Final Results

About this update from Bae Systems Plc

[{"type":"text","content":"\n \n BAE Systems plc \nPreliminary Results Announcement 2024 \n Charles Woodburn, Chief Executive, said : \"The results we're reporting today reflect the outstanding efforts of our employees and continue our track record of strong top-line and earnings growth, free cash flow and orders. \n \"We're supporting our customers around the world, while shaping our portfolio towards higher growth and strategically important markets. Across our business, we're also investing in our people, facilities and technologies to drive efficiencies, boost capacity and increase our agility to deliver in a rapidly evolving environment. \n \"Based on the exceptional visibility of our record order backlog and sustainability of our value-compounding business model, we remain confident in the positive momentum of our business into the future.\" \n \n \n \n \n Financial highlights \n Financial performance measures as defined by Group 1 \n \n \n Year \n ended \n 31 December \n 2024 \n \n \n Year \n ended \n 31 December \n 2023 \n \n \n   \n Variance 2 \n \n \n \n \n Sales \n \n \n £28,335m \n \n \n £25,284m \n \n \n 14% \n \n \n \n \n Underlying earnings before interest and tax (EBIT) \n \n \n £ 3,015 m \n \n \n £2,682m \n \n \n 14% \n \n \n \n \n Underlying Earnings Per Share (EPS) \n \n \n 68.5p \n \n \n 63.2p \n \n \n 10% \n \n \n \n \n Free cash flow \n \n \n £2,505m \n \n \n £2,593m \n \n \n £(88)m \n \n \n \n \n Order intake \n \n \n £33.7bn \n \n \n £37.7bn \n \n \n £(4.0)bn \n \n \n \n \n Order backlog \n \n \n £77.8bn \n \n \n £69.8bn \n \n \n £8.0bn \n \n \n \n \n   \n Financial performance measures as derived from IFRS \n \n \n \nYear \n ended \n 31 December \n 2024 \n \n \n \nYear \n ended \n 31 December \n 2023 \n \n \n   \n   \n Variance 2 \n \n \n \n \n Revenue \n \n \n £ 26,312 m \n \n \n £23,078m \n \n \n 14% \n \n \n \n \n Operating profit \n \n \n £ 2,685 m \n \n \n £2,573m \n \n \n 4% \n \n \n \n \n EPS - basic \n \n \n 64.9 p \n \n \n 61.3p \n \n \n 6% \n \n \n \n \n Net cash flow from operating activities \n \n \n £ 3,925 m \n \n \n £3,760m \n \n \n £165m \n \n \n \n \n Order book \n \n \n £60.4bn \n \n \n £58.0bn \n \n \n £2.4bn \n \n \n \n \n Dividend per share \n \n \n 33.0p \n \n \n 30.0p \n \n \n 10% \n \n \n \n \n As defined by Group \n ·       The 14% 2 growth in sales and underlying EBIT reflects strong programme performance across all sectors and the benefit of M&A activities in the year, including the acquisition of Ball Aerospace (now Space & Mission Systems (SMS)) in February. \n ·       Growth of 10% 2 in underlying EPS reflects the increase in underlying EBIT, partially offset by the increase in underlying net finance costs incurred as a result of the $4.8bn (£3.8bn) debt finance raised in the year. \n ·       Free cash flow was £2,505m, reflecting a high level of customer advances towards the end of the year and strong operational cash conversion. This was offset by higher capital expenditure and net finance costs. \n ·       Our order backlog grew by 11% to a record £77.8bn, which included order backlog of £3.0bn related to SMS. \n As derived from IFRS \n ·       The growth in revenue of 14% reflects the same strong programme performance across the portfolio. \n ·       Operating profit was up 4% as the growth in underlying EBIT was offset by the additional amortisation of intangible assets acquired with SMS. \n ·       Basic EPS was up 6%, also reflective of the additional finance costs and amortisation of intangibles incurred as a result of M&A activities in the year. \n ·       The increase in net cash flow from operating activities was driven by strong operational cash conversion. \n Capital deployment \n ·       The Board has recommended a final dividend of 20.6p, taking the total dividend for 2024 to 33.0p - an increase of 10% on last year. Subject to shareholder approval at the 2025 Annual General Meeting, the dividend will be paid \non 2 June 2025 to shareholders on the share register on 22 April 2025. \n ·       During the year, the Company repurchased 43m of shares under our share buyback programmes, at a cost of £555m. Combined with dividends, the Group returned £1,492m to shareholders in the year ended 31 December 2024. \n ·       In March, we successfully raised $4.8bn (£3.8bn) of debt finance following the $5.5bn (£4.4bn) acquisition of Ball Aerospace. \n Delivering for our customers \n Our continued focus on operational performance and contracting discipline enables our consistent delivery of critical capabilities and technologies for our customers worldwide. During the year, we secured £33.7bn of orders and made good progress executing on our long-term major programmes. Highlights included: \n ·      we reached agreement with our international partners, Leonardo SpA and Japan Aircraft Industrial Enhancement Co Ltd (JAIEC), to form a new joint venture company, which will be accountable for the design, development and delivery of a next generation combat aircraft under the Global Combat Air Programme (GCAP), subject to regulatory approvals; \n ·      under the AUKUS announcement, we were selected to deliver Australia's new fleet of nuclear-powered submarines, alongside ASC Pty Ltd (ASC). In November, we also entered into an initial mobilisation arrangement with the Australian Government to progress its SSN-AUKUS programme together with ASC; \n ·      we signed a contract, worth £4.6bn, for the delivery of the first three Hunter Class frigates in Australia, following which, we entered the construction phase and officially cut steel on the first ship at a ceremony at the Osborne Naval Shipyard in Adelaide, South Australia; \n ·      continued strong demand for our combat vehicles and, building on an initial contract in May, our Hägglunds business received further orders in December, bringing the total value to approximately $2.5bn (£2.0bn); and \n ·      multiple satellite launches with our systems on board for the US Space Force and NASA. We also completed testing and delivery of the primary scientific instrument for the Nancy Grace Roman Space Telescope to NASA's Goddard Space Flight Center. \n Investing in tomorrow \n Alongside good operational delivery, we continue to invest in our people, research and development (R&D) and capital expenditure. Highlights included: \n ·       we recruited around 2,300 new apprentices and graduates in the UK and, in the US our intern programme provided placement opportunities for nearly 500 interns; \n ·       we opened our new state-of-the-art shipbuilding academy in Glasgow, UK, greatly enhancing our ability to develop and train our Naval Ships workforce and expanding on our established academies in Barrow-in-Furness and Samlesbury, UK; \n ·       we made significant progress on the construction of our new ship build assembly hall in Glasgow, which we expect to be fully operational in 2025; \n ·       we are investing more than £160m in our Hägglunds business, based in Sweden, in advanced manufacturing capabilities and a new customer test and acceptance centre to expand our production and delivery capabilities; and \n ·       we have committed to investing £220m in an advanced technology factory in Rochester, UK, to support our UK-based Electronic Systems business, which is expected to deliver increased capacity through a more efficient and sustainable facility. \n Shaping the portfolio \n We continued to enhance our world class portfolio to strengthen our relevance in a rapidly evolving global threat environment. Highlights included: \n ·       making excellent progress on integration activities within our new SMS business, with the bulk of our core systems and processes now transitioned;  \n ·       reducing our shareholding in Air Astana from 49% to 17%, following its Initial Public Offering (IPO) in February - with cash proceeds on disposal of £166m and a profit on disposal of £75m; and \n ·       completing several smaller acquisitions in the UK during the year to strengthen our drone and counter-drone capabilities. \n Group guidance 3 for 2025 \n Guidance is provided on the basis of an exchange rate of $1.28:£1, which is in line with the actual 2024 exchange rate. \n   \n \n \n \n \n Year ended 31 December 2025 \n \n \n   \n   \n   \n Guidance \n \n \n Year ended \n31 December 2024 \n Results \n \n \n \n \n Sales \n \n \n Increase by 7% to 9% \n \n \n £28,335 m \n \n \n \n \n Underlying EBIT \n \n \n Increase by 8% to 10% \n \n \n £ 3,015 m \n \n \n \n \n Underlying EPS \n \n \n Increase by 8% to 10% \n \n \n 68.5 p \n \n \n \n \n Free cash flow target \n \n \n >£1.1bn \n \n \n £ 2,505 m \n \n \n \n \n Three-year cumulative free cash flow guidance \n \n \n \nGuidance \n \n \n   \n \n \n \n \n Cumulative free cash flow 2023-2025 \n (previously in excess of £5.0bn) \n \n \n In excess of £6.0bn \n \n \n   \n \n \n \n \n Cumulative free cash flow 2024-2026 \n (previously in excess of £5.0bn) \n \n \n In excess of £5.5bn \n \n \n   \n \n \n \n \n Cumulative free cash flow 2025-2027 \n \n \n In excess of £5.5bn \n \n \n   \n \n \n \n \n \n ·    Underlying net finance costs c.£ 400m \n ·    Effective tax rate c. 20 % \n ·    Non-controlling interests c.£ 90 m \n Sensitivity to foreign exchange rates: the Group operates in a number of currencies, the most significant of which is the US dollar. As a guide, a 5 cent movement in the £/$ exchange rate will impact sales by c.£525m, Underlying EBIT by c.£75m and Underlying EPS by c.1.4p. \n   \n 1.  We monitor the underlying financial performance of the Group using alternative performance measures (APMs). These measures are not defined in International Financial Reporting Standards (IFRS) and therefore are considered to be non-GAAP (Generally Accepted Accounting Principles) measures. The relevant IFRS measures are presented where appropriate. The purposes and definitions of non-GAAP measures are provided in the Alternative performance measures section on page 46. \n 2.  Growth rates for sales, underlying EBIT and underlying EPS are on a constant currency basis (i.e. calculated by translating the results from entities in functional currencies other than pounds sterling for the year ended 31 December 2023 to pounds sterling at the average exchange rate of such currencies for the year ended 31 December 2024). The comparatives have not been restated. All other growth rates and year-on-year movements are on a reported currency basis. \n 3.  While the Group is subject to geopolitical and other uncertainties, the Group guidance is provided on current expected operational performance. The guidance is based on the measures used to monitor the underlying financial performance of the Group. \n   \n For further information please contact: \n \n \n \n \n Investor Relations \n \n \n Media Relations \n \n \n \n \n Telephone: +44 (0) 1252 383455 \n \n \n Telephone: +44 (0) 7540 628673 \n \n \n \n \n Email: [email protected] \n \n \n Email: [email protected] \n \n \n \n \n Analyst and investor presentation \n A presentation, for analysts and investors, of the Group's Results for 2024 will be available at 9.00am GMT today (19 February 2025) on the investor website, followed by a live Q&A.   \n Details can be found on investors.baesystems.com , together with the presentation slides and a copy of this report. A recording of the webcast will be available for replay later in the day. \n About BAE Systems \n We are supporting our customers so that they can stay ahead of evolving threats across land, sea, air, cyber and space. We are a workforce of 107,400 ¹ highly skilled people in more than 40 countries. Working with our customers and local partners, we develop, engineer, manufacture and support products and systems that deliver military capability, protect national security and keep critical information and infrastructure secure. \n 1. As at 31 December 2024 and including share of equity accounted investments. \n Shareholder information \n Registered office \n BAE Systems plc \n 6 Carlton Gardens \n London \n SW1Y 5AD \n United Kingdom \n Registered in England and Wales, No. 01470151 \n Cautionary statement: \n All statements other than statements of historical fact included in this document, including, without limitation, those regarding the financial condition, results, operations and businesses of BAE Systems plc and its strategy, plans and objectives and the markets and economies in which it operates, are forward-looking statements. Such forward-looking statements, which reflect management's assumptions made on the basis of information available to it at this time, appear in a number of places throughout this document and include statements regarding the intentions, beliefs or current expectations of BAE Systems plc concerning, amongst other things, its results in relation to operations, financial condition, liquidity, prospects, growth, commitments and targets (including environmental, social and governance commitments and targets), strategies and the industry in which it operates. Forward-looking statements can be identified by the use of forward-looking terminology such as \"believes\", \"expects\", \"may\", \"intends\", \"will\", \"will continue\", \"should\", \"would be\", \"seeks\", \"anticipates\" or similar expressions or the negative thereof or other variations thereof or comparable terminology. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future.   \n   \n Forward-looking statements are not guarantees of future performance and the actual results of operations, financial condition and liquidity of BAE Systems plc, the development of the industry in which it operates and the ability of BAE Systems plc to meet its commitments and targets may differ materially from those made in or suggested by the forward-looking statements contained in this document. In addition, even if results of operations, financial condition and liquidity of BAE Systems plc, the development of the industry in which it operates and/or performance against commitments and targets are consistent with the forward-looking statements contained in this document, those results, developments or performance may not be indicative of results, developments or performance in subsequent periods. \n   \n These forward-looking statements speak only as of the date of this document. Subject to the requirements of the Disclosure Guidance and Transparency Rules, the Market Abuse Regulation or applicable law, BAE Systems plc explicitly disclaims any intention or obligation or undertaking publicly to release the result of any revisions to any forward-looking statements in this document that may occur due to any change in its expectations or to reflect events or circumstances after the date of it. All subsequent written and oral forward-looking statements attributable to either BAE Systems plc or to persons acting on its behalf are expressly qualified in their entirety by the cautionary statements referred to herein and contained elsewhere in this document. \n   \n BAE Systems plc and its directors accept no liability to third parties in respect of this document save as would arise under English law. Accordingly, any liability to a person who has demonstrated reliance on any untrue or misleading statement or omission shall be determined in accordance with Schedule 10A of the Financial Services and Markets Act 2000. It should be noted that Schedule 10A and Section 463 of the Companies Act 2006 contain limits on the liability of the directors of BAE Systems plc so that their liability is solely to BAE Systems plc. \n Preliminary results statement \n Overview \n In November 2024, we celebrated the 25th anniversary of British Aerospace and Marconi Electronic Systems coming together to create BAE Systems. \n Even as the world around us has changed dramatically, our deep commitment to collaboration and building long-term partnerships means that government customers have trusted us for decades to develop the next generation of defence and security capabilities. \n Today, nations are facing increasingly varied and complex threats to security. These growing threats have reinforced the essential nature of our work and highlighted the need for continued global investment in defence. \n By focusing on operational excellence, contracting discipline and growing our workforce, we are consistently delivering critical capabilities and technologies for our customers worldwide. \n The fundamentals of the business are strong and 2024 was another year of strong operational and financial performance, extending our track record of delivery. \n We know that our success relies on our people, their unwavering focus on protecting those who protect us and our tireless commitment to responsible business practices. We continue to invest in our people and our business for the long term, which together with our broad geographic and product diversity, positions us well for more growth in the years ahead. \n Delivering for our customers \n We made good operational progress in 2024, as our highly skilled employees continued to support our customers, helping them to stay ahead of evolving threats across land, sea, air, cyber and space. \n Our focus on operational excellence continues to benefit our customers and shareholders, as we execute on complex, long-term programmes like Dreadnought, Type 26 and Hunter Class frigates, Typhoon and F-35 jets, electronic warfare systems, combat vehicles, and many other programmes across our business. \n We also maintained momentum on key strategic international collaborations, which will define the next generation of capabilities and underpin our business for decades to come. Working with our industry partners in Italy and Japan, we reached agreement to form a joint venture, subject to regulatory approvals, to design and develop next-generation fighter jets under GCAP while, under the AUKUS announcements, we have been selected to partner with the Australian submarine builder ASC Pty Ltd to deliver Australia's SSN-AUKUS programme. \n Our financial performance \n We finished the year by delivering records across our key financial measures of order backlog, sales, underlying EBIT, underlying EPS and dividend per share. \n On a constant currency basis, we grew sales and underlying EBIT by 14% and underlying EPS by 10%. We delivered £2.5bn of free cash flow, taking our three-year cumulative free cash flow to over £7.0bn. \n Our order intake was £33.7bn which, combined with £3.0bn of order backlog in SMS, pushed our order backlog to a record £77.8bn. \n We ended 2024 with a strong balance sheet, featuring a cash position of £3.4bn, after we returned a further £1.5bn to shareholders in the year. Our net debt (excluding lease liabilities) of £4.9bn is an increase of £3.9bn and primarily reflects M&A activity, including the $5.5bn (£4.4bn) Ball Aerospace acquisition which was partially funded by debt raised during the year. \n Our strong financial performance gives us the strategic flexibility to invest in the business to support its long-term strength and expected growth, whilst maintaining focused and disciplined capital allocation. \n Investing in tomorrow \n Investing in our people, technologies and facilities is essential to achieving our ambitions and ensuring our business has the agility to anticipate and respond to the emerging threats our government customers face in a constantly changing world. \n We grew our global workforce by 7,600, including employees within our SMS business, to 107,400 employees. Given the long-term nature of many of our programmes, we are particularly focused on early careers to sustain our talent pipeline, recruiting around 2,300 apprentices and graduates in the UK. We increased our self-funded R&D to £357m, in key technology areas including electronic warfare, autonomy, laser-guided weapons, uncrewed air systems (UAS), synthetic training, electrification applications and space solutions. \n We also increased capital expenditure, compared to 2023, taking it to over £1.0bn as we continue to develop and modernise our systems and facilities to deliver an effective working environment and build greater capacity for the future, focused primarily on maritime, munitions, combat vehicles and electronics. \n Shaping the portfolio \n Alongside our organic investment, we are evolving our portfolio with a focus on the advanced technologies we believe will be highly relevant as our customers address evolving global threats and which will help drive higher growth. Notably, we completed the largest acquisition in the Company's history: the acquisition of Ball Aerospace in the US, forming our new SMS business and significantly enhancing our presence in the growing space market. We also made a number of smaller acquisitions in the UK, which further strengthen our UAS and counter UAS capabilities, and divested certain non-core business areas. \n Our capital distribution \n The strength and outlook for the Group, alongside our disciplined capital allocation, means that, after increasing investments in our people, technologies and capital expenditure, we were able to increase returns to shareholders. During the year, the Company repurchased £555m worth of shares and paid £937m in dividends, returning £1,492m to shareholders. The Board has recommended a 20.6p final dividend for approval by shareholders at the 2025 Annual General Meeting, which will take the total dividend in respect of 2024 to 33.0p - an increase of 10% on last year. \n Our market differentiation \n Our business has a unique combination of a diverse geographic footprint and multi-domain capabilities. We believe our technologies, expertise and global reach position BAE Systems as a leader in our industry and enable us to support our customers to meet the elevated threat environment of today and tomorrow. This breadth continues to be a real strength and a differentiator. \n Looking ahead, our key growth drivers are spread across major markets and include huge multi-national endeavours, including GCAP and AUKUS, which are significant for the Group in the medium and long term, and highlight the global reach, scale and longevity of our business. \n Responsible business \n The work we do is vital. We support our government customers to fulfil their primary obligation to keep their citizens safe, whilst contributing to the economic and social development of the communities and nations in which we operate, helping to build a stronger and more secure future. \n Our people are the heart of everything we do and it is critical that we attract and retain the very best talent so that we can support our customers' requirements and our own long-term growth. We remain fully committed to fostering a workplace culture and environment where everyone feels they belong and can thrive, which includes investing in our people's skills development from early careers through to lifelong learning. \n The safety, health and wellbeing of our people is an enduring priority. Despite our focused efforts, our safety performance deteriorated in 2024 and we are committed to strengthening our safety management programme to improve our performance in 2025 and beyond. \n We continue to focus on resource efficiency, ensuring that our energy and infrastructure strategies reduce our greenhouse gas emissions across our operations, while supporting our business growth. \n We do all of this while maintaining a robust governance structure and high standards. This includes continuing to operate under tight regulation and complying fully with applicable trade controls and sanctions. \n Board changes \n In September, Lord Sedwill stood down from the Board as a Non-Executive Director due to his evolving parliamentary and other commitments. \n Summary investment case \n We have a strong track record of delivering financial returns for investors and, through the careful long-term sustainable management and governance of our business, we are well placed to continue to generate good returns. This is supported by our seven key advantages: \n 1.  We provide customers with world-class defence products and capabilities across multiple markets. \n 2.  We undertake multi-decade programmes with long-term embedded value. Our contract order backlog provides a high level of sales visibility, driven by multi-year programmes. \n 3.  We have a growing global opportunity pipeline. Our diverse geographic footprint supports us in pursuing excellent opportunities across all sectors as countries around the world face up to the multi-faceted threat environment. \n 4.  We foster a high-performance, innovative culture and consistently invest in R&D to build on existing world-leading capabilities and generate new innovative and disruptive technologies. \n 5.  We have an intense focus on operational excellence, with strong, consistent programme performance. We focus on creating value for our investors and customers. \n 6.  Sustainability is embedded in our business - it forms part of our strategic framework and underpins our purpose. \n 7.  We operate a value-enhancing operating model, undertaking our core business activities with a clear, consistent and careful capital allocation. \n Group financial review \n \n \n \n \n Group income statement \n   \n \n \n \n \n \n \n \n \n Underlying - \nas defined by the Group 1 \n \n \n \n \n \n Statutory - \nas derived from IFRS \n \n \n \n \n \n \n \n \n \n \n \n \n \n 2024 \n£m \n \n \n 2023 \n£m \n \n \n \n \n \n 2024 \n£m \n \n \n 2023 \n£m \n \n \n \n \n Sales/Revenue \n \n \n   \n \n \n \n \n \n 28,335 \n \n \n 25,284 \n \n \n \n \n \n 26,312 \n \n \n 23,078 \n \n \n \n \n Underlying EBIT/Operating profit \n \n \n   \n \n \n \n \n \n 3,015 \n \n \n 2,682 \n \n \n \n \n \n 2,685 \n \n \n 2,573 \n \n \n \n \n Finance income \n \n \n   \n \n \n \n \n \n 117 \n \n \n 131 \n \n \n \n \n \n 135 \n \n \n 172 \n \n \n \n \n Finance costs \n \n \n   \n \n \n \n \n \n (513) \n \n \n (342) \n \n \n \n \n \n (488) \n \n \n (419) \n \n \n \n \n Net finance costs \n \n \n \n \n \n \n \n \n (396) \n \n \n (211) \n \n \n \n \n \n (353) \n \n \n (247) \n \n \n \n \n Profit before tax \n \n \n   \n \n \n \n \n \n 2,619 \n \n \n 2,471 \n \n \n \n \n \n 2,332 \n \n \n 2,326 \n \n \n \n \n Tax expense \n \n \n \n \n \n \n \n \n (469) \n \n \n (472) \n \n \n \n \n \n (291) \n \n \n   (386) \n \n \n \n \n Profit for the year 2 \n \n \n   \n \n \n \n \n \n 2,150 \n \n \n 1,999 \n \n \n \n \n \n 2,041 \n \n \n  1,940 \n \n \n \n \n Return on Sales/Revenue \n \n \n \n \n \n \n \n \n 10.6% \n \n \n 10.6% \n \n \n \n \n \n 10.2% \n \n \n 11.1% \n \n \n \n \n   \n \n \n \n \n Reconciliation of underlying EBIT to operating profit \n \n \n \n \n \n \n \n \n 2024 \n£m \n \n \n 2023 \n£m \n \n \n \n \n Underlying EBIT \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 3,015 \n \n \n 2,682 \n \n \n \n \n Adjusting items \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 23 \n \n \n 40 \n \n \n \n \n Amortisation of programme, customer-related and other intangible assets, \n and impairment of equity accounted investments and intangible assets \n \n \n \n \n \n (344) \n \n \n (116) \n \n \n \n \n Net finance income and tax of equity accounted investments \n \n \n \n \n \n \n \n \n (9) \n \n \n (33) \n \n \n \n \n Operating profit \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 2,685 \n \n \n 2,573 \n \n \n \n \n As defined by the Group \n Sales for the year were £28.3bn (2023 £25.3bn) representing growth, on a constant currency basis 3 , of 14% (2023 9%). All sectors delivered growth in the year as detailed below. \n Electronic Systems recorded sales of £7.2bn (2023 £5.5bn), equating to growth of 35% (2023 9%) on a constant currency basis and including the benefit of SMS. Excluding SMS, our Electronic Systems sector delivered organic growth of 9% driven by the precision strike & sensing and commercial aviation businesses. \n Our Platforms & Services sector posted sales of £4.4bn (2023 £3.9bn), with growth of 15% (2023 8%) on a constant currency basis. The US combat vehicles business grew following demand for Armored Multi-Purpose Vehicles (AMPV) and Bradley vehicles, while Hägglunds and Bofors both grew with European demand for CV90 and Archer. \n The Air sector recorded sales of £8.5bn (2023 £8.1bn), representing growth of 7% (2023 4%) on a constant currency basis. Activities in MBDA increased combined with our acquisitions in FalconWorks ® , which have expanded our capabilities in UAS. \n Maritime recorded sales of £6.2bn (2023 £5.5bn), with growth of 12% (2023 22%) on a constant currency basis. The ramp-up of the Hunter Class frigate programme in Australia contributed significantly to the growth, with our submarines business in the UK also making a material contribution from design work on SSN-AUKUS in the year. Demand for munitions also increased on 2023. \n Sales in the Cyber & Intelligence sector grew to £2.4bn (2023 £2.3bn), an increase of 6% (2023 6%) on a constant currency basis.  \n Underlying EBIT was up 14% (2023 9%), on a constant currency basis, to £3,015m (2023 £2,682m). \n Our Electronic Systems sector grew underlying EBIT to £1,071m (2023 £878m), an increase of 25% (2023 5%), on a constant currency basis, and including the benefit of SMS. Excluding SMS, our Electronic Systems sector had organic growth of 6% following the increase in sales. Return on sales was 14.9% (2023 16.1%) due to absorption of lower pension recoveries and incorporation of SMS. \n Platforms & Services reported underlying EBIT of £448m (2023 £354m), an increase of 29% (2023 10%) on a constant currency basis, with return on sales increasing to 10.2% (2023 9.0%). This was driven by full-rate production volumes on AMPV, combined with growth in our Hägglunds and Bofors businesses. \n Our Air sector reported underlying EBIT of £1,007m (2023 £949m), an increase of 7% (2023 12%) on a constant currency basis, maintaining a strong return on sales of 11.8% (2023 11.8%). This was driven by higher sales volumes. \n Maritime reported underlying EBIT of £474m (2023 £425m), growth of 12% (2023 20%) on a constant currency basis in line with sales, delivering a return on sales of 7.7% (2023 7.7%). \n Finally, Cyber & Intelligence reported underlying EBIT of £199m (2023 £199m), with a return on sales of 8.3% (2023 8.6%). \n Adjusting items totalled a net gain of £23m (2023 £40m). During the year, the Group realised a net profit of £94m on the disposal of a number of businesses, the most significant being the partial disposal of our partial shareholding in Air Astana which generated a profit of £75m. In addition, we recognised a settlement gain of £13m on a US pension buyout. This was largely offset by £72m of acquisition and integration-related costs, primarily in relation to Ball Aerospace, and £12m of other costs related to historic business transactions. \n Underlying net finance costs were £396m (2023 £211m), an increase of £185m. Of this, net costs of £455m (2023 £231m) related to the Group and net income of £59m (2023 £20m) related to the Group's share of equity accounted investments. \n As derived from IFRS \n Revenue was £26.3bn (2023 £23.1bn) with growth during the year of 14% (2023 9%), on a reported currency basis, reflective of the same drivers behind the increase in sales for the year excluding the impact of MBDA in the Air sector and other equity accounted investments. \n Operating profit increased 4% (2023 8%), to £2,685m (2023 £2,573m), on a reported currency basis. On an operating sector basis this reflected the same drivers as underlying EBIT, however, operating profit also reflected additional costs from the amortisation of acquired intangibles and impairment of equity accounted investments and intangibles, which increased by £228m to £344m in 2024. Of the £344m incurred in the year, £213m related to the assets acquired with Ball Aerospace. \n Net finance costs were £353m (2023 £247m), an increase of £106m reflective of the additional cost of debt raised during the year. Interest on loans and financial instruments totalled £482m compared to £286m in 2023. \n   \n 1.      The purposes and definitions of non-GAAP measures are provided in the Alternative performance measures section on page 46. \n 2.      On a Group basis, £85m (2023 £83m) of profit for the year is attributable to non-controlling interests, with £2,065m (2023 £1,916m) attributable to equity shareholders. On an IFRS basis, £85m (2023 £83m) of profit for the year is attributable to non-controlling interests, with £1,956m (2023 £1,857m) attributable to equity shareholders. \n 3.      Current year compared with prior year translated at current year exchange rates. The comparatives have not been restated. \n Earnings per share (EPS) \n \n \n \n \n As defined by the Group 1 \n \n \n   \n \n \n \n \n2024 \n \n \n 2023 \n \n \n \n \n Underlying earnings for the year attributable to equity shareholders \n \n \n   \n \n \n £2,065m \n \n \n £1,916m \n \n \n \n \n Underlying EPS \n \n \n \n \n \n 68.5p \n \n \n 63.2p \n \n \n \n \n As derived from IFRS \n \n \n   \n \n \n \n2024 \n \n \n \n2023 \n \n \n \n \n Profit for the year attributable to equity shareholders \n \n \n   \n \n \n £1,956m \n \n \n £1,857m \n \n \n \n \n Basic EPS \n \n \n   \n \n \n 64.9p \n \n \n 61.3p \n \n \n \n \n As defined by the Group \n Underlying EPS increased to 68.5p (2023 63.2p), 10% on a constant currency basis. This is largely driven by the improved underlying profit for the year, with detailed movements set out in the table below. \n As derived from IFRS \n Basic EPS increased 6% to 64.9p (2023 61.3p) with the gain in underlying profit being offset by amortisation on the intangibles acquired within the year, predominantly within our SMS business. \n Movement in underlying EPS \n \n \n \n \n   \n \n \n   \n \n \n 2024 \n pence \n \n \n 2023 \n pence \n \n \n \n \n As at 1 January \n \n \n   \n \n \n 63.2 \n \n \n 55.5 \n \n \n \n \n Foreign exchange \n \n \n \n \n \n (1.0) \n \n \n (0.2) \n \n \n \n \n Underlying EBIT (excluding impact of M&A activity) \n \n \n \n \n \n 5.7 \n \n \n 5.8 \n \n \n \n \n Impact of M&A activity \n \n \n \n \n \n 0.6 \n \n \n - \n \n \n \n \n Underlying net finance costs (excluding impact of M&A activity) \n \n \n \n \n \n (1.4) \n \n \n 0.8 \n \n \n \n \n Tax \n \n \n \n \n \n 1.0 \n \n \n (0.2) \n \n \n \n \n Share repurchases \n \n \n \n \n \n 0.4 \n \n \n 1.5 \n \n \n \n \n As at 31 December \n \n \n \n \n \n 68.5 \n \n \n 63.2 \n \n \n \n \n   \n Orders \n \n \n \n \n As defined by the Group 1 \n \n \n   \n \n \n 2024 \n £bn \n \n \n 2023 \n£bn \n \n \n \n \n Order intake 2 \n \n \n \n \n \n 33.7 \n \n \n 37.7 \n \n \n \n \n Order backlog 2 \n \n \n \n \n \n 77.8 \n \n \n 69.8 \n \n \n \n \n As derived from IFRS \n \n \n   \n \n \n \n2024 \n£bn \n \n \n \n2023 \n£bn \n \n \n \n \n Order book 3 \n \n \n   \n \n \n 60.4 \n \n \n 58.0 \n \n \n \n \n   \n Order intake, was £33.7bn which, combined with £3.0bn of order backlog in SMS, pushed order backlog to a record of £77.8bn. Order intake remained high across all sectors. Details of awards in the year are covered in the segmental reviews on pages 14 to 24 with significant orders in the year including: \n ·    In Maritime, a contract worth £4.6bn for delivery of the first three Hunter Class frigates (Batch 1) in Australia, following which we entered the construction phase and officially cut steel on the first ship at a ceremony at the Osborne Naval Shipyard in Adelaide, South Australia. \n ·    Our Hägglunds business, within the Platforms & Services sector, received orders worth a total of approximately $2.5bn (£2.0bn) for CV9035 MkIIIC vehicles for Sweden and Denmark. \n ·    Our Air sector confirmed orders totalling £1.1bn for our work share on additional Typhoon aircraft, including 25 for the Spanish Air Force and up to 24 for the Italian Air Force. \n 1.     The purposes and definitions of non-GAAP measures are provided in the Alternative performance measures section on page 46. \n 2.     Including share of equity accounted investments. \n 3.     Order book represents the transaction price allocated to unsatisfied and partially satisfied performance obligations as defined by IFRS 15 Revenue from Contracts with Customers. \n   \n Net debt (excluding lease liabilities) \n   \n \n \n \n \n Components of net debt 1 \n \n \n   \n \n \n \n \n2024 \n£m \n \n \n \n \n2023 \n£m \n \n \n \n \n Cash and cash equivalents \n \n \n   \n \n \n 3,378 \n \n \n 4,067 \n \n \n \n \n Debt-related derivative financial instruments (net) \n \n \n   \n \n \n 89 \n \n \n 22 \n \n \n \n \n Loans - non-current \n \n \n   \n \n \n (7,713) \n \n \n (4,432) \n \n \n \n \n Loans - current \n \n \n   \n \n \n (699) \n \n \n (679) \n \n \n \n \n Net debt (excluding lease liabilities) \n \n \n \n \n \n (4,945) \n \n \n (1,022) \n \n \n \n \n Cash and cash equivalents of £3,378m (2023 £4,067m) are held primarily for management of working capital as well as the repayment of debt securities, pension funding when required and committed shareholder returns. During the year, the Group cash-settled $1.5bn (£1.2bn) of the $5.5bn (£4.4bn) consideration for Ball Aerospace, with the balance funded from debt raised during the year.   \n The Group's net debt (excluding lease liabilities) at 31 December 2024 was £4,945m (2023 £1,022m), \na net increase of £3,923m (2023 decrease of £1,001m) from the position at the start of the year. This was primarily as a result of M&A activities in the year, including the $5.5bn (£4.4bn) acquisition of Ball Aerospace which was partially funded by debt finance raised during the year.   \n Other movements comprised foreign exchange on the Group's US dollar-denominated cash and borrowings, offset by their associated derivatives, and dividends paid to non-controlling interests. \n \n \n \n \n Movement in net debt (excluding lease liabilities) \n \n \n   \n \n \n \n \n2024 \n£m \n \n \n \n \n2023 \n£m \n \n \n \n \n As at 1 January \n \n \n   \n \n \n (1,022) \n \n \n (2,023) \n \n \n \n \n Operating business cash flow \n \n \n   \n \n \n 3,093 \n \n \n 3,218 \n \n \n \n \n Interest and tax \n \n \n   \n \n \n (588) \n \n \n (625) \n \n \n \n \n Shareholder returns \n \n \n   \n \n \n (1,492) \n \n \n (1,418) \n \n \n \n \n Business transactions and other \n \n \n   \n \n \n (4,936) \n \n \n (174) \n \n \n \n \n As at 31 December \n \n \n \n \n \n (4,945) \n \n \n (1,022) \n \n \n \n \n   \n 1.     The purposes and definitions of non-GAAP measures are provided in the Alternative performance measures section on page 46. \n Balance sheet \n \n \n \n \n   \n \n \n   \n \n \n \n \n2024 \n£m \n \n \n \n \n2023 \n£m \n \n \n \n \n Goodwill \n \n \n   \n \n \n 13,297 \n \n \n 11,386 \n \n \n \n \n Other intangible assets \n \n \n   \n \n \n 2,965 \n \n \n 713 \n \n \n \n \n Property, plant and equipment, right-of-use assets and investment property \n \n \n   \n \n \n 6,636 \n \n \n 5,003 \n \n \n \n \n Equity accounted investments and other investments \n \n \n   \n \n \n 906 \n \n \n 916 \n \n \n \n \n Working capital \n \n \n   \n \n \n (6,386) \n \n \n (5,468) \n \n \n \n \n Lease liabilities net of finance lease receivables \n \n \n   \n \n \n (1,817) \n \n \n (1,396) \n \n \n \n \n Group's share of IAS 19 post-employment benefits surplus \n \n \n   \n \n \n 768 \n \n \n 229 \n \n \n \n \n Net tax assets and liabilities \n \n \n   \n \n \n 422 \n \n \n 474 \n \n \n \n \n Net other financial assets and liabilities \n \n \n   \n \n \n (69) \n \n \n (112) \n \n \n \n \n Net debt (excluding lease liabilities) \n \n \n \n \n \n (4,945) \n \n \n (1,022) \n \n \n \n \n Net assets \n \n \n \n \n \n 11,777 \n \n \n 10,723 \n \n \n \n \n   \n Goodwill of £13.3bn (2023 £11.4bn) was an increase of £1.9bn on the prior year, driven by M&A activities including the acquisition of Ball Aerospace. \n Other intangible assets of £3.0bn (2023 £0.7bn) was an increase of £2.3bn on the prior year, also driven by the acquisition of Ball Aerospace and other M&A activities. \n Property, plant and equipment, right-of‑use assets and investment property was £6.6bn (2023 £5.0bn), an increase of £1.6bn. Property, plant and equipment increased by a net £1.2bn, reflecting M&A activities and capex spend across the business, offset by depreciation. \n Equity accounted investments and other investments was £906m (2023 £916m). The partial disposal of the Group's partial shareholding in Air Astana and disposal of its 49% interest in FNSS were offset by a net increase in the Group's share of profits of its remaining equity accounted investments. \n Working capital saw a £0.9bn decrease, in aggregate, mainly reflecting the movement on customer advances and the impact of M&A activities. \n   \n Lease liabilities, net of finance lease receivables , was £1.8bn (2023 £1.4bn), with the increase being driven by lease renewals in the year, mainly in the Air sector. \n The Group's share of the net IAS 19 post-employment benefits surplus was £0.8bn (2023 £0.2bn), \nnet of a 25% (2023 35%) withholding tax of £0.4bn (2023 £0.4bn). The increase in the net surplus of £0.5bn largely reflects changes in the underlying assumptions. Details of the Group's post-employment benefit schemes are provided in note 6. \n   \n Cash flow \n \n \n \n \n As defined by Group 1 \n \n \n   \n \n \n \n2024 \n £m \n \n \n \n2023 \n £m \n \n \n \n \n Free cash flow \n \n \n \n \n \n 2,505 \n \n \n 2,593 \n \n \n \n \n Operating business cash flow \n \n \n \n \n \n 3,093 \n \n \n 3,218 \n \n \n \n \n As derived from IFRS \n \n \n   \n \n \n \n2024 \n £m \n \n \n \n2023 \n £m \n \n \n \n \n Net cash flow from operating activities \n \n \n   \n \n \n 3,925 \n \n \n 3,760 \n \n \n \n \n Net cash flow from investing activities \n \n \n   \n \n \n (5,269) \n \n \n (541) \n \n \n \n \n Net cash flow from financing activities \n \n \n   \n \n \n 695 \n \n \n (2,188) \n \n \n \n \n Net (decrease)/increase in cash and cash equivalents \n \n \n   \n \n \n (649) \n \n \n 1,031 \n \n \n \n \n Cash and cash equivalents at 1 January \n \n \n   \n \n \n 4,067 \n \n \n 3,107 \n \n \n \n \n Effect of foreign exchange rate changes on cash and cash equivalents \n \n \n   \n \n \n (40) \n \n \n (71) \n \n \n \n \n Cash and cash equivalents at 31 December \n \n \n   \n \n \n 3,378 \n \n \n 4,067 \n \n \n \n \n As defined by the Group \n Free cash flow of £2,505m (2023 £2,593m) was above guidance, with higher than anticipated customer advances towards the end of the year together with good operational cash conversion. \n Operating business cash flow of £3,093m (2023 £3,218m) was a decrease of £125m (2023 increase of £666m) driven by the increase in capex spend in the year, with over £1.0bn (2023 £0.8bn) being invested across our systems and facilities. \n As derived from IFRS \n Net cash flow from operating activities was £3,925m (2023 £3,760m), an increase of £165m (2023 £921m) primarily resulting from increased profitability of the Group in the year. \n Net cash flow from investing activities was an outflow of £5,269m (2023 £541m). M&A investment in the year was significant with a number of acquisitions, including Ball Aerospace, accounting for a net cash outflow of £4.8bn. This was offset by cash proceeds of £194m from non-core business disposals in the year, including the partial disposal of the Group's partial shareholding in Air Astana, combined with interest and dividends from our equity accounted investments. There was no significant M&A activity in the comparative year. Capex also remained high, with over £1.0bn of cash invested in the year. \n Net cash flow from financing activities was an inflow of £695m (2023 outflow of £2,188m), an increase of £2,883m (2023 decrease of £145m). Cash returns to shareholders, through dividend and share repurchases, increased £74m to £1,492m. Although dividends increased, the value of share repurchases was lower. Dividends paid represent the 2023 final dividend and the 2024 interim dividend. During 2024, we repurchased 43m shares under the 2022 and 2023 share buyback programmes (2023 59m shares under the 2022 share buyback programme). This year also saw a net cash inflow from debt financing in the year of £3,139m primarily to fund the Ball Aerospace acquisition (2023 £162m from a private placement). \n   \n Exchange rates \n \n \n \n \n \n \n \n Average \n \n \n Year end \n \n \n \n \n \n \n \n 2024 \n \n \n 2023 \n \n \n 2024 \n \n \n 2023 \n \n \n \n \n £/$ \n \n \n 1.278 \n \n \n 1.244 \n \n \n 1.253 \n \n \n 1.275 \n \n \n \n \n £/€ \n \n \n 1.181 \n \n \n 1.150 \n \n \n 1.210 \n \n \n 1.154 \n \n \n \n \n £/A$ \n \n \n 1.938 \n \n \n 1.874 \n \n \n 2.023 \n \n \n 1.868 \n \n \n \n \n   \n 1.     The purposes and definitions of non-GAAP measures are provided in the Alternative performance measures section on page 46. \n Segmental review \n   \n \n \n \n \n \n \n \n As defined by the Group 1 \n \n \n \n \n \n \n \n   \n   \n   \n Year ended 31 December 2024 \n \n \n Sales \n£m \n \n \n Underlying EBIT \n£m \n \n \n Return \non sales \n% \n \n \n Operating business cash flow \n£m \n \n \n Order \n intake \n £bn \n \n \n Order \n backlog \n £bn \n \n \n \n \n \n \n \n Electronic Systems \n \n \n 7,189 \n \n \n 1,071 \n \n \n 14.9% \n \n \n 801 \n \n \n 7.3 \n \n \n 12.7 \n \n \n \n \n \n \n \n Platforms & Services \n \n \n 4,390 \n \n \n 448 \n \n \n 10.2% \n \n \n 732 \n \n \n 7.4 \n \n \n 14.3 \n \n \n \n \n \n \n \n Air \n \n \n 8,519 \n \n \n 1,007 \n \n \n 11.8% \n \n \n 1,243 \n \n \n 8.3 \n \n \n 26.8 \n \n \n \n \n \n \n \n Maritime \n \n \n 6,187 \n \n \n 474 \n \n \n 7.7% \n \n \n 436 \n \n \n 8.7 \n \n \n 23.2 \n \n \n \n \n \n \n \n Cyber & Intelligence \n \n \n 2,411 \n \n \n 199 \n \n \n 8.3% \n \n \n 139 \n \n \n 2.4 \n \n \n 1.8 \n \n \n \n \n \n \n \n HQ 2 \n \n \n 203 \n \n \n (184) \n \n \n - \n \n \n (258) \n \n \n 0.2 \n \n \n - \n \n \n \n \n \n \n \n Deduct Intra-group \n \n \n (564) \n \n \n - \n \n \n - \n \n \n - \n \n \n (0.6) \n \n \n (1.0) \n \n \n \n \n \n \n \n Total \n \n \n 28,335 \n \n \n 3,015 \n \n \n 10.6% \n \n \n 3,093 3 \n \n \n 33.7 \n \n \n 77.8 \n \n \n   \n \n \n \n \n   \n \n \n \n \n \n \n \n As derived from IFRS \n \n \n \n \n   \n   \n   \n   \n Year ended 31 December 2024 \n \n \n Revenue \n£m \n \n \n Operating profit \n£m \n \n \n Return on revenue \n% \n \n \n Net cash flow from operating activities \n£m \n \n \n Order \nbook \n£bn \n \n \n \n \n Electronic Systems \n \n \n 7,186 \n \n \n 708 \n \n \n 9.9% \n \n \n 1,044 \n \n \n 8.6 \n \n \n \n \n Platforms & Services \n \n \n 4,344 \n \n \n 456 \n \n \n 10.5% \n \n \n 976 \n \n \n 13.6 \n \n \n \n \n Air \n \n \n 6,880 \n \n \n 1,009 \n \n \n 14.7% \n \n \n 1,359 \n \n \n 15.6 \n \n \n \n \n Maritime \n \n \n 6,002 \n \n \n 465 \n \n \n 7.7% \n \n \n 734 \n \n \n 22.3 \n \n \n \n \n Cyber & Intelligence \n \n \n 2,411 \n \n \n 182 \n \n \n 7.5% \n \n \n 194 \n \n \n 1.3 \n \n \n \n \n HQ 2 \n \n \n 24 \n \n \n (135) \n \n \n - \n \n \n (207) \n \n \n - \n \n \n \n \n Deduct Intra-group \n \n \n (535) \n \n \n - \n \n \n - \n \n \n - \n \n \n (1.0) \n \n \n \n \n Deduct Tax 4 \n \n \n - \n \n \n - \n \n \n - \n \n \n (175) \n \n \n - \n \n \n \n \n Total \n \n \n 26,312 \n \n \n 2,685 \n \n \n 10.2% \n \n \n 3,925 \n \n \n 60.4 \n \n \n \n \n 1. The purposes and definitions of non-GAAP measures are provided in the Alternative performance measures section on page 46. \n 2. HQ comprises the Group's head office activities, together with a 17% interest in Air Astana as at 31 December 2024. \n 3. At a Group level, the key cash flow metric is free cash flow (see Alternative performance measures on page 46). In 2024, free cash flow \nwas £2,505m (2023 £2,593m). \n 4. Tax is managed on a Group-wide basis. \n Segmental performance: Electronic Systems \n Electronic Systems, with 22,400¹ employees, comprises the Group's US- and UK-based Electronic Systems business and the US-based Space & Mission Systems business. \n Financial performance \n \n \n \n \n Financial performance measures defined by Group 2 \n \n \n   \n \n \n Financial performance measures derived from IFRS \n \n \n \n \n \n \n \n \n \n \n2024 \n \n \n \n2023 \n \n \n   \n   \n   \n Variance 3 \n \n \n   \n \n \n \n \n \n 2024 \n \n \n 2023 \n \n \n   \n   \n   \n Variance 3 \n \n \n \n \n Sales \n \n \n £7,189m \n \n \n £5,458m \n \n \n +35% \n \n \n \n \n \n Revenue \n \n \n £7,186m \n \n \n £5,456m \n \n \n +32% \n \n \n \n \n Underlying EBIT \n \n \n £1,071m \n \n \n £878m \n \n \n +25% \n \n \n \n \n \n Operating profit \n \n \n £708m \n \n \n £806m \n \n \n -12% \n \n \n \n \n Return on sales \n \n \n 14.9% \n \n \n 16.1% \n \n \n -120bps \n \n \n \n \n \n Return on revenue \n \n \n 9.9% \n \n \n 14.8% \n \n \n -490bps \n \n \n \n \n   \n Operating business cash flow \n \n \n   \n £801m \n \n \n £811m \n \n \n   \n £(10m) \n \n \n \n \n \n Cash flow from operating activities \n \n \n £1,044m \n \n \n £961m \n \n \n   \n £83m \n \n \n \n \n Order intake \n \n \n £7.3bn \n \n \n £6.7bn \n \n \n £0.6bn \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Order backlog \n \n \n £12.7bn \n \n \n £8.9bn \n \n \n £3.8bn \n \n \n \n \n \n Order book \n \n \n £8.6bn \n \n \n £7.6bn \n \n \n £1.0bn \n \n \n \n \n 1.     Including share of equity accounted investments. \n 2.     The purposes and definitions of non-GAAP measures are provided in the Alternative performance measures section on page 46. \n 3.     Growth rates for sales and underlying EBIT are on a constant currency basis. All other growth rates and year-on-year movements are on a reported currency basis. \n Operational performance \n We continued to experience strong demand across our customer base for Electronic Systems in 2024 as evidenced by our order intake. We supported existing customers on key electronic warfare and precision guided-munition programmes, while pursuing and maturing new opportunities. \n After completing the Ball Aerospace acquisition in mid-February to form our SMS business, we have made excellent progress in integrating the organisation into our US operations. SMS is realising cost synergies and meeting key workforce integration milestones. It also continues to hold and reap benefits from 'synergy summits' to identify areas where our businesses can partner to pursue and capture new revenue opportunities for the US Intelligence Community, Department of Defense and civilian space agencies. \n In our commercial businesses, airline traffic exceeded pre-pandemic levels, generating stronger demand for aftermarket services. However, Original Equipment Manufacturer demand schedules are recovering from supply chain and labour relation issues experienced by airframe manufacturers. \n Key operational points for the year \n ·    Our SMS team marked multiple satellite launches with our systems on board; the Weather System Follow-on Microwave satellite to bridge critical gaps in environmental monitoring capabilities for the US Space Force and NASA's Europa Clipper mission that will orbit Jupiter and conduct detailed observations of one of its moons. \n ·    We completed testing and delivered the primary scientific instrument for the Nancy Grace Roman Space Telescope to NASA's Goddard Space Flight Center. The Roman Space Telescope is scheduled to launch by 2027 and we were selected as one of three teams to mature a next-generation stable optical system for the Habitable Worlds Observatory - NASA's next flagship astrophysics mission. \n ·    The F-35 Lightning II programme completed deliveries on Lot 16 and is delivering Lot 17/18/DTIP+ electronic warfare (EW) systems for a cumulative total of over 1,600 EW systems as at year end.   \n ·    The US Air Force Commander of Air Combat Command declared the F-15EX programme of record had successfully achieved initial operating capability by delivering eight F-15EXs equipped with the Eagle Passive Active Warning Survivability System. BAE Systems is on contract through Boeing for Full-Rate \nProduction Lot 5. \n ·    The EA-37B programme is executing contracts, inclusive of international support, valued at more than $1.0bn (£0.8bn). The team is focused on the cross-decking of prime mission equipment to the new EA-37B aircraft while sustaining and upgrading the existing EC-130H fleet. We have delivered three EA-37B aircraft for formal testing and training to the US Air Force, which will evolve its electromagnetic attack capabilities. \n ·    We are under contract to deliver additional Network Tactical Common Datalink production systems to support US Navy requirements for real-time intelligence, surveillance, reconnaissance, and command and control. Systems are currently being installed on US Navy aircraft carriers and Constellation-class guided-missile frigates. \n ·    We delivered our first RAD510™ software development unit to a space customer. The RAD510 builds on our proven legacy of space processing to provide the next generation of radiation-hardened space computing. These software development units will enable our customers to integrate their software for testing prior to receiving flight units for their space systems. \n Strategic and order highlights \n ·    We continue to support the F-35 Block 4 EW modernisation that is on track to begin incremental production starting with Lot 17, with full lot complete by Lot 19. \n ·    We were awarded the first task order of $116m (£91m), with follow-on production awards expected, to provide terminals and spares for the Multifunctional Information Distribution System Joint Tactical Radio System from Data Link Solutions, our joint venture with Collins Aerospace, Inc. \n ·    Production continues on the APKWS ® laser-guidance kit programme under an Indefinite Delivery, Indefinite Quantity (IDIQ) contract, and we demonstrated the APKWS counter-unmanned aircraft systems capability, leading to orders supporting both ground-to-air and air-to-air configurations. \n ·    Our Navigation & Sensor Systems team received the annual order for military GPS receivers for strategic munitions under another five-year IDIQ contract with a major US defence prime. \n ·    After receiving two new contracts in May on the National Oceanic and Atmospheric Administration's (NOAA) Geostationary Extended Observations (GeoXO) satellite constellation, SMS is contracted to build all three hyperspectral instruments for the mission totalling approximately $1.3bn (£1.0bn). The GeoXO satellites are expected to launch in the early 2030s as NOAA's current geostationary weather satellites near the end of their planned mission. \n Looking forward \n ·    Our Electronic Systems sector remains positioned for growth in the medium term. We maintain a diverse portfolio of defence and commercial products and capabilities for US and international customers and expect to benefit from applying innovative technology solutions to defence customers' existing and changing requirements, building on our significant roles on F-35 Lightning II, F-15 upgrades, EA-37B, M-Code GPS upgrades, classified programmes, as well as a number of precision weapon products.   \n ·    Over the long term, we are poised to build on our technology strengths in emerging areas of demand, including precision weaponry, space resilience, hyper-velocity projectiles, autonomous platforms and the development of multi-domain capabilities. \n ·    In our commercial portfolio, we continue to leverage our electric drive propulsion capabilities to address growing demand for low- and zero-emission solutions across an increasing number of civil platforms, with opportunities to migrate these technologies to defence applications. \n ·    In SMS, we continue to grow our expanding space portfolio, while also leveraging our proven capabilities in tactical systems to diversify our market presence. We continue to focus on cross-segment collaboration to identify new opportunities, unlock synergies and drive future growth. \n Segmental performance: Platforms & Services \n Platforms & Services, with 11,600 1 employees and operations in the US, Sweden and the UK, manufactures and upgrades combat vehicles, weapons and munitions, and delivers services and sustainment activities, including US naval ship repair and the management and operation of two government-owned, contractor-operated ammunition plants. \n Financial performance \n \n \n \n \n Financial performance measures defined by Group 2 \n \n \n \n \n \n Financial performance measures derived from IFRS \n \n \n \n \n \n \n \n \n2024 \n \n \n \n2023 \n \n \n   \n Variance 3 \n \n \n   \n \n \n \n \n \n \n2024 \n \n \n \n2023 \n \n \n   \n Variance 3 \n \n \n   \n \n \n \n \n Sales \n \n \n £4,390m \n \n \n £3,922m \n \n \n +15% \n \n \n \n \n \n Revenue \n \n \n £4,344m \n \n \n £3,842m \n \n \n +13% \n \n \n   \n \n \n \n \n Underlying EBIT \n \n \n £448m \n \n \n £354m \n \n \n +29% \n \n \n \n \n \n Operating profit \n \n \n £456m \n \n \n £373m \n \n \n +22% \n \n \n   \n \n \n \n \n Return on sales \n \n \n 10.2% \n \n \n 9.0% \n \n \n +120bps \n \n \n \n \n \n Return on revenue \n \n \n 10.5% \n \n \n 9.7% \n \n \n +80bps \n \n \n   \n \n \n \n \n Operating business cash flow \n \n \n   \n £732m \n \n \n £426m \n \n \n   \n £306m \n \n \n \n \n \n Cash flow from operating activities \n \n \n £976m \n \n \n £624m \n \n \n   \n £352m \n \n \n   \n \n \n \n \n Order intake \n \n \n £7.4bn \n \n \n £7.7bn \n \n \n £(0.3)bn \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n   \n \n \n \n \n Order backlog \n \n \n £14.3bn \n \n \n £11.5bn \n \n \n £2.8bn \n \n \n \n \n \n Order book \n \n \n £13.6bn \n \n \n £11.1bn \n \n \n £2.5bn \n \n \n   \n \n \n \n \n 1.     Including share of equity accounted investments. \n 2.     The purposes and definitions of non-GAAP measures are provided in the Alternative performance measures section on page 46. \n 3.     Growth rates for sales and underlying EBIT are on a constant currency basis. All other growth rates and year-on-year movements are on a reported currency basis. \n Operational performance \n We have continued to scale operations to meet continued demand for our products and services, including munitions, tracked combat vehicles, artillery systems and support services. \n In the US, our Combat Mission Systems team continues to produce at increased volumes across our key combat vehicle and naval programmes. Our US network of manufacturing facilities is delivering against customer demand, with support from our operations and engineering teams. We also continue to expand our production capabilities, whilst leveraging our investments in advanced manufacturing technologies, such as robotic welding capability, test and integration, paint and high-precision machining. \n Our Hägglunds team continues to grow a record backlog of orders, with more contracts for CV90 combat vehicles for Sweden and partner nations looking to replenish combat vehicle fleets, mainly following donations in kind to Ukraine. In parallel, major upgrade programmes continue for existing fleets of CV90s for a number of nations. \n In our support services operations, modernisation and maintenance activities continue in our US shipyards for the US Navy's non-nuclear fleet. In addition, the team is investing to expand our submarine manufacturing offering in order to meet the US Navy's shipbuilding requirements by taking on additional production programmes.    \n Across the US Army's two munitions facilities at the Radford and Holston ammunition plants, we are working to support the US Army's efforts to increase 155mm artillery ammunition production. \n Key operational points for the year \n ·    Full-rate production of the US Army's AMPV programme is underway and we are delivering all five variants in the family of vehicles to Armored Brigade Combat Teams. The team has invested in the development of four additional AMPV prototypes, each featuring different mission equipment packages, further demonstrating the modular platform's future capability options. The US Marine Corps is also growing its fleet of Amphibious Combat Vehicles, which had its first successful operational deployment.     \n ·    Our Hägglunds team continues to ramp up production capabilities with investments of more than $200m (£160m) in advanced manufacturing capabilities, a new customer test and acceptance centre and additional office space. A third weld line for CV90s is under construction and expected to be operational in 2026. \n ·    We continue to progress a modern shiplift and land-level repair complex at our Jacksonville, Florida, shipyard that is expected to be operational in 2025. \n ·    Two portfolio-adjusting transactions completed in December: the sale of our 49% share of our Turkish joint venture FNSS to partner Nurol Holdings and the sale of the Anniston Forge and Spares business in Alabama, US. \n Strategic and order highlights \n ·    Our Combat Mission Systems team secured a $754m (£590m) order from the US Army for the second phase of AMPV full-rate production, securing production through to February 2027. We also received a follow-on contract to this second phase for additional AMPVs, valued at $184m (£144m).   \n ·    We secured a five-year contract, valued up to $318m (£249m), from the US Army to perform technical and sustainment support services for its fleet of M109A6 and A7 Self-Propelled Howitzers and their companion, M992A3 Ammunition Carriers. In addition, we received a $493m (£386m) contract for additional orders of the M109A7 and M992A3, extending new production through to July 2026. \n ·    Using supplemental funding, the US Army contracted BAE Systems to deliver conversions of legacy analogue Bradleys to the modern A4 variant. The most recent September and December contracts, jointly worth over $800m (£626m), include the conversions of more A4 variants, some of which are replacing the Bradleys the US Government has provided to Ukraine. These production contracts extend vehicle deliveries into 2027. \n ·    In the first half, our Hägglunds business signed a framework agreement with the Danish Ministry of Defence to provide repair and maintenance services for the Danish Army's CV90s over a 15-year period, worth approximately $355m (£278m) including options. \n ·    Building on an initial contract in May, our Hägglunds business received orders in December bringing the total value to approximately $2.5bn (£2.0bn) for CV9035 MkIIIC vehicles for both Sweden and Denmark. In addition to spares, logistics and training support, the agreement includes more than 165 new-build vehicles, plus some vehicles for Ukraine. \n ·    Our US Ship Repair business received multiple US Navy contracts in the year supporting backlog into 2025. Our Jacksonville Ship Repair business was awarded contracts by General Dynamics Electric Boat for deck module fabrication for both US Navy Columbia- and Virginia-class submarines. \n Looking forward \n ·    We continue to shape our business to deliver on increased demand from US and international customers for production and sustainment of combat vehicles and artillery systems. We are also maintaining our position as a key supplier of US Army combat vehicles through our AMPV, M109A7 and M88 franchises. In addition, following the performance of Bradley in Ukraine, we are working with the US Army to develop the most advanced Bradley configuration to date, the M2A4E1, which features an enhanced range of defence capabilities. We are seeing increased international interest in these products. \n ·    Across our Swedish businesses, we continue to build a growing pipeline of business opportunities for the CV90, BvS10 and Beowulf from our Hägglunds business, as well as for artillery, naval and air defence systems and munitions from our Bofors business. \n ·    We are maintaining our strong positions on naval guns, missile launch and submarine programmes, as well as US Navy ship repair and modernisation activities where the business has invested in capitalised infrastructure and facilities in key home ports. \n Segmental performance: Air \n Air, with 27,800¹ employees, comprises the Group's UK‑based air build and support activities for European and international markets, US programmes, development of our Future Combat Air System and FalconWorks ® , alongside our business in the Kingdom of Saudi Arabia and interests in our European joint ventures: Eurofighter and MBDA.   \n Financial performance \n \n \n \n \n Financial performance measures defined by Group 2 \n \n \n \n \n \n Financial performance measures derived from IFRS \n \n \n   \n \n \n \n \n \n \n \n \n2024 \n \n \n \n2023 \n \n \n   \n Variance 3 \n \n \n   \n \n \n \n \n \n \n2024 \n \n \n \n2023 \n \n \n   \n Variance 3 \n \n \n \n \n Sales \n \n \n £8,519m \n \n \n £8,058m \n \n \n +7% \n \n \n \n \n \n Revenue \n \n \n £6,880m \n \n \n £6,517m \n \n \n +6% \n \n \n \n \n Underlying EBIT \n \n \n £1,007m \n \n \n £949m \n \n \n +7% \n \n \n \n \n \n Operating profit \n \n \n £1,009m \n \n \n £948m \n \n \n +6% \n \n \n \n \n Return on sales \n \n \n 11.8% \n \n \n 11.8% \n \n \n - \n \n \n \n \n \n Return on revenue \n \n \n 14.7% \n \n \n 14.5% \n \n \n +20bps \n \n \n \n \n Operating business cash flow \n \n \n   \n £1,243m \n \n \n £1,669m \n \n \n   \n £(426)m \n \n \n \n \n \n Cash flow from operating activities \n \n \n £1,359m \n \n \n £1,808m \n \n \n   \n £(449)m \n \n \n \n \n Order intake \n \n \n £8.3bn \n \n \n £11.0bn \n \n \n £(2.7)bn \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Order backlog \n \n \n £26.8bn \n \n \n £27.2bn \n \n \n £(0.4)bn \n \n \n \n \n \n Order book \n \n \n £15.6bn \n \n \n £18.5bn \n \n \n £(2.9)bn \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 1.     Including share of equity accounted investments. \n 2.     The purposes and definitions of non-GAAP measures are provided in the Alternative performance measures section on page 46. \n 3.     Growth rates for sales and underlying EBIT are on a constant currency basis. All other growth rates and year-on-year movements are on a reported currency basis. \n Operational performance \n We continue to work with our UK and international customers to support their existing platforms and provide new enhanced capabilities. Deliveries of Typhoon aircraft to Qatar continue, alongside support to the in-service fleet. Our US Programmes division remains focused on delivery execution across all production lines. Our Future Combat Air and FalconWorks ® organisations continue to invest in our people, facilities and cutting-edge technologies. \n Key operational points for the year \n ·    In the Kingdom of Saudi Arabia, we continued to deliver services under the five-year Saudi British Defence Co-operation and Salam programmes, including our support to the Royal Saudi Air Force's Tornado and Typhoon fleets. \n ·    Activity on our Qatar Typhoon and Hawk programmes continued with four Typhoon deliveries in the year. \n22 Typhoon aircraft have entered into service with the Qatar Emiri Air Force. \n ·    Development continued on the UK's Combat Air flying demonstrator, which will test the next-generation skills, tools, processes and techniques needed to underpin GCAP and the entry into service of the core aircraft platform, which will be called Tempest in the UK. \n ·    Through FalconWorks ® , we continue to invest in promising new and innovative technologies for the future, including the development of uncrewed systems in collaboration across industry. PHASA-35 ® , our persistent high-altitude solar-powered aircraft, completed another successful stratospheric flight trials programme during the year. \n Strategic and order highlights \n ·    We have agreed to form a joint venture with Leonardo in Italy and JAIEC in Japan, subject to regulatory approvals, for the design and development of a next-generation combat aircraft, under GCAP. \n ·    Alongside this, concept and assessment work on GCAP continues with our international partners in Italy and Japan under our respective national contracts. \n ·    We also confirmed orders for our workshare on an additional 25 Typhoon aircraft for the Spanish Air Force and for an order for up to 24 Typhoon aircraft for the Italian Air Force. These were valued at a combined initial total of £1.1bn. \n ·    We sustained production of the rear fuselage assemblies for the F-35 at full-rate levels at our Samlesbury site in the UK, with 152 aft fuselages completed, and agreed pricing with Lockheed Martin for F-35 production lots 18/19. This supports the continuation of production deliveries at Samlesbury into 2027. \n ·    During the first half of 2024, we completed the acquisitions of Malloy Aeronautics and Callen-Lenz, strengthening our position in the fixed wing and rotary UAS domains. \n ·    MBDA continued to secure significant orders through 2024. These include a large production order from the Polish Armament Agency to supply launchers and CAMM-ER (Common Anti-Air Modular Missile Extended Range) for the NAREW Air Defence System. Other air defence production orders were received for Aster missiles for the Italian Armed Forces, Patriot GEM-T missiles (under the European Sky Shield Initiative via the COMLOG Joint Venture) for the NATO Support and Procurement Agency, and an expansion of Sea Ceptor with CAMM to include the Polish, Swedish and Saudi Arabian navies. \n Looking forward \n ·    GCAP is a strategically important partnership that will foster innovation, technological advancements and safeguard long-term industrial capability to design, develop, manufacture and maintain combat aircraft and the wider systems within which they will operate in the UK.     \n ·    We will continue to focus on ensuring that deliveries of Typhoon aircraft and support are made in line with agreed customer milestones. Future Typhoon production and support sales are underpinned by existing contracts and discussions continue to secure potential further contract awards. \n ·    We expect production of the rear fuselage assemblies for the F-35 to be sustained at current levels. We play a significant role in the F-35 sustainment programme in support of Lockheed Martin and support volumes should increase as the number of jets in service continues to rise. \n ·    I n the Kingdom of Saudi Arabia, the In-Kingdom Industrial Participation programme continues to make good progress consistent with our long-term strategy, whilst supporting the Kingdom's National Transformation Plan and Vision 2030. This included a further package of industrialisation agreed during 2024 on our Salam programme. \n ·    We expect our Saudi in-Kingdom support business to remain stable underpinned by long-standing contracts while we continue to address the Kingdom's current and future combat air requirements. \n ·    Our FalconWorks ® organisation will continue to pursue internal and external investment opportunities which enhance our capabilities and technologies. \n ·    MBDA has a strong order backlog. Development programmes continue to improve the long-term capabilities of the business in air, land and sea domains. MBDA continues to be well placed to benefit from increased defence spending in Europe and internationally. \n Segmental performance: Maritime \n Maritime, with 30,100¹ employees, comprises the Group's UK‑based maritime and land activities, including ship build and support activities, major submarine build programmes, as well as our Australian business. \n Financial performance \n \n \n \n \n Financial performance measures defined by Group 2 \n \n \n   \n \n \n Financial performance measures derived from IFRS \n \n \n \n \n \n \n \n \n2024 \n \n \n \n2023 \n \n \n   \n Variance 3 \n \n \n   \n \n \n \n \n \n \n2024 \n \n \n \n2023 \n \n \n   \n Variance 3 \n \n \n   \n \n \n \n \n Sales \n \n \n £6,187m \n \n \n £5,536m \n \n \n +12% \n \n \n \n \n \n Revenue \n \n \n £6,002m \n \n \n £5,391m \n \n \n +11% \n \n \n   \n \n \n \n \n Underlying EBIT \n \n \n £474m \n \n \n £425m \n \n \n +12% \n \n \n \n \n \n Operating profit \n \n \n £465m \n \n \n £423m \n \n \n +10% \n \n \n   \n \n \n \n \n Return on sales \n \n \n 7.7% \n \n \n 7.7% \n \n \n - \n \n \n \n \n \n Return on revenue \n \n \n 7.7% \n \n \n 7.8% \n \n \n -10bps \n \n \n   \n \n \n \n \n Operating business cash flow \n \n \n   \n £436m \n \n \n £291m \n \n \n   \n £145m \n \n \n \n \n \n Cash flow from operating activities \n \n \n £734m \n \n \n £629m \n \n \n   \n £105m \n \n \n   \n \n \n \n \n Order intake \n \n \n £8.7bn \n \n \n £10.1bn \n \n \n £(1.4)bn \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n   \n \n \n \n \n Order backlog \n \n \n £23.2bn \n \n \n £21.3bn \n \n \n £(1.9)bn \n \n \n \n \n \n Order book \n \n \n £22.3bn \n \n \n £20.4bn \n \n \n £1.9bn \n \n \n   \n \n \n \n \n   \n 1.     Including share of equity accounted investments. \n 2.     The purposes and definitions of non-GAAP measures are provided in the Alternative performance measures section on page 46. \n 3.     Growth rates for sales and underlying EBIT are on a constant currency basis. All other growth rates and year-on-year movements are on a reported currency basis. \n Operational performance \n Our major Maritime platform programmes continue to progress. We have delivered five of the seven Astute Class submarines to the Royal Navy and continue construction on the first three Dreadnought Class submarines. \n Construction of the first five UK Type 26 frigates and first Australian Hunter Class frigate is also underway, while we continue to deliver on customer requirements in both Munitions and Maritime Services. Ongoing investments in our facilities and our people support our delivery and, with the future potential of the AUKUS trilateral programme, the sector is well positioned for growth. \n Key operational points for the year \n ·    We launched the sixth Astute Class submarine, Agamemnon, marking the start of its in-water phase, while we continue construction on the final vessel in the class.   \n ·    We continued to make progress on the four Dreadnought Class submarines, with advancing levels of construction underway on the first three submarines in the class, at our site in Barrow-in-Furness, UK. \n ·    On the Type 26 frigate programme of eight ships, investment continues both internally and within the supply chain to support delivery, with the transition from design to production remaining a key area of focus. HMS Glasgow is progressing from final outfit through to the key stages in her test and commissioning phase in advance of first of class sea trials. The second of class, HMS Cardiff, entered the water in August, before transitioning to our Scotstoun shipyard for further outfit in advance of testing and commissioning. Unit construction continues on HMS Belfast and HMS Birmingham at our Govan shipyard. Cut steel on the fifth ship, HMS Sheffield, took place in November. \n ·    In October, there was a fire in our Devonshire Dock Hall facility in Barrow-in-Furness, UK, the impact of which is currently being assessed. \n ·    In Australia, we successfully completed the Hunter Class Frigate Programme Production Readiness Review and entered the construction phase, officially cutting steel on the first ship in June. \n ·    Alongside this, the upgrade and sustainment of the Anzac Class frigates continues to progress with the penultimate ship, HMAS Ballarat, being returned to water. The final ship, HMAS Parramatta, is expected to be returned in 2025. \n ·    We made good progress on the installation of Radar 1 as part of the Jindalee Operational Radar Network Phase 6 upgrade with successful completion of half-radar trials enabling our team to start the full upgrade. \n ·    Investment activity across our Munitions business continues at pace. This includes an additional manufacturing line in Washington, UK, and an explosives filling facility in Monmouthshire, UK. \n ·    In RBSL, the Challenger 3 programme has delivered four prototype series vehicles, with two of those vehicles completing the initial phase of trials. A further four prototype series vehicles will be completed in 2025, two of which are nearing completion, ahead of entering the next phase of trials in 2025. \n Strategic and order highlights \n ·    In Australia, the release of the Surface Combatant Review confirmed the Government's commitment to the production of six Hunter Class frigates, with the contract for the first batch of three ships awarded in June. \n ·    Following the cancellation of the TransCAP element of the Anzac Class frigate upgrade programme, we are working with the Commonwealth to determine the appropriate use of our Henderson facility in Western Australia. \n ·    We secured an order of £958m for the continuation of funding for Dreadnought Boats 2 to 4. \n ·    In March, as part of the AUKUS trilateral security pact, the Australian Government announced its selection of BAE Systems and ASC Pty Ltd (ASC) to build Australia's SSN-AUKUS submarines. In December, we were awarded the first Tasking Statement under the mobilisation arrangements, following successful government-to-government engagement to initiate Australia's SSN-AUKUS build programme.  \n ·    The Ministry of Defence awarded our Combat Systems team within our Naval Ships business a £285m contract to support the Royal Navy's Shared Infrastructure, Combat Management Systems and warship networks. \n ·    The build of our new Ship Build Assembly Hall in Govan, UK, is maturing to schedule and we expect it to be fully operational in 2025. Our Applied Shipbuilding Academy in Glasgow, UK, opened in July, and is already proving to be a key training facility for our Naval Ships current and future workforce. \n Looking forward \n ·    Our Submarines business is executing across three long-term programmes: Astute, Dreadnought and SSN-AUKUS. Our focus remains on strengthening our workforce, supply chain and infrastructure to provide the capability, capacity and resilience required to deliver these long-term programmes. \n ·    We will work with ASC to deliver initial mobilisation activities to support Australia's SSN-AUKUS submarine build programme.    \n ·    We submitted design and production outputs for the Canadian River Class destroyer to enable our partner, Irving Shipbuilding Inc., to manufacture the production test module in Canada. \n ·    In Australia, we are a key partner to the Commonwealth in the delivery of its National Defence Strategy (NDS), which seeks a strategy of denial and an integrated, focused force. AUKUS nuclear-powered submarines, an enhanced lethality surface fleet, strategic surveillance and long-range strike are prioritised in the Integrated Investment Plan which supports the NDS. \n ·    As the UK Ministry of Defence's long-term strategic partner for munitions supply, we continue to focus our operations in support of the UK Ministry of Defence and the UK's NATO allies, as well as other customers. \n Segmental performance: Cyber & Intelligence \n Cyber & Intelligence, with 10,900¹ employees, comprises the US‑based Intelligence & Security business and UK‑headquartered Digital Intelligence business and covers the Group's cyber security activities for national security, central government and government enterprises.   \n Financial performance \n \n \n \n \n Financial performance measures defined by Group 2 \n \n \n   \n \n \n Financial performance measures derived from IFRS \n \n \n \n \n \n \n \n \n2024 \n \n \n \n2023 \n \n \n   \n Variance 3 \n \n \n   \n \n \n \n \n \n \n2024 \n \n \n \n2023 \n \n \n   \n Variance 3 \n \n \n   \n \n \n \n \n Sales \n \n \n £2,411m \n \n \n £2,321m \n \n \n +6% \n \n \n \n \n \n Revenue \n \n \n £2,411m \n \n \n £2,321m \n \n \n +4% \n \n \n   \n \n \n \n \n Underlying EBIT \n \n \n £199m \n \n \n £199m \n \n \n +2% \n \n \n \n \n \n Operating profit \n \n \n £182m \n \n \n £179m \n \n \n +2% \n \n \n   \n \n \n \n \n Return on sales \n \n \n 8.3% \n \n \n 8.6% \n \n \n -30bps \n \n \n \n \n \n Return on revenue \n \n \n 7.5% \n \n \n 7.7% \n \n \n -20bps \n \n \n   \n \n \n \n \n Operating business cash flow \n \n \n   \n £139m \n \n \n £204m \n \n \n   \n £(65)m \n \n \n \n \n \n Cash flow from operating activities \n \n \n £194m \n \n \n £261m \n \n \n   \n £(67)m \n \n \n   \n \n \n \n \n Order intake \n \n \n £2.4bn \n \n \n £2.5bn \n \n \n £(0.1)bn \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n   \n \n \n \n \n Order backlog \n \n \n £1.8bn \n \n \n £2.0bn \n \n \n £(0.2)bn \n \n \n \n \n \n Order book \n \n \n £1.3bn \n \n \n £1.4bn \n \n \n £(0.1)bn \n \n \n   \n \n \n \n \n 1.     Including share of equity accounted investments. \n 2.     The purposes and definitions of non-GAAP measures are provided in the Alternative performance measures section on page 46. \n 3.     Growth rates for sales and underlying EBIT are on a constant currency basis. All other growth rates and year-on-year movements are on a reported currency basis. \n Operational performance \n Our Intelligence & Security business performed well, delivering innovative solutions to government customers within the US Department of Defense, federal agencies and civilian organisations. We continue to focus on maintaining a robust pipeline of qualified business opportunities to provide ongoing mission-critical integration capabilities that address evolving customer and national security requirements. \n Our Digital Intelligence business saw continued demand in the security market and rigorous cost control helped to compensate for constrained customer budgets in other areas. \n Key operational points for the year \n ·    As part of the Ball Aerospace acquisition in February, we acquired Topaz Intelligence, which expands our modelling and simulation portfolio to provide data intelligence-as-a-service to drive agile decision-making for customers. \n ·    Through our Bohemia Interactive Simulations business, we secured a follow-on development and production order from the US Army PEO-STRI for VBS4, Mantle and BlueIG product licences in support of the Training Simulation Software and Training Management Tools programme to address advanced US Army-wide training solutions. \n ·    Our Air and Space Force Solutions business continues to expand its presence under the Instrumentation Radar Support Program providing support to 33 ranges around the world for the US Army, US Navy, US Air Force, US Space Force, Department of Energy, NASA and various international ranges. During 2024, we were awarded 250+ task orders valued at $198m (£155m). Under this contract, we will provide six mobile mechanical and multiple object radar tracking systems, systems engineering and range support activities. \n ·    In our Digital Intelligence business investment in our product portfolio continues, with good progress made on developing cross-domain products for the US and other international markets, low Earth orbit satellites and multi-domain network solutions for the defence market. \n Strategic and order highlights \n ·    Our Intelligence Solutions business secured over $300m (£235m) in task orders on an IDIQ contract from an agency. Task orders include delivery of analytics support for critical and core mission functions to the agency and its mission partners. \n ·    We were notified, in June 2024, that the Government Accountability Office had sustained our protest on the Integration Support Contract (ISC) 2.0 procurement and recommended the US Air Force take additional corrective action. The Air Force subsequently cancelled the solicitation. In January 2025, we were awarded an extension to our current ISC services contract with options through to July 2027, with an increased programme ceiling value of nearly $1.2bn (£0.9bn). \n ·    Our Integrated Defense Solutions business was awarded a cost-plus-fixed-fee contract worth $122m (£95m) for systems engineering and integration services and expert studies in support of the US Trident II Strategic Weapons Systems Program and D5LE2 Life Extension 2 Strategic System Programs Alteration. \n ·    We also secured a $251m (£196m) contract from the US Navy for on-site technical expertise and system engineering to validate total AEGIS ship combat system design in support of the US Navy, Missile Defense Agency and foreign militaries. \n ·    Our Integrated Defense Solutions business was also awarded multiple re-compete contracts in the year with a combined total potential lifecycle value of over $500m (£391m). \n ·    Our acquisition of Kirintec in Digital Intelligence further expands our product offering. Kirintec specialises in: cyber and electromagnetic activities; counter-improvised explosive devices; and counter-uncrewed aerial vehicle products for military customers. Our Digital Intelligence team will look to leverage this capability to accelerate growth in the defence market in the UK and internationally. \n Looking forward \n ·    Our Intelligence & Security business maintains a strong pipeline of qualified business opportunities. While there have been some delays in procurement decisions from the US Department of Defense, we are seeing an increase in demand driven by persistent global security challenges.   \n ·    T he US defence services market remains fiercely competitive and can change quickly based on US government priorities. Our Intelligence Solutions business has identified cyber security as a key focus area for business growth and we continue to pursue opportunities in the Intelligence Community, federal/civilian agencies and the US Department of Defense. \n ·    We are actively broadening our wargaming capabilities across new markets and customers, both in the US and internationally. This strategy enhances our growth potential and diversification in the modelling, simulation and synthetic training environment in support of a positive outlook for this market area.    \n ·    In Digital Intelligence, we will continue to progress the transformation roadmap to ensure the business is well placed to take advantage of favourable market conditions over the medium and long term, whilst also driving operational efficiencies, through system integration and a simplified organisational structure. \n   \n Consolidated income statement for the year ended 31 December \n   \n \n \n \n \n \n \n \n \n \n \n 2024 \n \n \n \n \n \n 2023 \n \n \n   \n \n \n \n \n \n \n \n Note \n \n \n £m \n \n \n Total \n£m \n \n \n \n \n \n £m \n \n \n Total \n£m \n \n \n \n \n Continuing operations \n \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n   \n \n \n   \n \n \n \n \n Revenue \n \n \n 2 \n \n \n   \n \n \n 26,312 \n \n \n \n \n \n \n \n \n 23,078 \n \n \n \n \n Operating costs \n \n \n \n \n \n   \n \n \n (24,106) \n \n \n \n \n \n \n \n \n (20,917) \n \n \n \n \n Other income \n \n \n \n \n \n   \n \n \n 266 \n \n \n \n \n \n \n \n \n 204 \n \n \n \n \n Share of results of equity accounted investments \n \n \n \n \n \n   \n \n \n 213 \n \n \n \n \n \n \n \n \n 208 \n \n \n \n \n Operating profit \n \n \n 2 \n \n \n \n \n \n 2,685 \n \n \n \n \n \n \n \n \n 2,573 \n \n \n \n \n Finance income \n \n \n \n \n \n 135 \n \n \n   \n \n \n \n \n \n 172 \n \n \n \n \n \n \n \n Finance costs \n \n \n \n \n \n (488) \n \n \n   \n \n \n \n \n \n (419) \n \n \n \n \n \n \n \n Net finance costs \n \n \n 3 \n \n \n   \n \n \n (353) \n \n \n \n \n \n \n \n \n (247) \n \n \n \n \n Profit before tax \n \n \n \n \n \n   \n \n \n 2,332 \n \n \n \n \n \n \n \n \n 2,326 \n \n \n \n \n Tax expense \n \n \n 4 \n \n \n   \n \n \n (291) \n \n \n \n \n \n \n \n \n (386) \n \n \n \n \n Profit for the year \n \n \n \n \n \n   \n \n \n 2,041 \n \n \n    \n \n \n \n \n \n 1,940 \n \n \n \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Attributable to: \n \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Equity shareholders \n \n \n \n \n \n   \n \n \n 1,956 \n \n \n \n \n \n \n \n \n 1,857 \n \n \n \n \n Non-controlling interests \n \n \n \n \n \n   \n \n \n 85 \n \n \n \n \n \n \n \n \n 83 \n \n \n \n \n \n \n \n \n \n \n   \n \n \n 2,041 \n \n \n \n \n \n \n \n \n 1,940 \n \n \n \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Earnings per share \n \n \n 5 \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Basic earnings per share \n \n \n \n \n \n   \n \n \n 64.9p \n \n \n \n \n \n \n \n \n 61.3p \n \n \n \n \n Diluted earnings per share \n \n \n \n \n \n   \n \n \n 64.1p \n \n \n \n \n \n \n \n \n 60.4p \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Consolidated statement of comprehensive income for the year ended 31 December \n   \n \n \n \n \n \n \n \n 2024 \n \n \n \n \n \n 2023 \n \n \n \n \n \n \n \n Other \nreserves \n£m \n \n \n Retained earnings \n£m \n \n \n Total \n£m \n \n \n \n \n \n Other \nreserves \n£m \n \n \n Retained earnings \n£m \n \n \n Total \n£m \n \n \n \n \n Profit for the year \n \n \n - \n \n \n 2,041 \n \n \n 2,041 \n \n \n \n \n \n - \n \n \n 1,940 \n \n \n 1,940 \n \n \n \n \n Other comprehensive income \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Items that will not be reclassified to the income statement: \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Consolidated: \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Remeasurements on post-employment benefit schemes \n \n \n - \n \n \n 414 \n \n \n 414 \n \n \n \n \n \n - \n \n \n (658) \n \n \n (658) \n \n \n \n \n Remeasurements on other investments \n \n \n - \n \n \n - \n \n \n - \n \n \n \n \n \n - \n \n \n (11) \n \n \n (11) \n \n \n \n \n Tax on items that will not be reclassified to the income statement \n \n \n - \n \n \n (25) \n \n \n (25) \n \n \n \n \n \n - \n \n \n 4 \n \n \n 4 \n \n \n \n \n Share of the other comprehensive income/(expense) of associates and joint ventures accounted for using the equity method (net of tax) \n \n \n - \n \n \n 15 \n \n \n 15 \n \n \n \n \n \n - \n \n \n (25) \n \n \n (25) \n \n \n \n \n Items that may be reclassified to the income statement: \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Consolidated: \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Currency translation on foreign currency net investments \n \n \n   \n 4 \n \n \n - \n \n \n   \n 4 \n \n \n \n \n \n   \n (510) \n \n \n - \n \n \n   \n (510) \n \n \n \n \n Reclassification of cumulative currency translation reserve on divestment of interest in equity accounted investments and other business disposals \n \n \n 3 \n \n \n - \n \n \n 3 \n \n \n \n \n \n - \n \n \n - \n \n \n - \n \n \n \n \n Fair value loss arising on hedging instruments during the year \n \n \n (36) \n \n \n - \n \n \n (36) \n \n \n \n \n \n (4) \n \n \n - \n \n \n (4) \n \n \n \n \n Cumulative fair value loss/(gain) on hedging instruments reclassified to the income statement \n \n \n 69 \n \n \n - \n \n \n 69 \n \n \n \n \n \n (19) \n \n \n - \n \n \n (19) \n \n \n \n \n Tax on items that may be reclassified to the income statement \n \n \n (7) \n \n \n - \n \n \n (7) \n \n \n \n \n \n 3 \n \n \n - \n \n \n 3 \n \n \n \n \n Share of the other comprehensive income of associates and joint ventures accounted for using the equity method (net of tax) \n \n \n 4 \n \n \n - \n \n \n 4 \n \n \n \n \n \n 11 \n \n \n - \n \n \n 11 \n \n \n \n \n Total other comprehensive income/(expense) for the year (net of tax) \n \n \n 37 \n \n \n 404 \n \n \n 441 \n \n \n \n \n \n (519) \n \n \n (690) \n \n \n (1,209) \n \n \n \n \n Total comprehensive income/(expense) for the year \n \n \n 37 \n \n \n 2,445 \n \n \n 2,482 \n \n \n \n \n \n (519) \n \n \n 1,250 \n \n \n 731 \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Attributable to: \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Equity shareholders \n \n \n 38 \n \n \n 2,357 \n \n \n 2,395 \n \n \n \n \n \n (511) \n \n \n 1,175 \n \n \n 664 \n \n \n \n \n Non-controlling interests \n \n \n (1) \n \n \n 88 \n \n \n 87 \n \n \n \n \n \n (8) \n \n \n 75 \n \n \n 67 \n \n \n \n \n \n \n \n 37 \n \n \n 2,445 \n \n \n 2,482 \n \n \n \n \n \n (519) \n \n \n 1,250 \n \n \n 731 \n \n \n \n \n   \n Consolidated statement of changes in equity for the year ended 31 December \n \n \n \n \n \n \n \n \n Attributable to equity holders of BAE Systems plc \n \n \n \n \n \n \n \n \n \n \n \n \n \n Issued \nshare \ncapital \n£m \n \n \n Share \npremium \n£m \n \n \n Other \nreserves \n£m \n \n \n Retained earnings \n£m \n \n \n Total \n£m \n \n \n Non-controlling \ninterests \n£m \n \n \n Total \nequity \n£m \n \n \n \n \n At 1 January 2023 \n \n \n 82 \n \n \n 1,252 \n \n \n 6,951 \n \n \n 2,930 \n \n \n 11,215 \n \n \n 185 \n \n \n 11,400 \n \n \n \n \n Profit for the year \n \n \n - \n \n \n - \n \n \n - \n \n \n 1,857 \n \n \n 1,857 \n \n \n 83 \n \n \n 1,940 \n \n \n \n \n Total other comprehensive expense for the year \n \n \n - \n \n \n - \n \n \n (511) \n \n \n (682) \n \n \n (1,193) \n \n \n (16) \n \n \n (1,209) \n \n \n \n \n Total comprehensive (expense)/income for the year \n \n \n - \n \n \n - \n \n \n (511) \n \n \n 1,175 \n \n \n 664 \n \n \n 67 \n \n \n 731 \n \n \n \n \n Share-based payments (inclusive of tax) \n \n \n - \n \n \n - \n \n \n - \n \n \n 132 \n \n \n 132 \n \n \n - \n \n \n 132 \n \n \n \n \n Cumulative fair value gain on hedging instruments transferred to the balance sheet (net of tax) \n \n \n - \n \n \n - \n \n \n (38) \n \n \n - \n \n \n (38) \n \n \n - \n \n \n (38) \n \n \n \n \n Ordinary share dividends \n \n \n - \n \n \n - \n \n \n - \n \n \n (857) \n \n \n (857) \n \n \n (88) \n \n \n (945) \n \n \n \n \n Purchase of own shares \n \n \n (1) \n \n \n - \n \n \n 1 \n \n \n (558) \n \n \n (558) \n \n \n - \n \n \n (558) \n \n \n \n \n Proceeds from unclaimed asset programme \n \n \n - \n \n \n 1 \n \n \n - \n \n \n - \n \n \n 1 \n \n \n - \n \n \n 1 \n \n \n \n \n At 31 December 2023 \n \n \n 81 \n \n \n 1,253 \n \n \n 6,403 \n \n \n 2,822 \n \n \n 10,559 \n \n \n 164 \n \n \n 10,723 \n \n \n \n \n Profit for the year \n \n \n - \n \n \n - \n \n \n - \n \n \n 1,956 \n \n \n 1,956 \n \n \n 85 \n \n \n 2,041 \n \n \n \n \n Total other comprehensive income for the year \n \n \n - \n \n \n - \n \n \n 38 \n \n \n 401 \n \n \n 439 \n \n \n 2 \n \n \n 441 \n \n \n \n \n Total comprehensive income for the year \n \n \n - \n \n \n - \n \n \n 38 \n \n \n...

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