FTSE COMPANY REPORT Share price analysis relative to sector and index performance

Chemring Group CHG & Defense — GBP 2.41 at close 03 August 2020

Absolute Relative to FTSE UK All-Share Sector Relative to FTSE UK All-Share Index PERFORMANCE 03-Aug-2020 03-Aug-2020 03-Aug-2020

3 220 180 1D WTD MTD YTD

170 Absolute 0.8 0.8 0.8 0.2 2.8 200 Rel.Sector 0.6 0.6 0.6 53.8 160 Rel.Market -1.2 -1.2 -1.2 25.5

2.6 180 150 VALUATION 2.4 140 160 Trailing

2.2 130

RelativePrice RelativePrice

140 120 PE 31.1

Absolute Price (local (local Absolutecurrency) Price 2 EV/EBITDA 12.4 110 120 1.8 PB 2.2 100 PCF 12.0 1.6 100 90 Div Yield 1.5 Aug-2019 Nov-2019 Feb-2020 May-2020 Aug-2020 Aug-2019 Nov-2019 Feb-2020 May-2020 Aug-2020 Aug-2019 Nov-2019 Feb-2020 May-2020 Aug-2020 Price/Sales 2.0 Absolute Price 4-wk mov.avg. 13-wk mov.avg. Relative Price 4-wk mov.avg. 13-wk mov.avg. Relative Price 4-wk mov.avg. 13-wk mov.avg. Net Debt/Equity 0.3

100 100 100 Div Payout 0.0 90 90 90 ROE 7.3

80 80 80

Share Index) Share

Share Sector) Share - 70 - 70 70 DESCRIPTION 60 60 60 50 50 The Company principal activities is development and 50 RSI RSI (Absolute) 40 40 manufacture of Countermeasures, Sensors & 40 Electronics, and Energetic Systems for the 30 30 aerospace, defence and security markets.

20 20 30 RSI (Relative to FTSE UKFTSE All to RSI (Relative RSI (Relative to FTSE UKFTSE All to RSI (Relative 10 10 20 Aug-2019 Nov-2019 Feb-2020 May-2020 Aug-2020 Aug-2019 Nov-2019 Feb-2020 May-2020 Aug-2020 Aug-2019 Nov-2019 Feb-2020 May-2020 Aug-2020

Past performance is no guarantee of future results. Please see the final page for important legal disclosures. 1 of 4 FTSE COMPANY REPORT: 03 August 2020

Valuation Metrics

Price to Earnings (PE) EV to EBITDA Price to Book (PB)

30-Jun-2020 30-Jun-2020 30-Jun-2020 100 ‖ ‖ 14 2.6 13 2.4 80 +1SD 12 2.2 +1SD 60 11 2

Avg 10 1.8 +1SD Avg 40 9 1.6 Avg 8 1.4 20 -1SD -1SD 7 1.2 -1SD 0 ‖ ‖ ‖ ‖ 6 1 Jul-2015 Jul-2016 Jul-2017 Jul-2018 Jul-2019 Jul-2015 Jul-2016 Jul-2017 Jul-2018 Jul-2019 Jul-2015 Jul-2016 Jul-2017 Jul-2018 Jul-2019

Avon Rubber 69.4 23.9 Avon Rubber 11.5 Aerospace & Defense 51.0 Rolls-Royce Holdings 23.4 Holdings 3.3 Chemring Group 31.1 Chemring Group 12.4 Aerospace & Defense 3.0 Ultra Electronics Holdings 19.0 Ultra Electronics Holdings 10.6 BAE Systems 2.9 Qinetiq Group 15.9 Aerospace & Defense 8.3 Chemring Group 2.2 10.2 BAE Systems 7.6 Meggitt 0.9 Senior 10.0 Meggitt 6.1 Group 0.6 Rolls-Royce Holdings -4.2 Babcock International Group 5.4 Senior 0.5 Babcock International Group -8.0 Senior 4.0 Rolls-Royce Holdings 0.0 -20 -10 0 10 20 30 40 50 60 70 80 0 5 10 15 20 25 30 0 2 4 6 8 10 12 14

Price to Cash Flow (PCF) Dividend Yield % Price to Sales (PS)

30-Jun-2020 30-Jun-2020 30-Jun-2020 35 2.5 2.5

30 +1SD 2 2 +1SD 25 +1SD 20 Avg 1.5 Avg 1.5 Avg 15 -1SD 1 -1SD 1 10 -1SD

5 0.5 0.5 Jul-2015 Jul-2016 Jul-2017 Jul-2018 Jul-2019 Jul-2015 Jul-2016 Jul-2017 Jul-2018 Jul-2019 Jul-2015 Jul-2016 Jul-2017 Jul-2018 Jul-2019

Avon Rubber 62.8 BAE Systems 4.8 Avon Rubber 5.5 Ultra Electronics Holdings 14.9 Senior 3.3 Chemring Group 2.0 Chemring Group 12.0 Aerospace & Defense 3.0 Ultra Electronics Holdings 1.7 Qinetiq Group 10.8 Meggitt 1.9 Qinetiq Group 1.6 Aerospace & Defense 6.4 Chemring Group 1.5 BAE Systems 0.8 Meggitt 6.3 Ultra Electronics Holdings 0.7 Aerospace & Defense 0.7 Babcock International Group 4.1 Qinetiq Group 0.7 Babcock International Group 0.4 Rolls-Royce Holdings 2.6 Avon Rubber 0.7 Rolls-Royce Holdings 0.3 Senior 2.5 Rolls-Royce Holdings 0.0 Senior 0.3 0 10 20 30 40 50 60 70 0 1 2 3 4 5 6 0 1 2 3 4 5 6 Note: bar chart reflects the top and bottom five current values for the valuation ratio in question for FTSE All Shares stocks in the same sector as the stock concerned. All valuation metrics are trailing.

2 of 4 FTSE COMPANY REPORT: Chemring Group 03 August 2020

Valuation Metrics

Net Debt to Equity Dividend Payout (DP) Return on Equity (RoE)

30-Jun-2020 30-Jun-2020 30-Jun-2020 0.6 100 8 90 0.55 7 80 6 0.5 +1SD 70 +1SD 5 0.45 60 50 4 0.4 40 Avg 3 Avg +1SD 0.35 30 2 20 0.3 10 Avg 1 -1SD -1SD 0.25 0 ‖ ‖ ‖ ‖ 0 ‖ ‖ ‖ ‖ Jul-2015 Jul-2016 Jul-2017 Jul-2018 Jul-2019 Jul-2015 Jul-2016 Jul-2017 Jul-2018 Jul-2019 Jul-2015 Jul-2016 Jul-2017 Jul-2018 Jul-2019

Babcock International Group 1.2 Aerospace & Defense 100.0 BAE Systems 27.0 BAE Systems 0.9 Senior 100.0 Ultra Electronics Holdings 17.5 Aerospace & Defense 0.8 Meggitt 60.3 Avon Rubber 16.7 Ultra Electronics Holdings 0.6 Ultra Electronics Holdings 51.5 Aerospace & Defense 13.6 Senior 0.4 BAE Systems 50.3 Qinetiq Group 12.8 Meggitt 0.4 Rolls-Royce Holdings 0.0 Meggitt 9.1 Chemring Group 0.3 Qinetiq Group 0.0 Chemring Group 7.3 Qinetiq Group 0.0 Chemring Group 0.0 Senior 5.2 Avon Rubber 0.0 Babcock International Group 0.0 Babcock International Group -7.2 0 0.2 0.4 0.6 0.8 1 1.2 1.4 0 20 40 60 80 100 120 -10 -5 0 5 10 15 20 25 30

ROE vs. PB — sector Du Pont Analysis

12 2.5 8

AVON 7 2 10 6

1.5 8 5

1 4 PB 6

3 0.5 4 2 ULE Aerospace & Defe BA. 0 CHG 1 2 QQ.

MGGT -0.5 ‖ ‖ 0 BAB SNR 2016 2017 2018 2019 2020 0 0 5 10 15 20 25 30 Net Margin Asset Turnover Gearing ROE (rhs) ‖ ROE Note: bar chart reflects the top and bottom five current values for the valuation ratio in question for FTSE All Shares stocks in the same sector as the stock concerned. All valuation metrics are trailing.

3 of 4 FTSE COMPANY REPORT: Chemring Group 03 August 2020

Brief description Brief description

Price to Earnings Price to Earnings (PE) is price over earnings per share. Earnings are based on the latest Gearing Gearing is Total Assets divided by Common Equity. Total Assets and Common Equity are (PE) available fiscal year earnings. each averaged over two years, that is, t and (t-1). Price to Sales (PS) Price to Sales (PS) is price divided by sales per share. It is based on sales from continuing Asset Turnover Asset turnover is Sales divided by Total Assets. Total Assets is averaged over two years, operations for the fiscal year. that is, t and (t-1). Price to Book (PB) Price to Book (PB) is price at the indicated date divided by common equity per share. Dupont Breakdown Return on Equity (RoE) = Net Margin * Gearing * Asset Turnover Common/ordinary equity is generally as reported at the most recent fiscal year-end but is Analysis adjusted to exclude minority interest, preferred stock and selected items as appropriate. RoE vs PB Plot of RoE versus PB at last month end for all FTSE UK All Share stocks in the sector Price to Cash Flow Price to Cash Flow (PCF) is price at the indicated date divided by cash flow per share. relative to the stock in question. Data may be limited to the stock in question if there are (PCF) currently no stocks in the corresponding FTSE UK All Share sector. Net Debt Equity Net Debt Equity is Net Debt as a percentage of common equity. Not calculated if Absolute Absolute graphs reflect performance for the stock in question for up to 366 days adjusted denominator (common equity) is negative for intervening corporate actions. EV to EBITDA EV to EBITDA is Enterprise Value divided by EBITDA (Earnings before Interest and Taxes, Relative Relative charts reflect the performance for the stock in question relative to the depreciation and amortisation). EV is full company Market Capitalisation at the data date corresponding sector of the FTSE All Share Index for up to 366 days, rebased to the start plus last annual net debt and Preferred Stock. Net Debt is total financial debt less cash date. Note that the stock itself may not be a FTSE All share constituent. Relative Chart and short-term investments. EBITDA is operating income plus depreciation and may be null if there are no stocks in the corresponding FTSE UK All Share sector. amortisation. RSI Relative Strength Index. Calculated as 100 minus (100 divided by (1+ratio of positive Dividend Yield % Dividend Yield reflects the dividend declared per share and/or paid for the security in versus negative time weighted returns)). Reflects 14 day average gains/losses question for the most recent fiscal year, divided by the share price. Valuation History Outlier valuation data is not shown to scale as these would distort the chart. Instead, ∥ Return on Equity Return on Equity is net income over average common equity. Not calculated if Charts denotes valuation data which falls outside display truncation limits. (RoE) denominator (average common equity) is negative Top/Bottom Reflect data for up to five top and five bottom performers for the valuation metric in Dividend Payout Total dividends divided by Net Income expressed as a percentage. Valuation Bar question. Note data may be limited to the stock in question if there are currently no Charts stocks in the corresponding FTSE UK All Share sector. Net Margin Net Margin is Net Income divided by sales.

Chemri ng Gr oup 03 August 2020 For further information visit www.ftse.com, email [email protected] or call your local FTSE office:

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