Exhibit 4.2 

MDA Space Ltd.

Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

(In millions of Canadian dollars)

KPMG LLP

100 New Park Place, Suite 1400
Vaughan, ON L4K 0J3

Canada

Tel 905 265 5900

Fax 905 265 6390

INDEPENDENT AUDITOR’S REPORT

To the Shareholders of MDA Space Ltd.

Opinion

We have audited the consolidated financial statements of MDA Space Ltd. (the Entity), which comprise:

(Hereinafter referred to as the “financial statements”).

In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated financial position of the Entity as at December 31, 2025 and December 31, 2024, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board.

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the “Auditor’s Responsibilities for the Audit of the Financial Statements” section of our auditor’s report.

We are independent of the Entity in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada and we have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

KPMG LLP, an Ontario limited liability partnership and member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. KPMG Canada provides services to KPMG LLP.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended December 31, 2025. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

We have determined the matters described below to be the key audit matters to be communicated in our auditor’s report.

Evaluation of total estimated costs to complete contracts for revenue recognition Description of the matter

We draw attention to notes 2(c), 3(c), and 7 to the financial statements. The Entity recorded revenue from contracts with customers for the year ended December 31, 2025 of $1,633.2 million. The Entity recognizes revenues from fixed-price contracts and cost-plus contracts with ceilings using a percentage of completion method based on the ratio of contract costs incurred to date to total estimated costs.

Estimating total costs requires judgments to be made around items including, but not limited to, labour productivity, complexity and scope of work to be performed, cost of materials, the length of time to complete the work, and execution by subcontractors.

Why the matter is a key audit matter

We identified the evaluation of total estimated costs to complete contracts for revenue recognition as a key audit matter. This matter represented an area of significant risk of material misstatement due to the magnitude of the balance and the high degree of subjectivity and estimation uncertainty in determining the total estimated costs to be incurred for each performance obligation. Significant auditor judgment was required in evaluating the results of our audit procedures.

How the matter was addressed in the audit

The primary procedures we performed to address this key audit matter included the following:

We evaluated the design and tested the operating effectiveness of certain controls over the Entity’s review of total expected costs to complete contracts for revenue recognition. These controls included management review controls over the budgeting and monitoring of total costs to complete.

We compared the Entity’s original and prior period estimate of total costs to be incurred to the actual costs incurred for a selection of completed contracts to assess the Entity’s ability to accurately estimate costs.

For a selection of revenue contracts, we interviewed operational personnel of the Entity in charge of the project about the project status to evaluate progress to date and inspected source documentation such as contracts, change orders and correspondence, and underlying records to assess the total expected costs by performance obligation with respect to the contract.

For a selection of revenue contracts, we evaluated the total expected costs to be incurred on the remaining performance obligations by comparing the costs incurred subsequent to year-end to the expected costs.

Evaluation of the fair value of acquired proprietary technology intangible assets from the SatixFy Communications Ltd. acquisition

Description of the matter

We draw attention to notes 2(c), 3(m), and 5 to the financial statements. On July 2, 2025, the Entity acquired all of the outstanding shares of SatixFy Communications Ltd. for total consideration of $448.3 million. Proprietary technology intangible assets were identified with a fair value of $298.7 million. The Entity estimated the fair value of the proprietary technology intangible assets acquired in the acquisition of SatixFy Communications Ltd. using the replacement cost method. The replacement cost method is a valuation technique that estimates the fair value of an intangible asset based on the estimated costs required to create or acquire a comparable asset at the transaction date.

Significant assumptions include costs to develop, obsolescence factors, expected developer’s profit margins, and required rate of return.

Why the matter is a key audit matter

We identified the evaluation of the fair value of acquired proprietary technology intangible assets from the SatixFy Communications Ltd. acquisition as a key audit matter. This matter represented an area of significant risk of material misstatement due to the magnitude of the balance and the high degree of estimation uncertainty in the selection of assumptions. Significant auditor judgment and the involvement of professionals with specialized skills and knowledge was required in evaluating the methodology and certain assumptions.

How the matter was addressed in the audit

The primary procedures we performed to address this key audit matter included the following:

We reconciled a selection of historical costs to develop to the underlying records of SatixFy Communications Ltd.

We evaluated the obsolescence factors by considering both functional and economic obsolescence. This included evaluating the appropriateness of management’s assessment of certain components of the technology that were no longer required or expected to be replaced, and assessing the consistency of the assumed level of obsolescence with the expected remaining economic life of the technology.

We evaluated the expected developer's profit margins assumption by comparing it to publicly available market data for entities with comparable technology and to the Entity’s historical profit margins for products supported by comparable technology.

We involved valuation professionals with specialized skills and knowledge, who assisted in:

Evaluation of the impairment assessment of goodwill of the Geointelligence cash generating unit

Description of the matter

We draw attention to Notes 2(c), 3(k), 3(l), and 16 to the financial statements. The Entity has a goodwill balance of $800.4 million, of which $285.9 million relates to the Geointelligence cash generating unit (“CGU”). Impairment testing of goodwill is performed at least annually, at December 31, and is conducted at the level of the minimum grouping of CGUs to which goodwill relates.

When the impairment test is performed, the recoverable amount of the CGU is assessed by reference to the higher of i) the value in use and ii) the fair value less costs of disposal. The value in use of CGUs at which goodwill is tested for impairment has been estimated using the forecasts prepared by the Entity for the next five years. In preparing the forecasts, the Entity uses significant assumptions about revenue growth, earnings before interest, taxes, depreciation and amortization, terminal growth rate and discount rate.

Why the matter is a key audit matter

We identified the evaluation of the impairment assessment of goodwill of the Geointelligence CGU as a key audit matter. This matter represented an area of significant risk of material misstatement due to the magnitude of the balance and the high degree of estimation uncertainty in assessing the value in use. Significant auditor attention and significant auditor judgment and the involvement of those professionals with specialized skills and knowledge were required in evaluating the results of our audit procedures.

How the matter was addressed in the audit

The primary procedures we performed to address this key audit matter included the following:

We compared the expected revenue growth and earnings before interest, taxes, depreciation and amortization assumptions to the actual historical revenue growth and earnings before interest, taxes, depreciation and amortization of the CGU to assess the Entity’s ability to accurately predict these cash flow assumptions. We compared the revenue growth assumptions to existing firm contracts on a sample basis.

We considered changes in conditions and events to assess the assumptions made in arriving at the expected future revenue estimates.

We involved valuation professionals with specialized skills and knowledge, who assisted in:

Other Information

Management is responsible for the other information. Other information comprises:

Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit and remain alert for indications that the other information appears to be materially misstated.

We obtained the information included in Management’s Discussion and Analysis as at the date of this auditor’s report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in the auditor’s report.

We have nothing to report in this regard.

The information, other than the financial statements and the auditor’s report thereon, included in a document likely to be entitled “2025 Annual Report” is expected to be made available to us after the date of this auditor’s report. If, based on the work we will perform on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact to those charged with governance.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Entity'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 management either intends to liquidate the Entity or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Entity's financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

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 an auditor’s report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit.

We also:

The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Chartered Professional Accountants, Licensed Public Accountants

The engagement partner on the audit resulting in this auditor’s report is Laura Price.

Vaughan, Canada

March 3, 2026

MDA Space Ltd.

Consolidated Statement of Comprehensive Income
For the years ended December 31, 2025 and 2024
(In millions of Canadian dollars except per share figures)  

The accompanying notes are an integral part of these consolidated financial statements

MDA Space Ltd.

Consolidated Statement of Financial Position

December 31, 2025 and 2024

(In millions of Canadian dollars)

The accompanying notes are an integral part of these consolidated financial statements

MDA Space Ltd.

Consolidated Statement of Changes in Shareholders’ Equity
For the years ended December 31, 2025 and 2024

(In millions of Canadian dollars)

The accompanying notes are an integral part of these consolidated financial statements

MDA Space Ltd.  

Consolidated Statement of Cash Flows
For the years ended December 31, 2025 and 2024

(In millions of Canadian dollars)

The accompanying notes are an integral part of these consolidated financial statements

MDA Space Ltd.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

(Amounts in millions of Canadian dollars, except share-based compensation awards and per share amounts)

MDA Space Ltd. and its subsidiaries (collectively “MDA Space” or the “Company”) is a trusted mission partner of leading-edge space missions. The Company’s recognized engineering capabilities, portfolio of space technologies, and space mission expertise make it a trusted partner of choice for a broad range of customers worldwide. The Company leverages its capabilities to enable next generation space exploration and infrastructure, space-based communication, and both earth and space observation missions. The Company’s space technology solutions and services enable governments and businesses to develop and operate critical space infrastructure used for exploration and space-based science, to research, develop and operate space-based communications supporting our connected world, and to monitor global activities including climate change, illegal and unregulated fishing, and detection of oil spills. The Company’s technologies and solutions are also deployed for defence and intelligence applications and space observation missions. MDA Space operates across three business areas: Geointelligence, Robotics & Space Operations, and Satellite Systems, with facilities and sites in Canada, United Kingdom, United States, Israel and Bulgaria. The Company collaborates and partners with governments and space agencies, commercial space companies and defence and aerospace prime contractors in the space industry.

MDA Space Ltd. was incorporated pursuant to a series of legal entity restructuring. On April 8, 2020, Neptune Acquisition Inc. (“NAI”), an affiliate of Northern Private Capital Ltd. purchased 100% of the equity interest in MDA GP Holdings Ltd., MDA Systems Inc., and Maxar Technologies ULC from Maxar Technologies Inc. The consideration for this transaction was $1 billion. Immediately after closing, NAI amalgamated with Maxar Technologies ULC, and changed its name to Neptune Operations Ltd. (“NOL”). On June 2, 2020, Neptune Acquisition Holdings Inc. (“NAHI”) was formed under the laws of the Province of Ontario and became the parent of its wholly owned subsidiary NOL. In March 2021, NAHI changed its name to MDA Ltd., and again to MDA Space Ltd. in April 2024.

MDA Space Ltd. is incorporated and domiciled in Canada, with its head office located at 7500 Financial Drive, Brampton, Ontario L6Y 6K7, Canada. MDA Space’s common shares are traded on the Toronto Stock Exchange under the symbol “MDA”.

These consolidated financial statements of the Company have been prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (“IASB”).

The consolidated financial statements were approved by the Board of Directors of MDA Space on March 3, 2026.

The consolidated financial statements of the Company have been prepared on the historical cost basis except for pension plan assets and liabilities and the following assets and liabilities which are measured at fair value: financial instruments at fair value through profit or loss (“FVTPL”), derivative financial instruments, and initial recognition of assets acquired and liabilities assumed in a business combination. Pension plan assets and liabilities are recognized as the present value of the defined benefit liabilities net of the fair value of the plan assets. Other post-retirement benefit liabilities are recognized as the present value of the defined benefit liability.

The preparation of the consolidated financial statements in conformity with IFRS Accounting Standards requires management to make estimates and judgments that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

MDA Space Ltd.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

(Amounts in millions of Canadian dollars, except share-based compensation awards and per share amounts)

Information about critical judgments in applying accounting policies that have the most significant effects on the amounts recognized in the consolidated financial statements included the following:

MDA Space Ltd.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

(Amounts in millions of Canadian dollars, except share-based compensation awards and per share amounts)

The consolidated financial statements comprise the accounts of the Company and entities controlled by the Company. The Company controls an entity when it is exposed to, or has the right to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. All subsidiaries of the Company are wholly owned. The financial results of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases. Intercompany balances and transactions are eliminated upon consolidation.

The table below lists the Company’s most material subsidiaries for the years ended December 31, 2025 and 2024 based on revenues. The Company held 100% of the interest in all the subsidiaries listed below.

The consolidated financial statements are presented in Canadian dollars, which is the Company’s functional currency.

Monetary assets and liabilities denominated in foreign currencies are translated at exchange rates in effect at the reporting date. Non-monetary assets and liabilities, and revenue and expense items denominated in foreign currencies are translated into the functional currency using the exchange rates in effect at the dates of the respective transactions. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in net income.

Assets and liabilities of subsidiaries that have a functional currency other than Canadian dollars are translated into Canadian dollars at exchange rates in effect at the reporting date. Revenue and expenses are translated at the average exchange rates. The resulting translation adjustments are included in other comprehensive income (“OCI”).

The Company enters into contracts with customers to provide development of customized systems, construction of robotics and satellite components, satellite imagery data and related analyses, and maintenance and support services.

The Company accounts for a contract when enforceable rights and obligations between the Company and its customer are present, the contract has commercial substance, the rights of the parties and payment terms are identified, collectability of consideration is probable, and both parties have approved the contract. Two or more contracts with the same customer entered into at or near the same time are combined for revenue recognition accounting when the contracts are negotiated as a package with a single commercial objective or when the goods or services in the contracts are a single performance obligation.

A performance obligation is a promise in the contract to transfer a distinct good or service to the customer. The Company’s contracts generally have a single performance obligation, as the promise to transfer the individual

MDA Space Ltd.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

(Amounts in millions of Canadian dollars, except share-based compensation awards and per share amounts)

goods or services are not separately identifiable from each other and therefore are not distinct. An amendment made to an existing contract is accounted for in combination with the existing contract unless it adds goods or services distinct from the goods or services promised in the existing contract at stand alone selling prices.

Revenue is measured based on the consideration specified in the contract. The Company recognizes revenue as it fulfills its performance obligations by transferring control of the promised goods or services to the customer.

The Company’s revenues are derived mainly from the following types of contracts:

Contract costs include direct costs such as materials, labour, and subcontract costs as well as indirect costs such as overhead costs that relate directly to satisfying the performance obligations under the contract. Costs are expensed as incurred.

Unbilled receivables represent the Company’s right to consideration for goods or services transferred to the customer but not billed at the reporting date. Unbilled receivables are transferred to trade receivables when the rights to the amounts become unconditional. This usually occurs when the Company issues an invoice to the customer. Unbilled receivables are adjusted for expected credit losses.

Contract liabilities relate to advance consideration received from customers in excess of revenue recognized under the contract.

Cash consist of cash on hand and deposits held with banks.

Property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes any amounts incurred in constructing and testing the asset as well as any other costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Depreciation expense is recognized on a straight-line basis over the estimated useful life of the related asset to its residual value. Expected useful lives and depreciation methods are reviewed annually.

MDA Space Ltd.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

(Amounts in millions of Canadian dollars, except share-based compensation awards and per share amounts)

The estimated useful lives of the Company’s various classes of property, plant and equipment are as follows:

The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The Company recognizes right-of-use assets and lease liabilities for all leases, except for leases of low-value assets and short-term leases with a term of 12 months or less. The Company recognizes the lease payments associated with low-value and short-term leases as an expense on a straight-line basis over the lease term.

The Company recognizes right-of-use assets at the commencement date of the lease and initially measured at cost, which is comprised of the amount of the initial lease liability recognized less any incentives received from the lessor. The initial cost also includes any initial direct costs incurred, lease payments made before the commencement date, and estimated restoration costs, if any. The right-of-use asset is subsequently depreciated on a straight-line basis over the shorter of the lease term and the estimated useful life of the asset. The right-of- use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made over the lease term, discounted using the Company’s incremental discount rate. The lease term includes all contractual non-cancellable periods of the lease plus enforceable periods covered by an option to renew if the Company is reasonably certain to exercise that option.

Lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. If applicable, the lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognized as expenses in the period in which the event or condition that triggers the payment occurs.

The Company also has certain leases which include payments that do not relate to the transfer of goods or services by the lessor to the Company (e.g. cleaning the common areas of a building, fees or other administrative costs) and are considered non-lease components. These amounts are not included in lease payments.

Subsequent to initial measurement, the Company measures lease liabilities at amortized cost using the effective interest method. Lease liabilities are remeasured when there is a change in the lease term, change in the future lease payments resulting from a change in an index or rate, or a change in the assessment of an option to purchase the underlying asset.

Intangible assets acquired separately are measured at cost on initial recognition. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any.

The cost of an internally generated intangible asset comprises all directly attributable costs necessary to create, produce, and prepare the asset to be capable of operating in the manner intended by management.

MDA Space Ltd.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

(Amounts in millions of Canadian dollars, except share-based compensation awards and per share amounts)

Amortization is calculated over the estimated useful lives of the assets on a straight-line basis as follows:

Interest expense is capitalized on qualifying assets. Qualifying assets are assets that take a substantial period of time to prepare for their intended use and include property, plant and equipment in construction and intangible assets in development. Capitalized interest is a component of the cost of the qualifying asset. Where the funds used to finance a qualifying asset form part of general borrowings, the amount capitalized is calculated using a weighted average of rates applicable to the relevant borrowings during the period. Where funds borrowed are directly attributable to a qualifying asset, the amount capitalized represents the borrowing costs specific to those borrowings. Capitalization ceases when the asset is substantially complete or if active construction or development ceases.

Research costs are expensed as incurred. Development costs are also expensed as incurred unless they meet all of the capitalization criteria established in IAS 38, Intangible Assets. Amortization of capitalized development costs commences when the asset is available for use.

Goodwill is measured at cost less accumulated impairment losses, if any.

Goodwill arises on the acquisition of subsidiaries. Goodwill represents the excess of the cost of an acquisition over the fair value of the net identifiable assets of the acquiree at the acquisition date.

At each reporting date, the Company assesses for any indication of impairment of its property, plant and equipment, intangible assets, right-of-use assets and goodwill. If any indication exists, the Company tests the assets for impairment. Impairment testing of goodwill is performed at least annually, at December 31, regardless of any indications of impairment.

Impairment testing is conducted at the level of the asset, a cash generating unit (“CGU”). A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Impairment testing of goodwill is conducted at the level of the minimum grouping of CGUs to which goodwill relates.

The Company tests for impairment by comparing the carrying amount of an asset, CGU to its recoverable amount. The recoverable amount of each CGU is assessed by reference to the higher of i) the VIU and ii) the fair value less costs of disposal (“FVLCD”). If the carrying amount exceeds the recoverable amount, an impairment loss in the amount of the excess is recognized in the consolidated statement of comprehensive income. Impairment losses are first allocated to reduce the carrying amount of any goodwill related to the CGU, the remaining amount of an impairment loss is allocated pro rata to other assets in the CGU, without reducing the carrying amount of the assets below the highest of their value of FVLCD, their VIU, and zero.

Except for goodwill, any reversal of an impairment loss is recognized immediately in the consolidated statement of comprehensive income. A reversal of an impairment loss for a CGU is allocated pro rata to the assets of the CGU. The recoverable amount of an asset increased by reversal of an impairment loss may not exceed the carrying amount that would have been determined, net of depreciation and amortization to date, if no impairment loss had been recognized for the asset in prior years.

MDA Space Ltd.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

(Amounts in millions of Canadian dollars, except share-based compensation awards and per share amounts)

Business combinations are accounted for using the acquisition method. Under this method, the identifiable assets acquired and liabilities assumed are recognized in the consolidated statement of financial position at their respective acquisition-date fair values. The results of operations after the date of acquisition are included in the consolidated statement of comprehensive income. Acquisition-related costs are expensed as incurred.

Provisions are recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of resources will be required to settle the obligation.

Provisions for estimated contract losses are recognized as an onerous contract provision in the period in which the loss is determined. Contract losses are measured at the amount by which the estimated costs of fulfilling the contract exceed the estimated total revenue from the contract. When measuring onerous contract provisions, estimated costs of fulfilling the contract include both incremental costs and an allocation of costs directly related to contract activities.

The Company’s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The defined benefit obligations are determined by an actuary for each plan using the projected unit credit method, which takes into account the expected salary increases as the basis for future benefit increases for the pension plans. The discount rate is the yield at the reporting date on high quality corporate bonds that have maturity dates approximating the terms of the Company’s obligations and that are denominated in the same currency in which the benefits are expected to be paid. Actuarial assumptions for discount rates, expected salary increases and the projected age of employees upon retirement reflect historical experience and the Company’s assessment of future expectations.

When the calculation results in a benefit to the Company, the employee benefit asset recognized is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. Minimum funding requirements may give rise to an additional liability to the extent that they require the Company to pay contributions to cover an existing shortfall in that particular plan. An economic benefit is available to the Company if it is realizable during the life of the plan, or on settlement of the plan liabilities. The fair value of plan assets is based on market price information.

The Company determines the net interest expense (income) on the net defined benefit liability (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 net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense (income) is recognized as a component of finance costs (income). The Company recognizes service cost and administrative expenses relating to defined benefit plans as a component of cost of revenue and selling, general and administration expense. Actuarial gains and losses from experience adjustments, changes in actuarial assumptions, return on plan assets (excluding amounts included in net interest expense) and the effect of any asset ceilings (excluding interest) are recognized in other comprehensive income in the period in which they arise.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in the net benefit liability that relates to past service or the gain or loss on curtailment is recognized immediately in the consolidated statement of comprehensive income.

The Company maintains defined contribution plans for some of its employees whereby the Company pays contributions based on a percentage of the employees’ annual salary. Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in the consolidated statement of comprehensive income as the services are provided.

MDA Space Ltd.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

(Amounts in millions of Canadian dollars, except share-based compensation awards and per share amounts)

Termination benefits are expensed when the Company has demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancies are expensed if the Company has made an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably.

Income tax expense is comprised of current and deferred tax. An income tax expense is recognized in income except to the extent that it relates to items recognized in OCI or equity, in which case it is recognized in OCI or equity, respectively.

Current tax is the expected tax payable to or receivable from tax authorities on the taxable income or loss reflected in the consolidated statement of comprehensive income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

Deferred tax assets are recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and reserves are made to the extent that it is no longer probable that the related tax benefit will be realized.

Deferred income tax assets and deferred income tax liabilities are offset if a legally enforceable right exists to offset current income tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.

The Company recognizes uncertain tax positions when the Company believes that it is probable that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The Company makes adjustments to these recognized uncertain tax positions when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. The provision for income taxes includes the effects of adjustments for uncertain tax positions, as well as any related interest and penalties.

The Company’s government assistance includes funding from government bodies to support the Company’s research and development (“R&D”) activities and to acquire or develop assets and investment tax credits (“ITCs”).

Government grants are recognized net of the related costs they are intended to compensate on a systematic basis over the periods that the related costs are expensed. Government grants related to the acquisition of assets are recognized as a reduction of the cost of the related asset.

If government assistance becomes repayable, the inception to date impact of assistance previously recognized in the consolidated statement of comprehensive income is reversed immediately in the period that the assistance becomes repayable.

ITCs expected to be recovered beyond 12 months are classified as non-current assets. ITCs are deemed to be equivalent to government assistance. This government assistance is claimed for eligible costs incurred in R&D projects.

In 2021, the Company established an Omnibus Long-term Incentive Plan (“Omnibus Plan”). The Omnibus Plan is a share-based plan, under which the Company receives services from directors and employees as consideration for equity instruments of the Company. The Company can issue stock options, deferred share units (“DSUs”),

MDA Space Ltd.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

(Amounts in millions of Canadian dollars, except share-based compensation awards and per share amounts)

restricted share units (“RSUs”), and performance share units (“PSUs”) pursuant to the terms and conditions of the Omnibus Plan and the related award agreements entered into thereunder.

The Company also has in place an Employee Share Trust Agreement arrangement, where eligible employees are issued shares held in a company trust (“Trustee Shares”) and released upon meeting prescribed conditions.

All of the above Company’s share-based awards are equity-settled and are measured based on the grant date fair value without subsequent remeasurement. Non-market vesting conditions are included in assumptions about the number of equity awards that are expected to vest. The grant date fair value of each award, net of estimated forfeitures, is recognized as an expense on a graded basis over the respective vesting period with a corresponding increase to contributed surplus. Forfeitures are estimated at the grant date and are revised to reflect changes in expected or actual forfeitures. Incremental fair value as a result of a modification that is beneficial to the employee is recognized over the remaining vesting period. Upon settlement of share-based awards, the amount recognized in contributed surplus for the award plus any cash received upon settlement is recognized as an increase in share capital.

In 2024, the Company established Employee Share Purchase Plan (“ESPP”). The ESPP is a cash-settled share- based payment plan, whereby employees of the Company can acquire common shares through regular payroll deductions. Company-matched employee contributions, up to a maximum of five thousand dollars per annum, are restricted to a one-year holding period. The employee and Company’s contributions are remitted to an independent plan administrator who is responsible for purchasing common shares on the market on behalf of the employee.

Common shares are classified as equity. Issuance costs directly attributable to the issuance of the shares are recognized as a deduction from equity, net of income tax effects.

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the financial instrument. All financial instruments are initially measured at fair value. Financial instruments are subsequently measured based on their classification as follows:

Transaction costs that are directly attributable to the acquisition or issuance of financial assets and financial liabilities (other than financial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in acquisition, transaction and integration costs on the consolidated statement of comprehensive income.

A financial asset is derecognized when the contractual rights to the cash flows from the financial asset expire. A financial liability is derecognized when it is extinguished, discharged, cancelled, or expires. Where a legally enforceable right to offset exists for recognized financial assets and financial liabilities and there is an intention to settle the liability and realize the asset simultaneously, or to settle on a net basis, such related financial assets and financial liabilities are offset.

On initial recognition, the Company classifies financial assets as measured at amortized cost when both of the following conditions are met:

Financial assets at amortized cost are subsequently measured using the effective interest rate method and are subject to impairment.

MDA Space Ltd.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

(Amounts in millions of Canadian dollars, except share-based compensation awards and per share amounts)

Financial assets are classified as held for trading if they are managed with the objective of realizing cash flows through the sale. Derivatives, including separate embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments. Financial assets at FVTPL are carried in the consolidated statement of financial position at fair value with net changes in fair value recognized in the consolidated statement of comprehensive income.

Financial assets at FVOCI include instruments such as equity investments the Company has irrevocably elected to classify at FVOCI and derivatives designated as effective hedging instruments.

Financial liabilities are classified as financial liabilities at FVTPL or amortized cost as appropriate. The Company determines the classification of its financial liabilities at initial recognition. Subsequent to initial recognition, financial liabilities at amortized cost are measured using the effective interest method with the accretion of interest recognized in finance costs. Financial liabilities at FVTPL are carried in the consolidated statement of financial position at fair value with net changes in fair value recognized in the consolidated statement of comprehensive income.

The Company classifies its financial assets and liabilities depending on the purpose for which the financial instruments were acquired, their characteristics and management intent as outlined below:

The Company recognizes loss allowances for expected credit losses ("ECLs") on financial assets measured at amortized cost. The Company applies a simplified approach in calculating ECLs. Therefore, the Company does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. The carrying amount of these assets in the consolidated statement of financial position is stated net of any loss allowance.

A loss allowance is estimated from a review of the current and expected economic conditions and counterparty specific facts. Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position when the Company has an unconditional and legally enforceable right to offset the recognized amounts and intends to settle on a net basis or to realize the asset and settle the liability simultaneously.

Financial assets and financial liabilities are measured at fair value using a valuation hierarchy for disclosure of fair value measurements. The determination of the applicable level within the hierarchy of a particular asset or liability depends on the inputs used in the valuation as of the measurement date, notably the extent to which the inputs are market-based (observable) or internally derived (unobservable). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from independent sources. Unobservable inputs are inputs reflecting the assumptions that market participants would use, and are based on the best information available in the circumstances.

The hierarchy is broken down into three levels based on the reliability of inputs as follows:

MDA Space Ltd.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

(Amounts in millions of Canadian dollars, except share-based compensation awards and per share amounts)

The Company enters into interest rate swap agreements to mitigate interest rate risk on long-term debt. The Company also from time to time enters into foreign exchange forward contracts to hedge a portion of exposure arising from expected foreign currency denominated cash flows. Hedge accounting is applied to those hedge relationships that are considered effective and designated by management. Management assesses the effectiveness of hedges by comparing actual outcomes against estimates on a regular basis. Subsequent changes in cash flows arising from forecasted transactions, if significant, may result in the discontinuation of hedge accounting for that hedge. The Company does not enter into derivative contracts for speculative purposes.

At the inception of a hedging relationship, management formally documents the relationship between the hedging instrument and the hedged item, as well as the risk management objectives and strategy for undertaking the hedge. Management also assesses, both at inception of a hedge and at the end of each quarter, whether the derivatives used in hedged transactions are highly effective in offsetting changes in cash flows of the hedged items. For effective hedging relationships, fair value changes in the hedging instrument are recognized in other comprehensive income.

When cash flow hedges are discontinued, they cease to meet the qualifying criteria required for a hedging relationship. Cash flow hedges where the future cash outflow is still expected to occur, accumulated amounts in accumulated other comprehensive income remain there until such time that the cash outflow occurs or if the amount is a loss that is not expected to be recovered. If the loss is not expected to recover, the Company immediately reclassifies it into net income. Cash flow hedges where the future cash flow is not expected to occur, the Company immediately reclassifies accumulated amounts in other comprehensive income to net income under finance cost.

The Company’s interests in equity-accounted investees represent investments in entities over which the Company has significant influence, but neither control nor joint control. These investments are accounted for using the equity method. They are initially recognized at cost, including transaction costs. Subsequent to initial recognition the consolidated financial statements include the Company’s share of the profit or loss and other comprehensive income of equity accounted investees.

Basic earnings per share (“EPS”) is calculated by dividing the net income for the period attributable to equity holders by the weighted average number of common shares outstanding during the period.

Diluted EPS is calculated by dividing the net income attributable to equity holders by the weighted average number of common shares outstanding during the period plus the weighted average number of common shares that would be issued upon exercise of share-based compensation arrangements, to the extent they are considered dilutive.

MDA Space Ltd.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

(Amounts in millions of Canadian dollars, except share-based compensation awards and per share amounts)

Amendments of IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures

IASB has amended IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures to clarify the timing in the recognition and derecognition of financial assets and the settlement of financial liabilities. These amendments change the timing of recognition or derecognition of financial assets or liabilities from the payment initiation date to the settlement date. Any derecognition of liability earlier than the settlement date would be subject to certain criteria being met, and only applicable to financial liabilities settled using an electronic payment system. These amendments are effective for annual reporting periods beginning on or after January 1, 2026, with earlier application permitted. Management expects a reclassification impact on the consolidated statement of financial position, affecting current assets and current liabilities.

Forthcoming Issuance of IFRS 18 Presentation and Disclosure in Financial Statements replacing IAS 1, Presentation of Financial Statements

IFRS 18 aims to achieve comparability of the financial performance of similar entities and will impact the presentation of primary financial statements and notes, including the statement of earnings where companies will be required to present separate categories of income and expense for operating, investing, and financing activities with prescribed subtotals for each new category. The standard will also require management-defined performance measures to be explained and included in a separate note within the consolidated financial statements. IFRS 18 is effective for annual reporting periods beginning on or after January 1, 2027, with earlier application permitted. Management is currently assessing the impact of adopting IFRS 18 on its consolidated financial statements.

MDA Space Ltd.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

(Amounts in millions of Canadian dollars, except share-based compensation awards and per share amounts)

Acquisition of SatixFy Communications Ltd.

On July 2, 2025, the Company acquired all of the outstanding shares of SatixFy Communications Ltd. (“SatixFy”) in an all-cash transaction. SatixFy is a supplier of cutting-edge semiconductors and solutions for the space and the satellite communications value chain. SatixFy’s technology enables satellite broadband and direct-to-device constellations and are designed to meet the needs of the next generation of satellite constellations. SatixFy’s space grade chips are used in digital communication satellites to support payload and antenna operations, and are designed to significantly improve satellite performance and decrease cost. The transaction brings to the Company a differentiated technology portfolio including more than 60 patents issued and pending, as well as a talented and largely specialized technical employee base of approximately 165 people globally. The acquisition has been accounted for using the acquisition method. The consolidated financial statements include the results of SatixFy for the approximate 6-months period from the acquisition date.

The fair values of the identifiable assets and liabilities of SatixFy as at the date of acquisition were:

MDA Space Ltd.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

(Amounts in millions of Canadian dollars, except share-based compensation awards and per share amounts)

As a result of the inherent complexity associated with the valuation of net assets acquired the valuation is provisional and has not been completed by the date the consolidated financial statements were approved for issue by the Board of Directors. Thus, assets and liabilities may need to be subsequently adjusted, with a corresponding adjustment to goodwill when available and no later than July 1, 2026 (one year after the transaction).

The goodwill has been adjusted by $10.6 since it was last reported for the three and nine months ending September 30, 2025 for the fair value of intangible assets acquired and its related deferred tax effect, additional settlement of pre- existing relationships, and the reclassification in presentation of asset items in the table above.

Pre-existing relationship consists mainly of an agreement between the Company and SatixFy for the purchase of SatixFy’s space grade chips. The amount of consideration transferred includes the effective settlement of the pre- existing relationship between the Company and SatixFy as the relationship became an intercompany relationship on acquisition. The Company determined that the fair value of the advance payments against future orders of chips at acquisition is similar to their carrying value.

The acquisition date fair value of trade and other receivable amounts to $2.8 which is also the gross amount receivable as it is expected that the full contractual amounts will be collected.

The acquisition date fair value of unbilled receivables amounts to $4.8 which is also the gross amount unbilled receivable as it is expected that the full contractual amounts will be billed and collected.

The acquisition date fair value of government departments and agencies receivables amounts to $8.1 which is also the gross amount receivables as it is expected that the full amounts will be collected.

The Company measured the acquired lease liabilities using the present value of the remaining lease payments at the date of acquisition. The right-of-use assets were measured at an amount equal to the lease liabilities. No adjustment was required for favourable or unfavourable terms since the leases were at market rates.

From the date of acquisition, SatixFy has contributed $8.4 of revenue and $13.3 of loss before taxes to the results of the Company.

If the acquisition had taken place at January 1, 2025, management estimates that the Company’s combined revenue would have been $1,645.4 and income before taxes for the period would have been $87.8. Income before taxes includes the additional amortization of intangible assets of $76.5 related to this acquisition.

The goodwill recognized is primarily attributed to:

The goodwill is not deductible for income tax purposes.

Other non-current liabilities include accrued income taxes, sales tax and other tax liabilities as at acquisition date.

Acquisition-related costs in 2025 of $10.9 for fees related to bank advisors, legal advisors, and other due diligence professionals and advisors have been expensed and are included in selling, general and administrative costs in the consolidated statement of comprehensive income.

Acquisition of SatixFy Space Systems UK Ltd.

On October 31, 2023, the Company acquired 100% share of SatixFy Space Systems UK Ltd (“SSS”), the digital payload division of SatixFy Communications Ltd. to strengthen MDA’s global leadership position in the growing market for digital satellite communications solutions. The acquired division, based in the United Kingdom, has been integrated into MDA UK, the company’s existing UK subsidiary. The final holdback of $2.8 ($2.0 USD) was released to the seller in the second quarter of 2025.

MDA Space Ltd.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

(Amounts in millions of Canadian dollars, except share-based compensation awards and per share amounts)

On March 5, 2024, the Company completed the sale of its terrestrial nuclear services assets for a total consideration of $7.6 and a gain of $5.8. The Company received $7.4 in 2024, and the remaining $0.2 in escrow was received in 2025. The gain was recognized on the consolidated statement of comprehensive income as part of other income.

Disaggregation of revenue from contracts with customers by business areas are presented in the table below:

For the year ended December 31, 2025, there were 3 customers that individually comprised more than 10.0% of revenue and 77.6% in total. For the year ended December 31, 2024, there were 3 customers that individually comprised more than 10.0% of revenue and 63.6% in total.

As at December 31, 2025, the Company had remaining performance obligations of $4,012.9 (December 31, 2024 - $4,385.5), which represents the transaction price of firm orders less inception to date revenue recognized. Remaining performance obligations exclude unexercised contract options and indefinite delivery or indefinite quantity contracts. The Company expects to recognize approximately 38% of its remaining performance obligations as revenue in 2026 and 29% in 2027 and the balance thereafter (December 31, 2024 - 28% in 2025, and 24% in 2026 and the balance thereafter).

Of the opening contract liabilities balance at January 1, 2025, $567.1 has been recognized as revenue in 2025 (2024 - $58.8).

Segmented information is reported in a manner consistent with the internal reporting provided to the chief operating decision maker (“CODM”), and reflects the way the CODM evaluates performance of, and allocates resources within, the business. The Company operates substantially all of its activities in one reportable segment, which includes the

MDA Space Ltd.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

(Amounts in millions of Canadian dollars, except share-based compensation awards and per share amounts)

Geointelligence, Robotics and Space Operations and Satellite Systems operating segments. The reportable segment earns revenue by providing space solutions to customers in a similar market and is managed by the CODM.

Revenues are attributed to geographical regions based on the location of customers as follows:

The Company’s property, plant and equipment, right-of-use assets, intangible assets and goodwill are attributed to geographical regions based on the location of the assets as follows:

The following table shows the breakdown of materials, labour and subcontractors costs included in cost of revenue:

The following tables show the breakdowns of selling, general and administration expenses and research and development, net included in operating expenses: