Strategy Update

21 October 2024

Ricardo plc ("Ricardo or the "Group")

Strategy update

In May 2022, the Board announced a 5-year strategy to transition the business to become a world-leading strategic and engineering consultancy in environmental and energy transition. The Group's portfolio is to focus on strategic, technical, and engineering solutions at the intersection of transport, energy and global climate agendas.

Consistent with the Group's strategy, Ricardo announces its intention to divest its Defense business.

The Defense business currently sits within the Group's 'Established Mobility' portfolio and provides capabilities in engineering and production services for land vehicles in the defence sector. Its solutions-products have been the principal contributor to the Defense business' recent strong financial performance, due to an extension contract award in September 2023 for $385m, extending the previous Antilock Brake System ("ABS") base three-year contract to March 2026, with deliveries through to September 2027. To support its future success, the Defense business is also active on several new pilot programmes for the US Army, for which it has received initial funding awards.

Reflecting its current strong financial performance, the potential divestment is expected to be dilutive to the Group's earnings per share in the near term. Depending on the level of proceeds received from the potential divestment, the board will consider the appropriate use of proceeds in line with the Group's capital allocation policy. As part of this, Ricardo has been actively exploring potential acquisition opportunities to reinvest some or all of the proceeds in the event of a completed divestment. Any potential acquisition would be expected to be earnings accretive and in line with Ricardo's strategy to increase its presence in the environmental consulting market, thereby accelerating our portfolio transition to a high-growth, high-margin, lower-capital intensive business.

There can be no certainty that any divestment or acquisition will proceed.

Ricardo Chief Executive Officer, Graham Ritchie, said, "The proposed sale of the Group's Defense business will enhance Ricardo's focus on growing as a leader in environmental and energy transition markets, whilst allowing for Defense to realise its full potential through new programme development, following the successful award of the ABS programme."

-ENDS-

About Ricardo plc

Ricardo plc is a global strategic, environmental, and engineering consulting company, listed on the London Stock Exchange. With over 100 years of engineering excellence and close to 3,000 employees in more than 20 countries, we provide exceptional levels of expertise in delivering innovative cross-sector sustainable outcomes to support energy transition and scarce resources, environmental services, together with safe and smart transport solutions. Our global team of consultants, environmental specialists, engineers, and scientists support our customers to solve the most complex and dynamic challenges to help achieve a safe and sustainable world. Visit www.Ricardo.com.