Letter to the Shareholder

Dear Shareholder,
Dear Sir or Madam,

The 2025 financial year was marked by operational challenges and important strategic decisions. With the successful transfer of the aircraft structural components business in Switzerland to Pilatus, RUAG International largely completed the divestment of its non-space-related business areas. The resulting significant reduction in the size of the company has led to a reduced risk-bearing capacity, while at the same time creating a clear strategic focus. Financial obligations arose from discontinued operations. The annual financial statements include appropriate provisions for these and other potential risks.

The Beyond Gravity space segment, which will remain owned by the Swiss Confederation following the final parliamentary decision in spring 2025, is currently undergoing a strategic realignment. In operational terms, the Satellites division once again performed well during the reporting year, delivering profitable growth. The Launchers division overcame key technological challenges and achieved important milestones in 2025, including the successful deployment of our products in new launch systems such as Vulcan, Ariane, and the dispenser program for Amazon. However, the division's operating result was significantly impacted. This was due to delays in completing necessary product developments in Decatur as a result of findings from missions in 2023 and 2024. In addition, ramping up additional capacity at the Decatur and Linköping sites took longer than planned. 

At the same time, investments in the implementation of the global transformation and digitalization strategy proceeded according to plan. These investments weigh on earnings in 2025 and 2026, but in combination with the expansion of production capacities they will strengthen the company's future viability, efficiency, scalability, and competitiveness in the medium term.

The global space industry continued to show strong momentum. In 2025, it achieved a volume of around USD 626 billion, exceeding the previous year's record high. Of this figure, USD 236 billion can be attributed to the direct space market – i.e. traditional upstream sectors such as rockets, satellites, and infrastructure. In addition, USD 329 billion was generated by applications enabled by space travel, such as navigation, telecommunications, and Earth observation. 

In recent years, the space industry has evolved from a government dominated sector into a diversified global economic ecosystem. Commercial activities now account for around 78% of global value creation and have become established as the most important growth driver. In 2025, the US reaffirmed its ambitions through long-term programs, the promotion of commercial activities, and an increased focus on security and defense interests. Europe also strengthened its commitment by increasing ESA budgets, adopting a long-term strategic perspective through 2040, and launching political initiatives to bolster European launch systems. 

With its Beyond Gravity brand, RUAG International's space segment has positioned itself as an agile and innovative partner within this environment. With an addressable market share of over 60% in payload fairings for launch vehicles and more than 800 satellites in space using Beyond Gravity technologies, the company is one of the leading Tier 1 suppliers in its core areas of expertise. Here the company focuses on strategic customer partnerships, attractive projects, and promising business areas in both the commercial and institutional sectors. The range of services extends from the implementation of modular designs in industrialized series production to the development of tailored solutions for unique space missions.

Beyond Gravity's market position is based on a solid order book, long-standing customer relationships, and the high level of expertise of its employees. A prime example of this is the major order won by the Satellites division in September 2025 from Swiss satellite manufacturer SWISSto12 for the supply of APPMAX3 alignment mechanisms for the HummingSat telecommunications satellites. Beyond Gravity is also developing and producing the structure for the satellites of ESA’s LISA mission. This major scientific project, comparable in its technological complexity to the James Webb Space Telescope, expands Europe's capabilities in basic research in the field of gravitational waves. 

Despite significant operational challenges, important milestones were also achieved in the Launchers division in 2025. In addition to the successful deployment of our products for the Vulcan and Ariane launch systems, the first 27 satellites from Amazon's LEO constellation were successfully launched into orbit in April. Among other components, Beyond Gravity supplied the dispenser system for deploying the satellites; by the end of 2025, a total of 180 satellites had been deployed in seven flights, and 15 dispensers had been handed over to Amazon. In Emmen, the transition from the development and verification phase to the series production of the first payload fairing for Relativity Space's Terran R rocket took place. Back in January, Blue Origin's New Glenn launch vehicle completed its successful maiden flight with com ponents from Beyond Gravity on board. And in October, our payload fairing was used for the first time on the Japanese H3 rocket from JAXA and Mitsubishi Heavy Industries – a significant step in the strategic expansion of our presence in the growing Asian market. 

These and other programs secure Beyond Gravity a substantial order volume for the coming years and underscore its position as a globally established supplier to the space industry.

With the completion of the divestment of its non-space segments, RUAG International has significantly reduced its size. This goes hand-in-hand with reduced risk-bearing capacity. At the same time, despite strong growth, the space business remains a challenging and risky market in which opportunities and risks must be carefully weighed. Declining launch costs and falling end-customer prices per satellite are increasing competitive and margin pressure along the entire value chain, placing high demands on industrial efficiency and scalability. To meet these requirements, Beyond Gravity has made targeted investments in standardization, industrial efficiency, technological transformation, and scalable production and process structures in recent years. These investments will have a short-term impact on earnings and cash flow, but will strengthen the company's profitability and competitiveness in the medium term.

By the end of 2025, RUAG International's workforce increased from 1,813 to 1,926 employees compared to the previous year. 

Net sales fell in 2025 from CHF 494.9 million in the previous year to CHF 412.0 million. After adjusting for divestment effects, sales amounted to CHF 402.4 million (previous year adjusted CHF 358.9 million), representing growth of +12% compared with the previous year. 

Earnings before interest and taxes (EBIT) amounted to CHF –114.3 million (previous year: CHF 19.9 million). Operating cash flow amounted to CHF –74.8 million (previous year: CHF 26.7 million), while free cash flow amounted to CHF –105.9 million (previous year: CHF 114.3 million). 

The net financial position remained positive at CHF 311 million at the end of 2025, but declined significantly (previous year: CHF 420.2 million). 

The order backlog as of December 31, 2025, amounts to CHF 810.5 million (previous year: CHF 862 million).

The negative earnings trend is mainly attributable to high engineering and qualification costs in Decatur. These were related to delays in product improvements due to findings from missions in previous years. 

In Linköping, the transition from development to series production for the dispenser systems of Amazon's LEO satellite constellation proved to be significantly more demanding than anticipated. Although production ramp-up proved to be challenging, output increased significantly in the fourth quarter and key qualification issues were resolved. 

In contrast, the Satellites division performed well in 2025 and had a stabilizing effect on the overall Group result. Through more targeted project selection, greater standardization, and disciplined implementation, we were able to further improve the profitability of our projects. 

Furthermore, discontinued operations resulted in financial obligations totaling CHF 26.5 million, which have a one-off negative impact on the 2025 annual results. In addition, provisions of CHF 39.6 million were set aside in view of further potential risks. What's more, transformation and digitalization costs incurred as part of the “EZYone” program and negative exchange rate effects also impacted earnings. 

The aforementioned decline in operating cash flow and net financial position reflects the operational burdens and continued high investments in transformation and capacity expansion.

The digitization and industrialization of Beyond Gravity's processes as part of the "EZYone" transformation program is a key lever by which to sustainably improve efficiency, transparency, and scalability. Through the consistent advancement of our development, production, and support processes, we are establishing an integrated operational basis that simplifies global collaboration between our locations and enables us to respond to market requirements more quickly, precisely, and in a more standardized manner. As part of the "Value Creation Roadmap", "EZYone" is designed as a comprehensive business transformation that connects people, processes, systems, and locations. 

Following the program launch in Lisbon in 2024 and the rollout for corporate services in Switzerland in early 2025, the new systems were introduced at the Swedish locations in June. The subsequent challenging stabilization phase required considerable resources. The gradual rollout at additional locations in Switzerland, the US, Austria, and Finland is planned for 2026. The transformation program remained a significant cost driver in 2025 and will continue to incur further expenses in 2026. However, it establishes structural conditions for the improved transparency, operational efficiency, and scalability of the company. 

In addition, Beyond Gravity made targeted investments in implementing the CMMC (Cybersecurity Maturity Model Certification) requirements in the US defense sector with a view to securing long-term access to the US market from a regulatory perspective.

During the reporting year, Beyond Gravity conducted a company-wide employee survey. The results serve as a roadmap for further improvement measures. In addition, we made targeted investments in Beyond Gravity's appeal as an employer, including the expansion of our management development program and the introduction of a new career path for engineers. We have also placed great emphasis on cross-team and cross-location collaboration and on promoting a corporate culture that combines diversity, innovative strength, and a focus on performance.

Sustainability and environmental and social responsibility are integral parts of Beyond Gravity's corporate strategy. They are systematically embedded within our business processes. We are committed to responsible and sustainable space travel, including adherence to high standards in the areas of human rights, health and safety, the development of reusable components, and the consistent reduction of our environmental footprint. 

As part of its decarbonization roadmap, Beyond Gravity has implemented most of the defined measures for reducing emissions, with the remainder to be completed in 2026. As the potential for further emissions reductions within our own operations is diminishing, the next phase involves examining options for CO2 removal and developing a more comprehensive sustainability strategy that also takes into account Scope 3 emissions along our value chain. We view sustainability not merely as an obligation, but also as an opportunity to promote our efficiency and competitiveness and to tap into new markets.

With the Swiss Parliament's final decision in spring 2025 to keep Beyond Gravity under the ownership of the Swiss Confederation, the company's strategic position has changed. In the future, Beyond Gravity will be more closely linked to the Confederation's space and security policy objectives. This includes, among other things, playing a more central role as a leading industrial partner and in terms of meeting the future needs of the Swiss Armed Forces in space, for example in the areas of situational awareness or space-based communication systems. In July 2025, the Federal Council transferred ownership control and the drafting of a consultation document for the new legal basis for federal participation to the Federal Department of Defence, Civil Protection, and Sport (DDPS).

On May 20, 2025, Rainer G. Schulz took over as Chairman of the Board of Directors from Remo Lütolf, who left the company after reaching the age limit applicable to Confederation-affiliated companies. Déborah Carlson-Burkart was appointed Vice Chair. Rainer G. Schulz will not stand for re-election at the Annual General Meeting in spring 2026. At the extraordinary General Meeting on 19 December 2025, the sole shareholder elected Daniel Frutig-Meier as a regular member of the Board of Directors as of 1 January 2026, and plans to elect him as Chairman of the Board of Directors at the 2026 Annual General Meeting. Board members Jürg Oleas and Andreas S. Spreiter have announced that they will not stand for re-election in 2026. The Board of Directors is in the process of finalizing the nomination of qualified candidates to succeed them.

As of January 1, 2026, Beyond Gravity has adapted and streamlined its organization to reflect its new size and strategic orientation. By merging the Satellites and Launchers divisions into one integrated business organization, synergies will in the future be exploited even more consistently, structures and processes will be further simplified, and the company's strengths will be pooled in a more targeted manner. At the same time, the Executive Board has been reduced from six to three members. As of January 1, 2026, it consists of André Wall (CEO), Angelo Quabba (CFO), and Oliver Grassmann, who takes on the newly created role of Chief Operating Officer (COO). 

The CEO of RUAG International and Beyond Gravity, André Wall, announced in June 2025 that he would be leaving the company in mid-2026. The search for a successor is underway and will help ensure a timely succession.

The market environment within the global space industry continues to develop dynamically in view of the rising demand for rocket launches, the expansion of satellite infrastructure, and increasing investment by commercial players. With a global organization, highly qualified employees, and a solid order book, Beyond Gravity is positioning itself to make a significant contribution to safe, efficient, and sustainable access to space in the coming years.

The focus of the 2026 fiscal year will be on the consistent reduction of risks. At the same time, we are driving forward the industrialization of the Linköping site with the aim of returning it to profitability. In 2026, we will also continue to invest in consolidating the expanded production sites and in digital transformation. We expect a sustained improvement in earnings from 2027 onward. 

Our priorities for 2026 are simultaneously focused on products and programs that make a clear contribution to sustainable profitability. The focus here is on the further development and targeted expansion of our commercial product lines. These include high-performance onboard computers, precise navigation receivers, innovative satellite and payload structures, and dispenser solutions for global satellite constellations. At the same time, Beyond Gravity is taking the strategic step of transforming itself from a specialized supplier to an integrated system provider. This includes expanding our space data services, gradually expanding into the downstream business, and possibly developing our own satellite platform.

We would like to express our gratitude to our employees, who, with their high level of commitment and professionalism, have contributed significantly to the stability and further development of our company within a challenging environment. We would also like to thank our owner, our customers, and our suppliers for their trust and constructive cooperation – they form the reliable foundation for the further development of Beyond Gravity.

Kind regards,

RUAG International Holding Ltd.

sig. Rainer G. Schulz Chairman of the Board of Directors, RUAG International

sig. André Wall CEO, RUAG International and Beyond Gravity