropriate given
Chemring is towards the middle of the group in terms of current market
capitalisation and there are an insufficient number of direct UK listed
comparators from which to determine a bespoke peer group.
In relation to the average operating cash conversion targets, the range of
targets were set having had regard to our investment plans over the next
three-year period and, specifically, the challenges of converting profit into
cash during a period of growth and effectively managing working capital.
The carbon reduction targets were set to be aligned with our carbon
reduction commitments.
Overall, the Committee considers the above targets to strike the right
balance between driving the delivery of medium-term performance and
longer-term growth and valuation creation. The same targets apply across
the executive team and so need to be realistic at the lower end of the
performance ranges and stretching at the top end, given internal plans,
market expectations and also the proposed quantum of awards.
With regard to non-executive director fees, the Board Chair fee for Tony
Wood was set at £265,000 on appointment and will next be reviewed with
effect from 1 January 2026. The base fee payable to the other non-executive
directors will be increased with effect from 1 January 2025 at 3.8%, in line
with the average budgeted increases set by the Group’s UK businesses. Small
adjustments will also be made to the fees paid to the non-executive directors
for their additional roles to align with the expected future time commitment
and current market rates, as detailed on page 118.
RENEWAL OF LONG-TERM INCENTIVE PLAN RULES
Our current PSP expires in 2026 and therefore the Committee is taking the
opportunity to renew the plan at the 2025 Annual General Meeting. The new
long-term incentive plan rules align with standard market practice and will
facilitate the operation of our directors’ remuneration policy and the award of
long-term incentives more generally within Chemring. A full summary ofthe
principal terms of the plan are set out in our 2025 Annual General Meeting
notice. It is the Committee’s intention to grant awards to the executive directors
under the existing PSP at 150% of salary shortly following the announcement
of the Group’s 2024 results (in line with normal practice) andthen to grant an
additional 25% of salary award, as per the proposed 2025 revised
remuneration policy, under the new long-term incentive plan shortly following
the 2025 Annual General Meeting. This will result in the total awards being
granted to executive directors for 2025 having a value of 175% of salary,
subject to the relevant shareholder approvals at the Annual General Meeting.
EMPLOYEE PAY AND ENGAGEMENT
With inflation remaining relatively high, wecontinued to take a range of
actions to support our employees in 2024. Given the nature of our operating
model, which necessitates a level of independence within our US operations,
our salary management responses varied by location based on our
understanding of local needs.
Outside of pay, as the designated non-executive director, I visited employees
in locations in the UK and the US to understand their perception of working
for Chemring and take their feedback to the Board. During these meetings,
which included front-line employees, supervisors, and middle and senior
management, the topics covered included Chemring’s approach to governance,
including the workings of the Remuneration Committee, and how remuneration
links to strategy through the business. Participants in these discussions had
theopportunity to feed back on remuneration as well as wider employment
considerations and all feedback received was presented to the appropriate
business leadership, the relevant Board committees and the full Board. My role
supplements the wider employee engagement process at Chemring, which
includes regular all-hands meetings and team briefings and other business-
specific engagement tools. These processes ensure that we understand the
employee perspective and can take appropriate action as we did during 2024.
CONCLUSION
I hope you will find this report helpful and informative, and that you will
support the resolutions on the directors’ remuneration policy and the
directors’ remuneration report and the new long-term incentive plan rules
atour forthcoming Annual General Meeting. Please do not hesitate to
contact me on executive directors’ remuneration matters via Sarah Ellard,
Group Legal Director & Company Secretary, at sarahe@chemring.co.uk.
Laurie Bowen
Chair of the Remuneration Committee
17 December 2024
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This part of the directors’ remuneration report sets out the remuneration
policy for the executive directors and has been prepared in accordance with
The Large and Medium-sized Companies and Groups (Accounts and Reports)
(Amendment) Regulations 2013, the Companies (Miscellaneous Reporting)
Regulations 2018 and the Companies (Directors’ Remuneration Policy and
Directors’ Remuneration Report) Regulations 2019 (the “Regulations”).
This directors’ remuneration policy will be put to a binding shareholder vote
at the Company’s Annual General Meeting on 26 February 2025. If approved,
the policy will apply for a three-year period from the date of the Annual
General Meeting, unless shareholder approval is sought for earlier changes.
KEY OBJECTIVES
In developing a policy for the executive directors’ remuneration, the
Remuneration Committee seeks to:
- maintain a competitive package of rewards required to promote the
long-term success of the Company, without being excessive by reference
tomarket rates across comparator companies, and neither encouraging
orrewarding inappropriate risk taking;
- ensure performance-related elements:
> are transparent, stretching and rigorously applied;
> form a significant proportion of the total remuneration package of each
executive director; and
> align the interests of executives with those of shareholders, by ensuring
that a significant proportion of remuneration is performance related and
delivered in shares; and
- set remuneration in the context of the core values of the business and with
the aim of alignment with culture.
The remuneration policy for the executive directors and other senior
executives is also designed with regard to the policy for employees across the
Group as a whole. However, there are some differences in the structure of
the remuneration policy for executive directors and other senior executives.
In general, these differences arise from the development of remuneration
arrangements that are market-competitive for the various categories of
individuals. They also reflect the fact that, in the case of the executive
directors and other senior executives, a greater emphasis tends to be placed
on performance-related pay in the market.
DECISION MAKING PROCESS
The Committee periodically reviews the policy and its implementation to
ensure it continues to allow us to incentivise and reward the executive directors
to achieve our strategy in both the short and long term. The review is
undertaken in the absence of the executive directors, where appropriate, to
manage potential conflicts of interest, and with the advice of our remuneration
consultants. The views of our shareholders and investor representative bodies
are taken into account in determining the policy and implementation each year,
as well as the UK Corporate Governance Code and market practice. The
Committee also has regard to the general pay levels and policies across the
Group and takes these into account when setting executive director pay.
Operation of the policy is considered annually for the year ahead in light of
the strategy and wider stakeholder experience, including the level of salary
increase, the types of performance metrics, and the weightings and target
ranges for incentives.
CONSIDERATION OF CODE PROVISIONS INDETERMININGPOLICY
When determining the directors’ remuneration policy for the executive directors, the Remuneration Committee also addressed the following factors outlined in
the 2018 Code:
CLARITY
Remuneration arrangements should be transparent and
promote effective engagement with shareholders and
theworkforce.
The Chair of the Remuneration Committee consults with major shareholders on the directors’
remuneration policy, which is subject to shareholder approval every three years, and on any
significant proposed changes to the policy.
The employee engagement initiatives implemented by the Board provide an opportunity for employees
to express their views on a wide range of topics, including directors’ remuneration arrangements.
SIMPLICITY
Remuneration structures should avoid complexity and their
rationale and operation should be easy to understand.
The Company operates only two incentive plans for the executive directors – an annual bonus plan
to incentivise and reward short-term performance and the performance share plan (“PSP”), which
incentivises long-term performance and aligns management’s interests with shareholder interests.
The annual bonus plan structure for the executive directors is broadly replicated in the bonus
arrangements for the business unit leaders and their direct reports.
RISK
Remuneration arrangements should ensure reputational
and other risks from excessive rewards, and behavioural
risks that can arise from target-based incentive plans, are
identified and mitigated.
The annual bonus plan includes non-financial strategic objectives covering the management of risks
in areas such as safety and compliance, as well as requiring bonus deferral.
The inclusion of broad malus and clawback provisions in the incentive arrangements and the
discretion reserved by the Committee to override formulaic outcomes also mitigate the risk of
inappropriate rewards.
PREDICTABILITY
The range of possible values of rewards to individual
directors and any other limits of discretions should be
identified and explained at the time of approving the policy.
The directors’ remuneration policy imposes maximum levels for annual bonus payments and PSP
awards and sets out the potential remuneration scenarios for executive directors at differing levels
of performance. The Remuneration Committee’s discretions are also detailed in the policy.
PROPORTIONALITY
The link between individual awards, the delivery
ofstrategy and the long-term performance of the
company should be clear. Outcomes should not reward
poor performance.
The annual bonus plan targets and performance conditions associated with PSP awards provide a
direct link between individuals’ incentive rewards and delivery of strategic objectives which
underpin the long-term performance of the Company.
The annual bonus plan and the PSP require threshold levels of performance before any payments
are made or awards vest, and the Remuneration Committee retains discretion to override
formulaic outcomes if deemed appropriate.
ALIGNMENT TO CULTURE
Incentive schemes should drive behaviours consistent
with company purpose, values andstrategy.
The annual bonus plan includes non-financial strategic objectives which embrace the Company’s
values of Safety, Excellence and Innovation, and which are also aligned to the delivery of the
Group’s agreed strategy. The performance conditions under the PSP also incentivise long-term
performance through the delivery of strategy and shareholder value.
DIRECTORS’ REMUNERATION REPORT continued
Directors’ remuneration policy
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SUMMARY OF PROPOSED CHANGES TO POLICY
The changes to the directors’ remuneration policy are set out below.
Annual bonus
- The level of bonus deferral will be reduced (or removed) from 40% once the executive directors have met their shareholding requirement. For 2025 bonuses,
executive directors who have met their 200% of salary share ownership requirement will have their deferral reduced from 40% of the total bonus to 20%.
Long-term incentive plan
- The normal maximum awards for the executive directors under the long-term incentive plan are to be increased from 150% of salary to 175% of salary.
Thereis no change to the exceptional maximum limit of 200% of salary.
- Up to 25% of maximum will be payable for achievement of threshold performance (previously 25% of maximum payable for threshold, with performance
below threshold resulting in zero payment).
Malus and clawback
- The malus and clawback provision trigger events for the annual bonus and long-term incentive plans will be broadened to include the failure of risk management
and the circumstance of the Committee treating a director as a good leaver due to retirement but the director then returning to executive employment.
Shareholding requirements
- The policy clarifies that the net of tax number of any deferred bonus shares will count towards the shareholding requirement.
REMUNERATION POLICY
The table below sets out each element of the executive directors’ remuneration policy, how the element is operated and the link to Company strategy.
ELEMENT
PURPOSE AND LINK
TOSTRATEGY OPERATION MAXIMUM PERFORMANCE ASSESSMENT
Salary
- Reflects the performance
of the individual, their
skills and experience over
time, and the responsibilities
of the role
- Provides an appropriate
level of basic fixed income,
avoiding excessive risk
arising from over-reliance
on variable income
- Normally reviewed annually with effect
from 1 January
- Benchmarked periodically against
companies with similar characteristics
and companies within the same sector
- Salaries take account of complexity of
the role, market competitiveness,
Group performance and the increases
awarded to the wider workforce
- Salary increases will
normally be set with
reference to those received
by the wider workforce
- More significant increases
may be awarded at the
discretion of the Committee,
for example where there is a
change in responsibilities, to
reflect individual development
and performance in the role
- None, although overall individual and company
performance is a factor considered when setting
andreviewing salaries
Bonus
- Incentivises delivery of
financial, strategic and
personal goals
- Maximum bonus only
payable for achieving
demanding targets
- Delivery of a proportion
of bonus in deferred
shares plus the ability
toreceive dividend
equivalents provides
alignment with
shareholders’ interests
and assists with retention
- Paid in cash, with up to 40% deferredas
a conditional award of deferred shares
- Once the minimum shareholding
requirement has been met, the
Remuneration Committee may reduce
or remove the requirement for a
portion of the bonus to be subject to
deferral. For 2025 bonuses, deferral
ofbonus will be limited to 20% of the
bonus if the executive director has met
their minimum shareholding requirement
- Vesting of deferred shares is subject to
continued employment (save in “good
leaver” scenarios) at the end of three
years from the award of the bonus
- The payment of any earned bonus
remains ultimately at the discretion
ofthe Committee
- Non-pensionable
- Executives are entitled to receive, on
vesting of deferred share awards, the
value of dividend payments that would
otherwise have been paid on the deferred
shares during the deferral period
- Chief Executive – 150%
ofsalary
- Other executive directors
– 125% of salary
- Mix of Group financial and, if appropriate,
non-financial objectives; financial objectives will
determine the majority of the award and will typically
include a measure of profitability and cash flow,
although the Committee has discretion to select
other metrics
- Non-financial objectives will be measurable and linked
to goals that are consistent with the Group’s strategy
- Payment of the non-financial objectives element
willbe subject to a general underpin based on the
Committee’s assessment of underlying business
performance, including inter alia levels of profitability
and cash flow, as well as health and safety performance
- Performance below the threshold for each financial
target results in zero payment in respect of that
element. Payment rises from 0% to 100% of the
maximum opportunity for levels of performance
between threshold and maximum with 50% of the
maximum normally payable for on-target performance
- Includes a malus and clawback mechanism
6
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ELEMENT
PURPOSE AND LINK
TOSTRATEGY OPERATION MAXIMUM PERFORMANCE ASSESSMENT
Long-term
incentive plan
(“LTIP” )
- Incentivises executives to
achieve targets aligned to
the Group’s main strategic
objectives of delivering
sustainable growth and
shareholder returns
- Delivery of awards in
shares plus the ability
toreceive dividend
equivalents helps align
executives’ rewards with
shareholders’ interests
- Annual grants of shares, which vest
subject to the Group’s performance
measured over at least three years
- Any shares vesting must be held by
theexecutives for a further period
oftwo years
- Executives are entitled to receive
thevalue of dividend payments that
would otherwise have been paid on
vested awards
- All awards are subject to the discretions
given to the Committee in the plan
rules during the vesting period
- Normally 175% of base
salary (although grants of up
to 200% of base salary may
be made in exceptional
circumstances such as
onrecruitment)
- Awards will be subject to a combination oflong-term
measures which are aligned tothe shareholder
experience and may include financial metrics
(suchasEPS and cash conversion), shareholder value
metrics (such as TSR), capital efficiency measures
(such as ROCE) and ESG or strategicmeasures.
TheCommittee will have discretion to set different
measures and weightings for awards in future years
to best support the strategy of the business at thattime
- Targets for each performance measure are set by the
Remuneration Committee prior to each grant. Targets
will be based on a sliding scale where appropriate
- For each measure, threshold performance results in
payment of up to 25% of maximum opportunity
rising to 100% of the maximum opportunity for
achievement of maximum performance
- Includes a malus and clawback mechanism
6
All-employee
share scheme
- UK employees, including
executive directors, are
encouraged to acquire
shares by participating in
the Group’s all-employee
share plan – the UK
Sharesave Plan
- The UK Sharesave Plan has
standardterms
- Participation limits are those
set by HM Revenue &
Customs from time to time
- N/A
Pension
- Provides retirement
benefits that reward
sustained contribution
- Pension provision is in the form
ofacash supplement, subjectto
auto-enrolment in the Group’s
definedcontributionscheme
- The pension provision
forexecutive directors is
aligned with the majority
rate available to the wider
UK workforce (or other
location as appropriate
based on the location of the
executive director). In the
UK, it is currently 7.5% of
base salary
- Executive directors receive a
cash supplement contribution
paid in lieu of occupational
pension scheme membership.
All UK employees, including
the executive directors, are
subject to auto-enrolment
into the Group’s defined
contribution scheme unless
they opt out. The minimum
employer contribution is set
at 6% of base salary
- N/A
Other
benefits
- Provides a competitive
package of benefits that
assists with recruitment
and retention
- Main benefits currently provided to
UKexecutives include but are not
limited to a car allowance, life assurance
and private medical insurance
- Executive directors are eligible for other
benefits which mayalso be introduced
for the wider workforce on broadly
similar terms
- Cash allowance in lieu of
company car of up to
£25,000 per annum
- Other benefits will be in line
with market. The value of
each benefit is based on the
cost to the Company and is
not pre-determined
- Any reasonable business-
related expenses (including
tax thereon) can be
reimbursed if determined
tobe a taxable benefit
- N/A
DIRECTORS’ REMUNERATION REPORT continued
Directors’ remuneration policy continued
REMUNERATION POLICY continued
Chemring Group PLC Annual report and accounts 2024112

Strategic report Governance Financial statements
ELEMENT
PURPOSE AND LINK
TOSTRATEGY OPERATION MAXIMUM PERFORMANCE ASSESSMENT
Minimum
shareholding
requirements
- Aligns the interests of the
executive directors with
those of shareholders
- Executive directors are expected to build up and maintain
ashareholding in the company equivalent to 200% of base
salary, by retaining at least 50% of the after-tax gain on vested
PSP awards until such time as the guidelines have been met.
The after-tax number of unvested deferred bonus shares and/
or any vested but unexercised nil-cost options under the
Company’s long-term incentive plan, will be eligible to count
towards an executive director’s shareholding
- Executive directors will be required to hold shares to the
value of the shareholding guideline (i.e 200% of base salary
ortheir existing shareholding if lower at the time) for two
years post-cessation of employment. The shareholding will
beassessed at the point of stepping down from the Board
- N/A - N/A
NOTES:
1. A description of how the Company intends to implement the policy set out in this table for the forthcoming year is set out in the annual report on remuneration on pages 117 and
118.
2. The all-employee share plan does not have performance conditions. UK-based executive directors are eligible to participate in the UK Sharesave Plan on the same terms as
otheremployees.
3. The Committee may make minor amendments to the policy set out above for regulatory, exchange control, tax or administrative purposes or to take account of a change in
legislation, without obtaining shareholder approval for that amendment.
4. The Regulations and investor guidance encourages companies to disclose a cap within which each element of the directors’ remuneration policy will operate. Where maximum
amounts for elements of remuneration have been set within the policy, these will operate simply as caps and are not indicative of any aspiration.
5. While the Committee does not consider it to form part of benefits in the normal usage of that term, it has been advised that corporate hospitality, whether paid for by the
Company or another, and business travel for directors, and in exceptional circumstances their families, may technically come within the applicable rules, and so the Committee
expressly reserves the right for the Committee to authorise such activities within its agreed policies (and to discharge any related tax liability).
6. The annual bonus and LTIP are subject to malus and clawback provisions in the event of misconduct, error in calculation of performance, material misstatement of results, company
insolvency, serious reputational damage to the Group, failure of risk management and retirement where the retired executive director subsequently returns to employment. Malus
and clawback may be applied within three years from the date on which a cash bonus was paid, a deferred bonus award was granted and/or the date on which an LTIP award vests.
COMMITTEE DISCRETIONS
The Committee operates the Group’s variable incentive plans according to their respective rules and in accordance with governing legislation and HM Revenue & Customs
rules where relevant. To ensure the efficient administration of these plans, the Committee will apply certain operational discretions. These include the following:
- selecting the participants in the plans on an annual basis;
- determining the timing of grants of awards and/or payment;
- determining the quantum of awards and/or payments (within the limits set out in the policy table above);
- determining the extent of vesting based on the assessment of performance;
- making the appropriate adjustments required in certain circumstances (e.g. change of control, rights issues, corporate restructuring events and special dividends);
- determining “good leaver” status for incentive plan purposes and applying the appropriate treatment; and
- undertaking the annual review of weighting of performance measures and setting targets for the annual bonus plan and the PSP from year to year.
If an event occurs which results in the annual bonus plan or PSP performance conditions and/or targets being deemed no longer appropriate by the Committee
(e.g. a material acquisition or divestment), the Committee will have the ability to adjust appropriately the measures and/or targets and alter weightings, provided
that the revised conditions or targets are not materially less difficult to satisfy (taking account of the relevant circumstances).
Ultimately, the payment of any bonus is entirely at the discretion of the Committee. Equally, the operation of share incentive schemes is at the discretion of the
Committee. In conjunction with malus and clawback provisions, the Committee has the flexibility to override formulaic outcomes and recover and/or withhold
sums. In choosing to use this discretion, the Committee will consider the specific circumstances at the time.
Where such action is considered necessary, this will be clearly stated in the relevant directors’ remuneration report.
Chemring Group PLC Annual report and accounts 2024 113

Strategic report Governance Financial statements
SELECTION OF PERFORMANCE METRICS AND TARGETS
The performance-related elements of remuneration will take into account the Group’s risk policies and systems and will be designed to align the senior executives’
interests with those of shareholders. The Committee reviews the metrics used and targets set for all of the Group’s senior executives (not just the executive
directors) every year, inorder to ensure that they are aligned with the Group’s strategy and to ensure an appropriate level of consistency of arrangements
amongst the senior executive team. All financial targets will (where appropriate) be set on a sliding scale. Non-financial targets are set based on individual
andmanagement team responsibilities.
The annual bonus plan performance metrics are expected to include a mix of financial targets and non-financial objectives, reflecting the key annual priorities of
the Group. Thefinancial metrics determine the majority of the bonus and typically include operating cash flow – a key measure of the Group’s ability to invest in
the business, and a measure of profitability, which together reflect the Group’s financial performance and are key measures for shareholders. The non-financial
objectives agreed on an annual basis will be measurable and based on individual and/or team performance and will be consistent with the achievement of the
Group’s strategy. The choice and weighting of performance metrics will be determined by the Committee each year.
The Committee has previously applied EPS, TSR and ESG-related performance conditions to awards made under the PSP. For the 2025 award under the LTIP
anoperating cash conversion performance condition has also been added. The new operating cash conversion metric provides alignment with the Group’s focus
on the generation of cash during the next investment phase and provides a clear focus on the efficient management of working capital. EPS is a measure of the
Group’s overall financial success and TSR provides an external assessment of the Company’s performance against a peer group. TSR also aligns the rewards
received by executives with the returns received by shareholders. The ESG-related performance measure recognises Chemring’s commitment to being a socially
and environmentally responsible business.
The Committee will review the choice and relative balance of performance measures and the appropriateness of performance targets prior to each grant of
awards under the LTIP. Financial targets are reset prior to each grant, following a review of internal and external expectations of growth for the Group, and are
based on underlying performance assessment. The Committee retains discretion to set different targets for future awards, providing that, in the opinion of the
Committee, the new targets are similarly challenging in light of the prevailing circumstances than those set previously. If substantially different targets to those
used previously are proposed, appropriate consultation with shareholders will take place.
HOW THE EXECUTIVE DIRECTORS’ REMUNERATION POLICY RELATES TO THE WIDER GROUP
In addition to determining the remuneration arrangements for the executive directors, the Committee considers and approves the base salaries for eight senior
executives, excluding those based in the US. The Committee also receives information on general pay levels and policies across the Group. The Committee,
therefore, has due regard to salary levels across the Group in applying its remuneration policy.
The Group comprises a number of businesses, some of which have been developed through organic growth, others of which have been acquired over time.
Asaresult, there are diverse remuneration arrangements in place across the Group. An example of this is pension provision, where contributions range from
6%to 15% of salary depending on location and length of service. Where possible the business aims to consolidate and normalise its remuneration approach,
particularly in relation to fixed pay arrangements, taking into account regional and sector-related variations.
In the US, the US Board has established a Compensation Committee to set the remuneration arrangements for the senior leadership of the US businesses,
inaccordance with the requirements of our Special Security Agreement with the US Government. The US Compensation Committee consults with the
Remuneration Committee where appropriate.
The annual bonus plan for the senior leadership is typically operated for around eighty employees and works in a similar fashion to that for the executive
directors, albeit with greater focus on business unit performance where appropriate. Therefore, overall bonus outcomes maintain a level of consistency with
Group level performance but allow for differentiated outcomes based on business unit and individual performance.
Below Board, the performance share plan is also operated, in order to allow us to recruit and retain the best talent. Employees who are considered to have
adirect influence on Group level performance participate in this plan and in 2024 this included fifty employees.
All UK employees are encouraged to participate in the UK Sharesave Plan. At present over 600 employees participate in the UK Sharesave Plan.
HOW SHAREHOLDERS’ VIEWS ARE TAKEN INTO ACCOUNT
The Remuneration Committee considers shareholder feedback received on the directors’ remuneration report each year and guidance from shareholder
representative bodies more generally. Shareholders’ views are key inputs when shaping remuneration policy, with the Company’s major shareholders being
consulted in advance in connection with proposed changes to policy.
In relation to the formulation of the new remuneration policy, shareholders’ views were sought at an early opportunity. Details of the consultation process,
feedback received, and outcome can be found in the Committee Chair’s report on pages 106 to 109.
LEGACY ARRANGEMENTS
For the avoidance of doubt, authority is given to the Company to honour any commitments entered into with current or former directors (such as the payment
of a pension or the unwinding of legacy share schemes) permitted under the current policy or which have been disclosed to shareholders in previous directors’
remuneration reports. Details of any payments to former directors will be set out in the annual report on remuneration as they arise.
EXTERNAL APPOINTMENTS
The Company’s policy is to permit an executive director to serve as a non-executive director elsewhere when this does not conflict with the individual’s duties
to the Company, and where an executive director takes such a role, they may be entitled to retain any fees which they earn from that appointment.
DIRECTORS’ REMUNERATION REPORT continued
Directors’ remuneration policy continued
Chemring Group PLC Annual report and accounts 2024114

Strategic report Governance Financial statements
POTENTIAL REMUNERATION SCENARIOS FOR EXECUTIVE DIRECTORS
The chart below details the hypothetical composition of each executive director’s remuneration package and how it could vary at different levels of performance
under the policy set out above.
Fixed pay
Annual bonus
LTIP
LTIP with 50% share price growth
£3,500k
£3,000k
£2,500k
£2,000k
£1,500k
£1,000k
£500k
£0k
Below target Target Maximum Below target
Group Chief Executive Chief Financial Officer Group Legal Director
& Company Secretary
Target Maximum Below target Target Maximum
100%
100%
51%
27%
48%
25%
100%
52%
28%
20%
20%
19%
33%
34%
41%
29%
30%
43%
28%
30%
42%
£666k
£1,378k
£2,613k
£3,137k
£467k
£908k
£2,075k
£345k
£666k
£1,516k
£1,252k
£1,712k
ASSUMPTIONS:
1. Minimum = fixed pay only (salary as at 1 January 2025 plus benefits plus pension
provision of 7.5% of salary).
On target = fixed pay plus target annual bonus of 75% of salary for the Group Chief
Executive and 62.5% for the other executive directors plus target LTIP awards of
43.75% of salary for each of the executive directors.
Maximum = fixed pay plus maximum annual bonus of 150% of salary for the Group
Chief Executive and 125% for the other executive directors plus maximum LTIP
awards of 175% of salary for each of the executive directors.
Maximum + share price growth = as maximum above, but with the value of the LTIP
awards increased by 50% to reflect potential share price growth.
2. The executive directors may participate in all-employee share schemes on the same
basis as other employees. The value that may be received under these schemes is
subject to tax-approved limits. For simplicity, the value that may be received from
participating in these schemes has been excluded from the above chart.
POLICY ON PAYMENTS FOR LOSS OF OFFICE
All new executive directors appointed will have service contracts which are
terminable on a maximum of twelve months’ notice. Provisions permitting the
Company to make any termination payments by instalments and requiring
directors to mitigate their loss in such circumstances will be included in each
contract. The Remuneration Committee will exercise discretion in determining
whether termination payments should be paid by instalments, taking account
of the reason for the departure of the director and their prior performance.
Other than in gross misconduct situations, the Company would expect to
honour the contractual entitlements of terminated directors.
Other than in certain “good leaver” circumstances (including, but not limited
to, redundancy, ill-health or retirement), no bonus would be payable under
the annual bonus plan unless the individual remains employed and is not
under notice at the payment date. Any bonus paid to a “good leaver” would
be based on an assessment of performance over the period and would
normally be pro-rated for the proportion of the year worked.
Deferred bonus share awards will also normally lapse on cessation of
employment, unless the executive director is deemed to be a “good leaver”
by the Remuneration Committee, as referred to above, in which case they
would vest in full on the normal vesting date.
With regards to long-term incentive awards, the PSP rules provide that other
than in certain “good leaver” circumstances, awards lapse on cessation of
employment. Where an individual is a “good leaver”, the Remuneration
Committee’s policy for PSP awards is normally to permit awards to remain
outstanding until the end of the original performance period, when a pro-rata
reduction will be made to take account of the proportion of the vesting
period that lapsed prior to termination of employment, although the
Committee has the discretion to partly or completely disapply pro-rating
inexceptional circumstances. The Committee has discretion to deem an
individual to be a “good leaver”. In doing so, it will take account of the reason
for their departure and the performance of the individual. Holding periods
will normally continue to apply to awards post-cessation of employment.
The Committee will have authority to pay any statutory entitlements and
settle claims against the Company (e.g. for unfair dismissal, discrimination
orwhistleblowing) that arise on termination. The Committee may also
authorise the provision of outplacement services and settle legal fees
whereconsidered appropriate.
EXECUTIVE DIRECTORS’ SERVICE AGREEMENTS AND LOSS
OFOFFICE PAYMENTS
The current executive directors have rolling service contracts, details of
which are summarised in the table below:
PROVISION DETAILED TERMS
Contract dates - Michael Ord – 30 April 2018
(effective 1 June 2018)
- James Mortensen – 23 May 2023
(effective 1 November 2023)
- Sarah Ellard – 2 November 2011
(effective 7 October 2011)
Notice period - Twelve months from both the Company and
from theexecutive
Termination payments - Contracts may be terminated without notice bythe
payment of a sum equal to the sum ofsalary due for
the unexpired notice period plusthe fair value of
any contractual benefits (including pension)
- Payments may be made in instalments and in these
circumstances, there is a requirement tomitigate loss
The Company’s policy on service agreements reflects the approach described
above (e.g. notice periods will normally be twelve months or less).
The executive directors’ service contracts are available for inspection at the
Company’s registered office.
Chemring Group PLC Annual report and accounts 2024 115

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RECRUITMENT OF EXECUTIVE DIRECTORS
The remuneration package for a new executive director will take into account the skills and experience of the individual, the market rate for a candidate of that
experience and the importance of securing the relevant individual.
Salaries for new hires (including internal promotions) will be set to reflect their skills and experience, the Company’s intended pay positioning, and the market
rate for the applicable role.
Where it is appropriate to offer a below-market salary initially, the Committee has the discretion to allow higher phased salary increases over a period of time
for newly-appointed directors, even though this may involve increases in excess of the rate for the wider workforce and inflation.
Benefits will be provided in line with those offered to other executive directors, taking account of local market practice, with relocation expenses or
arrangements provided if necessary. Tax equalisation may also be considered if an executive is adversely affected by taxation due to their employment with the
Company. Legal fees and other costs incurred by the individual may also be paid by the Company.
The aggregate incentive opportunity offered to new recruits will be no higher than that set out in the remuneration policy table. Different performance measures
and targets may be set initially for the annual bonus plan, taking into account the responsibilities of the individual and the point of the financial year at which they
join. A long-term incentive award may be granted shortly following appointment (assuming the Company is not in a closed period).
Current entitlements of a new joiner from their previous employer that are forfeited (e.g. benefits, bonus and share schemes) may be bought out on terms that
take due account of the nature of the entitlements in terms of (for example) type of award, time horizon, fair value and performance conditions. The Group’s
existing incentive arrangements will be used to the extent possible, although awards may also be granted outside of these arrangements if necessary, and as
permitted under the Listing Rules, reflecting the above parameters. Such awards will not, in accordance with the Regulations, be subject to the limits of the
remuneration policy for incentive pay.
In the case of an internal hire, any outstanding variable pay awarded in relation to the previous role will be allowed to pay out according to its terms of grant
(andmay be adjusted as relevant to take into account the Board appointment).
POLICY IN RESPECT OF THE CHAIRMAN AND NON-EXECUTIVE DIRECTORS
ELEMENT
PURPOSE AND LINK
TOSTRATEGY OPERATION MAXIMUM
PERFORMANCE
ASSESSMENT
The Chairman’s
and non-
executive
directors’ fees
Takes account of recognised
practice and set at a level
that is sufficient to attract
and retain high-calibre
non-executives
- The Chairman is paid a single fee for all his responsibilities. The non-executive
directors are paid a basic fee. Currently, the Senior Independent Director,
the Chairs of the Remuneration Committee and the Audit Committee and
the non-executive director responsible for employee engagement each
receive additional fees to reflect their extra responsibilities
- When reviewing fee levels, account is taken of market movements in
non-executive director fees, Board committee responsibilities, ongoing
time commitments, the general economic environment and the level of
increases awarded to the wider workforce
- Fee increases, if applicable, are normally effective from January of each year
- Non-executive directors do not participate in any pension, bonus or
share incentive plans
- Non-executive directors may be compensated for travel, accommodation
or hospitality-related expenses in connection with their roles and any
taxthereon
- In exceptional circumstances, additional fees may be paid where there
isasubstantial increase in the temporary time commitment required
ofnon-executive directors
- N/A - N/A
CHAIRMAN’S AND NON-EXECUTIVE DIRECTORS’ LETTERS OF APPOINTMENT
Non-executive directors do not receive compensation for loss of office but are appointed for a fixed term of three years, renewable for further three-year
terms if both parties agree and subject to annual re-election by shareholders. The Chairman’s appointment may be terminated on six months’ notice by either
party and the other non-executive directors’ appointments may be terminated on three months’ notice by either party. The non-executive directors’ letters of
appointment are available for inspection at the Company’s registered office.
The following table provides details of the terms of appointment for the Chairman and the current non-executive directors:
Non-executive Date original term commenced Date current term commenced Expected expiry date of current term
Tony Wood 1 October 2024 1 October 2024 30 September 2027
Alpna Amar 13 June 2023 13 June 2023 12 June 2026
Laurie Bowen 1 August 2019 1 August 2022 31 July 2025
Andrew Davies 17 May 2016 17 May 2022 31 January 2025
Stephen King 1 December 2018 1 December 2024 30 November 2027
Fiona MacAulay 3 June 2020 3 June 2023 2 June 2026
DIRECTORS’ REMUNERATION REPORT continued
Directors’ remuneration policy continued
Chemring Group PLC Annual report and accounts 2024116

Strategic report Governance Financial statements
APPLICATION OF THE REMUNERATION POLICY IN 2025
This part of the report sets out how the approved directors’ remuneration policy will be implemented in 2025.
Executive directors
ELEMENT IMPLEMENTATION
Salary - The executive directors’ salaries were reviewed in November 2024, and the following salary increases were agreed, effective 1 January 2025:
> Michael Ord – £599,134
> James Mortensen – £415,000
> Sarah Ellard – £302,242
- As set out in the Chair’s report, the Chief Financial Officer’s salary increase reflects a circa 8% market-related adjustment in addition to a
3.8% UK workforce aligned increase.
- The increases for the other executive directors were agreed at 3.8%, in line with the average of the budgeted increases that were set by, and
then agreed with, the Group’s UK businesses for 2025.
Benefits - No changes are proposed to the benefits provision for 2025.
Pension - The executive directors will receive a pension contribution of 7.5% of salary, which aligns with the typical rate of workforce pension provision.
Bonus - The maximum bonus opportunity will be 150% of salary for the Group Chief Executive and 125% of salary for the Chief Financial Officer
and the Group Legal Director & Company Secretary.
- The financial performance measures and weightings of financial performance measures and strategic objectives for the annual bonus plan
will be unchanged:
> Earnings per share 40%
> Operating cash flow 40%
> Strategic objectives 20%
- Strategic objectives have been set to reflect performance in the following key areas:
> Safety, including ensuring that the Group’s total recordable injury frequency rate and frequency of process safety events, particularly
those involving personnel exposure, remain below the targeted maximum rates
> Sustainability, including the continued delivery of reductions in the Group’s scope 1 and scope 2 carbon emissions
> Implementation of action plans to further strengthen our physical and cyber security posture, to safeguard our people, property,
information and technology
> Further development of our values-based culture in order to maximise the Group’s identity and competitiveness
> Delivery of diversity, equity and inclusion objectives
> Group performance and development including:
> Delivery of Group-wide corporate development plans
> Delivery of organic and inorganic growth strategies for Roke
> Delivery of growth plans for the Energetics businesses and execution of the associated capital investment programmes
> Review of US strategic options
> Implementation of operational improvement plans for the US Countermeasures businesses
- The Committee does not believe that it would be in shareholders’ interests to prospectively disclose the financial targets under the annual
bonus plan due to issues of commercial sensitivity. However, detailed retrospective disclosure of both the financial targets and the strategic
objectives, and performance against them, will be included in next year’s annual report on remuneration. As was the case in 2024, the
range of financial targets approved for 2025 have been set in the context of current business planning and the current economic outlook.
Overall, the targets are considered similarly challenging to those set in prior years in the current market context.
- No bonus will be payable in respect of the strategic objectives unless the Committee is satisfied that this is justified by the Group’s
underlying performance, including inter alia levels of profitability and cash flow, as well as health and safety performance.
- In line with the new policy, 40% of any bonus paid will be deferred for a period of three years unless the executive director has met their
minimum shareholding requirement of 200% of salary. If an executive director has met their shareholding requirement, 20% of any bonus
paid will be deferred for a period of three years.
Chemring Group PLC Annual report and accounts 2024 117

Strategic report Governance Financial statements
ELEMENT IMPLEMENTATION
Long-Term
Incentive Plan
(“LTIP”)
- Executive directors will be granted LTIP awards over 175% of salary in 2025.
- Performance conditions for 2025 (tested over a three-year performance period to 31 October 2027) and weightings will be 40% EPS,
20% relative TSR, 20% operating cash conversion and 20% ESG targets. 25% of each part of the award will vest for threshold or median
performance, with full vesting of each part of the award for stretch or upper quartile performance.
- The performance conditions for the 2025 awards will be measured as follows:
Performance measure Weighting Threshold target (25% vesting) Maximum target (100% vesting)
Compound EPS growth 40% 5% p.a. 10 % p.a.
Relative TSR against the TSR of the FTSE All-Share
(excluding investment trusts) 20% Median Upper quartile
Average operating cash conversion 20% 80% 100%
Reduction in scope 1 and scope 2 emissions
(market-based) 20% 15% 25%
Straight line vesting occurs between threshold and maximum targets.
NOTES:
1. The EPS and operating cash conversion target ranges are considered stretching when viewed against internal forecasts and market expectations for our
future performance with consideration also given to wider prevailing macroeconomic factors when setting the targets. The range targets also took into
account the higher quantum of awards for 2025. When calibrating the range of performance targets, the lower end of the range was set to be realistic
inthe context of internal plans, with the top end of the range set to be a stretch target. Further context on the approach to target setting is detailed in the
Chair’s annual report on the activities of the Committee during the year.
2. The reduction in scope 1 and scope 2 emissions target is aligned with our 2035 net zero target and takes into account the expected glidepath to reaching
this goal.
Fees for the Chairman and non-executive directors
As detailed in the directors’ remuneration policy, the Company’s approach to setting the non-executive directors’ remuneration takes account of the expected
time commitment of the role, recognised practice and is set at a level that is sufficient to attract and retain high-calibre non-executives. The fees for the
non-executive directors are determined by the executive directors and the Chairman, and the Remuneration Committee determines the fees for the Chairman.
Details of the fees that will apply for 2025 are set out below:
Fee as at
1 January 2025
Percentage
increase
Chairman’s fee
1
£265,000 17.8%
Other non-executive directors’ base fee £64,213 3.8%
Audit Committee Chair fee £12,000 20%
Remuneration Committee Chair fee £12,000 20%
Senior Independent Director fee £12,000 20%
Non-executive directors’ fee for employee engagement £10,000 100%
NOTE:
1. The Board Chair fee in 2024 prior to the appointment of our new Chairman was £224,952. The fee for the role was rebased on the appointment of a new Board Chair having had
regard to the expected future time commitment of the role and having had regard to the growth in size and complexity of the Group over the past three-year period and
expectations for future growth.
DIRECTORS’ REMUNERATION REPORT continued
Directors’ remuneration policy continued
Chemring Group PLC Annual report and accounts 2024118

Strategic report Governance Financial statements
2024 remuneration at a glance
2024 REMUNERATION YEAR IN SUMMARY
SALARY
Salary increases effective 1 January 2024 for the current executive directors were as follows:
- Michael Ord – 4% increase to £577,200
- Sarah Ellard – 4% increase to £291,177
- James Mortensen joined the Board on a salary of £370,000 with effect from 1 November 2023
ANNUAL BONUS
Bonuses payable for 2024 performance as follows:
- Michael Ord – 115% of salary (£662,510)
- James Mortensen – 96% of salary (£353,905)
- Sarah Ellard – 96% of salary (£278,511)
PERFORMANCE
SHARE PLAN
Awards granted
Awards made in December 2023, valued at 150% of salary, with EPS, TSR and ESG-related performance conditions measured over
athree-year period, and a two-year holding period post vesting.
Awards vesting
Awards made in December 2021 to the Group Chief Executive and the Group Legal Director & Company Secretary, which were
subject to EPS, TSR and emissions reduction performance conditions measured over the three years ended 31 October 2024,
willvestat 97.63% of the maximum.
As part of the buy-out arrangements for the incentives the Chief Financial Officer waived on taking up his appointment with the
Groupin November 2023, he received a share award in December 2023 which will vest in line with the vesting of the awards made
inDecember 2021 under the PSP. Accordingly, this award will also vest at 97.63% of the maximum. Full details of his buy-out
arrangements were disclosed in last year’s directors’ remuneration report.
SHAREHOLDING
Shareholding guideline of 200% of base salary (both in and post-employment, with the post-employment guideline based on the lower
of the guideline and shares held on cessation of employment, which are held for two years).
CHAIRMAN
ANDNON-
EXECUTIVE
DIRECTOR FEES
Base fees for the previous Chairman and non-executive directors increased by 4% effective 1 January 2024.
Chemring Group PLC Annual report and accounts 2024 119

Strategic report Governance Financial statements
EXECUTIVE DIRECTORS’ TOTAL PAY
This chart illustrates the total remuneration received by the executive directors in 2024.
Michael Ord
James Mortensen
1
Sarah Ellard
£0.0m £0.50m £1.0m £1.5m £2.0m £2.5m
Total pay
£2,303k
£1,429k
£1,147k
Salary Pension and benefits Annual bonus PSP
Michael Ord
James Mortensen
Sarah Ellard
£0.0m £0.1m £0.2m £0.3m £0.4m £0.5m £0.6m £0.8m £0.9m£0.7m
Total bonus
£663k
£354k
£279k
Target (% of salary) Actual (% of salary) Maximum (% of salary)
125.00%
125.00%
150.00%115.00%90.00%
96.00%75.00%
75.00% 96.00%
Grant £732k
Grant £265k
Grant £392k
Michael Ord
James Mortensen
Sarah Ellard
£0.0m £0.1m £0.2m £0.3m £0.4m £0.5m £0.6m £0.7m £0.8m £0.9m £1.0m £1.1m
Estimated vesting value £1,001k
Estimated vesting value £312k
Estimated vesting value £537k
Value of shares vesting Accrued dividends
1 James Mortensen’s PSP value shown includes payments made and shares awarded in lieu of the incentives he forfeited on joining the Group (see page 126 for further details).
ANNUAL BONUS PLAN OUTCOME
This chart illustrates the bonuses payable for performance in 2024. 60% of the bonus amount is payable in cash and 40% will be satisfied by way of an award
ofshares deferred for three years.
PERFORMANCE SHARE PLAN OUTCOME
This chart illustrates the total value of each of the performance share plan awards granted to Michael Ord and Sarah Ellard on 15 December 2021, which will
vest at 97.63% of the maximum. The grant value is based on the share price on the grant date and the vesting value is calculated on the same basis as in the
directors’ emoluments tableon page 121. The value shown for James Mortensen relates to the conditional share award he received in December 2023, which will
vest in line with the performance share plan awards (see page 126 for further details).
DIRECTORS’ REMUNERATION REPORT continued
2024 remuneration at a glance continued
Chemring Group PLC Annual report and accounts 2024120

Strategic report Governance Financial statements
Annual report on remuneration
This part of the report explains how the directors’ remuneration policy was implemented in 2024. The auditor has reported on certain sections of this report
and stated whether, in its opinion, those sections have been properly prepared in accordance with the Companies Act 2006. Those sections subject to audit are
clearly indicated.
DIRECTORS’ EMOLUMENTS (AUDITED)
The emoluments of all the directors who served during the year are shown below:
Year
Salaries/
fees
£’000
Taxable
benefits
1
£’000
Pension
benefits
2
£’000
Total
fixed pay
£’000
Bonus
(cash and
deferred
shares)
3
£’000
PSP
4
£’000
Other
5
£’000
Total
variable pay
£’000
Total
14
£’000
Executives
Michael Ord 2024 574 22 43 639 663 1,001 — 1,664 2,303
2023 549 21 41 611 781 555 — 1,336 1,947
Andrew Lewis
6
2024 104 5 7 116 — 532 — 532 648
2023 396 21 30 447 468 443 — 911 1,358
James Mortensen
7
2024 370 21 28 419 354 — 656 1,010 1,429
2023 — — — — — — — — —
Sarah Ellard 2024 289 20 22 331 279 537 — 816 1,147
2023 278 20 21 319 328 316 — 644 963
Non-executives
Tony Wood
8
2024 22 — — 22 — — — — 22
2023 — — — — — — — — —
Carl-Peter Forster
9
2024 224 — — 224 — — — — 224
2023 215 — — 215 — — — — 215
Alpna Amar
10
2024 61 — — 61 — — — — 61
2023 23 — — 23 — — — — 23
Laurie Bowen
11
2024 76 — — 76 — — — — 76
2023 74 — — 74 — — — — 74
Andrew Davies
12
2024 71 — — 71 — — — — 71
2023 69 — — 69 — — — — 69
Stephen King
13
2024 71 — — 71 — — — — 71
2023 69 — — 69 — — — — 69
Fiona MacAulay 2024 61 — — 61 — — — — 61
2023 59 — — 59 — — — — 59
Total remuneration 2024 1,923 68 100 2,091 1,296 2,070 656 4,022 6,113
2023 1,732 62 92 1,886 1,577 1,314 — 2,891 4,777
NOTES:
1. Comprises an annual car allowance of £20,000 for Michael Ord and £19,350 for each of Andrew Lewis (pro-rated), James Mortensen and Sarah Ellard, plus private medical insurance for
each of the executive directors.
2. The executive directors received a cash supplement of 7.5% of salary in lieu of occupational pension scheme membership in 2023 and 2024.
3. 40% of any bonus is delivered as an award of deferred shares.
4. The PSP awards granted in December 2021 to the Group Chief Executive, the Group Legal Director & Company Secretary and the previous Chief Financial Officer were based 50% on
EPS performance, 30% on TSR performance and 20% on carbon emissions reductions, all measured over the three years ended 31 October 2024. These awards will vest at 97.63% of the
maximum and their estimated values have been included in the 2024 emoluments based on the average share price over the three-month period ended 31 October 2024, equating to
383p per share. The share price on the date of grant of the December 2021 awards was 286.5p and therefore the amounts attributable to share price appreciation are £240,766 for the
Group Chief Executive, £129,046 for the Group Legal Director & Company Secretary and £127,833 for the previous Chief Financial Officer. The value of accrued dividends on each award
has also been included in the 2024 emoluments. The 2023 PSP values have been restated based on the share price on the date of vesting of 335p.
5. James Mortensen received compensation and buy-out awards to provide compensation for the remuneration forfeited as a result of him taking up his appointment with the Group. The
buy-out awards set out in the table above include compensation for his forfeited Smiths Group plc FY23 annual bonus totalling £156,987, replacement shares for his vested FY20 Smiths
Group plc LTIP totalling £186,333 and his replacement FY21 Smiths Group plc LTIP totalling £312,192 which will vest subject to the same performance conditions as the December 2021
PSP awards set out in note 4. Further details of James Mortensen’s buy out arrangements can be found later in this report and in the 2023 directors’ remuneration report.
6. Andrew Lewis retired as Chief Financial Officer and stepped down from the Board on 31 December 2023 but remained an employee until 19 January 2024. His salary shown in the table
above includes a payment of £14,592 for accrued holiday which was made on his retirement. The table also includes remuneration for the period from 1 January 2024 to 19 January 2024
totalling £25,982.
7. James Mortensen joined the Board on 1 November 2023 as Chief Financial Officer designate and was appointed Chief Financial Officer on 1 January 2024.
8. Tony Wood joined the Board as a non-executive director and Chairman-designate on 1 October 2024 and was appointed Chairman on 1 December 2024. His base fee from appointment
was set at £265,000 in light of the expected time commitment of the role.
9. Carl-Peter Forster retired from the Board and as Chairman on 30 November 2024.
Chemring Group PLC Annual report and accounts 2024 121

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DIRECTORS’ EMOLUMENTS (AUDITED) continued
NOTES: continued
10. Alpna Amar was appointed as a non-executive director on 13 June 2023.
11. Laurie Bowen received an additional fee of £10,000 per annum for her appointment as Chair of the Remuneration Committee during the year and an additional fee of £5,000 per annum
in respect ofherappointment as the non-executive director responsible for employee engagement.
12. Andrew Davies received an additional fee of £10,000 per annum for his appointment as Senior Independent Director during the year.
13. Stephen King received an additional fee of £10,000 per annum for his appointment as Chairman of the Audit Committee during the year.
14. For the purposes of the Companies Act 2006, total remuneration in respect of qualifying services was £2.8m (2023: £2.7m), total gains on exercise of share options was £1.8m (2023: £2.9m),
Total contributions to pension schemes was £0.1m (2023: £0.1m) and the number of directors accruing retirement benefits in respect of qualifying services was four (2023: three), for the
year ended 31 October 2024.
Amounts shown above in the salaries and fees column relate to base salary in the case of executive directors and fees in the case of non-executive directors.
BASE SALARY AND BENEFITS PAID DURING THE YEAR (AUDITED)
Salaries for the Group Chief Executive and the Group Legal Director & Company Secretary were reviewed in November 2023 and increases were approved
bythe Remuneration Committee effective 1 January 2024. James Mortensen joined the Board on 1 November 2023 and received a salary of £370,000; given
hisrecent appointment no salary increase was awarded effective 1 January 2024.
No salary increase was awarded to Andrew Lewis as he retired from his role as Chief Financial Officer on 31 December 2023.
The salaries of the executive directors during the year were therefore as follows:
Executive
Annual salary from
1 November 2023 to
31 December 2023
Annual salary from
1 January 2024 to
31 October 2024
Michael Ord £555,000 £577,200
Andrew Lewis £399,376 N/A
James Mortensen £370,000 £370,000
Sarah Ellard £279,978 £291,177
Michael Ord receives a cash allowance of £20,000 per annum in lieu of a company car and the other executive directors receive a cash allowance of £19,350 per annum.
DETAILS OF VARIABLE PAY OPPORTUNITY IN THE YEAR
Annual bonus (audited)
80% of the annual bonus opportunity for 2024 was based on financial targets (namely earnings per share and operating cash flow), with 20% based on strategic
objectives. No bonus is payable in respect of the strategic objectives unless the Committee is satisfied that this is justified by the Group’s underlying performance,
including inter alia levels of profitability and cash flow, as well as health and safety performance.
The Committee has consistently set challenging targets for the achievement of maximum bonuses. The financial targets for the 2024 bonus plan, compared with
actual performance (adjusted to reflect budgeted foreign exchange rates as per the plan rules), were as follows:
Weighting
(80% of overall bonus) Performance
Payout
(% of element) Target Actual
Payout achieved
(% of element)
Underlying diluted earnings per share
(continuing operations)
50% Threshold
Target
Stretch
0%
50%
100%
18.53p
19.50p
21.45p
19.55p 51.3%
Underlying operating cash flow
(continuing operations)
50% Threshold
Target
Stretch
0%
50%
100%
£86.55m
£91.10m
£95.66m
£97.30m 100%
The strategic objectives set in respect of the 2024 bonus plan were set on a consistent basis across the executive directors, members of the Executive
Committee and each of the business unit leaders, focused as appropriate on their respective businesses. Details of the key achievements of the executive
directors against the strategic objectives are set out below:
STRATEGIC OBJECTIVE TARGET PERFORMANCE AGAINST TARGETS
SAFETY
- Continued delivery of safety improvements to deliver
theGroup’s goal of zero harm.
- Maintain the Group’s total recordable injury frequency
rate below 1.0.
- Maintain the Group’s process safety event (level 3 & 2)
rate below 2.0.
- Total recordable injury frequency rate of 0.69 (2023: 0.9) against a targeted limit of 1.0.
- Process safety event (level 3 & 2) rate of 2.09 (2023: 2.87) against a targeted limit of 2.0.
Achieved at 50% of maximum in light of the process safety event rate exceeding
thetargeted limit.
DIRECTORS’ REMUNERATION REPORT continued
Annual report onremuneration continued
Chemring Group PLC Annual report and accounts 2024122

Strategic report Governance Financial statements
STRATEGIC OBJECTIVE TARGET PERFORMANCE AGAINST TARGETS
STRATEGY AND GROWTH
- Develop continued growth in the US space and
missilesmarkets.
- Establish new production facilities at Chemring
EnergeticDevices.
- Deliver sustainable growth in the energetic materials
market with continued assessment of organic growth
investment options.
- Secure grant funding for Chemring Nobel capital
expansion programme.
- Progress delivery of capital expansion projects
intheEnergetics businesses.
- Deliver organic and inorganic growth plans for Roke.
Establish new production and logistics facility.
- Deliver US Department of Defense biosecurity Programs
of Record.
- Progress US growth opportunities.
- Improve operational performance of the US
Countermeasures businesses.
- Reassess future strategic opportunities for the
Countermeasures businesses.
- Order intake at Chemring Energetic Devices exceeded $70m, reflecting continued organic
growth in the US space and missiles markets. Potential bolt-on acquisition opportunities reviewed.
- Completed purchase of additional facility in Chicago and established production inthe new facility.
- Chemring Nobel order book increased to £328m. Board approval secured for an additional
capacity expansion programme on the site during the year, with the first two expansion
projects proceeding in line with schedule and budget.
- Secured £90m of grant funding from the EU ASAP programme and the Norwegian Government.
- New propellant facility programme at Chemring Energetics UK proceeding in line with schedule
and budget.
- Delivered double digit revenue and profit growth at Roke and secured planning consent for a
new production and logistics facility.
- EMBD FRP contract continued to deliver to plan and completed all deliveries under the LRIP
contract for the JBTDS programme.
- Partially completed prototype development of new biological detection system for
non-military application.
- Completed review of wider market opportunities for Chemring Australia.
- Reviewed future business strategy for Kilgore against site infrastructure plans with work
ongoing at year end.
Achieved at 70% of maximum in light of the above targets being achieved in full, with the
exception of the three ongoing at year end versus the targets set which included: (i)
ongoing activities associated with the biological detection business; (ii) improving the
operational performance of the US Countermeasures business; and (iii) further
development of the business strategy for Kilgore.
ENVIRONMENTAL SUSTAINABILITY
- Reduce Group scope 1 and 2 emissions year-on-year
byaminimum of 10%.
- Group scope 1 and 2 emissions reduced by 13% (2023: 9.1%) and independently verified
byERM. Progress delivered against (i) electrification of the business; (ii) energy efficiency
improvements; and (iii) renewable energy sourcing.
Achieved in full.
PEOPLE
- Ensure all employees have a voice in the business to
strengthen our values-based culture by involvement in
regular employee sentiment assessment and demonstrate
management actions in response to employee feedback.
- Implement actions designed to improve gender diversity
to support delivery of the Group’s goal of increasing the
proportion of women in senior roles to no less than 33%
by 2027.
- All businesses are utilising employee engagement tools specific to their own business needs and
have established feedback mechanisms; some have centralised published action plans and others
respond directly when specific feedback topics are raised.
- All businesses are now reviewing and reporting on their diversity metrics on a monthly basis,
and utilising communication campaigns, training and employee engagement tools to identify local
priorities. The percentage of females in senior leadership roles at 31 October 2024 was 31%
against the target of 33% by 2027.
Achieved at 90% of maximum in light of ongoing activities in relation to employee
engagement and diversity at year end.
GOVERNANCE
- Deliver assured corporate governance framework through
continued development and deployment of the Code of
Conduct, Operational Framework, and Operational
Assurance Statement policies, processes, and standards.
- Continue to deploy common standards and practices to
ensure an increasingly robust Group-wide physical and
cyber security posture to safeguard our people, property,
information andtechnology
- Updated Code of Conduct and Operational Framework issued in November 2024. Updated
Chemring Cybersecurity Standard issued, including compliance options subject tojurisdictional
and customer requirements.
- Incident response retainers put in place with external consultants, and tabletop exercises held
to assess cyber incident scenarios and test and evolve our response in the event of an incident.
Cyber security training provided to employees, together with regular phishing exercises.
Achieved at 90% of maximum in light of ongoing activities in relation to further
strengthening of cyber-security controls at year end.
Chemring Group PLC Annual report and accounts 2024 123

Strategic report Governance Financial statements
DETAILS OF VARIABLE PAY OPPORTUNITY IN THE YEAR continued
Annual bonus (audited) continued
The Committee assesses performance against the targets using both qualitative and quantitative data. The above reflects a full summary of the targets set
andachievements delivered within the bounds of commercial confidentiality. Based on the overall performance against the five strategic targets detailed,
theCommittee determined that the targets had been met at 80% of the maximum.
Based on the above performance, bonuses are payable to the executive directors under the 2024 bonus plan as follows (audited). Andrew Lewis was not
entitled to receive a bonus for 2024.
Executive
Maximum bonus
(% of salary)
Bonus paid in respect of
financial targets (% of salary)
Bonus paid in respect of
strategic objectives (% of salary)
Total bonus
payment
1
Michael Ord 150% 91% 24% £662,510
James Mortensen 125% 76% 20% £353,905
Sarah Ellard 125% 76% 20% £278,511
NOTE:
1. 40% of bonuses payable are satisfied by way of an award of deferred shares, vesting of which is subject only to continued service over a period of three years.
The Committee reviewed the outcomes in light of broader company and individual performance and the stakeholder experience during the year and was
satisfied that no discretion was necessary.
Deferred bonus shares granted during the year in respect of the 2023 bonus
Details of the deferred bonus share awards granted on 12 December 2023 in relation to the bonus for the year ended 31 October 2023 are set out in the table
below. The awards will normally vest subject to continued employment in three years. The Committee agreed that, notwithstanding Andrew Lewis’s retirement
on31December 2023, his award would vest on the normal vesting date on 12 December 2026.
Executive Date of grant Shares awarded Face value of award
1
Michael Ord 12 December 2023 95,854 £312,484
Andrew Lewis 12 December 2023 57,480 £187,385
Sarah Ellard 12 December 2023 40,296 £131,365
NOTE:
1. Value based on the closing share price of 326p on the date of grant.
Performance Share Plan (audited)
Vesting of December 2021 PSP awards
The PSP awards granted to the executive directors (including the former Chief Financial Officer) on 15 December 2021 were made subject to the following
performance conditions:
Measure Threshold vesting Full vesting
Total compound EPS growth per annum over the three financial years ended 31 October 2024
(50%ofaward)
5% p.a.
(25% vests)
10% p.a.
(100% vests)
Rank of the Company’s TSR against the TSR of the members of the comparator group over the three
financial years ended 31 October 2024 (30% of award)
Median ranking
(25% vests)
Upper quartile ranking
(100% vests)
Reduction in scope 1 and scope 2 emissions (market-based) over the three financial years ended
31October 2024 (20% of award)
15%
(25% vests)
25%
(100% vests)
The Group’s compound EPS growth on continuing operations over the three financial years ended 31 October 2024 was 10.7% p.a. and the part of the award
subject to the EPS measure will therefore vest in full on 15 December 2024. The Company’s TSR over the same performance period was 27.4% against a median
TSR of -3.3% for the comparator group, ranking the Group at 98 out of 353, and therefore 92.1% of the TSR part of the award will vest on 15 December 2024.
The Group’s scope 1 and scope 2 emissions reduced by 30% over the performance period and therefore the emissions-related part of the award will vest in full
on 15 December 2024.
Details of the awards granted to the executive directors and former Chief Financial Officer on 15 December 2021 are provided below (audited):
Executive Normal vesting date
Number of shares
at grant
Number of
shares to vest
Number of
shares to lapse
Michael Ord 15 December 2024 255,555 249,498 6,057
Andrew Lewis 22 January 2026
2
195,386 132,469
3
3,216
Sarah Ellard 15 December 2024 136,973 133,726 3,247
Executive
Value of shares
to vest
Value of accrued
dividends
Total value of
awards to vest
1
Michael Ord £955,577 £45,907 £1,001,484
Andrew Lewis £507,356 £24,374 £531,730
Sarah Ellard £512,171 £24,605 £536,776
DIRECTORS’ REMUNERATION REPORT continued
Annual report onremuneration continued
Chemring Group PLC Annual report and accounts 2024124

Strategic report Governance Financial statements
NOTE:
1. Value estimated based on the average closing share price of 383p over the three-month period ended 31 October 2024.
2. The awards granted to Andrew Lewis will not vest until January 2026 in accordance with the arrangements agreed on his retirement and subject to him not having taken
upanother full-time executive role prior to the vesting date.
3. The number of shares vesting for Andrew Lewis also reflects pro-rating of his award as he was treated as a good leaver following his retirement.
As detailed in last year’s directors’ remuneration report, as part of the buy-out arrangements for the incentives the current Chief Financial Officer waived on
taking up his appointment with the Group in November 2023, he received a conditional award over 79,665 shares in December 2023, which will vest in line
withthe vesting of the awards made to the other executive directors in December 2021 under the PSP. Accordingly, this award will also vest at 97.63% of the
maximum, equating to 77,776 shares vesting on 15 December 2024. The value of the award is shown below (audited):
Executive
Value of shares
to vest
Value of accrued
dividends
Total value of
awards to vest
1
James Mortensen £297,882 £14,310 £312,192
NOTE:
1. Value estimated based on the average closing share price of 383p over the three-month period ended 31 October 2024.
PSP awards granted in the year
The following conditional awards of shares were granted to the executive directors under the PSP during the year:
Executive Date of grant Value of award
Closing share price
on date of grant
Number
of conditional
shares awarded Face value
% that vests
at threshold Vesting determined by
Michael Ord 13 December 2023 150% of salary 333p 255,368 £850,375 25%
50% EPS growth, 30% relative
TSRperformance and 20% ESG
performance, as detailed below
James Mortensen 13 December 2023 150% of salary 333p 170,245 £566,916 25%
Sarah Ellard 13 December 2023 150% of salary 333p 128,824 £428,984 25%
The performance conditions applying to the awards made in December 2023 will be measured over three financial years commencing 1 November 2023
andare weighted 50% EPS growth, 30% relative TSR performance and 20% ESG performance.
The EPS performance condition will be measured as follows:
Total compound EPS growth over the three-year performance period % of EPS part that may vest
Less than 5% p.a. 0%
5% p.a. 25%
Between 5% p.a. and 10% p.a. On a straight-line basis between 25% and 100%
10% p.a. or more 100%
NOTE:
1. Earnings per share is calculated on an underlying, fully diluted and normalised basis, as specified by the Committee prior to grant.
The TSR performance condition will be measured as follows:
Rank of the Company’s TSR against the TSR of the FTSE All-Share (excluding investment trusts) over the three-year performance period % of TSR part that may vest
Below median 0%
Median 25%
Between median and upper quartile On a straight-line basis between 25% and 100%
Upper quartile or above 100%
The ESG performance condition will be measured as follows:
Reduction in scope 1 and scope 2 emissions (market-based) over the three-year performance period % of ESG part that may vest
Less than 15% 0%
15% 25%
Between 15% and 25% On a straight-line basis between 25% and 100%
25% or more 100%
Any shares that vest in respect of the December 2023 awards will be subject to a two-year holding period (after allowing for the sale of sufficient shares to meet
the tax and national insurance liability arising on vesting).
Chemring Group PLC Annual report and accounts 2024 125

Strategic report Governance Financial statements
DETAILS OF VARIABLE PAY OPPORTUNITY IN THE YEAR continued
Performance Share Plan (audited) continued
Buy-out awards granted in the year to James Mortensen
The table below sets out the buy-out awards granted during the year to James Mortensen to provide compensation for the remuneration he forfeited as a result
of him taking up the role of Chief Financial Officer with the Group. Further details of the buy-out arrangements can be found in the 2023 directors’
remuneration report.
Buy-out award Date of grant
Closing share price
on date of grant
Number of
conditional
shares awarded Face value
% that vests
at threshold
FY20 LTIP1 13 December 2023 333p 55,956 £186,333 N/A
1
FY21 LTIP2 13 December 2023 333p 79,665 £265,284 25%
FY22 LTIP3 13 December 2023 333p 79,665 £265,284 25%
NOTES:
1. The quantum of the FY20 LTIP buy-out award was determined by the applicable Smiths Group plc performance condition achieved over the relevant performance period.
2. The FY21 LTIP buy-out award will vest subject to the achievement of the performance conditions for the Chemring PSP award granted in December 2021 as set out earlier in thisreport.
3. The FY22 LTIP buy-out award will vest subject to the achievement of the performance conditions for the Chemring PSP award granted in December 2022 based on performance
to 31 October 2025. Details of these performance conditions are set out later in this report.
PENSION (AUDITED)
The following table sets out the pension benefits earned by the executive directors during the year. Only Sarah Ellard previously accrued benefits during her
former membership of the Chemring Group Staff Pension Scheme.
Executive
Cash in lieu of
pension
contributions
£’000
Total benefit accrued at
31 October 2023
Transfer value
of accrued
benefit at
31 October
2023
£’000
Total benefit accrued at
31 October 2024
Transfer value
of accrued
benefit at
31 October
2024
£’000
Increase in
transfer value
during year
(less members’
contributions)
£’000
Value of
benefit
for single
figure
£’000
Pension
£’000 p.a.
Cash
£’000
Pension
£’000 p.a.
Cash
£’000
Michael Ord 43 — — — — — — — 43
Andrew Lewis 7 — — — — — — — 7
James Mortensen 28 — — — — — — — 28
Sarah Ellard 22 24 72 461 24 72 461 — 22
NOTES:
1. A cash supplement of 7.5% of base salary is paid to each of the executive directors in lieu of pension contributions.
2. Transfer values represent liabilities of the applicable scheme, and do not represent sums paid to individuals.
3. Transfer values have been calculated in accordance with the Occupational Pension Scheme (Transfer Value) Regulations 1996.
4. Sarah Ellard left pensionable service on 6 April 2010 and therefore has not accrued additional pension over the year. The accrued benefits shown are the benefits at the date of exit.
5. The scheme provided pension at a rate of 1/80th of final pensionable salary plus a cash lump sum of 3/80ths for each year of membership. Final pensionable salary was capped at
the HMRC notional earnings cap, and the scheme assumed a normal retirement age of 65. Early retirement is permissible from age 55 but accrued benefits are reduced accordingly
using the early retirement factors in force at the date of early retirement.
PAYMENTS TO PAST DIRECTORS AND PAYMENTS FOR LOSS OF OFFICE
As detailed in last year’s directors’ remuneration report, Andrew Lewis stepped down as Chief Financial Officer and as a director of the Company on
31December 2023 but remained an employee of the Company until 19 January 2024. Andrew continued to receive salary of £23,041, benefits of £1,212
andpension of £1,728 for the period from 1 January 2024 to 19 January 2024, when he retired and ceased employment. Andrew was not entitled to receive
anybonus for 2024 but retained his 2021 PSP award, pro-rated. Details of the estimated vesting value is set out in this report.
DIRECTORS’ REMUNERATION REPORT continued
Annual report onremuneration continued
Chemring Group PLC Annual report and accounts 2024126

Strategic report Governance Financial statements
DIRECTORS’ SHAREHOLDINGS (AUDITED)
Shareholding guidelines apply to executive directors during employment and post cessation of employment. Executive directors are expected to build up
andmaintain a shareholding in the Company equivalent to 200% of base salary, by retaining at least 50% of after-tax vested PSP awards until such time as the
guidelines have been met. The executive directors are also required to hold shares to the value of the shareholding guideline (i.e. 200% of base salary or their existing
shareholding if lower at the time) for two years post-cessation of employment. The shareholding will be assessed at the time of stepping down from theBoard.
The interests of the directors in the ordinary shares of the Company at 31 October 2024, or at the date of cessation of their appointment if earlier, are shown
below. All are beneficial holdings.
Executive
Legally
owned
(number
of shares)
Value of
legally owned
shares as %
of salary
1
Guideline
met
Unvested and subject to performance conditions under the PSP
Deferred
bonus share
awards
Sharesave
options
(unvested)
Dec 2021
award
Dec 2022
award
Dec 2023
award
Total at
31 October
2024
Michael Ord 329,829 203% Ye s 255,555 255,737 255,368 766,660 279,854 7,894
Andrew Lewis
2
373,471 332% Ye s 135,685 67,550 — 203,235 169,646 —
James Mortensen 29,524 28% No 79,665
3
79,665
3
170,245 329,575 — 5,983
Sarah Ellard 171,000 208% Ye s 136,973 131,137 128,824 396,934 118,929 7,894
Tony Wood — — — — — — — — —
Carl-Peter Forster 30,000 — — — — — — — —
Alpna Amar — — — — — — — — —
Laurie Bowen 15,000 — — — — — — — —
Andrew Davies — — — — — — — — —
Stephen King 130,500 — — — — — — — —
Fiona MacAulay — — — — — — — — —
NOTE:
1. Based on the number of shares legally owned, prevailing base salary and share price of 355p at 31 October 2024.
2. Andrew Lewis stepped down from the Board and his role as Chief Financial Officer on 31 December 2023. The table shows Andrew Lewis’ shareholdings as at this date.
TheDecember 2021 and December 2022 PSP awards have been pro-rated to reflect his retirement.
3. These awards were made to James Mortensen in December 2023 as part of the buy-out of his previous incentive arrangements, as detailed above.
The directors’ share interests at 31 October 2024 include shares held by the directors’ connected persons, if any, as required by the Regulations.
There have been no changes to the directors’ interests in shares since 31 October 2024.
OUTSTANDING PSP AWARDS (AUDITED)
Executive
At
1 November
2023
Number of shares under award
Normal date
of vesting
Closing
share price on
date of grant (p)
Awarded
during
the year
Lapsed
during
the year
Vested
during
the year
At
31 October
2024
Michael Ord
220,375 — (62,036) (158,339) — 16 December 2023 300.0
255,555 — — — 255,555
1
15 December 2024 286.5
255,737 — — — 255,737 14 December 2025 307.0
— 255,368 — — 255,368 13 December 2026 333.0
731,667 255,368 (62,036) (158,339) 766,660
Andrew Lewis
175,848 — (49,502) (126,346) — 16 December 2023 300.0
195,386 — (59,701)
2
— 135,685
1
15 December 2024 286.5
187,061 — (119,511)
2
— 67,550 14 December 2025 307.0
558,295 — (228,714) (126,346) 203,235
James Mortensen
— 55,956
3
— (55,956) — 13 December 2023 333.0
— 79,665
3
— — 79,665
1
15 December 2024 333.0
— 79,665
3
— — 79,665 14 December 2025 333.0
— 170,245 — — 170,245 13 December 2026 333.0
— 385,531 — (55,956) 329,575
Sarah Ellard
125,670 — (35,377) (90,293) — 16 December 2023 300.0
136,973 — — — 136,973
1
15 December 2024 286.5
131,137 — — — 131,137 14 December 2025 307.0
— 128,824 — — 128,824 13 December 2026 333.0
393,780 128,824 (35,377) (90,293) 396,934
NOTE:
1. As explained above, these awards will vest at 97.63% of the maximum on 15 December 2024.
2. These awards were pro-rated on Andrew Lewis’ retirement.
3. These awards were made to James Mortensen in December 2023 as part of the buy-out of his previous incentive arrangements, as detailed earlier in this report.
Additional statutory information
onremunerationarrangements
Chemring Group PLC Annual report and accounts 2024 127

Strategic report Governance Financial statements
OUTSTANDING PSP AWARDS (AUDITED) continued
Performance conditions for outstanding PSP awards
Measure Director
Executive directors’
award values
Threshold
vesting
Full
vesting
Awards made on
15December 2021
Total compound EPS growth per annum over the three
financial years ended 31 October 2024 (50% of award)
Michael Ord
James Mortensen
1
Andrew Lewis
Sarah Ellard
150% of salary
2
5% p.a.
(25% vests)
10% p.a.
(100% vests)
Rank of the Company’s TSR against the TSR of the
FTSE All-Share (excluding investment trusts) over
thethree financial years ended 31 October 2024
(30%of award)
Median ranking
(25% vests)
Upper quartile
ranking
(100% vests)
Reduction in scope 1 and scope 2 emissions
(market-based) over the three financial years ended
31October 2024 (20% of award)
15%
(25% vests)
25%
(100% vesting)
Awards made on
14December 2022
Total compound EPS growth per annum over the three
financial years ended 31 October 2025 (50% of award)
Michael Ord
James Mortensen
1
Andrew Lewis
Sarah Ellard
150% of salary
2
5% p.a.
(25% vests)
10% p.a.
(100% vests)
Rank of the Company’s TSR against the TSR of the
FTSE All-Share (excluding investment trusts) over
thethree financial years ended 31 October 2025
(30%of award)
Median ranking
(25% vests)
Upper quartile
ranking
(100% vests)
Reduction in scope 1 and scope 2 emissions
(market-based) over the three financial years ended
31October 2025 (20% of award)
15%
(25% vests)
25%
(100% vesting)
Awards made on
13December 2023
Total compound EPS growth per annum over the three
financial years ended 31 October 2026 (50% of award)
Michael Ord
James Mortensen
Sarah Ellard
150% of salary
5% p.a.
(25% vests)
10% p.a.
(100% vests)
Rank of the Company’s TSR against the TSR of the
FTSE All-Share (excluding investment trusts) over
thethree financial years ended 31 October 2026
(30%of award)
Median ranking
(25% vests)
Upper quartile
ranking
(100% vests)
Reduction in scope 1 and scope 2 emissions
(market-based) over the three financial years ended
31October 2026 (20% of award)
15%
(25% vests)
25%
(100% vesting)
NOTE:
1. These awards were made to James Mortensen in December 2023 as part of the buy-out of his previous incentive arrangements, as detailed earlier in this report.
2. James Mortensen’s buy-out awards to align with the December 2022 and December 2023 PSP awards were calculated on a different basis, as detailed earlier in this report.
DIRECTORS’ REMUNERATION REPORT continued
Additional statutory information onremuneration arrangements continued
Chemring Group PLC Annual report and accounts 2024128

Strategic report Governance Financial statements
OUTSTANDING DEFERRED BONUS SHARE AWARDS (AUDITED)
Executive
Number of shares under award
Date of
vesting
Closing
share price on
date of grant (p)
At 1 November
2023
Awarded during
the year
Lapsed during
the year
Vested during
the year
At 31 October
2024
Michael Ord
71,989 — — (71,989) — 15 December 2023 300.0
83,481 — — — 83,481 14 December 2024 283.5
100,249 — — — 100,249 13 December 2025 305.0
— 95,854 — 95,854 12 December 2026 326.0
255,719 95,854 — (71,989) 279,584
Andrew Lewis
45,954 — — (45,954) — 15 December 23 300.0
51,060 — — — 51,060 14 December 24 283.5
61,106 — — — 61,106 13 December 25 305.0
— 57,480 — — 57,480 12 December 26 326.0
158,120 57,480 — (45,954) 169,646
Sarah Ellard
29,557 — — (29,557) — 15 December 2023 300.0
35,795 — — — 35,795 14 December 2024 283.5
42,838 — — — 42,838 13 December 2025 305.0
— 40,296 — — 40,296 12 December 2026 326.0
108,190 40,296 — (29,557) 118,929
OUTSTANDING SHARESAVE OPTIONS (AUDITED)
Executive
At 1 November
2023
Number of shares under award
Exercise
price
Exercise
date
Awarded
during
the year
Lapsed
during
the year
Vested
during
the year
At 31 October
2024
Michael Ord 7,894 — — — 7,894 228p 1 October 2026 –
31 March 2027
James Mortensen — 5,983 — — 5,983 310p 1 October 2027 –
31 March 2028
Sarah Ellard 7,894 — — — 7,894 228p 1 October 2026 –
31 March 2027
Chemring Group PLC Annual report and accounts 2024 129

Strategic report Governance Financial statements
TOTAL SHAREHOLDER RETURN PERFORMANCE GRAPH
The following graph shows the Company’s cumulative TSR over the last ten financial years relative to the FTSE 250 Index. The FTSE 250 has been selected by
the Committee for this comparison because it provides the most appropriate measure of performance of listed companies of a similar size to the Company.
The graph shows the value, by 31 October 2024, of £100 invested in Chemring Group PLC on 31 October 2014 compared with the value of £100 invested in
the FTSE 250. The other points are the values at intervening financial year ends.
CHIEF EXECUTIVE’S REMUNERATION TABLE
The total remuneration figures for the Group Chief Executive during each of the last ten financial years are shown in the table below. Michael Ord replaced
Michael Flowers as Group Chief Executive on 1 July 2018.
The total remuneration figure for 2018 includes a full year’s salary and benefits for Michael Flowers.
The total remuneration figure for each year includes the annual bonus based on that year’s performance and, where applicable, vested PSP awards based on the
three-year performance period ending in the relevant year. The annual bonus payout and PSP award vesting level as a percentage of the maximum opportunity
are also shown for each of these years.
Michael
Flowers
Michael Flowers/
Michael Ord Michael Ord
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Total remuneration (£’000) 507 855 831 969 1,021 1,045 3,583 2,313 1,947 2,303
Annual bonus (% of maximum) 0% 68.3% 59.5% 0% 98% 98% 98%/ 98% 93.84% 76.7%
PSP awards vesting
(% of maximum) 0% 0% 0% 35% 0% 0%
86.4%/
100% 100% 71.85% 97.63%
DIRECTORS’ REMUNERATION REPORT continued
Additional statutory information onremuneration arrangements continued
Chemring FTSE 250
£300
£250
£200
£150
£100
£50
£0
31 Oct 14 31 Oct 15 31 Oct 16 31 Oct 17 31 Oct 18 31 Oct 19 31 Oct 20 31 Oct 21 31 Oct 22 31 Oct 23 31 Oct 24
Source: Datastream (Thomson Reuters)
Chemring Group PLC Annual report and accounts 2024130

Strategic report Governance Financial statements
PERCENTAGE CHANGE IN THE DIRECTORS’ REMUNERATION
The table below shows the annual percentage change in the total remuneration (excluding the value of any PSP awards and pension benefits receivable in the year)
foreach of the directors between the 2019 and 2024 financial years, compared to that of the average for all eligible employees of the Group.
2019 vs 2020 2020 vs 2021 2021 vs 2022 2022 vs 2023 2023 vs 2024
Salary Benefits
Annual
bonus Salary Benefits
Annual
bonus Salary Benefits
Annual
bonus Salary Benefits
Annual
bonus Salary Benefits
Annual
bonus
Group Chief
Executive 2.3% 0% 2.5% 8.2% 6.8% 6.8% 8.0% 0% 29.1% 6.8% 0% 2.2% 4.6% 4.8% (15.1)%
Chief Financial
Officer
1
2.6% 0% 2.7% 4.6% 4.5% 4.5% 3.6% 0% 28.7% 4.5% 5% 0.4% N/A N/A N/A
Group Legal Director
& CompanySecretary
2
2.3% 0% 2.8% 14.7%
1
4.9% 4.9% 2.7% 0% 28.7% 4.9% 0% 0.3% 4.0% 2.4% (14.9)%
Tony Wood
3
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Carl-Peter Forster 0% N/A N/A 0% 4.9% 4.9% 1.0% N/A N/A 4.9% N/A N/A 4.2% N/A N/A
Alpna Amar
4
N/A N/A N/A N/A N/A N/A 1.0% N/A N/A N/A N/A N/A 165% N/A N/A
Laurie Bowen
5
N/A N/A N/A 11.3%
3
4.2% 4.2% 2.9% N/A N/A 4.2% N/A N/A 2.7% N/A N/A
Andrew Davies
6
(12.6%) N/A N/A 8.6%
4
4.5% 4.5% 4.8% N/A N/A 4.5% N/A N/A 2.9% N/A N/A
Stephen King 0% N/A N/A 0% 4.5% 4.5% 1.5% N/A N/A 4.5% N/A N/A 2.9% N/A N/A
Fiona MacAulay
7
N/A N/A N/A N/A
5
5.4% 5.4% 1.8% N/A N/A 5.4% N/A N/A 3.4% N/A N/A
Average of other
employees 4.0% 0% 3.0% 5.2% 5.2% 34.8% 3.2% (18.0%) 5.0% 3.9% (0.7%) (6.9%) 3.8% (7.5)% 9.6%
NOTES:
1. The Chief Financial Officer’s remuneration for 2024 comprises remuneration for Andrew Lewis until 31 December 2023 and remuneration for James Mortensen from 1 January 2024.
2. The Group Legal Director & Company Secretary’s salary was increased pro-rata to reflect her resumption of full-time working hours with effect from 1 November 2020.
3. Tony Wood was appointed as a non-executive director on 1 October 2024.
4. Alpna Amar was appointed as a non-executive director on 13 June 2023.
5. The percentage increase in the fees paid to Laurie Bowen between 2020 and 2021 reflects the additional fees paid to her following her appointment as Chair of the Remuneration
Committee on 4 March 2020 and the fee paid to her as the non-executive director with responsibility for employee engagement from 1 January 2021.
6. The percentage increase in the fees paid to Andrew Davies between 2020 and 2021 reflects the additional fees paid to him as Senior Independent Director from 1 January 2021.
7. Fiona MacAulay was appointed as a non-executive director on 3 June 2020. Non-executive directors’ fees did not increase between 2020 and 2021.
Chemring Group PLC Annual report and accounts 2024 131

Strategic report Governance Financial statements
CHIEF EXECUTIVE’S PAY RATIO
The table below shows how the Group Chief Executive’s single remuneration figure from the 2024 financial year compares to equivalent single figure
remuneration for full-time equivalent UK employees ranked at the 25th, 50th and 75th percentile.
The Committee considered the calculation approaches as set out in the Regulations and elected to use Method A, as it is considered to be the most appropriate
and robust way to calculate the ratio. The calculation was based on:
- actual base salary, benefits, bonus and long-term incentive awards for the year ended 31 October 2024 for UK employees as at 31 October 2024, with salaries
for part-time employees annualised on a full-time equivalent basis to allow equal comparisons; and
- employer pension contributions.
No components of pay and benefits were omitted for the purpose of the calculations; however, joiners and leavers during the year were excluded from the calculations.
Total remuneration
Year Methodology
25
th
percentile
(lower quartile)
pay ratio
50
th
percentile
(median)
pay ratio
75
th
percentile
(upper quartile)
pay ratio
2024 Method A 62.3 42.8 27.7
2023 Method A 57.1 37.2 23.7
2022 Method A 68.3 46.8 29.7
2021 Method A 116.3 76.1 49.2
2020 Method A 39.9 25.0 15.8
Salary Total remuneration
Year 25
th
percentile 50
th
percentile 75
th
percentile 25
th
percentile 50
th
percentile 75
th
percentile
2024 £33,000 £47,300 £71,700 £36,980 £53,766 £83,187
The Committee is mindful that pay ratios, however calculated, are a useful reference point but cannot be considered in isolation. Any movement in ratios will be
reviewed by the Committee to understand the causes and longer-term trends will be monitored.
The pay ratios increased in 2021 as a result of, exceptionally, the inclusion of two PSP awards vesting in relation to the year. One of the PSP awards related to a
one-off award granted to the Group Chief Executive on appointment, which vested at 86.4% of maximum, and the second PSP award related to the normal PSP
grant, which vested at 100% of maximum. For 2022, there was only one PSP award included in the Group Chief Executive’s total single figure of remuneration,
which vested in full. Whilst the Group Chief Executive also received a salary increase for 2022 and an increase to his annual bonus entitlement, in 2022 the pay
ratio decreased primarily as a result of the total PSP value reducing during the year. The pay ratio reduced further in 2023 as the Group Chief Executive’s PSP
award did not vest in full and his overall remuneration in 2023 was lower than in 2022. In 2024, the pay ratio increased principally as the result of the Group
Chief Executive’s PSP award vesting at a higher level.
The reward policies and practices across the Group are considered by the Committee in the design process and implementation of the remuneration policy each
year for the executive directors. On this basis, the Committee is satisfied that the median pay ratio is consistent with the pay, reward and progression policies
against all employees.
RELATIVE IMPORTANCE OF SPEND ON PAY
The following table shows the Company’s actual spend on pay (for all employees) relative to dividends and retained profits:
2024
£m
2023
£m % change
Staff costs 196.1 176.6 +11%
Dividends 19.6 17.3 +13%
Retained profits 52.3 62.9 -17%
The dividends figures relate to amounts payable in respect of the relevant financial year.
Retained profits reflect the underlying success of the Group and the profit generated in the relevant financial year.
DIRECTORS’ REMUNERATION REPORT continued
Additional statutory information onremuneration arrangements continued
Chemring Group PLC Annual report and accounts 2024132

Strategic report Governance Financial statements
ADVISERS TO THE REMUNERATION COMMITTEE
Korn Ferry were appointed by the Remuneration Committee to advise on remuneration and incentive plan related matters from 4 March 2021. Korn Ferry is
asignatory to the Remuneration Consultants’ Group Code of Conduct and the Committee considers Korn Ferry’s advice to be independent and objective. The
Committee has reviewed the nature of the services provided by Korn Ferry and is satisfied that no conflict of interest exists in the provision of these services.
The Company received no other services from Korn Ferry during the year. The total fees paid to Korn Ferry in respect of the services to the Committee during
the year were £58,455 (2023: £59,865). Fees were determined based on the scope and nature of the projects undertaken for the Committee.
The Committee reviews the performance and independence of its advisers on an annual basis.
The Committee consults internally with the Group Chief Executive (Michael Ord) and the Group Legal Director & Company Secretary (Sarah Ellard). No executive
isinvolved in discussions on their own pay.
SHAREHOLDER VOTING ON THE DIRECTORS’ REMUNERATION POLICY AT THE 2022 ANNUAL GENERAL MEETING
The directors’ remuneration policy is subject to a binding vote by shareholders every three years. At the Annual General Meeting held on 3 March 2022,
theresolution relating to the directors’ remuneration policy received the following votes from shareholders:
For 231,710,461 98.45%
Against 3,654,614 1.55%
Total votes cast (for and against excluding withheld votes) 235,365,075 100.0%
Votes withheld
1
7,154,172
Total votes cast (including withheld votes) 242,519,247
NOTE:
1. A vote withheld is not a vote in law and is not counted in the calculation of the proportion of votes cast “for” and “against” a resolution.
SHAREHOLDER VOTING ON THE DIRECTORS’ REMUNERATION REPORT AT THE 2024 ANNUAL GENERAL MEETING
The directors’ remuneration report is subject to an advisory vote by shareholders every year. At the Annual General Meeting held on 23 February 2024, the
resolution relating to the directors’ remuneration report received the following votes from shareholders:
For 220,969,073 97.22%
Against 6,315,794 2.78%
Total votes cast (for and against excluding withheld votes) 227,284,867 100.0%
Votes withheld
1
20,573
Total votes cast (including withheld votes) 227,305,440
NOTE:
1. A vote withheld is not a vote in law and is not counted in the calculation of the proportion of votes cast “for” and “against” a resolution.
APPROVAL OF THE DIRECTORS’ REMUNERATION REPORT
The directors’ remuneration report was approved by the Board on 17 December 2024.
Signed on behalf of the Board
Laurie Bowen
Chair of the Remuneration Committee
17 December 2024
Chemring Group PLC Annual report and accounts 2024 133

Strategic report Governance Financial statements
DIRECTORS’ REPORT
The directors present their annual report, together with the audited
financialstatements of the Group and the Company, for the year ended
31October 2024.
The following sections of the annual report are incorporated into the
directors’ report by reference:
- strategic report on pages 1 to 84;
- corporate governance report on pages 90 to 99;
- Audit Committee report on pages 100 to 103;
- directors’ remuneration report on pages 106 to 133; and
- notes to the Group financial statements as detailed in this section.
BUSINESS REVIEW
The strategic report on pages 1 to 84 provides a review of the Group’s
business development, performance and position during and at the end of
thefinancial year, its strategy and likely future developments, key performance
indicators, and a description of the principal risks and uncertainties facing the
business. Further information regarding financial risk management policies and
financial instruments is provided in note 23 to the Group financial statements.
There have been no significant events since the balance sheet date.
RESULTS AND DIVIDENDS
The profit attributable to the Group’s shareholders for the year was £39.5m
(2023: £5.4m).
The directors are recommending the payment of a final dividend of 5.2p per
ordinary share which, together with the interim dividend of 2.6p per share
paid in September 2024, gives a total for the year of 7.8p (2023: 6.9p). The
final dividend is subject to approval by shareholders at the Annual General
Meeting on 26 February 2025 and has not therefore been included as a
liability in these financial statements.
DIRECTORS AND THEIR INTERESTS
The current directors are shown on pages 88 and 89. In addition, Andrew
Lewis served as a director until 31 December 2023. Carl-Peter Forster also
served as a director during the year and retired from the Board on 30
November 2024.
In accordance with the Company’s Articles of Association, all directors are
required to submit themselves for election or re-election at every Annual
General Meeting. With the exception of Andrew Davies, who will be retiring
as a non-executive director on 31 January 2025, all directors will therefore be
seeking election or re-election at the Annual General Meeting.
Details of the service contracts entered into between the Company and the
executive directors are set out in the directors’ remuneration report on page
115. The non-executive directors do not have service contracts with the
Company.
The Company maintains directors’ and officers’ liability insurance in respect
of legal action against its directors and officers. The Company has also granted
indemnities to its directors to the extent provided by law (which are qualifying
third party indemnities within the meaning of section 236 of the Companies
Act 2006). Neither the insurance nor the indemnities provide cover in the
event of proven fraudulent or dishonest activity.
Other than in relation to their service contracts, none of the directors is or
was beneficially interested in any significant contract to which the Group was
a party during the year ended 31 October 2024.
Information required in relation to directors’ shareholdings is set out in the
directors’ remuneration report on page 127.
EMPLOYEES AND EMPLOYEE CONSULTATION
Details of the Group’s employment policies and employee consultation
practices are set out on pages 61 to 65.
The Group makes no distinction between disabled and able-bodied persons
in recruitment, employment and training, career development and promotion,
provided that any disability does not make the particular employment impractical
or impossible under the strict health and safety legislation under which the
Group’s businesses operate.
POLITICAL DONATIONS
No political donations were made during the year (2023: £nil).
CONTRACTUAL ARRANGEMENTS
The Group contracts with a wide range of customers across the globe,
including governments, armed forces, prime contractors and OEMs. The UK
and US Governments are the largest customers and procure the Group’s
products under a substantial number of separate contracts placed with
individual Group businesses.
The Group’s businesses utilise many suppliers across the world and arrangements
are in place, wherever possible, to ensure that businesses are not reliant on
single suppliers for key raw materials or components.
RESEARCH AND DEVELOPMENT
The Group’s research and development expenditure for the year is detailed
in the financial review on page 70.
CHANGE OF CONTROL
Individual Group businesses have contractual arrangements with third parties,
entered into in the normal course of business, which may be amended or may
terminate on a change of control of the relevant business, or in certain
circumstances, following a takeover of the Group.
The most significant agreements entered into by the Group which contain
provisions granting the counterparties certain rights in the event of a change
of control of the Company are the agreements relating to the revolving credit
facility, the new term loan facility supported by UK Export Finance, overdraft
facilities and foreign exchange lines entered into with the Group’s banks.
These agreements provide that, in the event of a change of a control, the
Company must repay all outstanding borrowings, together with accrued
interest and other sums owing under each agreement.
SHARE CAPITAL AND SHAREHOLDER RIGHTS
General
The Company’s share capital consists of ordinary shares of 1p each and 7%
cumulative preference shares of £1 each, which are listed on the London
Stock Exchange. Full details of the movements in the issued share capital of
the Company during the financial year are provided in note 26 to the Group
financial statements.
Details of the rights attaching to shares are set out in the Articles of Association
(the “Articles”). All holders of ordinary shares are entitled to attend, speak
and vote at any general meeting of the Company, and to appoint a proxy
orproxies to exercise these rights. At a general meeting, every shareholder
present in person, by proxy or (in the case of a corporate member) by corporate
representative has one vote on a show of hands, and on a poll has one vote
for every share held. The Notice of Annual General Meeting specifies deadlines
for exercising voting rights and appointing a proxy or proxies to vote in
respect of the resolutions to be passed at the Annual General Meeting.
A member or members representing at least 5% of the ordinary share capital
of the Company may require the directors to convene a general meeting.
Amember or members representing at least 5% of the ordinary share capital
ofthe Company or at least 100 members with the right to vote at an Annual
General Meeting and each holding, on average, at least £100 of paid-up share
capital may request a resolution to be put before an Annual General Meeting.
There are no restrictions on the transfer of ordinary shares in the capital of
the Company, other than certain restrictions which may from time to time
beimposed by law. In accordance with the Market Abuse Regulation, certain
employees are required to seek the approval of the Company to deal in its shares.
The cumulative preference shares carry an entitlement to a dividend at the
rate of 7p per share per annum, payable in equal instalments on 30 April
and31 October each year. Holders of preference shares have the right on
awinding-up to receive, in priority to any other classes of shares, the sum
of£1per share together with any arrears of dividends. There are no
restrictions on the transfer of the cumulative preference shares.
Chemring Group PLC Annual report and accounts 2024134

Strategic report Governance Financial statements
The Company is not aware of any agreements between shareholders that
may result in restrictions on the transfer of securities and/or voting rights.
The Company’s Articles may only be amended by special resolution at a
general meeting of its shareholders.
Issue of shares
Under the provisions of section 551 of the Companies Act 2006 (the “Act”),
the Board is prevented from exercising its powers under the Articles to allot
shares without an authority contained either in the Articles or in a resolution
of the shareholders passed in general meeting. The authority, when given, can
last for a maximum period of five years, but the Board proposes that renewal
should be sought at each Annual General Meeting. An ordinary resolution, seeking
such authority, will be proposed at the forthcoming Annual General Meeting.
Section 561 of the Act requires that an allotment of shares for cash may not
be made unless the shares are first offered to existing shareholders on a
pre-emptive basis in accordance with the terms of the Act.
In accordance with general practice, to ensure that small issues of shares can
be made without the necessity of convening a general meeting, the Board
proposes that advantage be taken of the provisions of sections 570 and 573
of the Act to disapply the Act’s pre-emptive requirements. Accordingly, a
special resolution will be proposed at the forthcoming Annual General Meeting
which, if passed, will have the effect of granting the directors the power to
allot not more than 20% of the issued ordinary share capital free of the
requirements of section 561 of the Act. No issue of these shares will be
madewhich would effectively alter the control of the Company without
theprior approval of the shareholders in general meeting.
Purchase of own shares
On 1 August 2023, the Company launched a share buyback programme
forthe buyback of up to £50m of the Company’s ordinary shares over
aone-year period. In June 2024, with £37m having been returned to
shareholders, the Company announced the extension of the buyback
programme to 17 December 2024. In total, 8,617,243 ordinary shares
werepurchased by the Company during the year. All purchased shares
werecancelled. The Company did not hold any shares in treasury at
31October 2024 (2023: nil).
A special resolution will be proposed at the forthcoming Annual General
Meeting to renew the Company’s authority to purchase its own shares in the
market up to a limit of 10% of its issued ordinary share capital. The maximum
and minimum prices will be stated in the resolution at the date of the Annual
General Meeting. The directors believe that it is advantageous for the Company
to have this flexibility to make market purchases of its own shares. The directors
of the Company may consider holding repurchased shares pursuant to the
authority conferred by this resolution as treasury shares. This will give the
Company the ability to reissue treasury shares quickly and cost effectively,
and will provide the Company with additional flexibility in the management of
its capital base. Any issues of treasury shares for the purposes of the Company’s
employee share schemes will be made within the 10% dilution limit set out in
The Investment Association’s Principles of Remuneration. The directors will
only exercise this authority if they are satisfied that a purchase would result
inan increase in expected earnings per share and would be in the interests
ofshareholders generally.
SUBSTANTIAL SHAREHOLDINGS
At 16 December 2024, the following substantial holdings in the ordinary share
capital of the Company had been notified to the Company in accordance with
Chapter 5 of the Disclosure Guidance and Transparency Rules of the Financial
Conduct Authority. It should be noted that these holdings may have changed
since the Company was notified; however, notification of any change is not
required until a notifiable threshold is crossed.
Name % interest
Invesco Limited 8.1
BlackRock, Inc. 7.9
Old Mutual Asset Managers 5.1
Ameriprise Financial, Inc. and its group 5.0
J O Hambro Capital Management Limited 5.0
Royal London Asset Management Limited 5.0
FIL Limited Below 5.0
Jupiter Fund Management PLC Below 5.0
Schroders Plc Below 5.0
AXA Investment Managers S.A. 4.9
Aviva PLC and its subsidiaries 4.9
J P Morgan Chase & Co 4.9
Neptune Investment Management Limited 4.8
Prudential Plc 4.8
Investec Asset Management Limited 4.8
Standard Life Investments Limited 4.8
BT Pension Scheme Trustees Limited as Trustee of the BT
Pension Scheme 3.8
Norges Bank 2.9
EMPLOYEE SHARE SCHEMES AND PLANS
Approach to share ownership
The Group actively encourages its employees to share in its future success
and therefore operates share-based arrangements to provide incentives
andrewards to employees.
The Group operated two share-based incentive plans during the year,
assetout below. Further details of awards and vesting are provided in
note28 to the Group financial statements.
The Chemring Group 2018 UK Sharesave Plan
(the“UKSharesavePlan”)
The UK Sharesave Plan is open to all eligible UK employees. Employees may
choose between three and five-year savings periods, at the end of which the
employee can choose to exercise the option or request the return of their
savings. A grant of options was made on 5 August 2024.
The Chemring Group Performance Share Plan 2016
(The“2016PSP”)
The 2016 PSP is the primary long-term incentive plan for executive directors
and senior employees. Discretionary awards are granted under the PSP over
a fixed number of shares by reference to salary, with awards ordinarily vesting,
subject to meeting performance criteria, on the third anniversary of the grant
date. Awards were granted under the plan on 13 December 2023.
The 2016 PSP will expire in 2026 and approval will therefore be sought for a
new plan at the Annual General Meeting on 26 February 2025.
GOING CONCERN
Details of the conclusions arrived at by the directors in preparing the financial
statements on a going concern basis are set out in the viability statement on
page 83.
Chemring Group PLC Annual report and accounts 2024 135

Strategic report Governance Financial statements
ADDITIONAL INFORMATION, AS REQUIRED BY LISTING RULES
REQUIREMENT 9.8.4
The annual report is required to contain certain information under Listing
Rules Requirement 9.8.4. Where this information has not been cross-referenced
within the Group financial statements, it can be found in the following sections:
- capitalised interest (see note 7);
- long-term incentive schemes (see directors’ remuneration report);
- allotment of equity securities for cash (see note 28);
- contracts of significance (see directors’ report);
- contractual arrangements (see directors’ report);
- details of independent directors (see corporate governance report); and
- substantial shareholders (see directors’ report).
No profit forecasts are issued by the Group and no directors have waived
any current or future emoluments.
No shareholder is considered to be a Controlling Shareholder (as defined in
the Listing Rules Appendix 1) and the Group complies with the independence
provisions of the Listing Rules.
PROVISION OF INFORMATION TO THE AUDITOR
Each director at the date of this report confirms that, so far as they are each
aware, there is no relevant audit information of which the Company’s auditor
is unaware, and that they have each taken all of the steps that they ought to
have taken as a director to make themselves aware of any relevant audit information
and to establish that the Company’s auditor is aware of that information.
This confirmation is given and should be interpreted in accordance with
theprovisions of section 418 of the Companies Act 2006.
AUDITOR
Resolutions will be proposed at the forthcoming Annual General Meeting
toreappoint KPMG and to authorise the directors to determine the external
auditor’s remuneration.
ANNUAL GENERAL MEETING
The resolutions to be proposed at the Annual General Meeting to be
heldon26 February 2025, together with explanatory notes, appear in
theseparate Notice of Annual General Meeting sent to all shareholders.
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT
OFTHE ANNUAL REPORT AND ACCOUNTS
The directors are responsible for preparing the annual report and the Group
and parent company financial statements in accordance with applicable law
and regulations.
Company law requires the directors to prepare Group and parent company
financial statements for each financial year. Under that law they are required
to prepare the Group financial statements in accordance with UK-adopted
international accounting standards and applicable law, and they have elected
to prepare the parent company financial statements in accordance with
UKaccounting standards and applicable law, including FRS 101 Reduced
Disclosure Framework.
Under company law the directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Group and parent company and of their profit or loss for that
period. In preparing each of the Group and parent company financial statements,
the directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and estimates that are reasonable, relevant, reliable and, in
respect of the parent company financial statements only,prudent;
- for the Group financial statements, state whether they have been prepared
in accordance with UK-adopted international accounting standards;
- for the parent company financial statements, state whether applicable UK
accounting standards have been followed, subject to any material departures
disclosed and explained in the parent company financial statements;
- assess the Group and parent company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern; and
- use the going concern basis of accounting unless they either intend to
liquidate the Group or the parent company or to cease operations,
orhaveno realistic alternative but to do so.
The directors are responsible for keeping adequate accounting records that
are sufficient to show and explain the parent company’s transactions and
disclose with reasonable accuracy at any time the financial position of the
parent company and enable them to ensure that its financial statements
comply with the Companies Act 2006. They are responsible for such internal
control as they determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud
or error, and have general responsibility for taking such steps as are reasonably
open to them to safeguard the assets of the Group and to prevent and detect
fraud and other irregularities.
Under applicable law and regulations, the directors are also responsible for
preparing a strategic report, directors’ report, directors’ remuneration report
and corporate governance report that comply with that law and those regulations.
The directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company’s website.
Legislation in the UK governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
In accordance with Disclosure Guidance and Transparency Rule (“DTR”)
4.1.16R, the financial statements will form part of the annual financial report
prepared under DTR 4.1.17R and 4.1.18R. The auditor’s report on these
financial statements provides no assurance over whether the annual financial
report has been prepared in accordance with those requirements.
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT
OF THE ANNUAL FINANCIAL REPORT
We confirm that to the best of our knowledge:
- 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
- the strategic report and directors’ report include 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.
The strategic report, the directors’ report and the responsibility statement
were approved by the Board of directors on 17 December 2024 and are
signed on its behalf by:
Michael Ord Sarah Ellard
Group Chief Executive Group Legal Director
17 December 2024 17 December 2024
DIRECTORS’ REPORT continued
Chemring Group PLC Annual report and accounts 2024136

Financial statements
IN THIS SECTION:
138 Consolidated income statement
139 Consolidated statement of comprehensive income
140 Consolidated statement of changes in equity
141 Consolidated balance sheet
142 Consolidated cash flow statement
143 Notes to the Group financial statements
169 Parent company balance sheet
170 Parent company statement of comprehensive income
170 Parent company statement of changes in equity
171 Notes to the parent company financial statements
175 Accounting policies
182 Independent auditor’s report to the members of Chemring Group PLC
188 Five-year record
Chemring Group PLC Annual report and accounts 2024 137
Strategic report Governance Financial statements

CONSOLIDATED INCOME STATEMENT
For the year ended 31 October 2024
2024
2023
To t a l
Total
Note
£m
£m
Revenue
1,2
510.4
472.6
Operating profit
2,4
58.1
45.4
Finance expense
7
(4.8)
(1.3)
Profit before tax
53.3
44.1
Taxation
8
(10.6)
(6.4)
Profit after tax
42.7
37.7
Loss after tax from discontinued operations
5
(3.2)
(32.3)
Total profit after tax
39.5
5.4
Basic
10
15.7p
13.4p
Diluted
10
15.3p
13.1p
Basic
10
14.5p
1.9p
Diluted
10
14.2p
1.9p
Chemring Group PLC Annual report and accounts 2024138
Strategic report Governance Financial statements

CONSOLIDATED STATEMENT OF COMPREHENSIVEINCOME
For the year ended 31 October 2024
2024
2023
Note
£m
£m
Profit after tax attributable to equity holders of the parent as reported
39.5
5.4
Remeasurement of the defined benefit pension scheme
30
(1.3)
(4.7)
Movement on deferred tax relating to the pension scheme
25
0.5
1.6
(0.8)
(3.1)
Exchange differences on translation of foreign operations
(12.0)
(15.2)
Tax on exchange differences on translation of foreign operations
0.1
(1.1)
(11.9)
(16.3)
Total comprehensive income/(loss) attributable to equity holders of the parent
26.8
(14.0)
Chemring Group PLC Annual report and accounts 2024 139
Strategic report Governance Financial statements

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 October 2024
Share
Special
Share
premium
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
Share
Special
Share
premium
capital
Translation
Retained
capital
account
reserve
reserve
earnings
Total
£m
£m
£m
£m
£m
£m
At 1 November 2022
2.8
307.7
12.9
7.5
87.2
418.1
Profit after tax
—
—
—
—
5.4
5.4
Other comprehensive loss
—
—
—
(15.2)
(4.7)
(19.9)
Tax relating to components of other comprehensive loss
—
—
—
(1.1)
1.6
0.5
Total comprehensive (loss)/income
—
—
—
(16.3)
2.3
(14.0)
Ordinary shares issued
—
1.0
—
—
—
1.0
Purchase of own shares
—
—
—
—
(16.9)
(16.9)
Share-based payments (net of settlement)
—
—
—
—
7.6
7.6
Dividends paid
—
—
—
—
(17.3)
(17.3)
At 31 October 2023
2.8
308.7
12.9
(8.8)
62.9
378.5
Chemring Group PLC Annual report and accounts 2024140
Strategic report Governance Financial statements

2024
2023
Note
£m
£m
£m
£m
Goodwill
11
98.5
100.5
Development costs
12
18.6
17.6
Other intangible assets
12
10.0
9.6
Property, plant and equipment
13
287.8
242.2
Retirement benefit surplus
30
0.1
5.9
Deferred tax
25
7.3
36.9
422.3
412.7
Inventories
15
127.1
101.7
Trade and other receivables
16
91.0
74.8
Cash and cash equivalents
17
45.0
6.4
Derivative financial instruments
23
0.9
0.8
264.0
183.7
Assets classified as held for sale
5
5.8
—
Total assets
692.1
596.4
Borrowings
18
(43.0)
—
Lease liabilities
19
(2.1)
(1.1)
Trade and other payables
21
(163.3)
(124.0)
Provisions
24
(3.2)
(5.6)
Current tax
(8.8)
(8.2)
Derivative financial instruments
23
(1.5)
(3.2)
(221.9)
(142.1)
Borrowings
18, 33
(43.7)
(14.1)
Lease liabilities
19
(8.9)
(5.5)
Government grants
20
(24.0)
—
Provisions
24
(16.7)
(12.0)
Deferred tax
25
(17.6)
(43.8)
Derivative financial instruments
23
(2.9)
(0.3)
Preference shares
18, 26
(0.1)
(0.1)
(113.9)
(75.8)
Total liabilities
(335.8)
(217.9)
Net assets
356.3
378.5
Share capital
26
2.7
2.8
Share premium account
27
309.0
308.7
Special capital reserve
27
13.0
12.9
Translation reserve
27
(20.7)
(8.8)
Retained earnings
52.3
62.9
Total equity
356.3
378.5
These financial statements of Chemring Group PLC (registered number 86662) were approved and authorised for issue by the Board of directors on
17 December 2024.
Signed on behalf of the Board
Michael Ord James Mortensen
Director Director
CONSOLIDATED BALANCE SHEET
As at 31 October 2024
Chemring Group PLC Annual report and accounts 2024 141
Strategic report Governance Financial statements

CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 October 2024
2024
2023
Note
£m
£m
Cash generated from continuing underlying operations
31
96.0
80.0
Cash impact of continuing non-underlying items
(2.5)
(2.1)
Cash utilised in discontinued underlying operations
5, 31
(1.5)
(0.8)
Cash impact of discontinued non-underlying items
31
(1.5)
(1.9)
Cash flows from operating activities
90.5
75.2
Retirement benefit deficit contributions
30
(3.0)
—
Tax paid
(6.5)
(9.3)
Net cash inflow from operating activities
81.0
65.9
Purchases of intangible assets
(4.8)
(1.5)
Purchases of property, plant and equipment
(64.8)
(32.7)
Acquisition of subsidiary net of cash acquired
29
—
(7.2)
Grant funding
20
22.0
—
Settlement of short-term funding to defined benefit pension scheme
—
2.0
Net cash outflow from investing activities
(47.6)
(39.4)
Dividends paid
9
(19.6)
(17.3)
Purchase of own shares
27
(41.0)
(14.0)
Proceeds for transactions in own shares
28
0.9
0.9
Paid accrued dividends on shares
28
(0.2)
(0.3)
Finance expense paid
(4.0)
(0.7)
Facility fees paid
(0.8)
(0.3)
Drawdown of borrowings
100.0
60.1
Repayments of borrowings
(70.1)
(66.8)
Payment of lease liabilities
(2.5)
(1.8)
Net cash outflow from financing activities
(37.3)
(40.2)
Decrease in cash and cash equivalents
32
(3.9)
(13.7)
Cash and cash equivalents at beginning of year
6.4
19.8
Effect of foreign exchange rate changes
(0.5)
0.3
Cash and cash equivalents at end of year
1
17, 33
2.0
6.4
1. Cash and cash equivalents of £2.0m at 31 October 2024 includes current borrowings of £43.0m. See note 17 for further details.
Chemring Group PLC Annual report and accounts 2024142
Strategic report Governance Financial statements

1. REVENUE
All of the Group’s revenue is derived from the sale of goods and the provision of services. The following table provides an analysis of the Group’s revenue
by destination:
Sensors
Countermeasures
& Information
& Energetics
2024
£m
£m
£m
UK
162.7
66.5
229.2
US
31.1
141.5
172.6
Europe
10.9
75.1
86.0
Asia Pacific
3.6
13.1
16.7
Rest of the world
3.7
2.2
5.9
212.0
298.4
510.4
Sensors
Countermeasures
& Information
& Energetics
2023
£m
£m
£m
UK
142.6
59.6
202.2
US
34.1
147.7
181.8
Europe
9.3
62.0
71.3
Asia Pacific
0.7
15.2
15.9
Rest of the world
0.3
1.1
1.4
187.0
285.6
472.6
The directors consider that the only countries that are significant in accordance with IFRS 8 Operating Segments are the US and the UK.
The following table discloses the split of the Group’s revenue between goods and services:
Sensors
Countermeasures
& Information
& Energetics
2024
£m
£m
£m
Goods
48.6
290.8
339.4
Services
163.4
7.6
171.0
212.0
298.4
510.4
Sensors
Countermeasures
& Information
& Energetics
2023
£m
£m
£m
Goods
41.6
277.0
318.6
Services
145.4
8.6
154.0
187.0
285.6
472.6
All revenues recognised arose from contracts with customers.
As at 31 October 2024 £1,038m (2023: £922m) of revenue was not yet recognised in respect of obligations that were unfulfilled or only partially fulfilled as at
the year end. £413m (2023: £403m) of this revenue is expected to be recognised in the next financial year and £625m (2023: £519m) in future periods.
2. BUSINESS SEGMENTS
IFRS 8 Operating Segments requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly
reviewed by the Group Chief Executive and the Board to allocate resources to the segments and to assess their performance. For management purposes,
the Group’s operating and reporting structure clusters similar businesses together, based on the products and services they offer. These segments are the
basis on which the Group reports its segmental information.
The principal activities of each segment are as follows:
Sensors & Information
Provision of consulting and technology services to solve security-critical issues. Development and manufacture of electronic
NOTES TO THE GROUP FINANCIAL STATEMENTS
Chemring Group PLC Annual report and accounts 2024 143
Strategic report Governance Financial statements

NOTES TO THE GROUP FINANCIAL STATEMENTS continued
2. BUSINESS SEGMENTS continued
A segmental analysis of revenue and operating profit is set out below:
Sensors
Countermeasures
& Information
& Energetics
Unallocated *
To t a l
Year ended 31 October 2024
£m
£m
£m
£m
Revenue
212.0
298.4
—
510.4
Segment result before depreciation, amortisation and non-underlying items and
discontinued operations
47.3
63.2
(16.8)
93.7
Depreciation (note 13)
(4.6)
(16.4)
—
(21.0)
Amortisation (note 12)
(1.3)
(0.3)
—
(1.6)
Segmental underlying operating profit
41.4
46.5
(16.8)
71.1
Amortisation of acquired intangibles (note 12)
(0.8)
(1.2)
—
(2.0)
Non-underlying items (note 3)
(3.2)
2.8
(10.6)
(11.0)
Impact of non-underlying items on profit before tax (note 3)
(4.0)
1.6
(10.6)
(13.0)
Segmental operating profit
37.4
48.1
(27.4)
58.1
Finance expense
(4.8)
(4.8)
Profit before tax
(32.2)
53.3
Ta x
(10.6)
(10.6)
Profit for the year from continuing operations
(42.8)
42.7
Discontinued operations
3.2
(6.4)
—
(3.2)
Profit for the year
40.6
41.7
(42.8)
39.5
Sensors
Countermeasures
& Information
& Energetics
Unallocated *
Total
Year ended 31 October 2023
£m
£m
£m
£m
Revenue
187.0
285.6
—
472.6
Segment result before depreciation, amortisation and non-underlying items and
discontinued operations
38.5
65.5
(15.5)
88.5
Depreciation
(3.6)
(15.0)
—
(18.6)
Amortisation
(0.7)
—
—
(0.7)
Segmental underlying operating profit
34.2
50.5
(15.5)
69.2
Amortisation of acquired intangibles (note 3)
(1.3)
(1.7)
—
(3.0)
Non-underlying items (note 3)
(22.2)
—
1.4
(20.8)
Impact of non-underlying items on profit before tax (note 3)
(23.5)
(1.7)
1.4
(23.8)
Segmental operating profit
10.7
48.8
(14.1)
45.4
Finance expense
(1.3)
(1.3)
Profit before tax
(15.4)
44.1
Ta x
(6.4)
(6.4)
Profit for the year from continuing operations
(21.8)
37.7
Discontinued operations
(32.3)
—
—
(32.3)
Profit for the year
(21.6)
48.8
(21.8)
5.4
* Unallocated items are specific corporate level costs that cannot be allocated to a business segment.
Assets and liabilities by segment are not reported to the Group Chief Executive on a monthly basis; therefore they are not used as a key decision making tool
and are not disclosed here. A disclosure of non-current assets by location, excluding retirement benefit surplus and deferred tax, is shown below:
2024
2023
Non-current assets by location
£m
£m
UK
198.5
167.5
US
169.3
166.8
Norway
33.6
20.4
Australia
13.5
15.2
414.9
369.9
Information on major customers
Of the Group’s total revenue, £110.7m (2023: £117.8m) arose from sales to the US DoD, £98.5m (2023: £59.9m) arose from the sales to the UK MOD and
£50.7m (2023: £54.5m) arose from sales to BAE Systems plc. These were the only customers where direct sales accounted for more than 10% of Group
revenue for the year. Sales were reported in both of the Group’s segments.
Chemring Group PLC Annual report and accounts 2024144
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3. ALTERNATIVE PERFORMANCE MEASURES
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, and the amortisation of acquired intangibles. The directors believe that these APMs assist 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:
2024
2023
Underlying
Non-underlying
Statutory
Underlying
Non-underlying
Statutory
performance
items
To t a l
performance
items
Total
£m
£m
£m
£m
£m
£m
Revenue
510.4
—
510.4
472.6
—
472.6
Operating profit
71.1
(13.0)
58.1
69.2
(23.8)
45.4
Finance expense
(4.8)
—
(4.8)
(1.3)
—
(1.3)
Profit before tax
66.3
(13.0)
53.3
67.9
(23.8)
44.1
Taxation
(12.3)
1.7
(10.6)
(10.2)
3.8
(6.4)
Profit after tax
54.0
(11.3)
42.7
57.7
(20.0)
37.7
Loss after tax from discontinued operations
(1.3)
(1.9)
(3.2)
(0.9)
(31.4)
(32.3)
Total profit after tax
52.7
(13.2)
39.5
56.8
(51.4)
5.4
Basic
19.8
15.7
20.5p
13.4p
Diluted
19.3
15.3
20.0p
13.1p
Continuing operations and
discontinued operations
Basic
19.3
14.5
20.2p
1.9p
Diluted
18.8
14.2
19.7p
1.9p
In accordance with our accounting policy we have presented the following reconciliation of APMs used throughout this report to their IFRS equivalent measures
as follows:
2024
2023
Non-underlying items and non-underlying measures
£m
£m
(Loss)/gain on the movement in the fair value of derivative financial instruments (note 23)
(2.0)
1.4
Acquisition expenses (note 29)
(3.4)
(3.7)
Defined benefit pension buy-in and buy-out transaction
(7.5)
—
Change in senior management positions
(1.2)
—
Impairment of Chemical Detection assets
—
(18.5)
Release of disposal provisions (note 24)
—
3.2
Release of/(increase in) legal and disposal provisions (note 24)
3.1
(3.2)
Impact of non-underlying items on EBITDA
(11.0)
(20.8)
Amortisation of acquired intangibles arising from business combinations (note 12)
(2.0)
(3.0)
Impact of non-underlying items on profit before tax
(13.0)
(23.8)
Tax impact of non-underlying items
1.7
3.8
Impact of non-underlying items on continuing profit after tax
(11.3)
(20.0)
Non-underlying discontinued operations after tax (note 5)
(1.9)
(31.4)
Impact of non-underlying items on profit after tax
(13.2)
(51.4)
Underlying profit after tax
52.7
56.8
Statutory profit after tax
39.5
5.4
The APMs used may not be comparable across companies. The impact of non-underlying items on statutory basic and diluted EPS, as well as a reconciliation
to the IFRS equivalent, is presented in note 10. The impact of non-underlying items on cash generated from operating activities, as well as a reconciliation to the
IFRS equivalent, is presented in note 31. The cash impact of non-underlying items includes the impact of exceptional items from prior years where the income
statement and cash flow timings differ. Non-underlying items are defined in the accounting policies on page 180.
Chemring Group PLC Annual report and accounts 2024 145
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NOTES TO THE GROUP FINANCIAL STATEMENTS continued
3. ALTERNATIVE PERFORMANCE MEASURES continued
Derivative financial instruments
Included in non-underlying items is a £2.0m loss (2023: £1.4m gain) 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 expenses
Included in non-underlying items is £3.4m (2023: £3.7m) of acquisition related expenses. This includes £3.2m (2023: £3.4m) relating to deferred consideration
contingent on continued employment of the former owners of Geollect and Cubica, which has been accounted for as equity-settled share-based payments
under IFRS 2 Share-based payments. We have classified this cost as a non-underlying item as it is a non-recurring cost relating to acquisitions. See note 29
for further details. The remaining expense of £0.2m (2023: £0.3m) 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. This expense has been presented against the Sensors & Information business segment in note 2.
Defined benefit pension buy-in and buy-out transaction
Included in non-underlying items is an expense of £7.5m (2023: £nil). This comprises the settlement loss following the buy-in transaction agreed on 28 November 2023,
as well as ongoing costs 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.
Change in senior management positions
Included in non-underlying items are costs of £1.2m (2023: £nil) relating to the change of senior management positions within the Group, including the appointment
of the Chairman, the Group Chief Financial Officer and the President of the Group’s US operations. The non-underlying costs includes costs incurred in
recruitment and costs incurred during handover periods. Costs incurred of this nature are considered exceptional given their significance comparative to general
recruitment and remuneration activities across the Group; therefore, these costs have been excluded from the underlying measures.
Legal and disposal provisions
Included in non-underlying items is a £3.1m (2023: £nil) release of legal and disposal provisions, relating to the 2018 incident at our UK countermeasures facility
in Salisbury. The HSE prosecution was closed in the year; see note 34 for further details. This release has been presented against the Countermeasures &
Energetics business segment in note 2.
Amortisation of acquired intangibles
Included in non-underlying items is the amortisation charge arising from business combinations of £2.0m (2023: £3.0m). 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 £1.7m tax credit (2023: £3.8m 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 32 and 33. 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 5.
EBITDA
In our financial review we present measures of EBITDA, which is calculated as follows:
2024
2023
£m
£m
Operating profit
58.1
45.4
Amortisation arising from business combinations (note 12)
2.0
3.0
Amortisation of development costs (note 12)
1.3
0.7
Amortisation of patents and licences (note 12)
0.3
—
Depreciation of property, plant and equipment (note 13)
21.0
18.6
EBITDA
82.7
67.7
Non-underlying items
11.0
20.8
Underlying EBITDA
93.7
88.5
Constant currency revenue and operating profit
In our financial review we present a measure of constant currency revenue and operating profit. This is calculated by translating our results for the year ended
31 October 2024 at the average exchange rates for the comparative year ended 31 October 2023.
Underlying cash conversion
In our financial review we present a measure of underlying cash conversion. This is calculated as underlying operating cash as a ratio of underlying EBITDA for
the stated period. Comparative period values for years prior to the year ended 31 October 2023 can be found on page 188 in the five-year record of financials.
Chemring Group PLC Annual report and accounts 2024146
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4. OPERATING PROFIT
Operating profit is stated after charging/(crediting):
2024
2023
£m
£m
Research and development costs
– internally-funded
14.2
10.1
Amortisation
– arising from business combinations
2.0
3.0
– development costs
1.3
0.7
– patents and licences
0.3
—
Depreciation of property, plant and equipment
– owned assets
19.1
17.2
– leased assets
1.9
1.4
Impairment of development costs
—
15.6
Loss on disposal of non-current assets
1.7
—
Government grant income
—
(0.1)
Foreign exchange losses
0.3
2.7
Staff costs (note 6)
196.1
176.6
Cost of inventories recognised as an expense
165.3
146.5
The remaining items within operating profit predominantly relate to general and administrative expenses and production overheads.
A detailed analysis of the auditor’s remuneration on a worldwide basis is set out below:
2024
2023
Auditor’s remuneration
£m
£m
– the audit of the Company’s annual accounts
0.5
0.4
– the audit of the Company’s subsidiaries, pursuant to legislation
0.8
0.7
1.3
1.1
Audit-related assurance services
0.1
0.1
1.4
1.2
Included in the fees for the audit of the Company’s annual accounts is £0.1m (2023: £0.1m) in respect of the parent company. A description of the work
of the Audit Committee is set out in the Audit Committee report on pages 100 to 103, which includes an explanation of how auditor objectivity and
independence is safeguarded when non-audit services are provided by the auditor. No services were provided by the auditor pursuant to contingent fee
arrangements.
5. RESULTS FROM DISCONTINUED OPERATIONS AND HELD FOR SALE ASSET
Total losses from discontinued operations for the year to 31 October 2024 were £3.2m. Included in this balance is the underlying loss from the EHD business of
£1.3m and an associated non-underlying credit of £4.5m, 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 credit against those non-underlying items of £0.7m (see below). Also included in discontinued operations
is a £6.4m charge relating to an increase in provisions for a previously disposed European Munitions business (see note 24 for further details).
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. All assets were written off and impaired as at 31 October 2023.
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. An asset
purchase agreement was signed for the purchase of the EHD business. 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 during the year while the process of selling the EHD business was ongoing, as disclosed in the table below.
The sale transaction is expected to complete in the next 12 months, subject to regulatory approval.
Chemring Group PLC Annual report and accounts 2024 147
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NOTES TO THE GROUP FINANCIAL STATEMENTS continued
5. RESULTS FROM DISCONTINUED OPERATIONS AND HELD FOR SALE ASSET continued
2024
2023
Underlying
Non-underlying
To t a l
Underlying
Non-underlying
Total
£m
£m
£m
£m
£m
£m
Revenue
1.8
—
1.8
9.3
—
9.3
Operating loss
(1.5)
5.2
3.7
(1.2)
(33.6)
(34.8)
Ta x
0.2
(0.7)
(0.5)
0.3
2.2
2.5
Operating profit/(loss) from EHD business
(1.3)
4.5
3.2
(0.9)
(31.4)
(32.3)
Other discontinued operations
—
—
—
—
—
—
Increase in provisions
—
(6.4)
(6.4)
—
—
—
Total loss from discontinued operations
(1.3)
(1.9)
(3.2)
(0.9)
(31.4)
(32.3)
A held for sale asset of £5.8m in relation to the EHD business has been recognised as at 31 October 2024, representing the fair value of the assets less costs to sell.
In the year to 31 October 2023, non-underlying items included a non-cash impairment of £31.2m (of which £20.5m related to the goodwill associated with the
acquisition of the EHD business in 2009 and £10.7m related to other assets), site rationalisation costs of £1.7m and the amortisation of acquired intangibles of
£0.7m. The cash flows from discontinued operations are presented in note 31.
6. STAFF COSTS
The average monthly number of employees, including executive directors, was:
2024
2023
Number
Number
Direct
1,653
1,610
Indirect
1,019
931
Continuing operations
2,672
2,541
Discontinued operations
11
37
2,683
2,578
The costs incurred, including share-based payments, were:
2024
2023
£m
£m
Wages and salaries
162.7
148.8
Social security costs
17.3
15.0
Other pension costs
10.3
8.4
Share-based payment charge
5.8
4.4
Staff costs from continuing operations
196.1
176.6
Staff costs from discontinued operations
1.0
3.1
Total staff costs
197.1
179.7
The share-based payment charge of £5.8m (2023: £4.4m) excludes £3.2m (2023: £3.4m) of deferred consideration in relation to acquisitions accounted for as
equity-settled share-based payments. These amounts are included in non-underlying costs; see notes 3 and 28 for details.
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7. FINANCE EXPENSE
2024
2023
£m
£m
Bank overdraft and loan interest
5.8
2.9
Amortisation of debt finance costs
0.4
0.4
Interest cost on retirement benefit obligations (note 30)
—
0.6
Lease liability interest (note 19)
0.3
0.2
6.5
4.1
Amount capitalised (note 13)
(1.7)
(2.8)
Finance expense
4.8
1.3
The capitalisation rate used to determine the amount of borrowing costs to be capitalised is the weighted average interest rate applicable to the entity’s general
borrowings during the year, in this case 6.1% (2023: 5.7%). During the year £1.7m (2023: £2.8m) of interest was capitalised in relation to the automation
programme and the investment in capacity expansion in the niche Energetics businesses.
8. TAXATION
2024
2023
£m
£m
Current tax charge – current year
7.7
10.1
Current tax credit – prior year
(0.8)
(0.5)
Deferred tax charge/(credit) – current year (note 25)
3.0
(2.7)
Deferred tax charge/(credit) – prior year (note 25)
0.7
(0.5)
Tax charge
10.6
6.4
Income tax in the UK is calculated at 25% (2023: 22.5%) of the taxable profit for the year. Tax for other jurisdictions is calculated at the rates prevailing in
those jurisdictions.
The tax charge can be reconciled to the income statement as follows:
2024
2023
£m
£m
Profit before tax
53.3
44.1
Tax at the UK corporation tax rate of 25% (2023: 22.5%)
13.3
9.9
Expenses not deductible for tax purposes
0.1
0.5
Changes in tax rates
—
0.3
Tax losses/future interest deductions not previously recognised
—
(2.8)
Release of tax risk provision
(2.8)
(1.2)
Prior period adjustments
(0.1)
(1.0)
Overseas profits taxed at rates different to the UK standard rate
0.1
0.7
Tax charge for continuing operations
10.6
6.4
In addition to the tax charge in the income statement, a tax credit of £0.6m (2023: £0.5m) has been recognised in other comprehensive income in the year.
The effective rate of tax on the profit before tax of the Group is 19.9% (2023: 14.5%), and the effective rate of tax on the underlying profit before tax of the
Group is 18.6% (2023: 15.0%). The effective rate of tax on the underlying profit before tax is lower than the corporation tax rate due to benefit of US losses in
the period and the release of Chemring Countermeasures UK incident provision, which was not treated as tax deductible at the time of recognition in 2018.
Included within the tax charge is a current year non-underlying deferred tax credit of £1.6m (2023: £3.8m), predominantly relating to tax on amortisation
of acquired intangibles.
Factors affecting the tax charge in future years
The Group’s future tax charge and effective tax rate could be affected by several factors including: tax reform in countries around the world, including any
arising from the implementation of the OECD’s BEPS actions and European Commission initiatives such as the proposed tax and financial reporting directive
or as a consequence of state aid investigations, future corporate acquisitions and disposals and any restructuring of our business.
Chemring Group PLC Annual report and accounts 2024 149
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NOTES TO THE GROUP FINANCIAL STATEMENTS continued
9. DIVIDENDS
2024
2023
£m
£m
Dividends paid on ordinary shares of 1p each
Final dividend of 4.6p per share for the year ended 31 October 2023 (3.8p per share for the year ended 31 October 2022)
12.5
10.8
Interim dividend of 2.6p per share for the year ended 31 October 2024 (2.3p per share for the year ended 31 October 2023)
7.1
6.5
Total dividends
19.6
17.3
Subject to approval at the Annual General Meeting, the final dividend of 5.2p per ordinary share will be paid on 11 April 2025 to all shareholders registered
at the close of business on 21 March 2025. 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 7.8p (2023: 6 .9p) 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 2024.
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 2024
and 31 October 2024.
10. EARNINGS PER ORDINARY SHARE
Earnings per share is based on the average number of shares in issue, excluding own shares held, of 272,875,033 (2023: 281,655,927).
Diluted earnings per share has been calculated using a diluted average number of shares in issue, excluding own shares held, of 279,133,292 (2023: 288,780,153).
The number of shares used in the calculations is as follows:
2024
2023
Number
Number
millions
millions
Weighted average number of shares used to calculate basic earnings per share
272.9
281.7
Additional shares issuable other than at fair value in respect of options outstanding
6.2
7.1
Weighted average number of shares used to calculate diluted earnings per share
279.1
288.8
The earnings used in the calculations of the various measures of earnings per share are as follows:
2024
2023
Basic EPS
Diluted EPS
Basic EPS
Diluted EPS
£m
(Pence)
(Pence)
£m
(Pence)
(Pence)
Underlying profit after tax
54.0
19.8
19.3
57.7
20.5
20.0
Non-underlying items (note 3)
(11.3)
(20.0)
Profit from continuing operations
42.7
15.7
15.3
37.7
13.4
13.1
Loss from discontinued operations
(3.2)
(1.2)
(1.1)
(32.3)
(11.5)
(11.2)
Total profit after tax
39.5
14.5
14.2
5.4
1.9
1.9
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11. GOODWILL
At 1 November 2022
204.9
Acquisitions through business combinations (note 29)
5.9
Foreign exchange adjustments
(6.5)
At 31 October 2023
204.3
Acquisitions through business combinations (note 29)
—
Foreign exchange adjustments
(6.8)
At 31 October 2024
197.5
At 1 November 2022
(86.8)
Impairment
(20.5)
Foreign exchange adjustments
3.5
At 31 October 2023
(103.8)
Acquisitions through business combinations (note 29)
—
Foreign exchange adjustments
4.8
At 31 October 2024
(99.0)
At 31 October 2024
98.5
At 31 October 2023
100.5
Goodwill acquired in a business combination is allocated at acquisition to the cash-generating units (“CGUs”) that are expected to benefit from that business
combination. Cash-generating units are represented as the division within an operating company. In most of our operating companies, there is only one division
and therefore CGUs are represented by the individual operating companies within the operating segment descriptions in note 2. For Chemring Sensors &
Electronic Systems, Inc. the business unit is split into two separate CGUs to reflect the independent cash flows being generated and the way in which management
monitors the business. The two CGUs being Biological Detection and Chemical Detection.
The Group tests goodwill at least annually for impairment. Tests are conducted more frequently if there are indications that goodwill might be impaired.
The recoverable amounts of the CGUs are determined from value-in-use calculations. This exercise also forms the basis of any impairment reviews of PPE and
for the parent company’s investment in subsidiaries, should any impairment triggers be identified. The key assumptions for the value-in-use calculations have been
individually estimated for each CGU and include the discount rates and expected changes to cash flows during the period for which management has detailed
plans, which are underpinned by the winning and execution of key contracts. Based on our assessment, there is no reasonable possible change in a key
assumption which would result in the impairment of goodwill.
Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to each
of the CGUs. Pre-tax discount rates, derived from the Group’s post-tax weighted average cost of capital of 8.8% (2023: 8.5%) and which have been adjusted
for a premium specific to each of the CGUs to account for differences in currency risk, country risk and other factors affecting specific CGUs, have been
used to discount projected cash flows. The premiums for 2024 were all 1% (2023: 1%).
The Board-approved five-year plan which considers past experience, expectations of future changes and understanding of customer budgets and priorities
forms the basis of the impairment review. Cash flow considerations within the review include the timing of forecast revenues, expected contract outcomes and
forecast operating margins. The relative value ascribed to each varies between CGUs as the five-year plan is built up from the underlying operating companies
within each CGU. Considerations for new facilities include the impact of commissioning and production ramp up phasing on the timing of future cash flows.
At the end of five years, the calculations assume the performance of the CGUs will grow at a nominal annual rate of 2.5% (2023: 2.25%) in perpetuity. Growth rates
are based on management’s view of industry growth forecasts. The weighted average cost of capital is derived using beta values of a comparator group of defence
companies adjusted for funding structures as appropriate.
Chemring Group PLC Annual report and accounts 2024 151
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NOTES TO THE GROUP FINANCIAL STATEMENTS continued
11. GOODWILL continued
The pre-tax discount rates used for value-in-use calculations and the carrying value of goodwill by CGUs are:
2024
2023
2024
2023
%
%
£m
£m
Roke Manor Research Limited
13.2
12.9
37.4
37.4
Chemring Energetics UK Limited
13.2
12.9
14.6
14.6
Chemring Sensors & Electronic Systems, Inc. – Biological Detection
12.5
11.8
17.2
18.2
Chemring Sensors & Electronic Systems, Inc. – Chemical Detection
12.5
11.8
—
—
Chemring Energetic Devices, Inc.
12.5
11.8
16.2
17.1
Kilgore Flares Company LLC
12.5
11.8
5.8
5.8
Other
7.3
7.4
98.5
100.5
The pre-tax discount rates used for other CGUs ranged from 11.6% to 13.9% (2023: 11.6% to 12.9%).
The “Other” CGU is the carrying amount of goodwill that is allocated across multiple CGUs.
Stress testing was performed on the forecasts to consider the impact of reasonably possible scenarios over the forecast period, including a 1% increase
in discount rate, a 1% reduction in long-term growth rate, a 10% fall in the forecast cash flows or a $0.10 weakening in the sterling to US dollar exchange rate.
Even under any of these circumstances, no CGUs would require an impairment against goodwill.
There are no reasonably possible changes in assumptions that would require an impairment against goodwill.
12. DEVELOPMENT COSTS AND OTHER INTANGIBLE ASSETS
Development
Acquired
customer
Patents and
costs
technology
relationships
licences
Total
£m
£m
£m
£m
£m
At 1 November 2022
63.9
107.1
55.0
0.5
162.6
Acquisitions through business combinations (note 29)
—
1.4
1.2
—
2.6
Additions
1.5
—
—
—
—
Disposals
—
—
—
—
—
Foreign exchange adjustments
(2.0)
(4.9)
(2.0)
—
(6.9)
At 31 October 2023
63.4
103.6
54.2
0.5
158.3
Acquisitions through business combinations (note 29)
—
—
—
—
—
Additions
3.1
—
—
2.7
2.7
Disposals
—
(0.4)
—
—
(0.4)
Foreign exchange adjustments
(2.1)
(5.1)
(2.0)
—
(7.1)
At 31 October 2024
64.4
98.1
52.2
3.2
153.5
At 1 November 2022
(29.3)
(103.0)
(48.0)
(0.2)
(151.2)
Charge
(0.7)
(1.6)
(2.1)
—
(3.7)
Impairment
(16.3)
(0.2)
—
—
(0.2)
Disposals
—
—
—
—
—
Foreign exchange adjustments
0.5
4.7
1.7
—
6.4
At 31 October 2023
(45.8)
(100.1)
(48.4)
(0.2)
(148.7)
Charge
(1.3)
(0.8)
(1.2)
(0.3)
(2.3)
Impairment
—
—
—
—
—
Disposals
—
0.4
—
—
0.4
Foreign exchange adjustments
1.3
5.2
1.9
—
7.1
At 31 October 2024
(45.8)
(95.3)
(47.7)
(0.5)
(143.5)
At 31 October 2024
18.6
2.8
4.5
2.7
10.0
At 31 October 2023
17.6
3.5
5.8
0.3
9.6
Included within the development costs of £18.6m, individually material balances relate to Joint Biological Tactical Detection System of £8.8m (2023: £9.2m)
and Perceive of £4.3m (2023: £5.5m). Development costs are amortised over their useful economic lives, estimated to be between two and ten years, which
begins once a product is being actively marketed to customers, or in the case of products being sole supplied to a single customer, once that programme is in full
rate production. The remaining amortisation periods for these assets ranging up to ten years.
Chemring Group PLC Annual report and accounts 2024152
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12. DEVELOPMENT COSTS AND OTHER INTANGIBLE ASSETS continued
During the year ended 31 October 2023, the Group recognised an impairment of capitalised development costs of £15.6m having undertaken a wider strategic
review of the US Sensors business and concluding that the prospect of securing a Program of Record in the Chemical Detection part of the business is no longer
probable. In addition, a further £0.7m impairment was recognised in relation to capitalised development costs associated with the EHD business that was treated
as a discontinued operation in 2023.
Acquired intangibles are recognised at fair value on acquisition and are amortised over their estimated useful lives. Fair values for acquired intangibles are
assessed by reference to future estimated cash flows, discounted at an appropriate rate to present value, or by reference to the amount that would have
been paid in an arm’s length transaction between two knowledgeable and willing parties. Other intangible assets are recognised at cost and are amortised
over their estimated useful economic lives, which are set out in the accounting policies section.
Acquired technology of £2.8m includes individually material balances relating to Roke (including the Cubica Group and Geollect) of £2.8m (2023: £3.1m)
and Chemring Energetic Devices of £nil (2023: £0.4m). The remaining amortisation periods for these assets are seven years.
Acquired customer relationships of £4.5m include individually material balances relating to Chemring Energetic Devices of £2.1m (2023: £3.1m) and Roke
(including the Cubica Group and Geollect) of £2.4m (2023: £2.7m). The remaining amortisation periods for these assets are two years and seven years respectively.
During the year ended 31 October 2023, the Group recognised an impairment of acquired technology of £0.2m related to the Chemical Detection business.
13. PROPERTY, PLANT AND EQUIPMENT
Right-of-use
Right-of-use
Land and
Plant and
land and
plant and
buildings
equipment
buildings
equipment
Total
£m
£m
£m
£m
£m
At 1 November 2022
145.3
182.8
10.1
0.7
338.9
Reclassification
0.2
(0.2)
—
—
—
Additions
14.4
21.8
2.2
0.1
38.5
Disposals
(0.7)
(5.3)
(0.1)
—
(6.1)
Foreign exchange adjustments
(4.7)
(8.5)
(0.3)
—
(13.5)
At 31 October 2023
154.5
190.6
11.9
0.8
357.8
Reclassification
0.8
(0.8)
—
—
—
Additions
27.6
41.1
6.4
0.3
75.4
Disposals
(0.4)
(2.1)
(4.2)
(0.2)
(6.9)
Foreign exchange adjustments
(4.3)
(7.0)
(0.4)
—
(11.7)
At 31 October 2024
178.2
221.8
13.7
0.9
414.6
At 1 November 2022
(24.9)
(77.9)
(4.4)
(0.4)
(107.6)
Charge
(3.8)
(13.4)
(1.6)
(0.1)
(18.9)
Impairment
(0.1)
(0.2)
—
—
(0.3)
Disposals
0.7
5.3
0.1
—
6.1
Foreign exchange adjustments
1.2
3.7
0.2
—
5.1
At 31 October 2023
(26.9)
(82.5)
(5.7)
(0.5)
(115.6)
Charge
(4.3)
(14.8)
(1.8)
(0.1)
(21.0)
Impairment
—
—
—
—
—
Disposals
0.2
0.6
4.2
0.2
5.2
Foreign exchange adjustments
1.1
3.0
0.5
—
4.6
At 31 October 2024
(29.9)
(93.7)
(2.8)
(0.4)
(126.8)
At 31 October 2024
148.3
128.1
10.9
0.5
287.8
At 31 October 2023
127.6
108.1
6.2
0.3
242.2
During the year, £1.7m (2023: £2.8m) of interest was capitalised, as set out in note 7. £1.0m (2023: £1.0m) of capitalised interest was charged as depreciation
and £nil (2023: £nil) was disposed of. This results in a net book value for capitalised interest of £11.3m (2023: £10.6m).
During the year ended 31 October 2023, the Group recognised an impairment of property, plant and equipment of £0.3m in relation to assets associated
with the EHD division of the US Sensors business which was treated as a discontinued operation in 2023. See note 5 for further details.
Included within land and buildings and plant and equipment are assets under construction of £34.6m and £31.4m respectively (2023: £28.6m and £30.6m).
These assets are not depreciated.
During the year, £12.3m (2023: £nil) of property, plant and equipment additions related to capital projects funded via receipt of government grants (see note 20).
Chemring Group PLC Annual report and accounts 2024 153
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NOTES TO THE GROUP FINANCIAL STATEMENTS continued
13. PROPERTY, PLANT AND EQUIPMENT continued
As part of the transition to IFRS in 2005, Chemring utilised the most recent revaluation amount for land and buildings for two pyrotechnic sites, to be utilised
as the deemed cost of the asset under IFRS. All other tangible fixed assets are stated at historical cost.
At 31 October 2024, the Group had entered into contractual commitments for the acquisition of property, plant and equipment amounting to £19.5m (2023: £27.9m).
In addition, the Group had commitments for the acquisition of property, plant and equipment of £7.0m under government grant conditions.
Cash flows from purchases of property, plant and equipment are £64.8m (2023: £32.7m). The difference to the additions total presented above includes
£6.9m (2023: £2.3m) non-cash movements related to right-of-use assets as well as the movement in accrued capital expenditure.
14. SUBSIDIARY UNDERTAKINGS
All subsidiary undertakings have been reflected in these financial statements. The subsidiary undertakings held at 31 October 2024, which have a single class
of ordinary shares all 100% owned by the Group, are shown below. All of these subsidiary undertakings are wholly controlled by Chemring Group PLC,
unless otherwise stated.
(or registration) and operation
Operating segment
Chemring Australia Pty Limited
Australia
Countermeasures & Energetics
Chemring Countermeasures Limited*
England
Countermeasures & Energetics
Chemring North America Unlimited
England
Dormant
Chemring Prime Contracts Limited*
England
Dormant
Chemring Technology Solutions Limited*
England
Countermeasures & Energetics
Chemring Holdings Limited* (formerly CHG Overseas Limited)
England
Holding company
Cubica Technology Limited*
England
Dormant
Geollect Limited*
England
Dormant
Q6 Holdings Limited*
England
Dormant
Roke Manor Research Limited
England
Sensors & Information
Vigil AI Limited**
England
Sensors & Information
Chemring Nobel AS
Norway
Countermeasures & Energetics
Chemring Energetics UK Limited
Scotland
Countermeasures & Energetics
Alloy Surfaces Company, Inc.
US
Countermeasures & Energetics
ASC Realty LLC
US
Property holding company
Chemring Energetic Devices, Inc.
US
Countermeasures & Energetics
Chemring North America Group, Inc.
US
Holding company
Chemring Sensors & Electronic Systems, Inc.
US
Sensors & Information
CHG Flares, Inc.
US
Holding company
CHG Group, Inc.
US
Holding company
Geollect LLC
US
Sensors & Information
Kilgore Flares Company LLC
US
Countermeasures & Energetics
Roke USA, Inc.
US
Sensors & Information
Tactical Systems and Ordnance, Inc.
US
Non-trading
* Shares directly held by Chemring Group PLC.
** 80% indirectly owned by Chemring Group PLC.
Chemring Holdings Limited (company number 02731691), Chemring Technology Solutions Limited (company number 01528540) and Geollect Limited (company
number 10584604) are exempt from the requirement to file audited accounts for the year ended 31 October 2024 by virtue of section 479A of the Companies
Act 2006. See page 189 for the registered offices of the subsidiary undertakings.
15. INVENTORIES
2024
2023
£m
£m
Raw materials
57.4
49.6
Work in progress
54.7
33.1
Finished goods
15.0
19.0
127.1
101.7
There are no significant differences between the replacement cost of inventory and the carrying amount shown above. The Group recognised £0.8m (2023: £0.3m)
as a write down of inventories to net realisable value. See note 4 for details of cost of inventories recognised as an expense.
Chemring Group PLC Annual report and accounts 2024154
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16. TRADE AND OTHER RECEIVABLES
2024
2023
£m
£m
Trade receivables
46.2
41.5
Allowance for doubtful debts
(0.1)
(0.2)
46.1
41.3
Advance payments to suppliers
1.4
2.3
Other receivables
13.8
10.7
Prepayments
7.0
6.9
Accrued income
22.7
13.6
91.0
74.8
All amounts shown above are due within one year.
The average credit period taken by customers on sales of goods, calculated using a countback basis, is 15 days (2023: 16 days). No interest is charged
on receivables from the date of invoice to payment.
Given the Group’s customer base, expected credit losses are typically not material; however, if there is any doubt over recoverability, the Group’s policy
is to provide in full for trade receivables outstanding for more than 120 days beyond agreed terms. As at 31 October 2024, £2.0m of gross trade receivables
were aged greater than 30 days past due (2023: £0.5m).
The directors consider that the carrying amount of trade and other receivables approximates to their fair values.
Of the £13.6m of accrued income at 31 October 2023, £13.6m had been billed and paid in the year. Of the £22.7m of accrued income at 31 October 2024,
£6.0m was billed in the month after the reporting date. The remainder relates to the completion of performance obligations which will be billed at the next
contractual milestone, which is expected within the next year.
Of the £13.8m (2023: £10.7m) of other receivables at 31 October 2024, £11.7m (2023: £8.9m) related to research and development expenditure credits receivable.
17. CASH AND CASH EQUIVALENTS
Bank balances and cash comprise cash held by the Group and short-term deposits with an original maturity of three months or less. The carrying amount of these
assets approximates to their fair value. For the purposes of the statement of cash flows, cash and cash equivalents comprises cash at bank of £2.0m (2023: £6.4m).
This differs to the balance sheet value of £45.0m due to the inclusion of the bank borrowing within one year of £43.0m. Chemring has a UK Cash Pooling Arrangement
(“UKCPA”) which legally allows the netting of the borrowing due within one year against the UK cash balances and the UKCPA is an integral part of cash
management.
18. BORROWINGS
During the year to 31 October 2024, management has considered the classification of the UKCPA and determined that positive and negative cash positions should
not be netted down on the balance sheet as the balances are no longer expected to be settled net. As such, positive balances in the UKCPA have been show gross
in cash and cash equivalents and negative balances are shown within current liabilities as bank borrowings. As at 31 October 2023, the net position of the UKCPA
was included as borrowings within non-current liabilities.
Interest accrued on the UKCPA is calculated on the net position.
Borrowings due within one year comprise overdrafts that are repayable on demand.
2024
2023
£m
£m
Bank borrowings
43.0
—
Borrowings due within one year
43.0
—
Bank borrowings
43.7
14.1
Preference shares
0.1
0.1
Borrowings due after more than one year
43.8
14.2
Total borrowings
86.8
14.2
Analysis of borrowings by currency:
2024
2023
£m
£m
Sterling
71.7
14.2
US dollar
15.1
—
86.8
14.2
Chemring Group PLC Annual report and accounts 2024 155
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NOTES TO THE GROUP FINANCIAL STATEMENTS continued
18. BORROWINGS continued
The weighted average interest rates paid were as follows:
2024
2023
%
%
Bank overdrafts
6.3
5.4
UK bank loans
– Sterling denominated
6.6
5.7
– US dollar denominated
—
1.4
An analysis of borrowings by maturity is as follows:
2024
2023
Bank
Bank
loans and
Preference
loans and
Preference
overdrafts
shares
To t a l
overdrafts
shares
Total
£m
£m
£m
£m
£m
£m
– within one year
43.0
—
43.0
—
—
—
Borrowings due within one year
43.0
—
43.0
—
—
—
– within one to two years
—
—
—
—
—
—
– within two to five years
43.7
—
43.7
14.1
—
14.1
– after five years
—
0.1
0.1
—
0.1
0.1
Borrowings due after more than one year
43.7
0.1
43.8
14.1
0.1
14.2
Total borrowings
86.7
0.1
86.8
14.1
0.1
14.2
The Group’s principal debt facilities comprise a £150m revolving credit facility up to December 2025, of which £130m has been extended to December 2026.
The revolving credit facility was established in July 2021 with a syndicate of six banks. In addition the Group has a US$20m swingline overdraft facility for use in
the US, and in October 2024, the Group entered into a UK Export Finance Export Development Guarantee led by Barclays PLC for up to £80m. This is a
four-year, arm’s length facility with a one-year draw down period and a three-year amortising repayment schedule. None of the borrowings are secured.
There have been no breaches of the terms of the loan agreements during the current or prior year.
The Group has the following undrawn borrowing facilities available, in respect of which all conditions precedent have been met. Interest costs under these
facilities are charged at floating rates.
2024
2023
£m
£m
Undrawn borrowing facilities
157.4
142.9
The Group is subject to two key financial covenants, which are tested quarterly. These covenants relate to the leverage ratio between “underlying EBITDA” and net
debt, and the interest cover ratio between underlying EBITDA and finance costs. The calculation of these ratios involves the translation of non-sterling denominated
debt using average, rather than closing, rates of exchange. Therefore the leverage ratio of 0.57 times differs to the ratio of 0.56 times that is disclosed elsewhere
in the annual report and accounts, which is calculated using the closing rates of exchange. The Group was in compliance with the covenants throughout the year.
The year-end leverage ratio was 0.57 times (covenant limit of 3 times) and the year-end interest cover ratio was 15.28 times (covenant floor of 4 times).
19. LEASES
The carrying amount, additions and depreciation charge for right-of-use assets by class of underlying asset is included in note 13.
The expense relating to short-term and low-value leases in the year was £0.8m (2023: £1.3m). In total, payments of £3.3m (2023: £1.8m) were made under
leasing contracts. Included in the financing activities section of the cash flow is £2.2m (2023: £1.6m) to repay the principal portion of the lease and £0.3m
(2023: £0.2m) to repay lease interest. Included in the operating activities section of the cash flow is £0.8m (2023: £1.3m) relating to short-term and low-value
leases. A maturity analysis of the future undiscounted lease payments in respect of the Group’s lease liabilities is presented in the table below:
2024
2023
£m
£m
– within one year
2.1
1.1
– within one to two years
1.5
0.8
– within two to five years
5.4
1.9
– more than five years
2.4
3.0
9.3
5.7
Impact of discounting
(0.4)
(0.2)
Lease liabilities included in balance sheet as at 31 October
11.0
6.6
Chemring Group PLC Annual report and accounts 2024156
Strategic report Governance Financial statements

20. GOVERNMENT GRANTS
A total of £24.0m (2023: £nil) of government grants were recognised on the balance sheet at 31 October 2024. The nature of these grants are capital grants
towards the construction of certain buildings and equipment. Of the £24.0m of grants held at 31 October 2024, £22.0m (2023: £nil) was received as cash in the
current financial year and £nil (2023: £nil) are expected to be recognised as other income within one year.
21. TRADE AND OTHER PAYABLES
2024
2023
£m
£m
Trade payables
27.9
16.3
Other payables
36.2
32.8
Interest payable
—
—
Other tax and social security
6.4
6.4
Advance receipts from customers
78.2
47.2
Accruals
11.0
15.3
Deferred income
3.7
6.0
163.4
124.0
Other payables of £36.2m (2023: £32.8m) includes payroll-related creditors of £19.1m (2023: £18.1m).
Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs.
Advance receipts from customers represent the obligation to transfer goods or services to a customer for which consideration has been received. The amount
of £47.2m included in advance receipts from customers recognised at 31 October 2023 has been recognised as revenue in 2024. Of the £78.2m of advanced
receipts from customers at 31 October 2024, £26.6m is relevant to goods and services that will be delivered and provided within a year. No revenue was
recognised in 2024 from performance obligations satisfied in previous years.
The average credit period taken on purchases of goods is 30 days (2023: 18 days) using year-end trade payables divided by cost of sales. No interest is payable
on trade payables from the date of invoice to payment.
22. FINANCIAL RISK MANAGEMENT
The Group uses financial instruments to manage financial risk wherever it is appropriate to do so. The main risks addressed by financial instruments are liquidity
risk, foreign currency risk, interest rate risk and credit risk. The Group’s policies in respect of the management of these risks, which remained unchanged
throughout the year, are set out below.
(a) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises
principally from the Group’s receivables from customers.
The impairment provisions for financial assets disclosed in note 16 “Trade and other receivables” are based on assumptions about risk of default and expected
loss rates. The Group uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Group’s past history
and existing market conditions, as well as forward-looking estimates at the end of each reporting period. Customers are mainly multinational organisations
or government agencies with which the Group has long-term business relationships. The Group’s principal customers are government defence departments,
such as the US Department of Defense (“US DoD”) and the UK Ministry of Defence (“UK MOD”), US and UK defence prime contractors, such as BAE Systems,
and distributors of products for their onward sale to end users.
The majority of revenue in 2024 related to the US DoD, the UK MOD and the US and UK defence prime contractors, which consistently pay within terms
and are deemed low credit risk as a result. For all other customers the Group’s policy is to trade under a letter of credit. If there is any doubt over recoverability,
the Group’s policy is to provide in full for trade receivables outstanding for more than 120 days beyond agreed terms. The balances which might be affected
by credit risk are trade receivables, accrued income and cash and cash equivalents.
(b) Capital management
The Group manages its capital to ensure that all entities in the Group will be able to continue as a going concern while meeting the returns to stakeholders.
The capital structure of the Group consists of equity (as disclosed in the consolidated statement of changes in equity), retained earnings, cash and cash equivalents
(note 17), a revolving credit facility (“RCF”) (note 18) and a UK Export Finance Export Development Guarantee (note 18). The Group seeks to manage its
capital through an appropriate mix of these items. The Group’s principal debt facilities comprise a £150m revolving credit facility up to December 2025, of
which £130m has been extended to December 2026. The revolving credit facility was established in July 2021 with a syndicate of six banks. In addition, we have
a US$20m swingline overdraft facility for use in the US, and in October 2024, the Group entered into a UK Export Finance Export Development Guarantee
led by Barclays PLC for up to £80m. This is a four-year, arm’s length facility with a one-year draw down period and a three-year amortising repayment schedule.
As at 31 October 2024, the RCF was drawn by £45.0m (2023: £15.1m).
Chemring Group PLC Annual report and accounts 2024 157
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NOTES TO THE GROUP FINANCIAL STATEMENTS continued
22. FINANCIAL RISK MANAGEMENT continued
(c) Financial risk management
The primary risks that the Group is exposed to are liquidity risk, foreign currency risk, interest rate risk and credit risk. It is the Group’s policy to manage these
risks under the following policies:
i. Liquidity risk management
Liquidity risk is the risk that the Group does not have sufficient financial resources to meet its obligations as they fall due. The Group manages liquidity risk
by maintaining adequate reserves and by continually monitoring forecast and actual cash flows. The Group’s policy is to maintain continuity of funding through
available cash and cash equivalents and the RCF.
ii. Foreign currency risk management
The Group’s presentational currency is sterling. The Group is subject to exposure on the translation of the assets of foreign subsidiaries, whose functional
currencies differ from the Group. The Group’s primary balance sheet translation exposures are to the US dollar, Australian dollar and Norwegian krone.
The Group minimises the balance sheet translation exposures, where it is practical to do so, by funding subsidiaries with long-term loans, on which exchange
differences are taken to reserves. US dollar borrowings held by the Group are treated as a net investment hedge against the US dollar assets of the Group.
The Group faces currency exposures arising from the translation of profits earned in foreign currency. These exposures are not hedged. Exposures also arise
from foreign currency denominated trading transactions undertaken by subsidiaries’ deemed transactional exposures. The Group’s policy is to hedge transactional
exposures above £250,000 in the banking market on a one-to-one basis using forward contracts. Below £250,000, the exposures are netted across subsidiaries
and any surplus or deficit hedged in the banking market using spot or forward contracts. The Group’s policy is that there is no speculative trading in financial
instruments. During the year ended 31 October 2024, there were no options or structured derivatives utilised.
iii. Interest rate risk management
The Group finances its operations through a combination of retained profits and bank borrowings. The UK borrowings are denominated in sterling and
US dollars, and at the shorter end are subject to floating rates of interest.
IFRS 9 Financial Instruments
Chemring Group PLC is not a financial institution and does not have any complex financial instruments. The Group does not apply hedge accounting
to derivatives and the Group’s customers are generally governments that are considered creditworthy and pay consistently within agreed payment terms.
2024
2023
Carrying value
Fair value
Carrying value
Fair value
£m
£m
£m
£m
Trade receivables
46.1
46.1
41.3
41.3
Accrued income
22.7
22.7
13.6
13.6
Cash and cash equivalents
45.0
45.0
6.4
6.4
Derivative financial instruments
0.9
0.9
0.8
0.8
Derivative financial instruments
(4.4)
(4.4)
(3.5)
(3.5)
Trade payables
(27.9)
(27.9)
(16.3)
(16.3)
Other payables
(36.2)
(36.2)
(32.8)
(32.8)
Interest payable
—
—
—
—
Borrowings
(86.8)
(86.8)
(14.2)
(14.2)
The following items are not financial instruments as defined by IFRS 9:
(a) prepayments made/advances received (right to receive future goods or services, not cash or a financial asset); or
(b) tax receivables and payables and similar items (statutory rights and obligations, not contractual); or
(c) deferred revenue and warranty obligations (obligations to deliver goods and services, not cash or financial assets).
Chemring Group PLC Annual report and accounts 2024158
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23. FINANCIAL INSTRUMENTS
The following table details the fair value of derivative financial instrument assets/(liabilities) recognised in the balance sheet:
2024
2023
£m
£m
Included in current assets
0.9
0.8
Included in current liabilities
(1.5)
(3.2)
(0.6)
(2.4)
Included in non-current liabilities
(2.9)
(0.3)
Forward foreign exchange contracts
(3.5)
(2.7)
There was a £2.0m loss (2023: £1.4m gain) on the movement in the fair value of derivative financial instruments recognised in the income statement.
The table below details the remaining contractual maturities of the Group’s derivative financial instruments and loans at the reporting date. The amounts
are gross and undiscounted and include interest payments estimated based on the conditions existing at the reporting date.
2024
2023
Derivative
Loans and
Derivative
Loans and
instruments
overdrafts
To t a l
instruments
overdrafts
Total
£m
£m
£m
£m
£m
£m
– within one year
(0.6)
(43.0)
(43.6)
(2.4)
—
(2.4)
– within one to two years
(1.2)
—
(1.2)
(0.3)
—
(0.3)
– within two to five years
(1.7)
(43.8)
(45.5)
—
(14.2)
(14.2)
(3.5)
(86.8)
(90.3)
(2.7)
(14.2)
(16.9)
A maturity analysis of the contracted cash outflows on lease liabilities is provided in note 19.
Fair value hierarchy
IFRS 7 Financial Instruments: Disclosures requires companies that carry financial instruments at fair value in the balance sheet to disclose their level of hierarchy,
determining into which category those financial instruments fall under the fair value hierarchy.
The fair value measurement hierarchy is as follows:
- Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;
- Level 2 – inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly
(i.e. derived from prices); and
- Level 3 – inputs for the asset or liability that are not based on observable market data (i.e. as unobservable inputs).
The following tables present the Group’s assets and liabilities that are measured at fair value:
2024
2023
Carrying
Carrying
Fair value
amount
Fair value
amount
Fair value
hierarchy
£m
£m
£m
£m
Derivative financial instruments – assets
Level 2
0.9
0.9
0.8
0.8
Derivative financial instruments – liabilities
Level 2
(4.4)
(4.4)
(3.5)
(3.5)
(3.5)
(3.5)
(2.7)
(2.7)
The fair value of derivative financial instruments is estimated by discounting the future contracted cash flow, using readily available market data.
Chemring Group PLC Annual report and accounts 2024 159
Strategic report Governance Financial statements

NOTES TO THE GROUP FINANCIAL STATEMENTS continued
23. FINANCIAL INSTRUMENTS continued
Sensitivity analysis
For the year ended 31 October 2024 the closing exchange rate for the US dollar was 1.29 (2023: 1.21), Australian dollar was 1.96 (2023: 1.92) and Norwegian
krone was 14.18 (2023: 13.56). The average exchange rates were 1.27 (2023: 1.24), 1.95 (2023: 1.91) and 13.69 (2023: 13.10) respectively.
The following table details the Group’s sensitivity to a 10% weakening or strengthening of sterling against the US dollar, Australian dollar and Norwegian krone
with regard to its income statement. The Group considers a 10% strengthening or weakening of sterling as a reasonably possible change in foreign exchange
rates.
2024
2023
2024
2023
Continuing operations
£m
£m
£m
£m
Revenue
22.8
22.0
(17.8)
(19.7)
Underlying operating profit
1.3
3.3
(0.7)
(2.4)
Interest
—
—
—
—
Underlying profit before tax
1.3
3.3
(0.7)
(2.4)
As at 31 October 2024, 89% of the Group’s gross debt was at floating rates. The Group monitors its exposure to movements in interest rates, having regard
to prevailing market conditions, and considers the use of interest rate swaps on an ongoing basis to manage this exposure. The Group has not entered into any
interest rate swaps as of 31 October 2024.
Based on the closing debt value as at 31 October 2024, a change in interest rates of 1% throughout the year would cause the Group’s finance expense to change
by £0.9m (2023: £0.2m).
24. PROVISIONS
Legal
Environmental
Disposal
Dilapidations
provision
provision
provision
provision
Other
Total
£m
£m
£m
£m
£m
£m
At 1 November 2023
4.0
3.5
9.4
0.7
—
17.6
Released
(3.1)
—
—
(0.1)
—
(3.2)
Provided
—
0.2
6.4
—
0.9
7.5
Foreign exchange adjustments
—
(0.2)
(0.2)
—
—
(0.4)
Paid
(0.6)
—
(1.0)
—
—
(1.6)
At 31 October 2024
0.3
3.5
14.6
0.6
0.9
19.9
These provisions are classified on the balance sheet as follows:
2024
2023
£m
£m
Included in current liabilities
3.2
5.6
Included in non-current liabilities
16.7
12.0
19.9
17.6
The legal provision represents the estimated legal liabilities faced by the Group at the balance sheet date. There are uncertainties regarding the range
of possible outcomes and timing of cash outflows, dependent on the outcome of court proceedings. During the year £3.1m of legal provisions was
released in relation to the Countermeasures UK incident. Further details of the Group’s contingent liabilities are set out in note 34.
The environmental provision is held in respect of potential liabilities associated with the Group’s facility in Chicago, US. The range of possible outcomes
is between £1.2m and £8.1m. There are uncertainties regarding the timing of cash outflows, dependent on the outcome of regulatory proceedings.
The disposal provision principally consists of balances relating to estimated liabilities faced by the Group in respect of the disposal of its European Munitions
businesses in 2014 under the terms of their respective sale agreements. During the year, the Group increased its provisions by £6.4m following progress in
developing a remediation plan for one of the sites which will be presented to the local regulator. Whilst there is a range of outcomes between £5m–£15m,
the directors do not believe there is a reasonable possibility of a material movement from the carrying value in the next year. These are expected to be largely
utilised over the next five years.
The dilapidations provision represents the estimated liabilities costs that the Group estimates will be incurred upon vacating properties which are occupied
under rental agreements.
Other provisions is held in respect of potential liabilities relating to production licensing at the Group’s facility in Norway.
Provisions are subject to uncertainty in respect of the outcome of future events. Legal provisions will be utilised based on the outcome of cases and the
level of costs incurred defending the Group’s position. Environmental provisions will be utilised based on the outcome of further environmental studies and
remediation work. Disposal provisions will be utilised based on the outcome of certain events which are specified in sale and purchase agreements. It is not
possible to estimate more accurately the expected timing of any resulting outflows of economic benefits.
Chemring Group PLC Annual report and accounts 2024160
Strategic report Governance Financial statements

25. DEFERRED TAX
The following are the principal deferred tax assets/(liabilities) recognised by the Group and movements thereon:
tax
US interest
Tax
Acquired
depreciation
Pensions
deductions
losses
intangibles
Other
Total
£m
£m
£m
£m
£m
£m
£m
At 1 November 2022
(33.0)
(2.9)
8.1
12.9
(8.4)
10.4
(12.9)
(Charge)/credit to income statement
(1.3)
0.3
(0.2)
5.4
(0.3)
1.8
5.7
Credit/(charge) to other comprehensive income
1.0
1.6
(0.2)
(0.6)
0.2
(0.4)
1.6
Recognised on acquisition
—
—
—
—
(0.6)
—
(0.6)
Recognised directly in equity
—
—
—
—
—
(0.7)
(0.7)
At 31 October 2023
(33.3)
(1.0)
7.7
17.7
(9.1)
11.1
(6.9)
(Charge)/credit to income statement
(2.9)
0.5
0.5
(0.1)
(0.2)
(1.5)
(3.7)
Credit to other comprehensive income
—
0.5
—
—
—
—
0.5
Recognised on acquisition
—
—
—
—
—
—
—
Recognised directly in equity
—
—
—
—
—
(0.2)
(0.2)
At 31 October 2024
(36.2)
—
8.2
17.6
(9.3)
9.4
(10.3)
Deferred tax assets
—
—
8.2
17.6
—
9.4
35.2
Deferred tax liabilities
(36.2)
—
—
—
(9.3)
—
(45.5)
At 31 October 2024
(36.2)
—
8.2
17.6
(9.3)
9.4
(10.3)
Deferred tax assets
—
—
7.7
17.7
—
11.5
36.9
Deferred tax liabilities
(33.3)
(1.0)
—
—
(9.1)
(0.4)
(43.8)
At 31 October 2023
(33.3)
(1.0)
7.7
17.7
(9.1)
11.1
(6.9)
Certain deferred tax assets and liabilities have been offset where there is a legally enforceable right to set off deferred tax assets against deferred liabilities that
relate to the same fiscal authority. Deferred tax balances before offset are analysed in the table above. After netting off the net deferred tax assets are £7.3m
(2023: £36.9m) and net deferred tax liabilities are £17.6m (2023: £43.8m).
Deferred tax balances of £9.2m (2023: £11.1m) within the “Other” category above include temporary differences arising on provisions and accruals.
At the balance sheet date, the Group had unrecognised deferred tax of £0.3m (2023: £0.5m) on gross US State tax losses of £4.6m (2023: £8.3m) and unrecognised
deferred tax of £21.7m (2023: £19.7m) on gross interest deductions of £81.0m (2023: £73.7m) as a result of US interest limitation regulations, potentially available for
offset against future profits in certain circumstances. The Group also had unrecognised deferred tax of £0.7m (2023: £0.7m) on gross US capital losses of £3.4m
(2023: £3.5m). No deferred tax asset has been recognised in respect of these amounts because of the unpredictability of future taxable qualifying profit streams.
The aforementioned gross interest deductions are available indefinitely with no fixed expiry date, while the gross tax losses and gross capital losses expire
in 2031 and 2026 respectively.
The Group has not recognised any deferred tax liability on temporary differences relating to potentially taxable unremitted earnings of overseas subsidiaries
because the Group is in a position to control the timing of the reversal of the temporary differences and none are expected to reverse in the foreseeable future.
26. SHARE CAPITAL
2024
2023
£m
£m
272,627,634
(2023:
280,842,610) ordinary shares of 1p each
2.7
2.8
During the year 402,267 ordinary shares (2023: 495,671) were issued for cash to employees under the Group’s approved savings-related share schemes.
The Company’s share capital also includes 62,500 7% cumulative preference shares of £1 each, which are all issued and fully paid up, and are classified for
accounting purposes within non-current liabilities. The cumulative preference shares carry an entitlement to a dividend at the rate of 7p per share per annum,
payable in equal instalments on 30 April and 31 October each year. Holders of the preference shares have the right on a winding-up to receive, in priority
to any other classes of shares, the sum of £1 per share together with any arrears of dividends.
On 1 August 2023, the Company announced a share buyback programme to repurchase up to £50m of its own shares over the following twelve months, and
the programme was subsequently extended to 17 December 2024. During 2024, 8,617,243 (2023: 3,194,803) shares were purchased for a total price, including
transaction costs, of £27.8m (2023: £9.0m). These shares were subsequently cancelled, with the nominal value of shares cancelled deducted from share capital
against the special capital reserve.
As at 31 October 2024, the Group had agreed to further share purchases of £0.4m (2023: £2.9m) that were settled in cash subsequent to the year end.
The £0.4m (2023: £2.9m) is included as a liability in trade and other payables (see note 21).
Chemring Group PLC Annual report and accounts 2024 161
Strategic report Governance Financial statements

NOTES TO THE GROUP FINANCIAL STATEMENTS continued
27. RESERVES
The share premium account and the special capital reserve are not distributable.
The special capital reserve was created as part of a capital reduction scheme involving the cancellation of the share premium account which was approved
by the Court in 1986, in accordance with the requirements of the Companies Act 1985.
The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations and the
accumulation of gains or losses from the effective portion of hedges of net investments in foreign operations.
Included within retained earnings is £11.5m (2023: £4.3m) of the Company’s own shares held by the Group’s Employee Share Ownership Plan Trust (“ESOP”)
which is treated as a branch of the parent company. The ESOP purchased 3,611,952 shares during the year (2023: 1,652,072) and 1,820,850 shares (2023: 2,734,163)
were distributed following the vesting of awards under the deferred bonus and performance share plan schemes. The total number of ordinary shares held by
the ESOP at 31 October 2024 was 3,152,723 (2023: 1,361,618).
On 1 August 2023, the Company announced a share buyback programme to purchase up to £50m of its own shares over the following twelve months. See note
26 for further details.
Group dividends (note 9) are payable out of the parent company retained earnings as disclosed in the parent company financial statements. This provides
cover over the declared final dividend of 5.2p per ordinary share for the year ended 31 October 2024.
28. SHARE-BASED PAYMENTS
The Group operates share-based compensation arrangements to provide incentives to the Group’s senior management and eligible employees.
The Group recognised a net charge of £9.0m (2023: £7.8m) in respect of share-based payments during the year, of which £3.2m (2023: £3.4m) is included
in non-underlying costs.
Details of the three schemes which operated during the year are set out below.
The Chemring Group Performance Share Plan 2016 (the “2016 PSP”)
Under the 2016 PSP, conditional awards of ordinary shares are made at nil cost to employees. Awards ordinarily vest on the third anniversary of the award date.
2016
PSP
2024
2023
Outstanding at the beginning of the year
5,553,280
5,987,329
Awarded
2,131,934
2,290,834
Vested
(1,059,656)
(2,015,696)
Lapsed
(930,607)
(709,187)
Outstanding at the end of the year
5,694,951
5,553,280
Subject to vesting at the end of the year
—
—
The following awards were outstanding at 31 October 2024:
ordinary
Vesting price
Date when
shares
per share
awards due
Date of award
under award
Pence
to vest
15 December 2021
1,871,255
nil
15 December 2024
14 December 2022
1,851,816
nil
14 December 2025
13 December 2023
1,971,880
nil
13 December 2026
The Group has applied a discount to the share-based payments to reflect the anticipated achievement of the stipulated targets for each 2016 PSP award based
on the predicted figures within the Group’s financial projections and the expected number of leavers over the life of the awards.
The 2016 PSP awards made in the year ended 31 October 2024 had targets based on earnings per share growth, total shareholder return and reduction
in the Group’s carbon emissions. The awards have been valued using the following modelling inputs. The total shareholder return element was valued using
a Monte-Carlo model. Expected volatility was determined by assessing the volatility in share price of the Group and its comparator group of companies over
a three-year period prior to the grant date.
13 December
14 December
15 December
2023
2022
2021
Share price at valuation
326p
305p
284p
Exercise price
nil
nil
nil
Risk-free rate
0.5%
0.5%
0.5%
Expected volatility
29.1%
29.1%
29.1%
Fair value
291.1p
272.3p
232.9p
The weighted average fair value of awards made during the year was 291.1p (2023: 272.3p).
In the year ended 31 October 2024 1,059,656 shares vested (2023: 2,015,696). The charge recognised in respect of the awards is based on their fair value at the
grant date.
Chemring Group PLC Annual report and accounts 2024162
Strategic report Governance Financial statements

28. SHARE-BASED PAYMENTS continued
The Chemring Group 2018 UK Sharesave Plan (the “UK Sharesave Plan”)
Options were granted during the year on 1 September 2024.
2024
2023
Weighted
Weighted
average
average
Number
exercise
Number
exercise
of share
price
of share
price
options
Pence
options
Pence
Outstanding at the beginning of the year
2,035,483
236.1
1,878,345
229.3
Granted
716,874
310.0
845,661
264.0
Exercised
(402,267)
224.0
(483,778)
193.5
Lapsed
(212,994)
236.4
(204,745)
240.5
Outstanding at the end of the year
2,137,096
239.5
2,035,483
236.1
Subject to exercise at the end of the year
65,256
229.2
145,218
201.7
The following options were outstanding at 31 October 2024:
of ordinary
Exercise price
shares under
per share
Dates between which
Date of award
award
Pence
options may be exercised
29 July 2019
8,181
154.0
1 October 2024–31 March 2025
30 July 2020
66,827
202.0
1 October 2025–31 March 2026
26 July 2021
57,057
240.0
1 October 2024–31 March 2025
26 July 2021
66,650
240.0
1 October 2026–31 March 2027
1 September 2022
409,122
264.0
1 October 2025–31 March 2026
1 September 2022
69,896
264.0
1 October 2027–31 March 2028
4 August 2023
645,075
228.0
1 October 2026–31 March 2027
4 August 2023
103,378
228.0
1 October 2028–31 March 2029
5 August 2024
571,349
310.0
1 October 2027–31 March 2028
5 August 2024
139,543
310.0
1 October 2029–31 March 2030
The weighted average fair value of options granted in the year was 79.0p (2023: 57.0p). The weighted average fair value of options exercised in the year was
49.7p (2023: 38.9p). The weighted average share price on exercise of the options during the year was 224.0p (2023: 193.5p).
The fair values of the share options in the UK Sharesave Plan are based on the difference between the exercise price and the share price on the grant date
of the option.
Deferred bonus share plan
Under the deferred bonus share plan, deferred awards of ordinary shares are made at nil cost to employees. Awards ordinarily vest on the second
or third anniversary of the award date.
2024
2023
Outstanding at the beginning of the year
874,098
937,055
Awarded
307,514
320,288
Vested
(387,821)
(361,932)
Lapsed
(34,076)
(21,313)
Outstanding at the end of the year
759,715
874,098
Subject to vesting at the end of the year
—
—
Chemring Group PLC Annual report and accounts 2024 163
Strategic report Governance Financial statements

NOTES TO THE GROUP FINANCIAL STATEMENTS continued
28. SHARE-BASED PAYMENTS continued
Deferred bonus share plan continued
The following awards were outstanding at 31 October 2024:
ordinary
Share price
Vesting price
Date when
shares
at valuation
per share
awards are due
Date of award
under award
Pence
Pence
to vest
14 December 2021
170,336
284p
nil
14 December 2024
13 December 2022
93,463
305p
nil
13 December 2024
13 December 2022
204,193
305p
nil
13 December 2025
12 December 2023
98,093
326p
nil
12 December 2025
12 December 2023
193,630
326p
nil
12 December 2026
The fair value of the deferred bonus share awards is based on the share price on the grant date of the award. The weighted average fair value of awards made
during the year was 326p (2023: 305p). The Group has applied a discount to the share-based payments to reflect the expected number of leavers over the life
of the awards.
Deferred shares related to acquisition
Deferred consideration in relation to the acquisition of the Cubica Group of up to £2.0m and in relation to the acquisition of Geollect of up to £7.5m has been
accounted for as equity-settled share-based payments under IFRS 2. See note 29 for further detailed disclosure.
Cubica Group
The deferred consideration is comprised of two tranches of 326,792 Chemring ordinary shares each, valued at £2m based on the share price on 2 June 2021
of 307p. The first tranche vested on the second anniversary of completion, 2 June 2023, and the second tranche vested on the third anniversary of completion,
2 June 2024.
No further awards were granted during the year ended 31 October 2024 (2023: nil) in respect of the Cubica Group acquisition. 319,921 vested and 6,871 lapsed
(2023: 326,792 vested and nil lapsed) in the year. Nil are outstanding at the end of the year (2023: 326,792). Nil were subject to vesting at the end of the year (2023: nil).
The fair value of the deferred share awards is based on the share price on the grant date of the award.
Geollect
The deferred consideration is comprised of two tranches of 1,233,552 Chemring ordinary shares each, valued at £7.5m based on the share price on
7 December 2022 of 298.5p. The first tranche will vest on the second anniversary of completion, 7 December 2024, and the second tranche will vest
on the third anniversary of completion, 7 December 2025, subject to remaining eligible employees.
No further awards were granted during the year ended 31 October 2024 (2023: 2,467,104). Nil vested or lapsed in the year (2023: nil) and 2,467,104
are outstanding at the end of the year (2023: 2,467,104). Nil were subject to vesting at the end of the year (2023: nil).
The fair value of the deferred share awards is based on the share price on the grant date of the award.
29. ACQUISITION OF SUBSIDIARY
Acquisitions in the prior year ended 31 October 2023
Acquisition of Geollect Limited
On 7 December 2022, Chemring Group PLC acquired 100% of the issued shares in Geollect Limited (“Geollect”). Geollect is an international provider
of geospatial intelligence consultancy and subscription services. The acquisition was completed for an initial purchase consideration of £7.3m, funded from
Chemring’s existing bank facilities. Further deferred consideration of up to £7.5m is payable in Chemring 1p ordinary shares in two tranches (subject to the
former owners remaining employed in the Chemring Group) on the second and third anniversary of completion.
The deferred consideration of £7.5m is contingent on continued employment of the former owners and has been accounted for as equity-settled share-based
payments under IFRS 2, resulting in a charge of £3.2m (2023: £2.8m). This has been classified as non-underlying costs; see note 3 and note 28 for further details.
Chemring Group PLC Annual report and accounts 2024164
Strategic report Governance Financial statements

30. RETIREMENT BENEFIT OBLIGATIONS
In the UK, the Group operates a defined benefit scheme (the “Chemring Group Staff Pension Scheme”or “Scheme”). The Group’s other UK and overseas
pension arrangements are all defined contribution schemes, with a combined cost of £9.4m (2023: £8.4m) for continuing operations.
The Chemring Group Staff Pension Scheme is a funded scheme and the assets of the scheme are held in a separate trustee administered fund. The scheme
was closed to future accrual on 6 April 2012. A full actuarial valuation for the scheme as at 6 April 2021 has been updated to 31 October 2024, using the
projected unit credit method. The main assumptions for the scheme are detailed below.
The trust deed provides for an unconditional right to a return of surplus assets in the event of a plan wind-up. The trustees are given no rights to unilaterally
wind up or augment the benefits due to members of the scheme. Based on these rights, any net surplus in the UK scheme is recognised in full.
Pension buy-in arrangement, which is expected to lead to a full buy-out in the future
On 28 November 2023, the trustees of the Scheme (the “Trustees”) entered into a buy-in contract with an insurer, Pension Insurance Corporation (“PIC”), to
purchase a bulk annuity insurance policy that operates as an investment asset. The buy-in removes future risk associated with funding of the Scheme from the
balance sheet, while ensuring the security of benefits for the Scheme members. The buy-in premium was initially funded through the transfer of the majority
of the Scheme’s assets to PIC, as well as by an upfront contribution from the Group of approximately £1.6m and further contributions of £1.4m were made in
the year to 31 October 2024. Overall the Group expects to pay a further c£1.1m over the next twelve to eighteen months to provide funding for the rectification
of certain members’ benefits and to meet the costs associated with the initial buy-in and eventual buy-out of the Scheme.
Under IAS 19, the insurance policy is typically treated as an investment of the pension scheme, valued at its fair value. Correspondingly, the pension liabilities
remain on the balance sheet, with no immediate derecognition of liabilities related to the insured members.
The trustees have exercised judgement in treating the buy-in as a precursor to a full buy-out. A buy-out would involve the full discharge of the pension scheme’s
obligations to the insured members, transferring all future obligations and risks to the insurance provider.
Consequently a settlement cost of £7.0m and administrative expenses in relation to the buy-in of £0.5m has been recognised as non-underlying costs in the
profit and loss account in the year to 31 October 2024.
Under IAS 19, the treatment of the buy-in remains distinct from that of a full buy-out until the legal transfer of liabilities is finalised. Therefore, the insurance
policy remains recorded as a scheme asset, and the corresponding liabilities are not derecognised until the buy-out is formally completed.
The purchase of the bulk annuity policy matches the vast majority of the benefits due to be paid from the Fund. Consequently, the difference in the values of
the assets and liabilities is mainly the remaining assets after the bulk annuity policy purchase.
The decision to treat the buy-in as a future buy-out is based on the following considerations:
- Management intention: The management is committed to transitioning from the current buy-in to a full buy-out and is actively working towards this outcome.
- Negotiations in progress: Formal discussions and negotiations with the insurer are underway to conclude the buy-out, with the expectation of completion
within a reasonable timeframe.
- Economic substance: Even though a legal buy-out has not yet been finalised, the economic substance of the transaction closely aligns with a buy-out, as the
insurance policy transfers significant risks and rewards to the insurer.
The movement in the net defined benefit asset is as follows:
Defined benefit obligations
Defined benefit asset
Net defined benefit asset
2024
2023
2024
2023
2024
2023
£m
£m
£m
£m
£m
£m
At 1 November
(56.3)
(60.2)
62.2
71.4
5.9
11.2
Administrative expenses
—
—
(0.5)
(1.1)
(0.5)
(1.1)
Settlement
—
—
(7.0)
—
(7.0)
—
Net interest (cost)/credit
(2.9)
(3.0)
2.9
3.5
—
0.5
(2.9)
(3.0)
(4.6)
2.4
(7.5)
(0.6)
– demographic and financial assumptions
(1.6)
3.8
—
—
(1.6)
3.8
– experience adjustment
(0.3)
(0.4)
—
—
(0.3)
(0.4)
– return on plan assets excluding interest income
—
—
0.6
(8.1)
0.6
(8.1)
(1.9)
3.4
0.6
(8.1)
(1.3)
(4.7)
Other
Contributions by the employer
—
—
3.0
—
3.0
—
Net benefits paid out
4.4
3.5
(4.4)
(3.5)
—
—
At 31 October
(56.7)
(56.3)
56.8
62.2
0.1
5.9
Chemring Group PLC Annual report and accounts 2024 165
Strategic report Governance Financial statements

NOTES TO THE GROUP FINANCIAL STATEMENTS continued
30. RETIREMENT BENEFIT OBLIGATIONS continued
Pension buy-in arrangement, which is expected to lead to a full buy-out in the future continued
The Chemring Group Staff Pension Scheme had 796 members at the end of the year (2023: 801). Of these members 62.7% (2023: 59.8%) were pensioners
drawing benefits from the scheme and the balance were deferred members. The duration of the liability is long, with pension payments expected to be made
for at least the next 40 years. The pension scheme’s assets are analysed as follows:
2024
2023
2024
2023
£m
£m
%
%
Buy-in policy
54.7
—
96.3
—
Liability driven investment
—
33.7
—
54.2
Corporate bonds
—
25.4
—
40.8
Assets held by insurance company
1.0
1.0
1.8
1.6
Cash
1.1
2.1
1.9
3.4
56.8
62.2
100.0
100.0
The buy-in policy’s fair value is determined to be equal to the defined benefit obligation (less any other assets held by the insurance company and any liabilities
determined by the actuary which are not included within the buy-in policy) as it is valued using the same assumptions used by the actuary to value the liability.
The value of the buy-in policy is £2.0m lower than the value of total obligations as at 31 October 2024 due to £1.0m of other liabilities held for GMP equalisation
and NRA equalisation which are not included within the policy and £1.0m of other insurance assets.
As at 31 October 2023, the pension scheme assets were invested in corporate bonds and a portfolio of leveraged liability driven pooled funds designed to hedge
interest rate and inflation risk, in preparation of reaching the buy-out position. Liability driven investments and corporate bonds are either pooled or unpooled
investment vehicles. Unpooled investment vehicles, which are not quoted on active markets, have been valued at the latest available bid price or single price
provided by the pooled investment manager. Where funds are valued weekly, the value is taken as at the week ending immediately before or after the year-end
date. Shares in other pooled arrangements have been valued at the latest available net assets value, determined in accordance with fair value principles, provided
by the pooled investment manager.
As at 31 October 2023, the scheme’s liability matching portfolio was invested in leveraged pooled liability driven investment (“LDI”) funds, a liquidity fund and
investments in funds with underlying assets in corporate bonds. The trustees target an interest rate and inflation hedge ratio of around 100% (based on the
scheme’s technical provisions funding basis).
The principal assumptions used in the actuarial valuation of the Chemring Group Staff Pension Scheme were as follows:
2024
2023
%
%
Discount rate
5.3
5.6
Inflation
– RPI
3.6
3.6
– CPI
2.9
2.9
In determining defined benefit obligations, the Group uses mortality assumptions which are based on published mortality tables. For the Chemring Group Staff
Pension Scheme, the actuarial table currently used is S3PA tables (series 3 of the SAPS tables) with future improvements in line with CMI 2023 and a 1.25%
long-term trend rate. This results in the following life expectancies at age 65:
2024
2023
No.
No.
Future pensioners
– male
87.8
87.9
– female
90.0
90.0
Current pensioners
– male
87.0
87.1
– female
88.6
88.7
The most significant assumptions in the pension valuation are the discount rate applied to the liabilities, the inflation rate to be applied to pension payments
and the mortality rates. If the discount rate used in determining retirement benefit obligations were to change by 0.1% then it is predicted that the deficit in the
scheme would change by approximately £0.7m. A change in the rate of inflation by 0.1% is predicted to change the deficit by approximately £0.3m and a 10%
change to the mortality assumption would change the deficit by approximately £1.8m. The principal risks to the scheme are that the investments do not perform
as well as expected, the discount rate continues to rise driven by higher market interest rates, short-term movements in inflation, and the rate of improvement
in mortality assumed is insufficient and life expectancies continue to rise.
The Group anticipates contributions to the defined benefit scheme for the year ending 31 October 2025 will be £nil (2024: £nil).
In June 2023, the High Court handed down a decision in the case of Virgin Media Limited v NTL Pension Trustees II Limited and others relating to the validity
of certain historical pension changes due to the lack of actuarial confirmation required by law. In July 2024, the Court of Appeal dismissed the appeal brought by
Virgin Media Ltd against aspects of the June 2023 decision. The conclusions reached by the court in this case may have implications for some UK defined benefit plans.
The Trustee of the Chemring Group Staff Pension Scheme has taken advice from the Scheme’s legal advisors regarding the Virgin Media case and has concluded
that no action is required at present. The Trustee believes that the Scheme has implemented robust governance processes and has no reason to believe that
actuarial confirmation was not obtained for any historical benefit changes. As such, the defined benefit obligation continues to reflect the benefits currently
being administered.
Chemring Group PLC Annual report and accounts 2024166
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31. CASH GENERATED FROM OPERATING ACTIVITIES
2024
2023
Notes
£m
£m
Operating profit from continuing operations
58.1
45.4
Amortisation of development costs
12
1.3
0.7
Amortisation of intangible assets arising from business combinations (non-underlying)
12
2.0
3.0
Amortisation of patents and licences
12
0.3
—
Impairment of development costs
12
—
15.6
Loss on disposal of non-current assets
12
1.7
—
Depreciation of property, plant and equipment
13
21.0
18.6
Non-underlying items
3
11.0
5.2
Share-based payment expense
28
5.8
4.4
Operating cash flows before movements in working capital
101.2
92.9
Increase in inventories
(30.1)
(18.2)
Increase in trade and other receivables
(16.9)
(18.7)
Increase in trade and other payables
41.8
23.7
Increase in provisions
—
0.3
Operating cash flow from continuing underlying operations
96.0
80.0
Operating cash flow from discontinued underlying operations
(1.5)
(0.8)
Cash impact of non-underlying items from discontinued operations
(1.5)
(1.9)
Net cash outflow from discontinued operations
(3.0)
(2.7)
32. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
2024
2023
£m
£m
Decrease in cash and cash equivalents
(3.9)
(13.7)
Decrease in debt and lease financing due to cash flows
(26.6)
8.8
Increase in net debt resulting from cash flows
(30.5)
(4.9)
Effect of foreign exchange rate changes
(0.3)
0.3
Acquired debt
—
(0.1)
New leases entered into, lease interest and other non-cash movements
(7.2)
(2.1)
Amortisation of debt finance costs
(0.4)
(0.4)
Movement in net debt
(38.4)
(7.2)
Net debt at the beginning of the year
(14.4)
(7.2)
Net debt at the end of the year
(52.8)
(14.4)
Chemring Group PLC Annual report and accounts 2024 167
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NOTES TO THE GROUP FINANCIAL STATEMENTS continued
33. ANALYSIS OF NET DEBT
At
At
1 November
Non-cash
Exchange
31 October
2023
Cash flows
changes
rate effects
2024
£m
£m
£m
£m
£m
Cash and cash equivalents (including bank overdraft)
6.4
(3.9)
—
(0.5)
2.0
Debt due after one year
(14.1)
(29.1)
(0.6)
0.1
(43.7)
Preference shares
(0.1)
—
—
—
(0.1)
(7.8)
(33.0)
(0.6)
(0.4)
(41.8)
Lease liabilities
(6.6)
2.5
(7.0)
0.1
(11.0)
(14.4)
(30.5)
(7.6)
(0.3)
(52.8)
Accrued interest is included in the carrying amount of interest payable (note 21) measured at amortised cost and therefore is not presented as a separate line
item in the above table.
34. CONTINGENT LIABILITIES
The Group is, from time to time, party to legal proceedings and claims, which arise in the ordinary course of business. In addition, the Group enters into various
guarantee and performance bond arrangements in the ordinary course of business. Provision is made for any amounts that the directors reasonably consider
may become payable (see note 24). 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.
Countermeasures UK incident
On 10 August 2018, an incident occurred at our Countermeasures facility in Salisbury. The Group responded to support those who were injured and all related
claims by employees were settled under our employers’ liability insurance. We also fully supported the UK Health and Safety Executive with its investigation.
The business pleaded guilty to a breach of section 2(1) of the Health and Safety at Work Act 1974 in connection with the incident and on 27 June 2024 was
fined £613,075. This matter is now closed.
35. RELATED PARTY TRANSACTIONS
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
Transactions with the Group’s pension schemes are disclosed in note 30.
Remuneration of key management personnel
The directors of the Company had no material transactions with the Company during the year, other than in connection with their service agreements.
The remuneration of the executive directors is determined by the Remuneration Committee, having regard to the performance of the individuals and market
trends. The remuneration of the non-executive directors is determined by the Board, having regard to the practice of other companies and the particular
demands of the Group.
For the purposes of remuneration disclosure, key management personnel includes only the directors and excludes the other senior business managers
and members of the Executive Committee. Further information on the remuneration of individual directors is provided in the audited part of the directors’
remuneration report on pages 121 to 130.
Total emoluments for key management personnel charged to the consolidated income statement were:
2024
2023
£m
£m
Short-term employee benefits
2.8
2.9
Post-employment benefits
0.1
0.1
Share-based payment benefits
3.2
1.6
Total remuneration of key management personnel
6.1
4.6
36. POST BALANCE SHEET EVENTS
There were no events after the balance sheet date requiring disclosure.
Chemring Group PLC Annual report and accounts 2024168
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PARENT COMPANY BALANCE SHEET
As at 31 October 2024
2024 2023
Note £m £m £m £m
Non-current assets
Property, plant and equipment 1 0.3 0.4
Investments in subsidiaries 2 786.0 786.0
Retirement benefit surplus 10 0.1 3.1
Deferred tax 9 1.3 0.6
787.7 790.1
Current assets
Trade and other receivables 3 28.1 14.6
Cash and cash equivalents 0.3 0.3
28.4 14.9
Total assets 816.1 805.0
Current liabilities
Borrowings 5 (28.2) —
Trade and other payables 4 (34.2) (36.9)
(62.4) (36.9)
Non-current liabilities
Borrowings 5 (43.7) (30.0)
Trade and other payables 4 (2.9) (0.3)
Provisions 6 (14.6) (9.1)
Preference shares 7 (0.1) (0.1)
(61.3) (39.5)
Total liabilities (123.7) (76.4)
Net assets 692.4 728.6
Equity
Share capital 8 2.7 2.8
Share premium account 309.0 308.7
Special capital reserve 13.0 12.9
Retained earnings 367.7 404.2
Total equity 692.4 728.6
Profit attributable to shareholders
In accordance with the concession granted under section 408 of the Companies Act 2006, the profit and loss account of Chemring Group PLC has not
beenpresented separately in these financial statements. There is no material difference between the results disclosed and the results on an unmodified
historicalcost basis. The Company reported a profit for the year ended 31 October 2024 of £15.1m (2023: £11.0m).
These financial statements of Chemring Group PLC (registered number 86662) were approved and authorised for issue by the Board of directors on
17December 2024.
Signed on behalf of the Board
Michael Ord James Mortensen
Director Director
Chemring Group PLC Annual report and accounts 2024 169
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PARENT COMPANY STATEMENT OF COMPREHENSIVEINCOME
For the year ended 31 October 2024
2024 2023
£m £m
Profit after tax attributable to equity holders of the parent as reported 15.1 11.0
Items that will not be reclassified subsequently to profit and loss
Remeasurement of the defined benefit pension scheme, net of deferred tax (2.1) (1.6)
Total comprehensive income attributable to the equity holders of the parent 13.0 9.4
PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 October 2024
Share Special
premium capital Retained
Share capital account reserve earnings Total
£m £m £m £m £m
At 1 November 2023 2.8 308.7 12.9 404.2 728.6
Profit after tax — — — 15.1 15.1
Other comprehensive loss — — — (2.1) (2.1)
Total comprehensive income — — — 13.0 13.0
Ordinary shares issued — 0.3 — — 0.3
Share-based payments (net of settlement) — — — 8.7 8.7
Deferred tax on share-based payments — — — (0.2) (0.2)
Dividends paid — — — (19.6) (19.6)
Purchase of own shares (0.1) — 0.1 (38.4) (38.4)
At 31 October 2024 2.7 309.0 13.0 367.7 692.4
Share Special
premium capital Retained
Share capital account reserve earnings Total
£m £m £m £m £m
At 1 November 2022 2.8 307.7 12.9 422.0 745.4
Profit after tax — — — 11.0 11.0
Other comprehensive loss — — — (1.6) (1.6)
Total comprehensive income — — — 9.4 9.4
Ordinary shares issued — 1.0 — — 1.0
Share-based payments (net of settlement) — — — 7.6 7.6
Deferred tax on share-based payments — — — (0.6) (0.6)
Dividends paid — — — (17.3) (17.3)
Purchase of own shares — — — (16.9) (16.9)
At 31 October 2023 2.8 308.7 12.9 404.2 728.6
The auditor’s remuneration for audit and other services is disclosed in note 4 to the Group financial statements.
A final dividend of 5.2p per ordinary share has been proposed. See note 9 to the Group financial statements.
As at 31 October 2024 the Company had distributable reserves of £367.7m (2023: £404.2m). When required, the Company can receive dividends from its
subsidiaries to further increase distributable reserves.
Included within retained earnings is the Company’s own shares held by the Group’s Employee Share Ownership Plan Trust (“ESOP”); see note 27 of the Group
financial statements for details.
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1. PROPERTY, PLANT AND EQUIPMENT
Detailed disclosure of property, plant and equipment was not considered necessary due to its immaterial value. The Company had no capital commitments as at
31 October 2024 or 31 October 2023.
2. INVESTMENTS IN SUBSIDIARIES
Shares in
subsidiary
undertakings
£m
Cost
At 31 October 2023 922.2
Additions —
At 31 October 2024 922.2
Impairment
At 31 October 2023 (136.2)
Impairment —
At 31 October 2024 (136.2)
Carrying amount
At 31 October 2024 786.0
At 31 October 2023 786.0
Investment values are allocated to their respective legal entities. Where the investment value relates to an intermediate holding company, the subsidiaries of that
holding company are used to support the carrying value.
The Company tests investments at least annually for impairment. Tests are conducted more frequently if there are indications that investments might be
impaired. There were no impairment indicators identified during the year ended 31 October 2024. The recoverable amounts of the CGUs are determined from
value-in-use calculations. In determining the value in use, we have allocated central costs necessary to generate the underlying cash flows. The key assumptions
for the value-in-use calculations have been individually estimated for each CGU and are detailed in note 11 of the Group financial statements. All of the CGUs
referred to in note 11 represent either investments held directly by the Company or investments held by an intermediate holding company, in which case the
value-in-use of those CGUs in aggregation is used to support the carrying value of the intermediate holding company. The pre-tax discount rates used for the
CGUs ranged from 11.6% to 13.9% (2023: 11.6% to 12.9%).
Stress testing was performed on the forecasts to consider the impact of reasonably possible scenarios over the forecast period, including a 1% increase in
discount rate, a 1% reduction in long-term growth rate, a 10% fall in the forecast cash flows or a $0.10 weakening in the sterling to US dollar exchange rate.
Evenunder any of these circumstances, no CGUs would require an impairment against goodwill.
Details of the Group undertakings at 31 October 2024 are set out in note 14 to the Group financial statements. The Company has given a parental guarantee
under section 479A of the Companies Act 2006 to certain subsidiary undertakings, details of which are also set out in note 14 to the Group financial statements.
The directors consider that the carrying value of the investments does not exceed their fair value.
3. TRADE AND OTHER RECEIVABLES
2024 2023
£m £m
Within current assets
Amounts owed by subsidiary undertakings 26.3 12.9
Derivative financial instruments (note 23 to the Group financial statements) 0.9 0.7
Prepayments and accrued income 0.6 0.7
Other debtors 0.3 0.3
28.1 14.6
The directors consider that the carrying value of the trade and other receivables approximates to their fair value.
Interest on amounts owed by subsidiary undertakings is charged between 0% and 8%. No interest is charged on trade and other receivables from the date
ofinvoice to payment. Expected credit losses on financial assets are not material.
NOTES TO THE PARENT COMPANY FINANCIALSTATEMENTS
Chemring Group PLC Annual report and accounts 2024 171
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NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS continued
4. TRADE AND OTHER PAYABLES
2024 2023
£m £m
Within current liabilities
Derivative financial instruments (note 23 to the Group financial statements) 1.5 3.2
Trade payables 0.5 0.2
Amounts owed to subsidiary undertakings 26.7 25.7
Other payables 5.2 7.8
Corporation tax 0.3 —
34.2 36.9
Within non-current liabilities
Derivative financial instruments (note 23 to the Group financial statements) 2.9 0.3
37.1 37.2
Other payables of £5.2m (2023: £7.8m) includes payroll-related creditors of £3.3m (2023: £3.6m).
Interest on amounts owed to subsidiary undertakings attracts interest rates between 0% and 5%. No interest is payable on trade payables from the date of invoice
to payment.
5. BORROWINGS
During the year to 31 October 2024, management has considered the classification of the UK Cash Pooling Arrangement (“UKCPA”) and determined that
positive and negative cash positions should not be netted down on the balance sheet as the balances are no longer expected to be settled net. As such, positive
balances in the UKCPA have been show gross in cash and cash equivalents and negative balances are shown within current liabilities as bank borrowings. As at
31October 2023, the net position of the UKCPA was included as borrowings within non-current liabilities.
Interest accrued on the UKCPA is calculated on the net position.
Borrowings due within one year comprise overdrafts that are repayable on demand.
2024 2023
£m £m
Within current liabilities
Bank borrowings – sterling denominated 28.2 —
Borrowings due within one year 28.2 —
Within non-current liabilities
Bank borrowings – sterling denominated 43.7 30.0
Borrowings due after more than one year 43.7 30.0
Total borrowings 71.9 30.0
An analysis of borrowings by maturity is as follows:
2024 2023
£m £m
Borrowings falling due:
– less than one year 28.2 —
– within one to two years — —
– within two to five years 43.7 30.0
71.9 30.0
The interest incurred on the above borrowings is detailed within notes 7 and 18 to the Group financial statements. As at 31 October 2024, sterling denominated
borrowings related to drawdowns on the revolving credit facility which carried interest at 6.47%.
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6. PROVISIONS
Total
£m
At 1 November 2023 9.1
Provided 6.4
Foreign exchange (0.2)
Paid (0.7)
At 31 October 2024 14.6
It is not possible to estimate more accurately the expected timing of any resulting outflows of economic benefits. Total provisions include legal provisions of
£0.2m, which represent the estimated legal costs relating to ongoing investigations, and disposal provisions of £14.4m, which relate to estimated liabilities faced
bythe Company in respect of the disposal of its European Munitions businesses in 2014 under the terms of their respective sale agreements. See note 24 to the
Group financial statements for further details.
7. PREFERENCE SHARES
2024 2023
£m £m
Cumulative preference shares (62,500 shares of £1 each) 0.1 0.1
The cumulative preference shares carry an entitlement to a dividend at the rate of 7p per share per annum, payable in equal instalments on 30 April and
31October each year. Holders of the preference shares have the right on a winding-up to receive, in priority to any other classes of shares, the sum of
£1pershare together with any arrears of dividends.
8. SHARE CAPITAL
Total
£m
As at 1 November 2023 280,824,610
Cancelled shares under the share buyback programme (note 26) (8,617,243)
Issued to employees under savings-related share schemes 402,267
Total number of ordinary shares of 1p each 272,627,634
2024 2023
£m £m
Issued, allotted and fully paid
272,627,634 (2023: 280,842,610) ordinary shares of 1p each 2.7 2.8
During the year, 402,267 ordinary shares (2023: 495,671) were issued for cash to employees under the Group’s approved savings-related share schemes.
On 1 August 2023, the Company announced a share buyback programme to repurchase up to £50m of its own shares over the following 12months. See note
26 to the Group financial statements for further details.
The preference shares are presented as a liability and accordingly are excluded from called-up share capital in the balance sheet.
Share-based incentive schemes
Full details of the schemes are set out in note 28 to the Group financial statements.
9. DEFERRED TAX
2024 2023
£m £m
At the beginning of the year 0.6 0.8
Credit/(charge) to income statement 0.7 (1.0)
Credit to other comprehensive income — 0.8
Deferred tax asset at the end of the year 1.3 0.6
The amount provided represents:
Pension — (0.8)
Other temporary differences 1.3 1.4
1.3 0.6
At the balance sheet date, the Company had unrecognised tax losses of £nil (2023: £nil) potentially available for offset against future profits in certain circumstances.
Chemring Group PLC Annual report and accounts 2024 173
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10. RETIREMENT BENEFIT OBLIGATIONS
The Company has assumed its share of the assets and liabilities of the Group’s defined benefit pension scheme. An analysis of the balance is shown below:
Total
£m
At 1 November 2022, retirement benefit surplus 5.8
Contributions —
Other finance costs (0.3)
Actuarial movements (2.4)
At 31 October 2023, retirement benefit surplus 3.1
Contributions 3.0
Settlement loss (3.9)
Actuarial movements (2.1)
At 31 October 2024, retirement benefit surplus 0.1
Further details are set out in note 30 to the Group financial statements.
11. STAFF COSTS
2024 2023
Number Number
Average monthly number of total employees (including executive directors) 33 34
The costs incurred in respect of these employees (including share-based payments) were:
2024 2023
£m £m
Wages and salaries 6.5 6.6
Social security costs 0.8 0.8
Other pension costs 0.5 0.5
Share-based payment 3.3 5.6
11.1 13.5
Disclosures in respect of directors’ emoluments can be found in the directors’ remuneration report on pages 106 to 133.
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS continued
Chemring Group PLC Annual report and accounts 2024174
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ACCOUNTING POLICIES
1. GENERAL INFORMATION
Chemring Group PLC is a company incorporated in England and Wales under
registration number 86662. The address of the registered office is Roke
Manor, Old Salisbury Lane, Romsey, Hampshire SO51 0ZN. The nature
of the Group’s operations and its principal activities are set out in note 2
of the Group financial statements and in the directors’ report on pages 134
to 136. These financial statements are the consolidated financial statements
of Chemring Group PLC and its subsidiaries (the “Group”).
Chemring Group PLC and the companies in which it directly and indirectly
owns investments are separate and distinct entities. In this publication of
the annual report and accounts, the collective expressions “Chemring”
and “the Group” may be used for convenience where reference is made
in general to those companies. Likewise, the words “we”, “us”, “our” and
“ourselves” are used in some places to refer to the subsidiaries of the Group
in general. These expressions are also used where no useful purpose is served
by identifying any particular company or companies.
The financial statements are presented in pounds sterling, being the currency
of the primary economic environment in which the Group operates, and
rounded to the nearest £0.1m. Foreign operations are included in accordance
with the foreign currencies accounting policy.
Going concern
The directors have, at the time of approving the financial statements, a reasonable
expectation that the Group and the Company have adequate resources to
continue to adopt the going concern basis of accounting in preparing these
financial statements. Further detail is contained in the statement on going
concern on page 83 which forms part of these financial statements.
2. ADOPTION OF NEW AND REVISED STANDARDS
The following standards, amendments and interpretations have been issued
by the International Accounting Standards Board (“IASB”) or by the IFRS
Interpretations Committee. The Group’s approach to these is as follows:
i) There were no IFRS Interpretations Committee (“IFRIC”) interpretations,
amendments to existing standards or new standards adopted in the year
ended 31 October 2024 that have materially impacted the reported
results or the financial position.
ii) The following IFRIC interpretations, amendments to existing standards
and new standards were adopted in the year ended 31 October 2024 but
have not materially impacted the reported results or the financial position:
> IFRS 17 Insurance Contracts;
> Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS
Practice Statement 2);
> Definition of Accounting Estimates (Amendments to IAS 8); and
> Deferred Tax related to Assets and Liabilities arising from a Single
Transaction (Amendments to IAS 12).
iii) At the date of authorisation of this announcement, the following
standards and interpretations that are potentially relevant to the Group
and which have not yet been applied in these reported results were in
issue but not yet effective (and in some cases had not yet been adopted
by the UK Endorsement Board):
Effective for periods beginning on or after 1 January 2024
> Classification of liabilities as Current or Non-current
(Amendments to IAS 1);
> Non-current liabilities with covenants (Amendments to IAS 1);
> Supplier finance (Amendments to IAS 7 and IFRS 7);
> Financial instrument disclosures (Amendments to IFRS 17);
> General Requirements for Disclosure of Sustainability-related Financial
Information (IFRS S1); and Climate-related Disclosures (IFRS S2).
Effective for periods beginning on or after 1 January 2025
> Lack of exchangeability (Amendments to IAS 21).
Effective for periods beginning on or after 1 January 2026
> Classification and measurement of financial instruments (Amendments
to IFRS 9); and
> Annual improvements to IFRS Standards.
Effective for periods beginning on or after 1 January 2027
> IFRS 18 Presentation and Disclosure in Financial Statements; and
> IFRS 19 Subsidiaries without Public Accountability: Disclosures.
The directors do not expect the adoption of these standards and
interpretations will have a material impact on the results of the Group
in future periods.
3. GROUP ACCOUNTING POLICIES
Basis of preparation
These financial statements have been prepared in accordance with
UK-adopted international accounting standards (“UK-adopted IFRS”)
in conformity with the requirements of the Companies Act 2006.
The financial statements are prepared under the historical cost convention,
except as described below under the heading of “Derivative financial instruments”.
The accounting policies adopted have been applied consistently throughout
the current and previous year.
Basis of consolidation
The Group financial statements consolidate those of the Company and all of
its subsidiaries. Subsidiaries are entities controlled by the Group. The Group
“controls” an entity when it is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect those returns
through its power over the entity. The financial statements of subsidiaries are
included in the consolidated financial statements from the date on which
control commences until the date on which control ceases.
The Company considers that it has the power to govern the financial and
operating policies of the US entities falling within the Special Security Agreement
and these entities have therefore been consolidated in these financial statements.
The Company and all of its subsidiaries make up their financial statements
to the same date. All intra-group transactions, balances, income and expenses
are eliminated on consolidation.
Non-controlling interest
The Group recognises non-controlling interest in an acquired entity
either at fair value or at the non-controlling interest’s proportionate share
of the acquired entity’s net identifiable assets. This decision is made on an
acquisition-by-acquisition basis. For non-controlling interests that the Group
holds, the Group elected to recognise the non-controlling interests at its
proportionate share of the acquired net identifiable assets.
Q6 Holdings Limited, a wholly owned subsidiary of Chemring Group PLC,
owns 80% of the issued shares of Vigil AI Limited. Disclosure of the minority
interest on the face of the primary statements has not been included as this
is considered immaterial to the Group. As at 31 October 2024, profit after
tax, total comprehensive income and equity attributable to minority interests
were less than £0.1m.
Chemring Group PLC Annual report and accounts 2024 175
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ACCOUNTING POLICIES continued
3. GROUP ACCOUNTING POLICIES continued
Revenue recognition
Chemring is organised into two sectors, Sensors & Information and
Countermeasures & Energetics.
From a revenue recognition perspective, whilst Chemring operates across
the whole lifecycle of its products and services, these are generally awarded
by its customers as individual contracts for the different stages rather than
being large, complex, long-term framework agreements requiring extensive
consideration of price allocation and performance obligations. As a result we
are less susceptible to judgements over revenue recognition regarding contract
performance, modifications and cancellations.
Whilst as a Group we aim to develop products which can be sold on to
multiple end users and markets, in some instances the nature of products and
services are unique to a customer and may not have an alternative use at the
point of production. In such cases, where an enforceable right to payment
exists, revenue will be recognised over time.
From time to time we enter into contracts for “customer-funded R&D”
where Chemring provides a service towards the development of a technology
for a customer resulting in revenue. In certain instances, Chemring partly
funds the development effort and this can result in the recognition of a
controlled asset.
Contracts
The majority of the Group’s revenue arises from the manufacture and
shipment of goods.
Sales contracts are reviewed for performance obligations but the principal
driver for timing of revenue recognition is delivery obligations, typically based
on Incoterms. Certain contracts may also require customer acceptance testing.
Once the relevant delivery obligation has been met and, as applicable, customer
acceptance received, revenue can be recognised.
The timing of payment from customers is generally aligned to revenue
recognition, though on certain contracts advance receipts are received as
disclosed in note 21. This also applies to sales where there are no goods
shipped but a deliverable is completed at a certain point in time, such as the
issue of a report where there is no enforceable right to payment for work
in progress.
In a smaller number of cases, revenue also arises from milestone contracts
that contain multiple performance obligations. Often these contracts are
already divided into milestones for payment purposes, but judgement is
required when assessing the way the contract is divided up to ensure that
each element is a separate and valid performance obligation. If they are not,
the relevant revenue amount is allocated across the other obligations as
appropriate. In some cases milestones are achieved in one period but not
billed until the next period, leading to a timing difference with the recognition
of revenue in advance of customer billing. In this instance accrued income is
recognised as described in note 16. There are no contracts with a significant
financing component.
At the start of the contract, the total transaction price is estimated as the
amount of consideration to which the Group expects to be entitled in exchange
for transferring the promised goods and services to the customer, excluding
sales taxes. This is based on the agreed contract price, with no material claims
and incentive payment terms, and therefore significant judgement to determine
the transaction price is not required. Typically our contracts do not have any
material variable consideration and no significant judgement has been required
around the extent to which this ought to be recognised. The total transaction
price is allocated to the performance obligations identified in the contract in
proportion to their relative stand-alone selling prices, where stand-alone selling
prices are typically estimated based on expected costs plus contract margin.
The Group provides warranties to its customers to give them assurance that
its products and services will function in line with agreed-upon specifications.
Warranties are not provided separately and, therefore, do not represent
separate performance obligations.
A number of sales contracts allow for bill and hold arrangements, where
the customer has bought the goods but has not yet taken physical possession.
This usually arises when the customer has limited storage space or there have
been delays in their own production schedule. For such revenue to be recognised
the bill and hold arrangement must be substantive and the relevant goods
must be clearly identified as belonging to the customer and ready for immediate
shipment at the customer’s request. These categories of sales are common
across all segments.
In its ordinary business the Group enters into contracts with government
defence agencies where, from time to time, judgement is required in order
to determine if the arrangement is that of a supply of goods and services to be
accounted for under IFRS 15 or a government grant to be accounted for under
IAS 20. Such arrangements require a consideration of the wider economics of
the contractual arrangement as well as critical evaluation against the scope
criteria of each of the above accounting standards.
Where a contract includes transactions that should be accounted for other
than as revenue or expenses based on their nature, these transactions are
presented in accordance with the applicable accounting standard. In the instance
that this results in the acquisition of assets on receipt of a government grant,
the transactions will be accounted for following our government grants
accounting policy.
Qualifying costs to obtain a contract are not material across the Group.
Sale of goods
Revenue from the sale of goods is recognised when all of the following
conditions are satisfied:
- the Group has identified a sales contract with a customer;
- the performance obligations within this contract have been identified;
- the transaction price has been determined;
- this transaction price has been allocated to the performance obligations
in the contract; and
- revenue is recognised as or when each performance obligation is satisfied.
Performance obligations are satisfied when the customer gains control of
promised goods or services from the contract. Customers do not typically
gain a right of return of goods.
Rendering of services
Revenue from a contract to provide services, including customer-funded research
and development, is recognised by reference to the stage of completion of the
contract. Stage of completion is typically estimated by either the proportion of
contract costs incurred for work performed to date or completion of relevant
milestones where this faithfully depicts the transfer of control of the goods
and services to the customer and does not significantly differ from using the
proportion of contract costs incurred basis.
Another significant source of Group revenue, especially within the Sensors
& Information segment, arises from time and materials contracts, where
revenue is typically accrued and billed in the following month based on work
performed to date, following which payment is typically promptly received.
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3. GROUP ACCOUNTING POLICIES continued
Revenue recognition continued
Principal versus agent assessment
The Group enters into certain arrangements which involve a consortium
of service providers. The Group acts as a “prime” contractor in certain contracts
with customers and utilises sub-contractors to undertake the work. Under
these contracts the Group is considered to be primarily responsible for fulfilling
the service to the customer. The Group performs a technical assessment of
the work before it is delivered to the customer and is responsible for quality
and performance of the sub-contractor. As such the Group is considered to
be the principal to the arrangement with the customer and includes sub-contractor
costs within revenue. However, where the Group is merely acting as an agent
of a sub-contractor then no revenue is recognised in respect of sub-contractor costs.
All consortium arrangements are assessed by the Group to determine if it is the
principal or agent considering who is responsible for fulfilling the performance
obligation, who bears inventory risk and who has price discretion.
Contract assets and liabilities
As described above, on some contracts there is a timing difference between
the recognition of revenue and the customer billing. Where this is the case,
contract asset and liability balances are recognised, referred to as accrued
income or deferred income and advance receipts from customers in the
financial statements.
Acquisitions and disposals
On acquisition of a subsidiary, associate or jointly controlled entity, the cost
is measured as the fair value of the consideration. The assets, liabilities and
contingent liabilities of subsidiary undertakings that meet the IFRS 3 (Revised)
Business Combinations recognition criteria are measured at the fair value at the
date of acquisition, except that:
- deferred tax assets or liabilities, and liabilities or assets relating to employee
benefit arrangements, are recognised and measured in accordance with
IAS 12 Income Taxes and IAS 19 (Revised) Employee Benefits respectively;
- liabilities or equity instruments related to the replacement by the Group of
an acquiree’s share-based payment awards are measured in accordance with
IFRS 2 Share-based Payments; and
- assets (or disposal groups) that are classified as held for sale, in accordance
with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations,
are measured in accordance with that standard.
Where cost exceeds fair value of the net assets acquired, the difference
is recorded as goodwill.
Where the fair value of the net assets exceeds the cost, the difference is
recorded directly in the income statement. The accounting policies of
subsidiary undertakings are changed where necessary to be consistent
with those of the Group.
If the initial accounting for a business combination is incomplete by the end
of the reporting period in which the combination occurs, the Group reports
provisional amounts for the items for which the accounting is incomplete.
Those provisional amounts are adjusted during the measurement period
(see below), or additional assets or liabilities recognised, to reflect new
information obtained about facts and circumstances that existed as at the
acquisition date that, if known, would have affected the amounts recognised
as at that date.
The measurement period runs from the date of acquisition to the date the
Group obtains complete information about facts and circumstances that
existed as at the acquisition date, subject to a maximum period of one year.
In accordance with IFRS 3 (Revised) Business Combinations, acquisition
and disposal-related items are recognised through the income statement.
Acquisition and disposal-related items refer to credits and costs associated
with the acquisition and disposal of businesses, together with the costs
of aborted bids and the establishment of joint ventures.
Discontinued operations and assets held for sale
When the Group makes a decision to exit a significant business unit
or separate major line of business, the associated operations and cash
flows are classified as discontinued operations in the financial statements,
in accordance with the provisions of IFRS 5 Non-current Assets Held for Sale
and Discontinued Operations.
These discontinued operations may represent components of the Group
that have already been disposed of or are classified as held for sale.
Non-current assets and disposal groups classified as held for sale are measured
at the lower of carrying amount and fair value less costs to sell.
Non-current assets and disposal groups are classified as held for sale if their
carrying amount will be recovered through a sales transaction rather than
continuing use. This condition is regarded as met only when the sale is highly
probable and the asset or disposal group is available for immediate sale in its
present condition. Management must be committed to the sale which should
be expected to qualify as a completed sale within one year from the date
of classification.
Intangible assets – goodwill
The purchased goodwill of the Group is regarded as having an indefinite
useful economic life and, in accordance with IAS 36 Impairment of Assets,
is not amortised but is subject to annual tests for impairment. On disposal
of a subsidiary, associate or jointly controlled entity, the amount attributable
to goodwill is included in the determination of the profit or loss on disposal.
Acquired intangibles
The Group recognises, separately from goodwill, intangible assets that are separable
or arise from contractual or other legal rights and whose fair value can be
measured reliably. These intangible assets are amortised at rates calculated to
write down their cost or valuation to their estimated residual values by equal
instalments over their estimated useful economic lives, which are:
- technology – average of ten years
- customer relationships – average of ten years
Development costs
Development costs that qualify as intangible assets are capitalised as incurred
and, once the relevant intangible asset is ready for use, are amortised on a
straight-line basis over their estimated useful lives, averaging ten years
(2023: ten years).
The carrying value of development assets is assessed for recoverability at least
annually or when a trigger is identified.
Patents and licences
Patents and licences are measured initially at purchase cost and are amortised
on a straight-line basis over their estimated useful lives, averaging five years
(2023: six years).
Property, plant and equipment
Land and buildings, property, plant and equipment is held at cost less
accumulated depreciation and any recognised impairment loss. Borrowing
costs on significant capital expenditure projects are capitalised and allocated
to the cost of the project.
No depreciation is provided on freehold land. On other assets, depreciation
is provided at rates calculated to write down their cost to their estimated
residual values by equal instalments over their estimated useful economic lives,
which are:
- freehold buildings – up to fifty years
- leasehold buildings – the period of the lease
- plant and equipment – up to ten years
Chemring Group PLC Annual report and accounts 2024 177
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ACCOUNTING POLICIES continued
3. GROUP ACCOUNTING POLICIES continued
Impairment of non-current assets
Assets that have indefinite lives are allocated to the Group’s cash-generating
units and tested for impairment at least annually. Assets that are subject to
depreciation or amortisation are reviewed for impairment whenever changes
in circumstances indicate that the carrying value may not be recoverable.
To the extent that the carrying value exceeds the recoverable amount, an
impairment loss is recorded for the difference as an expense in the income
statement. The recoverable amount used for impairment testing is the higher
of the value-in-use and the asset’s fair value less costs of disposal. For the
purpose of impairment testing, assets are grouped at the lowest levels for
which there are separately identifiable cash flows.
Inventories
Inventories are recorded at the lower of cost and net realisable value. Cost
represents materials, direct labour, other direct costs and related overheads,
and is determined using a weighted average cost basis. Net realisable value is
based on estimated selling price, less further costs expected to be incurred
to completion and disposal.
Provision is made for slow-moving, obsolete and defective items where appropriate.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or
production of qualifying assets, which are assets that necessarily take a
substantial period of time to prepare for their intended use, are added to
the cost of those assets, until such time as the assets are ready for their
intended use. Once the assets are ready for their intended use, these
capitalised borrowing costs are depreciated in line with the underlying asset.
All other borrowing costs are recognised in the income statement in the
period in which they are incurred.
Government grants
Government grants are not recognised until there is reasonable assurance
that the Group will comply with the conditions attaching to them and that
the grants will be received.
Government grants for staff retraining costs are recognised as deferred
income over the periods necessary to match them with the related costs
and are deducted in reporting the related expense.
The Group initially recognises government grants received relating to the
construction or acquisition of assets as deferred income at fair value, if there is
reasonable assurance that they will be received and the Group complies with
the conditions associated with the grant. Grants related to the acquisition of
assets are recognised in profit and loss as other income on a systematic basis
over the useful life of the asset.
Tax
The tax expense represents the sum of current tax and deferred tax.
Current tax is based on taxable profit for the year. Taxable profit differs
from profit as reported in the income statement because it excludes items
of income or expense that are taxable or deductible in other years, and it
excludes items of income or expense that are never taxable or deductible.
The Group’s liability for current tax is calculated using tax rates that have
been enacted or substantively enacted at the balance sheet date.
Deferred tax represents amounts expected to be payable or recoverable
on differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation
of taxable profit, and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary
differences, and deferred tax assets are recognised to the extent that it is
probable taxable profits will be available in the future against which deductible
temporary differences can be utilised. Such assets and liabilities are not
recognised if the temporary difference arises from goodwill or from the
initial recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the taxable profit nor
the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising
on investments in subsidiaries and associates, and interests in joint ventures,
except where the Group is able to control the reversal of the temporary
difference and it is probable that the temporary difference will not reverse
in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised. Deferred tax is charged
or credited in the income statement, except where it relates to items charged
or credited directly to equity, in which case the deferred tax is also dealt with
in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable
right to set off current tax assets against current tax liabilities, when they
relate to income taxed by the same tax authority, and when the Group
intends to settle its current tax assets and liabilities on a net basis .
Special capital reserve
The special capital reserve was created as part of a capital reduction scheme
involving the cancellation of the share premium account which was approved
by the Court in 1986, in accordance with the requirements of the Companies
Act 1985.
Any repurchase of the Company’s ordinary shares as permitted under
Companies Act 2006 is credited to this reserve.
Foreign currencies
The individual financial statements of each Group company are presented in its
functional currency, being the currency of the primary economic environment
in which it operates. For the purpose of these Group financial statements, the
results and financial position of each Group company are expressed in pounds
sterling, which is the functional currency of the Company, and the presentation
currency for these financial statements.
In preparing the financial statements of each Group company, transactions in
foreign currencies, being currencies other than the entity’s functional currency,
are recorded at the rates of exchange prevailing on the dates of the transactions.
At each balance sheet date, monetary assets and liabilities that are denominated
in foreign currencies are retranslated at the rates prevailing on the balance
sheet date. Non-monetary items carried at fair value that are denominated
in foreign currencies are translated at the rates prevailing at the date when
the fair value was determined.
Non-monetary items that are measured in terms of historical cost in a foreign
currency are not retranslated.
Exchange differences arising on the settlement of monetary items and on
the retranslation of monetary items are included in the income statement
for the period.
In order to hedge its exposure to certain foreign exchange risks, the Group
enters into forward foreign exchange contracts which are accounted for
as derivative financial instruments (see below for details of the Group’s
accounting policies in respect of such derivative financial instruments).
For the purpose of presenting these financial statements, the assets and
liabilities of the Group’s foreign operations are translated at exchange rates
prevailing on the balance sheet date. Income and expense items are translated
at the average exchange rates for the period.
Goodwill and fair value adjustments arising on the acquisition of a foreign
entity are treated as assets and liabilities of the foreign entity and translated
at the closing rate.
Financial instruments
Financial assets and liabilities are recognised in the Group’s balance sheet when
the Group becomes a party to the contractual provisions of the instrument.
Chemring Group PLC Annual report and accounts 2024178
Strategic report Governance Financial statements

3. GROUP ACCOUNTING POLICIES continued
Financial assets
Trade receivables
Trade receivables do not carry any interest and are stated at their fair value
and amortised cost as reduced by appropriate allowances for expected credit losses.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits,
and other short-term highly liquid investments that are readily convertible
to a known amount of cash and are subject to an insignificant risk of change
in value.
Financial liabilities and derivative financial instruments
Financial liabilities
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into.
Bank borrowings
Interest bearing bank loans and overdrafts are recorded at the proceeds received,
net of direct issue costs. Finance charges, including premiums payable on settlement
or redemption, and direct issue costs are accounted for on an accruals basis in
the income statement using the effective interest method, and are added to
the carrying amount of the instrument to the extent that they are not settled
in the period in which they arise.
Trade payables
Trade payables are not interest bearing and are stated at their fair value
and amortised cost.
Derivative financial instruments
The Group’s activities expose it to the financial risks of foreign currency
transactions, and it uses forward foreign exchange contracts to hedge its
exposure to these transactional risks. The Group does not use derivative
financial instruments for speculative purposes.
Derivative financial instruments are recognised at fair value on the date
the derivative contract is entered into and are revalued to fair value at
each balance sheet date. The fair values of derivative financial instruments
are calculated by external valuers.
The Group does not apply hedge accounting for derivative financial
instruments, with changes in the fair value of derivatives being recognised
in the income statement immediately.
Hedges of net investments in foreign operations
Any gain or loss on the hedging instrument relating to the effective portion
of the hedge is recognised in the statement of comprehensive income and
accumulated in the translation reserve. The gain or loss relating to the
ineffective portion is recognised immediately in the income statement.
Retirement benefit costs
Payments to defined contribution retirement benefit schemes are charged
as an administrative expense in the period to which they relate. For defined
benefit schemes, the cost of providing benefits is determined using the projected
unit credit method, with actuarial valuations being carried out at each balance
sheet date. Remeasurement of the defined benefit pension scheme, which
comprises actuarial gains and losses, the return on plan assets (excluding
interest) and the effect of the asset ceiling (if any, excluding interest), are
recognised in the statement of comprehensive income in full in the period
in which they occur.
The Group determines the net interest income on the net defined benefit
asset for the period by applying the discount rate used to measure the defined
benefit obligation at the beginning of the annual period to the then net defined
benefit asset, taking into account any changes in the net defined benefit asset
during the year as a result of contributions and benefit payments. Net interest
income and other expenses related to defined benefit plans are recognised in
profit or loss.
When the benefits of a plan are changed or when a plan is curtailed, the
resulting change in benefit that relates to past service or the gain or loss on
curtailment is recognised immediately in profit or loss.
The retirement benefit obligation recognised in the balance sheet represents
the present value of the defined benefit obligation as reduced by the fair value
of scheme assets. Any asset resulting from this calculation is limited to past
service cost, plus the present value of available refunds and reductions in
future contributions to the scheme.
Leased assets
At the lease commencement date (i.e. the date the underlying asset is available
for use), the Group recognises a right-of-use asset and a lease liability on the
balance sheet.
The lease liability is initially measured at the present value of future lease
payments, discounted using the Group’s incremental borrowing rate. The
right-of-use asset is initially measured at cost, comprising the initial value of
the lease liability, any lease payments made before commencement of the
lease, any initial direct costs and any restoration costs. The asset is recorded
as property, plant and equipment, and is depreciated over the shorter of its
estimated useful economic life and the lease term on a straight-line basis.
The finance cost is charged to the income statement over the lease term to
produce a constant periodic rate of interest on the lease liability. The lease
payment is allocated between repayment of the lease liability and finance cost.
The Group has elected to account for short-term leases and leases of
low-value assets using the practical expedients. Instead of recognising a
right-of-use asset and lease liability, the payments in relation to these are
recognised as an expense in the income statement on a straight-line basis
over the lease term.
Share-based compensation
The Group operates equity-settled share-based compensation schemes.
For grants made under the Group’s share-based compensation schemes,
the fair value of an award is measured at the date of grant and reflects any
market-based vesting conditions. Non-market-based vesting conditions are
excluded from the fair value of the award. At the date of grant, the Company
estimates the number of awards expected to vest as a result of non-market-based
vesting conditions, and the fair value of this estimated number of awards is
recognised as an expense in the income statement on a straight-line basis over
the vesting period. At each balance sheet date, the impact of any revision to
vesting estimates is recognised in the income statement over the vesting
period. Proceeds received, net of any directly attributable transaction costs,
are credited to share capital and share premium.
Provisions
Provisions are recognised when the Group has a present obligation, either
legal or constructive, as a result of a past event, it is probable that the Group
will be required to settle that obligation, and a reliable estimate can be made
of the amount of the obligation. The amount recognised as a provision is the
best estimate of the consideration required to settle the present obligation
at the balance sheet date, taking into account the risks and uncertainties
surrounding the obligation. Where a provision is measured using the estimated
cash flows to settle the present obligation, its carrying amount is the present
value of those cash flows. The Group uses the “expected value” or “most likely
outcome” method on a case-by-case basis to estimate the value of provisions.
When some or all of the economic benefits required to settle a provision
are expected to be recovered from a third party, a receivable is recognised
as an asset if it is virtually certain that reimbursement will be received and the
amount of the receivable can be measured reliably.
Chemring Group PLC Annual report and accounts 2024 179
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ACCOUNTING POLICIES continued
3. GROUP ACCOUNTING POLICIES continued
Provisions continued
Environmental provisions
Where the Group is liable for decontamination work or the restoration of
sites to their original condition, an estimate is made of the costs needed to
complete these works, discounted back to present values, relying upon
independent third party valuers where appropriate.
Restructuring provisions
A restructuring provision is recognised when the Group has developed a
detailed formal plan for the restructuring and has raised a valid expectation in
those affected that it will carry out the restructuring by starting to implement
the plan or announcing its main features to those affected by it. The measurement
of a restructuring provision includes only the direct expenditures arising from the
restructuring and not those associated with the ongoing activities of the entity.
Warranty provisions
In the event of warranty obligations, provisions for the expected cost of
warranty obligations under local sale of goods legislation are recognised at
the date of sale of the relevant products, based upon the best estimate of
the expenditure required to settle the Group’s obligations.
Disposal provisions
Disposal provisions relate to estimated liabilities faced by the Group in respect
of discontinued operations and other disposed entities under the terms of
their respective sale agreements.
Contingent liabilities
The Group exercises judgement in recognising exposures to contingent
liabilities related to pending litigation or other outstanding claims subject
to negotiated settlement, mediation, arbitration or government regulation,
as well as other contingent liabilities. Judgement may be necessary in assessing
the likelihood that a pending claim will succeed, or a liability will arise, and/or
to quantify the possible range of the financial settlement.
Alternative Performance Measures (“APMs”)
In the analysis of the Group’s financial performance and position, operating
results and cash flows, APMs are presented to provide readers with additional
information. The principal APMs presented are underlying measures of earnings
including underlying operating profit, underlying profit before tax, underlying
profit after tax, underlying EBITDA, underlying earnings per share and underlying
operating cash flow. In addition, EBITDA, net debt and constant currency
metrics are presented which are also considered non-IFRS measures. These
measures are consistent with information regularly reviewed by management
to run the business, including planning, budgeting and reporting purposes and
for its internal assessment of the operational performance of individual businesses.
The directors believe that the use of these APMs assists in providing additional
information on the underlying trends, performance and position of the Group.
APMs are used to assist with the comparability of information between reporting
periods by adjusting for items that are non-recurring or otherwise non-underlying.
Management considers non-underlying items to be:
- amortisation of acquired intangibles;
- material exceptional items, for example relating to acquisitions
and disposals, business restructuring costs, legal costs and other non-
reoccuring items;
- gains or losses on the movement in the fair value of derivative
financial instruments;
- pension buy-in and buy-out transactions; and
- the tax impact of all of the above.
The Group’s use of APMs is consistent and we provide comparatives
alongside all current period figures.
Further detail on the APMs presented within these financial statements,
including a reconciliation to the IFRS equivalent, is presented in note 3.
Exceptional items
Exceptional items are excluded from management’s assessment of profit
because by their size or nature they need to be separately disclosed to
properly understand the Group’s underlying quality of earnings. They are
typically gains or losses arising from events that are not considered part of
the core operations of the business. These items are excluded to reflect
performance in a consistent manner and are in line with how the business
is managed and measured on a day-to-day basis.
Post-balance sheet events
In accordance with IAS 10 Events after the Reporting Period, the Group
continues to disclose events that it considers material, non-disclosure of which
can influence the economic decisions of users of the financial statements.
4. CHEMRING GROUP PLC – PARENT COMPANY
ACCOUNTINGPOLICIES
FRS 101 Reduced Disclosure Framework
The financial statements have been prepared in accordance with UK accounting
standards and applicable law, including FRS 101 Reduced Disclosure Framework.
The Company operates a defined benefit scheme including employees of other
Group companies (a Group plan). Following FRS 101, the scheme assets and
liabilities have been allocated across the Group companies using a method
thatmanagement considers to be the most appropriate, based on scheme
membership, in accordance with the Group’s internal policy.
The following exemptions from the requirements of IFRS have been applied
inthe preparation of these financial statements, in accordance with FRS 101:
- share-based payments;
- financial instruments;
- fair value measurements;
- IFRS 16 Leases (paragraphs 52 and 58);
- presentation of comparative information in respect of certain assets;
- IFRSs issued but not yet effective;
- related party transactions;
- assumptions and sensitivities for impairment review; and
- cash flow.
Investment in Group undertakings
Investments are stated at cost less any provision for impairment in value.
Critical accounting judgements and sources of estimation uncertainty
There are no critical accounting judgements for the Company. The other
non-significant areas that include a degree of estimation uncertainty are below.
5. ACCOUNTING JUDGEMENTS AND SOURCES OF
ESTIMATION UNCERTAINTY
When applying the Group’s accounting policies, management must make
judgements, assumptions and estimates concerning the future that affect
the carrying amounts of assets and liabilities at the balance sheet date and
the amounts of revenue and expenses recognised during the period. Such
judgements, assumptions and estimates are based upon factors including
historical experience, the observance of trends in the industries in which
the Group operates, and information available from the Group’s customers
and other external sources.
Accounting judgements
Revenue recognition
Following IFRS 15 Revenue from Contracts with Customers, the Group recognises
revenue on the basis of the satisfaction of performance obligations.
Management has to consider whether performance obligations should be
recognised at a single point in time, which is generally the case for the sale
of products by the Group, or over a period of time, which is more common
for certain service contracts.
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5. ACCOUNTING JUDGEMENTS AND SOURCES OF
ESTIMATIONUNCERTAINTY continued
Accounting judgements continued
Revenue recognition continued
In making its judgement about obligations that are satisfied at a point in
time, management has to consider at what point control has passed to the
customer, allowing revenue to be recognised. This is typically determined
through a consideration of customer acceptance testing, stage of completion,
contract terms and delivery arrangements.
Key sources of estimation uncertainty
There are no key sources of estimation uncertainty at the balance sheet date
that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year.
Other non-significant areas that include a degree of estimation
uncertainty or judgements
While these areas do not present a significant risk resulting in a material
adjustment, they are areas of focus for management and include:
Provisions
The Group holds provisions where appropriate in respect of future economic
outflows which arise due to past events. These are subject to uncertainty in
respect of the outcome of future events. Estimates, judgements and assumptions
are based on factors including historical experience, the observance of trends
in the industries in which the Group operates, and information available from
the Group’s customers and other external sources. Actual outflows of economic
benefit may not occur as anticipated, and estimates may prove to be incorrect,
leading to further charges or releases of provisions as circumstances change.
The provisions held by the Group as at 31 October 2024 are set out in note 24.
Goodwill impairment
Determining whether goodwill is impaired requires an estimation of the
value-in-use of the cash-generating units to which goodwill has been allocated.
The value-in-use calculation requires the entity to estimate the future cash
flows expected to arise from the cash-generating unit, and to determine
a suitable discount rate in order to calculate present value (see note 11).
In reviewing the carrying value of goodwill of the Group’s businesses, the
Board has considered the separate plans and cash flows of these businesses
consistent with the requirements of IAS 36 Impairment of Assets. The plans and
cash flows of these businesses reflect current and anticipated conditions in the
defence industry. The total goodwill intangible asset is set out in note 11, which
shows a carrying value of £98.5m at 31 October 2024.
Capitalised development costs impairment
IAS 38 Intangible Assets requires that development costs, arising from the
application of research findings or other technical knowledge to a plan or
design of a new substantially improved product, are capitalised, subject to
certain criteria being met. Determining the future cash flows generated by
the products in development requires estimates which may differ from the
actual outcome. In particular, this can depend on the estimation applied to
future milestone events to secure long-term positions on production
contracts, for example Programs of Record for the US DoD. The total
capitalised development intangible asset is set out in note 12, which shows
a carrying value of £18.6m at 31 October 2024. Included in this balance are
individually material balances relating to Joint Biological Tactical Detection
System (£8.8m) and Perceive (£4.3m).
Taxation
The Group operates in a number of countries around the world. Uncertainties
exist in relation to the interpretation of complex tax legislation, changes in tax
laws and the amount and timing of future taxable income. In some jurisdictions
agreeing tax liabilities with local tax authorities can take several years. This
could necessitate future adjustments to taxable income and expense already
recorded. At the year-end date, tax liabilities and assets are based on management’s
best judgements around the application of the tax regulations and management’s
estimate of the future amounts that will be settled.
The Group’s operating model involves the cross-border supply of goods
into end markets. There is a risk that different tax authorities could seek to
assess higher profits (or lower costs) to activities being undertaken in their
jurisdiction, potentially leading to higher total tax payable by the Group.
At 31 October 2024 there was a provision of £1.0m in respect of uncertain
tax positions. Due to the uncertainties noted above, there is a risk that the
Group’s judgements are challenged, resulting in a different tax payable or
recoverable from the amounts provided. Management estimates that the
reasonably possible range of outcomes is between £nil and £1.0m.
Deferred tax assets on tax losses and US interest deductions
The category of deferred tax asset which contains significant estimation
uncertainty and which requires management judgement in assessing its
recoverability relates to US interest limitations and tax losses carried
forward (see note 25).
Applicable accounting standards permit the recognition of deferred tax
assets only to the extent that it is probable that future taxable profits will be
available, or to the extent that the existing taxable temporary differences, of
an appropriate type, reverse in an appropriate period to utilise the tax losses
carried forward. The assessment of future taxable profits involves significant
estimation uncertainty, principally relating to an assessment of management’s
projections of future taxable income based on business plans and ongoing tax
planning strategies. These projections include assumptions about the future
strategy of the Group, the economic and regulatory environment in which
the Group operates, future tax legislation and customer behaviour, amongst
other variables.
Defined benefit pension scheme
There is inherent uncertainty associated with the timing of the anticipated
buy-out and the final settlement of liabilities. Should the buy-out not proceed
as expected, there may be a need to adjust the accounting treatment in a
future period.
Investments in subsidiaries impairment (parent company only)
The parent company tests investments at least annually for impairment,
in addition to when there is an indicator of impairment. Determining
whether investments in subsidiaries are impaired requires an estimation
of the value-in-use of the legal entities to which the investments relate.
Where the investment value relates to an intermediate holding company,
the subsidiaries of that holding company are used to support the carrying
value. The value-in-use calculation requires the entity to estimate the future
cash flows expected to arise from the legal entity, and to determine a suitable
discount rate in order to calculate present value (see note 11 of the Group
financial statements). In reviewing the carrying value of investments in subsidiaries,
the Board has considered the separate plans and cash flows of these businesses
consistent with the requirements of IAS 36 Impairment of Assets. The plans and
cash flows of these businesses reflect current and anticipated conditions in the
defence industry. The total investments in subsidiaries are set out in note 2 of
the parent company financial statements, which shows a carrying value of
£786.0m at 31 October 2024.
Climate change
In preparing the financial statements, we have considered the impact of both
physical and transitional climate change risks, which have helped develop the
Group’s internal transitional plan to ensure we achieve our climate-related
targets, through the monitoring and assessment of our environmental metrics
(discussed earlier in the annual report). The key element to achieving our
climate-related target in our transitional plan is the electrification, energy
efficiency and renewable energy sourcing for our operations; this approach
requires upgrading and improvement of current facilities and equipment to
be more efficient and is dependent on future capital expenditure. Therefore,
the main areas affected from a financial perspective have been our impairment
and going concern and viability assessments where we have ensured that these
potential risks have been appropriately considered in forecast cash flows used.
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF CHEMRING GROUP PLC
1. OUR OPINION IS UNMODIFIED
We have audited the financial statements of Chemring Group PLC
(“theCompany”) for the year ended 31 October 2024 which comprise the
consolidated income statement, consolidated statement of comprehensive
income, consolidated statement of changes in equity, consolidated balance
sheet, consolidated cash flow statement, parent company balance sheet,
parent company statement of comprehensive income, parent company
statement of changes in equity, and the related notes, including the accounting
policies in notes 3 and 4.
In our opinion:
- the financial statements give a true and fair view of the state of the Group’s
and of the parent Company’s affairs as at 31 October 2024 and of the
Group’s profit for the year then ended;
- the Group financial statements have been properly prepared in accordance
with UK-adopted international accounting standards;
- the parent Company financial statements have been properly prepared
inaccordance with UK accounting standards, including FRS 101 Reduced
Disclosure Framework; and
- the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on
Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities are
described below. We believe that the audit evidence we have obtained
isasufficient and appropriate basis for our opinion. Our audit opinion
isconsistent with our report to the audit committee.
We were first appointed as auditor by the directors on 23 March 2018.
Theperiod of total uninterrupted engagement is for the seven financial years
ended 31 October 2024. We have fulfilled our ethical responsibilities under,
and we remain independent of the Group in accordance with, UK ethical
requirements including the FRC Ethical Standard as applied to listed public
interest entities. No non-audit services prohibited by that standard
wereprovided.
Overview
Materiality: Group
financial statements
asa whole
£3.5m (2023: £3.3m)
5.3% (2023: 4.9%) of profit before tax, normalised
toexclude this year’s non-underlying items
Coverage 91% (2023: 86%) of total profits and losses that made
up Group profit before tax including continuing
operations only
Key audit matters (KAM) Risk vs 2023
Recurring KAM Recoverability of goodwill and other assets
associated with Kilgore Flares
Recoverability of parent Company’s
investments in subsidiaries
◄►
◄►
New KAM Revenue recognition for sale of goods
throughout the period
◄►
2. KEY AUDIT MATTERS: OUR ASSESSMENT OF RISKS
OFMATERIAL MISSTATEMENT
Key audit matters are those matters that, in our professional judgement, were
of most significance in the audit of the financial statements and include the
most significant assessed risks of material misstatement (whether or not due
to fraud) identified by us, including those which had the greatest effect on: the
overall audit strategy; the allocation of resources in the audit; and directing the
efforts of the engagement team. We summarise below the key audit matters,
in decreasing order of audit significance, in arriving at our audit opinion above,
together with our key audit procedures to address those matters and, as
required for public interest entities, our results from those procedures. These
matters were addressed, and our results are based on procedures undertaken,
in the context of, and solely for the purpose of, our audit of the financial
statements as a whole, and in forming our opinion thereon, and consequently
are incidental to that opinion, and we do not provide a separate opinion on
these matters.
RECOVERABILITY OF GOODWILL AND OTHER ASSETS
ASSOCIATED WITH KILGORE FLARES
(Goodwill: £5.8m; 2023: £5.8m) and other assets associated with Kilgore Flares.
Refer to page 101 (Audit Committee report), page 177 (accounting policies)
and page 151 (financial disclosures).
THE RISK
Forecast-based assessment
Kilgore Flares (“KFL”) has significant goodwill and other assets. Operational
challenges at KFL resulted in performance significantly below management’s
forecasts. We determined at planning that the forecast future cash flows used
in calculating the value in use of the Kilgore cash generating unit (“CGU”)
involves a degree of estimation uncertainty, with a potential range of
reasonable outcomes greater than our materiality for the financial statements
as a whole. The estimated recoverable amount of KFL is subjective due to the
level of inherent uncertainty involved in forecasting and discounting the future
cash flows which are reliant upon the successful commissioning and level of
downtime in operations at the new automated facilities at this site.
In conducting our final audit work, we concluded that reasonably possible
changes to the value in use of KFL goodwill would not be expected to result
inmaterial impairment.
Previously we identified recoverability of goodwill of the Group’s CGUs,
including KFL as a key audit matter. We continue to perform procedures
overrecoverability of goodwill however, given the significant headroom and
lack of sensitivity in key assumptions relative to the other CGUs, we have not
assessed this as one of the most significant risks in our current year audit.
Therefore we have only separately identified recoverability of the KFL
goodwilland other assets in our report this year.
Our response
We performed the tests below rather than seeking to rely on any of the
Group’s controls because the nature of the balance is such that we would
expect to obtain audit evidence primarily through detailed procedures
described. Our procedures included:
- Historical comparisons: We challenged the cash flow forecasts by
comparinghistorical projects to actual results to assess the Group’s
abilitytoaccurately forecast;
- Our sector experience: We evaluated assumptions used, in particular those
relating to operating cash flow forecasts and downtime assumptions when
compared with our business understanding and downtime experienced in
the commissioning and normal operation of similar automated facilities
elsewhere in the Group;
- Benchmarking assumptions: We benchmarked KFL discount rates
(includingunderlying assumptions used) against market data, including
publicly available analysts’ reports and peer comparison using input from
ourown valuation specialists;
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THE RISK continued
- Sensitivity analysis: We performed sensitivity analysis by reviewing the impact
of reasonable downward changes to the assumptions noted above; and
- Assessing transparency: We assessed whether the Group’s disclosures about
the estimation uncertainty related to the impairment assessment reflect the
risks inherent in the valuation of goodwill.
Our results
We found the Group’s conclusion that there is no impairment in the goodwill
or assets in respect of the KFL CGU to be acceptable (2023 result: acceptable).
REVENUE RECOGNITION FOR SALE OF GOODS THROUGHOUT
THE PERIOD
(Revenue relating to goods at a point in time: £339.4m (2023: £318.6m)
Refer to page 101 (Audit Committee report), page 176 (accounting policies)
and page 143 (financial disclosures).
THE RISK
Revenue recognition for sale of goods throughout the period
We consider revenue recognition for goods to be a key audit matter as it is a key
driver of the Group’s results. Its size, the fact it is earned over the majority of
our components and the manual nature of our approach is reflected in the
allocation of our resources in planning and executing the audit across the Group.
Based on our cumulative audit experience, we have concluded that there is not a
material judgement or estimation in sale of goods revenue recognition, nor do
we consider there to be a significant risk of material misstatement.
We assess the degree of risk in relation to recognition of goods revenue to be
similar to prior periods, but have included this as a KAM this year reflecting the
relative assessment of areas of our audit and the removal of a number of
goodwill balances from our KAM reporting.
Our response
We performed the tests below rather than seeking to rely on any of the
Group’s controls because for certain components the low volume of high
value transactions meant that detailed testing is inherently the most effective
means of obtaining audit evidence and for other components our knowledge
of the design of these controls indicated that we would be unlikely to obtain
the required evidence to support reliance on controls.
Our procedures included:
- Tests of detail: Analysis of revenue throughout the period using data
andanalytical techniques to assess for unexpected transactions based
uponexpected account pairings, and vouching unexpected pairings to
supporting documentation;
- Tests of detail: Reconciling revenue recognition and cash receipts, adjusting
for reconciling items including sales taxes, to verify the existence and
accuracy of total revenue recorded; and
- Test of detail: Selecting revenue transactions throughout the period using
statistical sampling methods and vouching each to supporting documentation
to verify the existence and accuracy of the transactions recorded.
Our results
We considered the amount of sale of goods revenue throughout the period to
be acceptable (2023: acceptable).
RECOVERABILITY OF PARENT COMPANY’S INVESTMENTS
INSUBSIDIARIES
(Investments in subsidiaries: £786.0m; 2023: £786.0m)
Refer to page 101 (Audit Committee report), page 180 (accounting policies)
andpage 171 (financial disclosures).
THE RISK
Low risk, high value
The carrying amount of the parent company’s investments in subsidiaries
represents 96% (2023: 98%) of the parent company’s total assets.
Their recoverability is not at a high risk of material misstatement or subject to
significant judgement. However, due to their materiality in the context of the
parent company’s financial statements, this is considered to be the area that
had greatest effect on our overall parent company audit.
Our response
We performed the tests below rather than seeking to rely on any of the
parent Company’s controls because the nature of the balance is such that we
would expect to obtain audit evidence primarily through detailed procedures
described. Our procedures included:
- Historical comparisons: We challenged the cash flow forecasts supporting
the Group’s assessment that there are no impairment indicators for the
carrying value of each investment by comparing historical projections to
actual results to assess the Group’s ability to accurately forecast;
- Sensitivity analysis: We performed sensitivity analysis by performing a
reverse stress test to calculate how much cash flows would have to reduce
such that a material impairment would occur;
- Our sector experience: We evaluated whether the reduction in cash flows
calculated from our reverse stress test was realistic when compared with
our business understanding and historical comparisons; and
- Comparing valuations: We compared the carrying amount of the investments
with the expected value of the business based on the Group’s market
capitalisation and the fair value of the net debt.
Our results
We found the parent Company’s conclusion that there is no impairment of
investment in subsidiaries to be acceptable (2023 result: acceptable).
Chemring Group PLC Annual report and accounts 2024 183
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF CHEMRING GROUP PLC continued
3. OUR APPLICATION OF MATERIALITY AND AN OVERVIEW
OFTHE SCOPE OF OUR AUDIT
Materiality for the Group financial statements as a whole was set at £3.5m
(2023: £3.3m), determined with reference to a benchmark of Group profit
before tax, normalised to exclude non-underlying items as disclosed in note 3
to the Group financial statements, of which it represents 5.3% (2023: 4.9%).
We adjusted for these items because they do not represent the normal,
continuing operations of the Group.
Materiality for the parent Company financial statements as a whole was set
at£3.2m (2023: £3.0m) determined with reference to a benchmark of parent
Company total assets, of which it represents 0.4% (2023: 0.4%).
In line with our audit methodology, our procedures on individual account
balances and disclosures were performed to a lower threshold, performance
materiality, so as to reduce to an acceptable level the risk that individually
immaterial misstatements in individual account balances add up to a material
amount across the financial statements as a whole.
Performance materiality was set at 75% (2023: 75%) of materiality for the
financial statements as a whole, which equates to £2.6m (2023: £2.5m) for
theGroup and £2.4m (2023: £2.3m) for the parent Company. We applied this
percentage in our determination of performance materiality because we did
not identify any factors indicating an elevated level of risk.
We agreed to report to the Audit Committee any corrected or uncorrected
identified misstatements exceeding £175k (2022: £165k), in addition to other
identified misstatements that warranted reporting on qualitative grounds.
Of the Group’s 14 reporting components, we subjected six (2023: six) to full
scope audits for Group purposes, and two (2023: two) to specified risk-focused
audit procedures over revenue, inventory and management override of controls.
The components for which we performed work other than audits for Group
reporting purposes were not individually significant but were included in the
scope of our Group reporting work in order to provide further coverage over
the Group’s results. We conducted analytical procedures over the financial
information at a further two (2023: two) non-significant components in order
to provide further coverage over the Group’s results.
The components within the scope of our work accounted for the percentages
illustrated right.
The remaining 10% (2023: 16%) of total Group revenue and 9% (2023: 14%)
of total profits and losses that made up Group profit before tax is represented
by four components. None of these four components individually represented
more than 5% (2023: 7%) of any of total Group revenue or total profits and
losses that made up Group profit before tax. The remaining 13% (2023: 8%)
of total Group assets is represented by four (2023: four) components noneof
which individually represented more than 8% (2023: 4%) of totalGroupassets.
For these residual components, we performed analysis at an aggregated
Group level to re-examine our assessment that there were no significant
risksof material misstatement within these.
The Group team instructed component auditors as to the significant areas
tobe covered, including the relevant risks detailed above and the information
to be reported back. The Group team approved the component materialities
which ranged from £0.9m to £2.8m (2023: £1.2m to £2.4m), having regard to
the mix of size and risk profile of the Group across the components. The work
on 6 of the 14 (2023: 6 of the 14) components was performed by component
auditors and the rest, including the audit of the parent Company, was performed
by the Group team. The Group team performed procedures onthe items
excluded from normalised profit before tax.
Normalised profit before tax
Group materiality
NORMALISED PROFIT BEFORE TAX
£66.3m (2023: £67.9m)
GROUP MATERIALITY
£3.5m (2023: £3.3m)
£3.5m
Whole financial statements
materiality (2023: £3.3m)
£175k
Misstatements reported
tothe audit committee
(2023: £165k)
£2.6m
Whole financial statements
performance materiality
(2023: £2.5m)
£2.8m
Range of materiality at 9
components (£0.9m to £2.8m)
(2023: £1.2m to £2.4m)
GROUP REVENUE TOTAL PROFITS AND LOSSES THAT
MADE UP GROUP PROFIT BEFORE TAX
GROUP TOTAL ASSETS
68
71
75
72
15
15
77
14
70
Full scope for Group audit
purposes2024
Specified risk-focused audit procedures 2024
Residual components 2024
Full scope for Group audit
purposes2023
Specified risk-focused audit procedures 2023
Residual components 2023
16
91%
(2023: 86%)
16
90%
(2023: 84%)
21
87%
(2023: 92%)
The Group team visited two (2023: four) component locations in the UK
andUS (2023: UK and US), to assess the audit risk and strategy. Video and
telephone conference meetings were also held with these component auditors
and all others that were not physically visited. At these visits and meetings, the
findings reported to the Group team were discussed in more detail, and any
further work required by the Group team was then performed by the
component auditor. The Group team also inspected the component audit
team’s key workpapers.
We were able to rely upon the Group’s internal control over financial reporting
in several areas of our audit, where our controls testing supported this approach,
which enabled us to reduce the scope of our substantive audit work; in the
other areas the scope of the audit work performed was fully substantive.
Chemring Group PLC Annual report and accounts 2024184
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4. THE IMPACT OF CLIMATE CHANGE ON OUR AUDIT
In planning our audit, we considered the potential impacts of climate change on
the Group’s business and its financial statements, based on our knowledge of the
Group’s operations and their stated strategy with respect to climate change.
The context of climate change for the Group
Climate change impacts the Group in a variety of ways including the impact
ofclimate risk on manufacturing and procurement, potential reputational risk
associated with the Group’s delivery of its climate-related initiatives, and greater
emphasis on climate-related narrative and disclosure in the annual report.
The Group’s exposure to climate change is primarily through environmental
factors impacting the safety of the sites across the Group, including wildfires in
Australia and hurricanes in the US. As part of our audit we have made
enquiries of the Group to understand the extent of the potential impact of
climate change risk on the Group’s financial statements and the Group’s
preparedness for this.
The Group emits greenhouse gases directly from energy used in its production
operations. As explained on page 48 of the Group’s annual report, the Group
is working toward targets to reduce scope 1 and 2 carbon emissions to
become net zero (scope 1 and scope 2 market-based) by 2035 and then
working towards being a scope 3 net zero organisation by 2050.
The Group’s assessment of accounting consequences
IFRS requires the Group’s financial reporting to be based, amongst other
things, on the Group’s best estimate of assumptions that are reasonable and
supportable as at the date of reporting. Those assumptions may not align with
the ways in which the global economy, society and government policies will
need to change to meet the relevant targets.
The Group has set carbon emissions targets and estimated the incremental
capital and operational expenditure required to deliver those targets. The
Group has considered the potential for asset obsolescence or shorter economic
lives of its existing property, plant and equipment, and this does not result
inany material changes to accounting estimates as a result.
The Group has provided more detail on how it has considered climate change
in its financial reporting on page 181 of the Group’s financial statements.
Our audit response
Risk assessment procedures
As part of our risk assessment procedures, we made enquiries, with the
assistance of our climate change professionals, of key members of management.
Our enquiries focused on understanding the Group’s climate-related strategy
and identifying those areas where climate change could have a potential
material impact on the financial statements. We did not identify the impact
ofclimate risk as a separate Key Audit Matter in our audit given the nature
ofthe Group’s operations and knowledge gained of its impact on significant
accounting estimates and judgements during our risk assessment procedures
and testing.
Audit procedures in relation to Key Audit Matters
We did not consider the impact of climate change to be significant to our audit
response for the Key Audit Matters relating to recoverability of goodwill and
the parent Company’s investments in subsidiaries. On the basis of our risk
assessment, we determined that while climate change poses a risk to the
determination of future cash flows, the risk to this year’s financial statements
from climate change alone is not significant taking into account the extent of
headroom available on the cash-generating units. As such, there was no impact
on our key audit matters.
Other audit procedures
During the course of our audit, we carried out the following additional
auditprocedures: we considered the Group’s processes around climate
change-related disclosures in the annual report and read the disclosures in the
strategic report and directors’ report and considered its consistency with the
financialstatements and our audit knowledge.
5. GOING CONCERN
The directors have prepared the financial statements on the going concern basis
as they do not intend to liquidate the Group or the Company or to cease their
operations, and as they have concluded that the Group’s and the Company’s
financial position means that this is realistic. They have also concluded that there
are no material uncertainties that could have cast significant doubt over their
ability to continue as a going concern for at least a year from the date of
approval of the financial statements (“the going concern period”).
We used our knowledge of the Group, its industry, and the general economic
environment to identify the inherent risks to its business model and analysed
how those risks might affect the Group’s and parent Company’s financial
resources or ability to continue operations over the going concern period.
Therisks that we considered most likely to adversely affect the Group’s and
parent Company’s available financial resources, EBITDA and net debt
covenants over this period were:
- delays to significant revenue contracts;
- manufacturing facility safety incidents causing business interruption; and
- the potential outcome of the provisions related to environmental
remediation claims.
We considered whether these risks could plausibly affect the liquidity or
covenant compliance in the going concern period by assessing the directors’
sensitivities over the level of available financial resources and covenant
thresholds indicated by the Group’s financial forecasts taking account
ofsevere, but plausible, adverse effects that could arise from these risks
individually and collectively.
We also assessed completeness of the going concern disclosure.
Our conclusions based on this work:
- we consider that the directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate;
- we have not identified, and concur with the directors’ assessment that there
is not, a material uncertainty related to events or conditions that, individually
or collectively, may cast significant doubt on the Group’s or Company’s
ability to continue as a going concern for the going concern period;
- we have nothing material to add or draw attention to in relation to the
directors’ statement in note 1 to the financial statements on the use of the
going concern basis of accounting with no material uncertainties that may
cast significant doubt over the Group and Company’s use of that basis for
the going concern period, and we found the going concern disclosure in page
83 to be acceptable; and
- the related statement under the Listing Rules set out on page 136 is
materially consistent with the financial statements and our audit knowledge.
However, as we cannot predict all future events or conditions and as subsequent
events may result in outcomes that are inconsistent with judgements that were
reasonable at the time they were made, the above conclusions are not a
guarantee that the Group or the Company will continue in operation.
6. FRAUD AND BREACHES OF LAWS AND REGULATIONS
– ABILITY TO DETECT
Identifying and responding to risks of material misstatement
due to fraud
To identify risks of material misstatement due to fraud (“fraud risks”) we
assessed events or conditions that could indicate an incentive or pressure to
commit fraud or provide an opportunity to commit fraud. Our risk assessment
procedures included:
- Enquiring of directors and internal audit and inspection of policy documentation
as to the Group’s high-level policies and procedures to prevent and detect
fraud, including the internal audit function, and the Group’s channel for
“whistleblowing”, as well as whether they have knowledge of any actual,
suspected, or alleged fraud;
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF CHEMRING GROUP PLC continued
6. FRAUD AND BREACHES OF LAWS AND REGULATIONS
– ABILITY TO DETECT continued
Identifying and responding to risks of material misstatement
due to fraud continued
- reading Board, Audit Committee, Executive Committee, Remuneration
Committee and Risk Management Committee meeting minutes;
- considering remuneration incentive schemes and performance targets for
management and directors including the EPS target for management
remuneration; and
- using analytical procedures to identify any unusual or unexpected relationships.
We communicated identified fraud risks throughout the audit team and
remained alert to any indications of fraud throughout the audit. This included
communication from the Group audit team to in-scope component audit teams
of relevant fraud risks identified at the Group level and request to full scope
component audit teams to report to the Group audit team any instances of
fraud that could give rise to a material misstatement at Group level.
As required by auditing standards and taking into account possible pressures to
meet profit targets, we perform procedures to address the risk of management
override of control, in particular the risk that Group and component management
may be in a position to make inappropriate accounting entries, and the risk of
bias in accounting estimates and judgements including recoverability ofgoodwill
and recoverability of parent Company investments in subsidiaries as detailed in
section 2 of this report. On this audit, we do not believe there is a fraud risk
related to revenue recognition because there are no complexities or significant
areas of estimation within the revenue recognition.
We did not identify any additional fraud risks.
We performed procedures including:
- identifying journal entries and other adjustments to test for all in-scope
components based on risk criteria and comparing the identified entries
tosupporting documentation. These included those posted to unusual
accounts; and
- assessing whether the judgements made in making significant accounting
estimates are indicative of potential bias.
Identifying and responding to risks of material misstatement
due to non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be
expectedto have a material effect on the financial statements from our
general commercial and sector experience, through discussion with the
directors (asrequired by auditing standards) and from inspection of the
Group’s regulatory and legal correspondence and discussed with the directors
the policies and procedures regarding compliance with laws and regulations.
As the Group is regulated, our assessment of risks involved gaining an
understanding of the control environment including the entity’s procedures
forcomplying with regulatory requirements.
We communicated identified laws and regulations throughout our team and
remained alert to any indications of non-compliance throughout the audit.
This included communication from the Group audit team to component audit
teams of relevant laws and regulations identified at the Group level, and a
request for component auditors to report to the Group team any instances
ofnon-compliance with laws and regulations that could give rise to a material
misstatement at Group level.
The potential effect of these laws and regulations on the financial statements
varies considerably.
Firstly, the Group is subject to laws and regulations that directly affect the financial
statements including financial reporting legislation (including related companies
legislation), distributable profits legislation, taxation legislation and pension
legislation, and we assessed the extent of compliance with these laws and
regulations as part of our procedures on the related financial statement items.
Secondly, the Group is subject to many other laws and regulations where the
consequences of non-compliance could have a material effect on amounts or
disclosures in the financial statements, for instance through the imposition of
fines or litigation. We identified the following areas as those most likely to have
such an effect: health and safety, environmental protection legislation, and
anti-bribery and corruption, recognising the regulated nature of the Group’s
activities and its legal form. Auditing standards limit the required audit
procedures to identify non-compliance with these laws and regulations to
enquiry of the directors and inspection of regulatory and legal correspondence,
if any. Therefore if a breach of operational regulations is not disclosed to us or
evident from relevant correspondence, an audit will not detect that breach.
For the Health and Safety Executive matter discussed in note 34, we assessed
disclosures against our understanding from legal correspondence, including
discussions held with the lawyers as well as inspection of relevant documentation.
Context of the ability of the audit to detect fraud or breaches of
law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk
thatwe may not have detected some material misstatements in the financial
statements, even though we have properly planned and performed our audit
in accordance with auditing standards.
For example, the further removed non-compliance with laws and regulations
is from the events and transactions reflected in the financial statements, the
less likely the inherently limited procedures required by auditing standards
would identify it.
In addition, as with any audit, there remained a higher risk of non-detection
offraud, as these may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal controls. Our audit procedures
are designed to detect material misstatement. We are not responsible for
preventing non-compliance or fraud and cannot be expected to detect
non-compliance with all laws and regulations.
7. WE HAVE NOTHING TO REPORT ON THE OTHER
INFORMATION IN THE ANNUAL REPORT
The directors are responsible for the other information presented in the
annual report together with the financial statements. Our opinion on the
financial statements does not cover the other information and, accordingly,
wedo not express an audit opinion or, except as explicitly stated below, any
form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider
whether, based on our financial statements audit work, the information therein
is materially misstated or inconsistent with the financial statements or our
audit knowledge. Based solely on that work we have not identified material
misstatements in the other information.
Strategic report and directors’ report
Based solely on our work on the other information:
- we have not identified material misstatements in the strategic report and the
directors’ report;
- in our opinion the information given in those reports for the financial year
isconsistent with the financial statements; and
- in our opinion those reports have been prepared in accordance with the
Companies Act 2006.
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Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration Report to be audited
has been properly prepared in accordance with the Companies Act 2006.
Disclosures of emerging and principal risks and longer-term viability
We are required to perform procedures to identify whether there is a
material inconsistency between the directors’ disclosures in respect of
emerging and principal risks and the viability statement, and the financial
statements and our audit knowledge.
Based on those procedures, we have nothing material to add or draw
attention to in relation to:
- the directors’ confirmation on page 73 that they have carried out a robust
assessment of the emerging and principal risks facing the Group, including
those that would threaten its business model, future performance, solvency
and liquidity;
- the principal risks and uncertainties disclosures describing these risks and
how emerging risks are identified, and explaining how they are being
managed and mitigated; and
- the directors’ explanation in the of viability statement of how they have
assessed the prospects of the Group, over what period they have done so
and why they considered that period to be appropriate, and their statement
as to whether they have a reasonable expectation that the Group will be
able to continue in operation and meet its liabilities as they fall due over the
period of their assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
We are also required to review the viability statement, set out on page 83
under the Listing Rules. Based on the above procedures, we have concluded
that the above disclosures are materially consistent with the financial
statements and our audit knowledge.
Our work is limited to assessing these matters in the context of only the
knowledge acquired during our financial statements audit. As we cannot
predict all future events or conditions and as subsequent events may result in
outcomes that are inconsistent with judgements that were reasonable at the
time they were made, the absence of anything to report on these statements
is not a guarantee as to the Group’s and Company’s longer-term viability.
Corporate governance disclosures
We are required to perform procedures to identify whether there is a
material inconsistency between the directors’ corporate governance
disclosures and the financial statements and our audit knowledge.
Based on those procedures, we have concluded that each of the following is
materially consistent with the financial statements and our audit knowledge:
- the directors’ statement that they consider that the annual report and
financial statements 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;
- the section of the annual report describing the work of the Audit Committee,
including the significant issues that the audit committee considered in relation
to the financial statements, and how these issues were addressed; and
- the section of the annual report that describes the review of the
effectiveness of the Group’s risk management and internal control systems.
We are required to review the part of the Corporate Governance Statement
relating to the Group’s compliance with the provisions of the UK Corporate
Governance Code specified by the Listing Rules for our review. We have
nothing to report in this respect.
8. WE HAVE NOTHING TO REPORT ON THE OTHER MATTERS
ONWHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
Under the Companies Act 2006, we are required to report to you if, in
ouropinion:
- adequate accounting records have not been kept by the parent Company,
orreturns adequate for our audit have not been received from branches
notvisited by us; or
- the parent Company financial statements and the part of the Directors’
Remuneration Report to be audited are not in agreement with the
accounting records and returns; or
- certain disclosures of directors’ remuneration specified by law are not made; or
- we have not received all the information and explanations we require for our audit.
We have nothing to report in these respects.
9. RESPECTIVE RESPONSIBILITIES
Directors’ responsibilities
As explained more fully in their statement set out on page 136, the directors are
responsible for: the preparation of the financial statements including
beingsatisfied that they give a true and fair view; such internal control as they
determine is necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error; assessing the
Group and parent Company’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern; and using the going concern basis
of accounting unless they either intend to liquidate the Group orthe parent
Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue our opinion in an auditor’s report. Reasonable
assurance is a high level of assurance, but does not guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in aggregate, they could reasonably
beexpected to influence the economic decisions of users taken on the basis
ofthe financial statements.
A fuller description of our responsibilities is provided on the FRC’s website at
www.frc.org.uk/auditorsresponsibilities.
The Company is required to include these financial statements in an annual
financial report prepared under Disclosure Guidance and Transparency Rule
4.1.17R and 4.1.18R. This auditor’s report provides no assurance over whether the
annual financial report has been prepared in accordance with those requirements.
10. THE PURPOSE OF OUR AUDIT WORK AND TO WHOM WE
OWE OUR RESPONSIBILITIES
This report is made solely to the Company’s members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the Company’s members those matters we
are required to state to them in an auditor’s report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company’s members, as a body, for
our audit work, for this report, or for the opinions we have formed.
James Childs-Clarke (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
Gateway House
Tollgate
Chandlers Ford
Southampton
SO53 3TG
17 December 2024
Chemring Group PLC Annual report and accounts 2024 187
Strategic report Governance Financial statements

FIVE-YEAR RECORD
For the year ended 31 October 2024
2024 2023 2022 2021 2020
£m £m £m £m £m
Revenue 510.4 472.6 401.0 351.6 351.4
Underlying EBITDA 93.7 88.5 77.3 67.7 62.7
Underlying operating profit 71.1 69.2 59.4 49.2 43.2
Non-underlying items (13.0) (23.8) (10.0) (7.1) (8.4)
Operating profit 58.1 45.4 49.4 42.1 34.8
Finance expense (4.8) (1.3) (1.5) (1.6) (3.0)
Profit before taxation 53.3 44.1 47.9 40.5 31.8
Taxation (10.6) (6.4) (3.5) (5.3) (5.8)
Profit for the year from continuing operations 42.7 37.7 44.4 35.2 26.0
(Loss)/profit after tax from discontinued operations (3.2) (32.3) 3.0 6.3 8.7
Profit attributable to equity shareholders 39.5 5.4 47.4 41.5 34.7
Cash generated from continuing underlying operations 96.0 80.0 85.1 71.3 70.5
Intangible assets and property, plant and equipment 414.9 369.9 395.4 351.5 348.9
Working capital 88.3 82.3 93.9 84.4 85.1
Provisions (19.9) (17.6) (18.4) (17.5) (19.0)
Retirement benefit surplus 0.1 5.9 11.2 13.7 7.6
Net current and deferred tax liabilities (19.1) (15.1) (20.8) (24.5) (16.3)
Net debt (52.8) (14.4) (7.2) (26.6) (48.2)
Other (55.2) (32.5) (36.0) (28.2) (28.5)
Net assets employed 356.3 378.5 418.1 352.8 329.6
Financed by:
Ordinary share capital 2.7 2.8 2.8 2.8 2.8
Reserves attributable to equity shareholders 353.6 375.7 415.3 350.0 326.8
Total equity 356.3 378.5 418.1 352.8 329.6
Basic underlying earnings per ordinary share (continuing operations) 19.8p 20.5p 19.0p 14.7p 12.1p
Diluted underlying earnings per ordinary share (continuing operations) 19.3p 20.0p 18.5p 14.4p 11.8p
Basic earnings per ordinary share (continuing operations) 15.7p 13.4p 15.8p 12.5p 9.2p
Diluted earnings per ordinary share (continuing operations) 15.3p 13.1p 15.4p 12.2p 9.0p
Dividend per share 7.8p 6.9p 5.7p 4.8p 3.9p
Chemring Group PLC Annual report and accounts 2024188
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HEADQUARTERS AND REGISTERED OFFICE
Roke Manor
Old Salisbury Lane
Romsey
Hampshire
SO51 0ZN
T: +44 (0)1794 463401
F: +44 (0)1794 463374
E: info@chemring.com
Website: www.chemring.com
REGISTERED NUMBER
86662
REGISTRARS
Computershare Investor Services plc
The Pavilions
Bridgwater Road
Bristol
BS13 8AE
SUBSIDIARY UNDERTAKINGS’ REGISTERED OFFICES
Subsidiary undertakings in England:
Roke Manor
Old Salisbury Lane
Romsey
Hampshire
SO51 0ZN
Subsidiary undertaking in Scotland:
Troon House
Ardeer Site
Stevenston
Ayrshire
KA20 3LN
Subsidiary undertakings in the US:
14401 Penrose Place
Suite #130
Chantilly
Virginia
20151
Subsidiary undertaking in Australia:
230 Staceys Road
Lara
Victoria
Australia
3212
Subsidiary undertaking in Norway:
Engeneveien 7
N-3475 Sætre
Norway
CORPORATE INFORMATION AND WEBSITE
Chemring Group PLC Annual report and accounts 2024 189
Strategic report Governance Financial statements

OTHER INFORMATION
FIND OUT MORE ONLINE
For more information about Chemring Group PLC, please visit www.chemring.com, where the latest shareholder information can be accessed, including:
- Current share price
- Key financial information
- Financial calendar
- Shareholder services and notices
- Corporate governance
- Results and presentations
- Analysts’ forecasts
- Regulatory news
Chemring Group PLC’s 2024 annual report and accounts and the notice of the Annual General Meeting can also be viewed and downloaded at
www.chemring.com/investors.
© CHEMRING GROUP PLC 2024
The information in this document is the property of Chemring Group PLC 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 Group PLC. This information is given in good faith based upon the
latest information available to Chemring Group PLC; no warranty or representation is given concerning such information, which must not be taken as establishing
any contractual or other commitment binding upon Chemring Group PLC or any of its subsidiary or associated companies.
Chemring Group PLC Annual report and accounts 2024190
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Chemring’s commitment to environmental issues is reflected in this Annual Report,
which has been printed on Magno Satin, an FSC
®
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