Half-year Report

About this update from Bae Systems Plc

[{"type":"text","content":"\n \n \n \n \n \n \n \n \n \n \n \n BAE Systems plc \n \n \n \n \n \n \n Half-yearly Report 2025 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Charles Woodburn, Chief Executive, said \" Our teams have delivered another strong operational and financial performance in the first half of the year, giving us the confidence to upgrade our guidance. In this heightened global threat environment, we continue to deliver mission critical capabilities to armed forces around the world and invest in our people, technologies and facilities to drive the improved efficiency, capacity and agility needed to meet the increasing demand for our highly relevant products and services. The breadth and depth of our geographic and product portfolio, together with our trusted track record of delivery, strengthen our confidence in the positive momentum of our business.\" \n \n \n Financial highlights \n \n \n \n \n \n \n \n Financial performance measures as defined by the Group 1 \n \n \n \n Six months ended 30 June 2025 \n \n \n Six months ended 30 June 2024 \n \n \n \n Variance 2 \n \n \n \n \n \n \n Sales \n \n \n \n £14,621m \n \n \n £13,399m \n \n \n +11% \n \n \n \n \n Underlying earnings before interest and tax (EBIT) \n \n \n £1,550m \n \n \n £1,393m \n \n \n +13% \n \n \n \n \n \n Underlying earnings per share (EPS) - basic \n \n \n \n 34.7p \n \n \n 31.4p \n \n \n +12% \n \n \n \n \n \n Free cash flow \n \n \n \n £(368)m \n \n \n £219m \n \n \n £(587)m \n \n \n \n \n Order intake \n \n \n £13.2bn \n \n \n £15.1bn \n \n \n £(1.9)bn \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n As at 30 June 2025 \n \n \n As at 31 December 2024 \n \n \n Variance \n \n \n \n \n Order backlog \n \n \n £75.4bn \n \n \n £77.8bn \n \n \n £(2.4)bn \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Financial performance measures as derived from IFRS \n \n \n Six months ended 30 June 2025 \n \n \n Six months ended 30 June 2024 \n \n \n \n Variance 2 \n \n \n \n \n \n \n Revenue \n \n \n \n £13,571m \n \n \n £12,477m \n \n \n +9% \n \n \n \n \n \n Operating profit \n \n \n \n £1,327m \n \n \n £1,296m \n \n \n +2% \n \n \n \n \n \n EPS - basic \n \n \n \n 32.3p \n \n \n 31.4p \n \n \n +3% \n \n \n \n \n \n Net cash flow from operating activities \n \n \n \n £74m \n \n \n £757m \n \n \n £(683)m \n \n \n \n \n Dividend per share \n \n \n 13.5p \n \n \n 12.4p \n \n \n +9% \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n As at 30 June 2025 \n \n \n As at 31 December 2024 \n \n \n Variance \n \n \n \n \n Order book \n \n \n £57.0bn \n \n \n £60.4bn \n \n \n £(3.4)bn \n \n \n \n \n \n \n As defined by the Group \n \n -         Sales increased 11% 2 in the period, with all sectors contributing growth. Organic growth was 9% 2 . \n -         Underlying EBIT was up 13% 2 , increasing the Group's return on sales for the period to 10.6%. Organic growth was 10% 2 . \n -         Underlying EPS increased 12% 2 to 34.7p, after accounting for the Group's underlying net finance costs and tax. \n -         Free cash outflow of £368m is inclusive of movements on customer advances and is in line with expectations. \n -         Order intake of £13.2bn remained high across all sectors and we closed the period with an order backlog of £75.4bn. \n \n As derived from IFRS \n \n -         The reported growth in revenue of 9% 2 reflects the same strong operational performance across the portfolio but excludes the impact of our equity accounted investments. \n -         Operating profit increased 2% 2 as the growth in underlying EBIT was offset by additional costs from the amortisation of acquired intangibles, reflecting the significant acquisitions in the prior year which included Ball Aerospace. The prior year also included a one-off profit on the disposal of our partial interest in Air Astana of £75m. \n -         Basic EPS was up 3% 2 to 32.3p, after accounting for net finance costs and tax. \n -         Net cash flow from operating activities is also inclusive of movements in customer advances in the period, as well as timing of other working capital requirements. \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 38. \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 period ended 30 June 2024 to pounds sterling at the average exchange rate of such currencies for the period ended 30 June 2025). The comparatives have not been restated. All other growth rates and year-on-year movements are on a reported currency basis. \n \n   \n \n \n Delivering for our customers \n \n \n Our focus on operational performance and contracting discipline enables our consistent delivery of critical capabilities and technologies for our customers. In the first half of the year, we secured £13.2bn of orders and made good progress executing on our long-term major programmes. \n \n \n Highlights in the period included the following: \n \n -         We laid the keel of HMS Dreadnought, the first of four Dreadnought Class submarines we are constructing for the Royal Navy, at our Barrow-in-Furness shipyard in the UK. \n -         Concept and assessment work on the Global Combat Air Programme (GCAP) continues with our international partners and we received a further £1.0bn of funding on the UK assessment phase contract in the first half of the year. \n -         We launched Edgewing, a joint venture with our international industry partners in Italy and Japan on GCAP, which will be accountable for the design and development of the next generation combat aircraft under the programme. \n -         We secured a $1.2bn (£0.9bn) contract to provide the US Space Force with space-based missile tracking capabilities as the prime contractor to design and build a constellation of satellites. \n -         Our Armored Multi-Purpose Vehicle (AMPV) celebrated its 500 th delivery milestone and is on track, in full-rate production, to meet the US Army's plan to field nearly 3,000 AMPVs in its Armored Brigade Combat Team formations. \n -         We played a critical role in preparing Royal Navy ships for the UK Carrier Strike Group 2025 and the Royal Navy selected our all-electric Malloy T-150 uncrewed air systems (UAS) to transport vital supplies between the ships for the first time during its ongoing deployment to the Indo-Pacific. \n -         Her Royal Highness The Princess of Wales officially named HMS Glasgow, the first of eight Type 26 frigates we are building for the Royal Navy, at a ceremony in Glasgow, UK. Work continues on HMS Glasgow's sister ships - HMS Cardiff moved to our Scotstoun yard last year to begin outfitting whilst HMS Belfast, HMS Birmingham and HMS Sheffield are progressing at our Govan site. \n \n Investing to support future growth \n \n \n We continue to invest in our technologies, facilities and people to boost efficiency, capacity and innovation, deliver on our programmes and respond to the emerging threats our government customers are facing: \n \n -         We opened a new shiplift and land-level repair complex at our Jacksonville, Florida, shipyard. The $250m (£190m) investment significantly enhances the capabilities of the complex and increases capacity on the site to maintain and repair US Navy vessels and commercial ships. \n -         We officially opened the Janet Harvey Hall at our ship build site in Glasgow, UK. The hall has capacity for two Type 26 frigates to be constructed side-by-side, with HMS Belfast and HMS Birmingham currently under construction in the hall. \n -         Her Royal Highness The Princess Royal officially opened our Applied Shipbuilding Academy in Glasgow, UK. The £12m facility comprises a multi-purpose flexible learning hub and provides a high quality, hands-on training environment. \n -         Secretary of State for Defence, John Healey, opened our new £25m artillery factory in Sheffield, which is the first to restore critical gun barrel manufacturing capability in the UK and is on track to be operational before the end of the year. \n -         We have invested more than £8m to develop innovative new approaches in the production of energetics and propellants, which will support the ramp up of our critical munitions production and strengthen supply chain resilience for the UK and its allies. \n -         We made good progress against our target to recruit 2,400 graduates and apprentices in the UK this year. In South Australia, we welcomed our largest ever cohort of apprentices, which is part of a wider intake of more than 250 graduates, apprentices and interns in 2025. \n \n Capital deployment \n \n -         The strength and outlook for the Group, alongside our disciplined capital allocation, means that, after investing in our people, technologies and capital expenditure, we have continued to make significant returns to shareholders. In the first six months of the year, we returned £849m to shareholders, a 5% increase compared to the £812m returned in the first half of 2024. This reflected paying £622m in respect of the 20.6p 2024 final dividend (2024 £562m in respect of the 18.5p 2023 final dividend) and repurchasing 15,038,662 (2024 19,403,928) ordinary shares at a total cost of £227m including transaction costs (2024 £250m) under our ongoing buyback programme. \n -         In addition, the Board has declared an interim dividend of 13.5p in respect of the first six months of the year, which will be paid on 3 December 2025. \n \n 2025 Upgraded Group guidance 1 \n \n \n Given the strong operational performance in the first half, we are upgrading our sales and underlying EBIT guidance for the full year by 100bps each. Sales are now expected to increase in the range of 8% to 10% whilst underlying EBIT is expected to increase in the range of 9% to 11%. The share price increase since the start of the year is expected to result in fewer shares being repurchased which, along with a marginally higher tax rate, means our guidance for EPS growth remains unchanged between 8% to 10%. Our free cash flow target remains >£1.1bn. \n \n \n Guidance is provided on a constant currency basis using an exchange rate of $1.28:£1, which is in line with the actual 2024 exchange rate. \n \n \n \n \n \n \n \n Year ended 31 December 2025 \n \n \n \n \n Updated guidance \n \n \n \n \n Previous guidance \n \n \n \n \n \n \n \n \n Year ended 31 December 2024 \n \n \n \n \n \n \n Results \n \n \n \n \n \n \n \n \n \n \n Sales \n \n \n Increase in the range of 8% to 10% \n \n \n Increase in the range of 7% to 9% \n \n \n £28,335m \n \n \n \n \n Underlying EBIT \n \n \n Increase in the range of 9% to 11% \n \n \n Increase in the range of 8% to 10% \n \n \n £3,015m \n \n \n \n \n Underlying EPS \n \n \n Increase in the range of 8% to 10% \n \n \n Increase in the range of 8% to 10% \n \n \n 68.5p \n \n \n \n \n Free cash flow target \n \n \n >£1.1bn \n \n \n >£1.1bn \n \n \n £2,505m \n \n \n \n \n \n -         Underlying net finance costs c.£400m \n -         Effective tax rate c.20% \n -         Non-controlling interests c.£90m \n \n Sensitivity to foreign exchange rates: the Group operates in a number of currencies, the most significant of which is the US dollar. As a guide, a 5 cent movement in the £ /$ exchange rate will impact sales by c. £ 525m, underlying EBIT by c. £ 75m and underlying earnings per share by c.1.4p. \n \n 1.         Whilst 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. Reconciliations from these measures to the financial performance measures defined in IFRS are provided in the Alternative performance measures section on page 38. \n \n   \n \n \n For further information please contact: \n \n \n \n \n \n \n Investor Relations \n \n \n Media Relations \n \n \n \n \n Paul Checketts \n \n \n Kristina Anderson \n \n \n \n \n Telephone: +44 (0) 1252 383455 \n \n \n Telephone: +44 (0) 7540 628673 \n \n \n \n \n \n Email: [email protected] \n \n \n \n \n Email: [email protected] \n \n \n \n \n \n \n \n Analyst and investor presentation \n \n \n A presentation, for analysts and investors, of the Group's half year results for 2025 will be available via webcast at 09.30am today (30 July 2025). \n \n \n Details can be found on investors.baesystems.com, together with presentation slides and a copy of this report. A recording of the webcast will be available for replay later in the day. \n \n \n About BAE Systems \n \n \n We provide some of the world's most advanced, technology-led defence, aerospace and security solutions, helping customers stay ahead of evolving threats across land, sea, cyber and space. We are a skilled workforce of 109,700 1 people, working with customers and local partners in more than 40 countries to deliver military capability, protect national security and keep critical information and infrastructure secure. \n \n 1.         As at 30 June 2025 and including share of equity accounted investments. \n \n   \n \n \n Shareholder information \n \n \n Registered office \n \n \n BAE Systems plc 6 Carlton Gardens London SW1Y 5AD United Kingdom \n \n \n Registered in England and Wales, No. 01470151 \n \n \n   \n \n \n   \n \n \n Interim management report \n \n \n Half-year overview \n \n \n We delivered a strong set of half-year results, building on the performance of recent years. In the first half of 2025, we have: \n \n -         delivered increased sales and underlying EBIT compared to the first half of 2024; \n -         secured £13.2bn of orders; \n -         delivered mission critical capabilities to our customers; \n -         sustained strong operational performance; \n -         enhanced our product portfolio by integrating the advanced technologies and capabilities acquired through M&A activities in 2024; and \n -         increased our self-funded R&D and continued investment in capital expenditure at high levels. \n \n Our order backlog and programme incumbencies underscore our confidence in our long-term, value-compounding model. Our global presence and diverse portfolio of products and services provide high visibility for top-line growth and cash generation in the coming years. \n \n \n Delivering for our customers \n \n \n Our overall operational performance was strong across all sectors in the first half of the year, as our highly skilled employees continued to deliver mission critical capabilities to our customers to help them stay ahead of evolving threats. \n \n \n Typhoon continues to play a visible and critical role in supporting defence and security objectives of our government customers. In the UK, in recent months, our teams have stepped up to support the Royal Air Force's heightened response posture and ensure aircraft availability. This readiness to respond enables us to work closely with our customers to understand and anticipate their critical needs in challenging times. \n \n \n We delivered extensive warship support and simulated training to the Royal Navy in preparation for its eight-month Carrier Strike Group deployment to the Indo-Pacific. The Royal Navy selected our all-electric Malloy T-150 UAS to transport vital supplies between the ships during its ongoing deployment to the Indo-Pacific, marking the first time it has used drones in this way on such a deployment. Our teams are also embedded with armed forces personnel to provide ongoing support and training to the aircraft, ships and crews throughout this important mission. \n \n \n Meanwhile, we continued to execute on complex, long-term programmes like Dreadnought and Astute Class submarines, Type 26 and Hunter Class frigates, Typhoon and F-35 jets, electronic warfare systems, combat vehicles and many other programmes across our business. \n \n \n We also maintained momentum on key strategic international collaborations. Together with our industry partners in Italy and Japan, we launched our new joint venture, Edgewing, to design and develop next-generation combat aircraft under GCAP. \n \n \n Working alongside our partner, ASC Pty Ltd, we started initial mobilisation activities to support the delivery of the SSN-AUKUS fleet of conventionally armed, nuclear-powered submarines for the Royal Australian Navy. \n \n \n Our 2025 half-year financial performance \n \n \n We have delivered a strong set of half-year results with increases across a number of our key financial measures including sales, underlying EBIT, underlying EPS and dividend per share. This underpins confidence in our upgraded guidance for the full year. \n \n \n On a constant currency basis, we grew sales by 11% and underlying EBIT by 13%, pushing the Group's return on sales to 10.6%. Underlying EPS, which reflects the Group's earnings after accounting for underlying net finance costs and tax in the period, increased 12% to 34.7p. \n \n \n Our order intake for the period was £13.2bn and we closed the half year with an order backlog of £75.4bn. Further details of awards in the period are included in the segmental reviews from page 11. \n \n \n Our free cash flow for the period was an outflow of £368m. Free cash flow reflects cash generated by the Group's operations, after servicing debt and tax obligations, and is inclusive of movements on customer advances. During the period, we saw a net free cash outflow as advances from customers flowed out to the supply chain against the absence of any new material advances received. \n \n \n We ended the period with a strong balance sheet, featuring a cash position of £2,153m and net debt (excluding lease liabilities) of £5,566m, after increasing returns to shareholders in the period, through share buybacks and dividends, to £849m. The Group's pension position, on an IAS 19 basis, remains in an accounting surplus. \n \n \n Further details of the Group's financial performance in the period can be found in the Group financial review on page 7. \n \n \n Market backdrop of increased defence spending \n \n \n The regions where we operate are poised for higher defence spending. We expect this to provide significant opportunities across all our sectors. \n \n \n In response to the increased global security challenges, at the NATO Summit in June, member countries committed to investing 5% of GDP in defence - including 3.5% on core defence requirements and 1.5% on defence- and security-related investments like infrastructure and industry. This represents a significant increase from the previous benchmark of 2% of GDP. We have a strong, established position in Europe and NATO and our range of products and services aligns well to the capability requirements of these nations. These include combat aircraft, combat vehicles, air defence, missile systems, artillery, munitions, drones, electronic warfare and sensor technology. \n \n \n In June, the UK Government published its National Security Strategy (NSS), bringing together various strands of work that have been underway since the 2024 general election, including the Strategic Defence Review and the Industrial Strategy. The NSS states the UK is entering a period in which it is likely to face indirect and potentially direct confrontation with adversaries and the country must adapt its national security approach in response. The three pillars of the new strategic framework to address the increased threats - security at home, strength abroad and increased sovereignty and asymmetric capabilities - align well to our capabilities and provide commitment to our long-term programmes. In conjunction with the NSS, the Government pledged to meet the aforementioned NATO spending commitment and set a target date of 2035 for achieving the 5% level with an interim target of at least 4.1% expected to be spent in 2027. \n \n \n The US Department of Defense has submitted its fiscal year 2026 budget request to Congress totalling $961bn. This includes a base request of $848bn and reconciliation funding of $113bn, representing a 13% increase from the enacted fiscal year 2025 budget . While details on the 2027 budget have not been disclosed, residual defence reconciliation funds will be available in 2027 to help bolster FY27 defence spending, and the Administration has said it intends to ensure the United States has unmatched military strength for years to come. Our portfolio aligns with the key priorities of US and international defence and intelligence customers, focusing on capabilities such as electronic warfare, precision strike munitions, space systems, tactical missile systems, counter-UAS, critical submarine components and combat vehicles. Our expertise in space-based capabilities and electronic and sensor technologies mean we are well positioned to contribute to the US Government's Golden Dome project. \n \n \n Our key markets in the Asia-Pacific and the Middle East are also expected to increase spending and we will continue to support our government customers in these regions with leading products and services. \n \n \n Defence spending in the Kingdom of Saudi Arabia is around 7% of GDP per year and the 2025 military budget is expected to increase by 5%. Areas of longer-term focus for the Kingdom align well with our portfolio and include combat aircraft, missile defence systems, naval vessels and further increasing the localisation of its defence spend. \n \n \n Australia's inaugural 2024 National Defence Strategy reintroduced the measure of defence spending as a percentage of GDP with a promise to increase defence investment from 1.9% to 2.4% by 2033 to 2034. The AUKUS security pact, which will provide Australia with conventionally-armed nuclear-powered submarines, is a key programme that is expected to see substantial increases in spending from 2027. \n \n \n In 2022, in response to the increased threat environment, the Japanese Government made significant changes to its security strategy. It pledged to double defence spending from 1% of GDP, a cap first put in place in 1976, to 2% by 2027. Increased investment is expected across multiple areas as the country fundamentally reinforces its defence capabilities. We have partnered with Japan and Italy to design and develop next-generation fighter jets under GCAP, with the aircraft due to come into service in 2035. Through GCAP, we continue to deepen our links with Japan. \n \n \n Investing to support future growth \n \n \n We continue to invest in our technologies, facilities and people to drive efficiencies and ensure our business has the capacity and agility to deliver on our programmes, as well as anticipate and respond to higher defence spending and the emerging threats our government customers are facing. \n \n \n In 2024, we invested a record amount in R&D and capital expenditure, and we continue to invest to support future growth. Our investment in self-funded R&D is focused on key technology areas including electronic warfare, autonomy, laser-guided weapons, uncrewed systems, synthetic training, electrification applications and space solutions. \n \n \n Through a combination of self-funded R&D and acquisitions, we have established ourselves as one of Europe's leading producers of drone capabilities and through research hubs embedded across our business, we continued to explore transformational technologies that will further advance our state-of-the-art capabilities in defence systems. \n \n \n We are building on more than £1bn of capital expenditure in 2024, as we increase capacity for the future and develop and modernise our systems and facilities. This includes a new shipbuild assembly hall in Glasgow, UK, and a modern shiplift and land-level repair complex in Florida, US, both of which have already become operational. In the UK, a new artillery factory in Sheffield and explosives filling facility in South Wales are on track to become operational later in the year. \n \n \n We continue to hire and train people to enable us to deliver for our customers. We have grown our global workforce by more than 20,000 people over the past five years and, in the UK alone, we intend to recruit more than 2,400 apprentice, undergraduate and graduate roles this year. \n \n \n Our market differentiation \n \n \n Our business has a unique combination of a diverse geographic footprint and multi-domain capabilities. We believe our technologies, deep domain 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 \n \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 \n \n Responsible business \n \n \n We support our government customers to fulfil their primary obligation to keep their citizens safe, while contributing to the economic and social development of the communities and nations where we operate, helping to build a stronger and more secure future. \n \n \n Our people are the heart of everything we do, and it is critical that we attract and retain the best talent so that we can support our customers' requirements and our own long-term growth. We are fully committed to fostering a workplace culture and environment where everyone feels they belong and can contribute fully to our mission, which includes investing in our people's skills development from early careers through to lifelong learning. \n \n \n The safety, health and wellbeing of our people is an enduring priority. We are committed to strengthening our safety management programme to improve our performance in 2025 and beyond. \n \n \n We continue to focus on resource efficiency, developing energy and infrastructure strategies to reduce our greenhouse gas emissions across our operations, while supporting our business growth. \n \n \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 \n \n   \n \n \n Outlook \n \n \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 \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-compounding operating model, undertaking our core business activities with a clear, consistent and careful capital allocation. \n \n   \n \n \n   \n \n \n Group financial review \n \n \n Group income statement \n \n \n \n \n \n \n \n \n \n \n Underlying - as defined by the Group 1 \n \n \n \n \n \n \n \n \n \n \n Statutory - \n \n \n \n \n as derived from IFRS \n \n \n \n \n \n \n \n \n \n \n \n \n Six months ended 30 June 2025 \n \n \n Six months ended 30 June 2024 \n \n \n \n \n \n Six months ended 30 June 2025 \n \n \n Six months ended 30 June 2024 \n \n \n \n \n \n \n \n £m \n \n \n £m \n \n \n \n \n \n £m \n \n \n £m \n \n \n \n \n Sales/Revenue \n \n \n 14,621 \n \n \n \n \n \n \n   \n \n \n 13,399 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 13,571 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 12,477 \n \n \n \n \n \n \n \n \n \n Underlying EBIT/Operating profit \n \n \n 1,550 \n \n \n \n \n \n \n   \n \n \n 1,393 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 1,327 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 1,296 \n \n \n \n \n \n \n \n \n \n Finance income \n \n \n 39 \n \n \n \n \n \n \n   \n \n \n 63 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 65 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 69 \n \n \n \n \n \n \n \n \n \n Finance costs \n \n \n \n \n \n \n \n \n \n (242) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (243) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (203) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (202) \n \n \n \n \n \n \n \n \n \n Net finance costs \n \n \n \n \n \n \n \n \n \n (203) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (180) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (138) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (133) \n \n \n \n \n \n \n \n \n \n Profit before tax \n \n \n 1,347 \n \n \n \n \n \n \n   \n \n \n 1,213 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 1,189 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 1,163 \n \n \n \n \n \n \n \n \n \n Tax expense \n \n \n \n \n \n \n \n \n \n (264) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (225) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (178) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (175) \n \n \n \n \n \n \n \n \n \n \n Profit for the period 2 \n \n \n \n 1,083 \n \n \n \n \n \n \n   \n \n \n 988 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 1,011 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 988 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Return on Sales/Revenue \n \n \n \n \n \n \n 10.6 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n 10.4 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 9.8 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n 10.4 \n \n \n % \n \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 \n Six months ended 30 June 2025 \n \n \n Six months ended 30 June 2024 \n \n \n \n \n \n \n \n £m \n \n \n £m \n \n \n \n \n Underlying EBIT \n \n \n \n \n \n \n   \n \n \n 1,550 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 1,393 \n \n \n \n \n \n \n \n \n \n Adjusting items \n \n \n \n \n \n \n \n \n \n (14) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 46 \n \n \n \n \n \n \n \n \n \n Amortisation of programme, customer-related and other intangible assets, and impairment of intangible assets \n \n \n \n \n \n \n \n \n \n (196) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (143) \n \n \n \n \n \n \n \n \n \n Net finance income and tax of equity accounted investments \n \n \n \n \n \n \n \n \n \n (13) \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 Operating profit \n \n \n \n \n \n \n   \n \n \n 1,327 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 1,296 \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n As defined by the Group \n \n \n Sales for the period were £14.6bn (2024 £13.4bn) representing growth, on a constant currency basis 3 , of 11%. On an organic basis, sales grew 9% on a constant currency basis. All sectors delivered growth in the period as detailed below. \n \n \n Electronic Systems recorded sales of £3.6bn (2024 £3.4bn), equating to growth of 9% on a constant currency basis, which included the full six-month benefit of our Space & Mission Systems (SMS) business and increased demand in the Electronic Combat and Precision Strike & Sensing businesses. \n \n \n Our Platforms & Services sector posted sales of £2.5bn (2024 £2.1bn), with growth of 21% on a constant currency basis, as the sector works to deliver on the recent increased demand for combat vehicles both in the US, through our Combat Mission Systems business which was up 27%, and, in Europe, through our Hägglunds and Bofors businesses which were up 25% and 39% respectively. \n \n \n Our Air sector recorded sales of £4.3bn (2024 £4.0bn), representing growth of 9% on a constant currency basis. The period saw an increase in design and development activities on our Future Combat Air System programme, as well as 18% sales growth in MBDA. The acquisitions in FalconWorks® in the first half of 2024, which expanded our capabilities in UAS, also contributed additional sales in the period. The sector recorded organic growth of 8% on a constant currency basis. \n \n \n Maritime recorded sales of £3.2bn (2024 £2.9bn), which was an increase of 12% on a constant currency basis, with increased activities across the sector. In Submarines, design work has continued on SSN-AUKUS and, in Naval Ships, construction continued across the Type 26 programme. In our UK Munitions business, sales have grown following additional investment to meet increased demand. \n \n \n Sales in the Cyber & Intelligence sector increased by 2% on a constant currency basis, to £1.2bn (2024 £1.2bn), with growth from the prior year acquisitions in the Digital Intelligence business. \n \n \n Underlying EBIT was up 13% on a constant currency basis, to £1,550m (2024 £1,393m), resulting in an increased return on sales for the period of 10.6% (2024 10.4%). On an organic basis, underlying EBIT grew 10% on a constant currency basis. \n \n \n Our Electronic Systems sector grew underlying EBIT to £541m (2024 £473m), an increase of 17% on a constant currency basis, and generated a return on sales of 15.0% (2024 14.0%). The growth in underlying EBIT benefitted from both the sales growth in the period and a full six months of SMS. On an organic basis, the sector saw an increase in underlying EBIT of 12% on a constant currency basis. \n \n \n Platforms & Services reported underlying EBIT of £292m (2024 £216m), an increase of 37% on a constant currency basis, with the return on sales increasing to 11.8% (2024 10.4%). The growth reflects the demand for combat vehicles as production ramps up to deliver increased volumes across Bradley, CV90 and AMPV, which is operating at full-rate production. \n \n \n Our Air sector reported underlying EBIT of £500m (2024 £446m), an increase of 13% on a constant currency basis, with a strong return on sales of 11.5% (2024 11.1%) reflecting good operational performance. \n \n \n The Maritime sector reported underlying EBIT of £220m (2024 £228m), a decrease of 2% on a constant currency basis. The return on sales of 6.8% (2024 7.8%) reflected the timing of milestones in our Submarines business and contract-related trade-ups posted on the Hunter Class programme in the prior year. \n \n \n   \n \n \n Adjusting items totalled a net cost of £14m (2024 net gain of £46m) of which £11m relates to the ongoing integration of Ball Aerospace, which was acquired in 2024, and the remaining £3m to other historic acquisitions. The prior period gain of £46m reflected a profit on the sale of a partial shareholding in Air Astana of £75m and a settlement gain of £13m on a US pension buy-out, offset by £42m of acquisition and integration-related costs, primarily in relation to Ball Aerospace. \n \n \n Underlying net finance costs were £203m (2024 £180m), an increase of £23m. Of this, net costs of £234m (2024 £207m) related to the Group and net income of £31m (2024 £27m) related to the Group's share of equity accounted investments. The Group's underlying net finance costs increased as interest income on cash and other financial instruments fell in the period from £63m to £39m. \n \n \n As derived from IFRS \n \n \n Revenue was £13.6bn (2024 £12.5bn). Growth during the period of 9%, on a reported currency basis, reflected the same drivers behind the increase in sales for the period excluding the impact of MBDA in the Air sector and other equity accounted investments. \n \n \n Operating profit increased 2%, to £1,327m (2024 £1,296m), on a reported currency basis. On an operating sector basis, this reflected the same drivers as underlying EBIT, however, operating profit was impacted by additional costs from amortisation of programme, customer-related and other intangible assets, and impairment of intangible assets which increased by £53m to £196m in the six month period ended 30 June 2025. The comparative period also reflected a net income from adjusting items of £46m (as detailed above) with the current period adjusting items being a cost of £14m as the Group continued integration activities from acquisitions in the prior year. \n \n \n Net finance costs were £138m (2024 £133m), consisting of finance income of £65m (2024 £69m) and finance costs of £203m (2024 £202m). \n \n \n   \n \n 1.         The purposes and definitions of non-GAAP measures are provided in the Alternative performance measures section on page 38. \n 2.         On a Group basis, £42m (2024 £40m) of profit for the period is attributable to non-controlling interests, with £1,041m (2024 £948m) attributable to equity shareholders. On an IFRS basis, £42m (2024 £40m) of profit for the period is attributable to non-controlling interests, with £969m (2024 £948m) attributable to equity shareholders. \n 3.         Calculated by translating the results from entities in functional currencies other than pounds sterling for the period ended 30 June 2024 to pounds sterling at the average exchange rate of such currencies for the period ended 30 June 2025. The comparatives have not been restated. \n \n   \n \n \n Orders \n \n \n \n \n \n \n \n As defined by the Group 1 \n \n \n \n Six months ended 30 June 2025 \n \n \n Six months ended 30 June 2024 \n \n \n \n \n £bn \n \n \n £bn \n \n \n \n \n \n Order intake 2 \n \n \n \n \n \n \n \n \n \n \n 13.2 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 15.1 \n \n \n \n \n \n \n \n \n \n \n \n \n \n As at 30 June 2025 \n \n \n \n \n As at 31 December 2024 \n \n \n \n \n \n \n \n \n £bn \n \n \n £bn \n \n \n \n \n \n Order backlog 2 \n \n \n \n \n \n \n \n \n \n \n 75.4 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 77.8 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n As derived from IFRS \n \n \n \n As at 30 June 2025 \n \n \n \n \n As at 31 December 2024 \n \n \n \n \n \n £bn \n \n \n £bn \n \n \n \n \n \n Order book 3 \n \n \n \n \n \n \n \n \n \n \n 57.0 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 60.4 \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n As defined by the Group \n \n \n Order intake of £13.2bn remained high across all sectors: \n \n -         In Electronic Systems, the £3.8bn of order intake included significant orders in the Electronic Combat business, together with the missile warning and tracking system award to our space business in the US, a capability essential for the Golden Dome project. \n -         In Platforms & Services, the £2.4bn of order intake featured strong European contract awards in Bofors, as well as continued orders for our US combat vehicle programmes. \n -         Our Air sector recorded £3.8bn of order intake for the period including £1.4bn in MBDA, showing continued European growth, and a further £1.0bn of funding for the UK assessment phase of the sixth generation combat aircraft. \n -         The Maritime sector landed £2.0bn of orders for the next major phase of Canada's River Class destroyer programme, Australia's Hobart Class combat system upgrade and increased orders for the Royal Navy in our Submarines business. \n -         Cyber and Intelligence contributed £1.4bn in new orders across the half year. \n \n Further details of awards in the period are covered in the segmental reviews starting on page 11. \n \n 1.         The purposes and definitions of non-GAAP measures are provided in the Alternative performance measures section on page 38. \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 Earnings per share (EPS) \n \n \n \n \n \n \n \n As defined by the Group 1 \n \n \n \n Six months ended 30 June 2025 \n \n \n Six months ended 30 June 2024 \n \n \n \n \n Underlying profit for the period attributable to equity shareholders \n \n \n £1,041m \n \n \n £948m \n \n \n \n \n Underlying EPS - basic \n \n \n 34.7p \n \n \n 31.4p \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n As derived from IFRS \n \n \n Six months ended 30 June 2025 \n \n \n Six months ended 30 June 2024 \n \n \n \n \n Profit for the period attributable to equity shareholders \n \n \n £969m \n \n \n £948m \n \n \n \n \n EPS - basic \n \n \n 32.3p \n \n \n 31.4p \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 38. \n \n   \n \n \n As defined by the Group \n \n \n Underlying EPS increased to 34.7p (2024 31.4p), 12% on a constant currency basis. This is largely driven by the increase in the Group's profitability in the period, as shown in the table below. \n \n \n \n \n \n \n Movement in underlying EPS \n \n \n pence \n \n \n \n \n As at 30 June 2024 \n \n \n \n \n \n \n \n \n \n 31.4 \n \n \n \n \n \n \n \n \n \n Foreign exchange \n \n \n \n \n \n \n \n \n \n (0.4) \n \n \n \n \n \n \n \n \n \n Underlying EBIT \n \n \n \n \n \n \n \n \n \n 4.7 \n \n \n \n \n \n \n \n \n \n Underlying net finance costs \n \n \n \n \n \n \n \n \n \n (0.7) \n \n \n \n \n \n \n \n \n \n Tax rate \n \n \n \n \n \n \n \n \n \n (0.5) \n \n \n \n \n \n \n \n \n \n Share buybacks \n \n \n \n \n \n \n \n \n \n 0.2 \n \n \n \n \n \n \n \n \n \n As at 30 June 2025 \n \n \n \n \n \n \n   \n \n \n 34.7 \n \n \n \n \n \n \n \n \n \n \n \n As derived from IFRS \n \n \n Basic EPS increased 3% on a reported currency basis, to 32.3p (2024 31.4p), with the gain in underlying profit being offset by amortisation on the intangibles acquired in the six month period to 30 June 2024 and the prior period further benefitting from the one-off gain on the Group's partial disposal of Air Astana. \n \n \n   \n \n \n Net debt (excluding lease liabilities) \n \n \n \n \n \n \n \n Components of net debt (excluding lease liabilities) 1 \n \n \n \n \n As at 30 June 2025 \n \n \n \n As at 31 December 2024 \n \n \n \n \n £m \n \n \n £m \n \n \n \n \n Cash and cash equivalents \n \n \n \n \n \n \n \n \n \n 2,153 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 3,378 \n \n \n \n \n \n \n \n \n \n Debt-related derivative financial instruments (net) \n \n \n \n \n \n \n \n \n \n (25) \n \n \n \n \n \n \n \n 89 \n \n \n \n \n Loans - non-current \n \n \n \n \n \n \n \n \n \n (7,053) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (7,713) \n \n \n \n \n \n \n \n \n \n Loans - current \n \n \n \n \n \n \n \n \n \n (641) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (699) \n \n \n \n \n \n \n \n \n \n Net debt (excluding lease liabilities) \n \n \n \n \n \n \n   \n \n \n (5,566) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (4,945) \n \n \n \n \n \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 38. \n \n   \n \n \n Cash and cash equivalents of £2,153m (31 December 2024 £3,378m) 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 period, the Group paid £849m (2024 £812m) to shareholders, through dividends and share buybacks, which accounted for the majority of the cash movement. \n \n \n The Group's net debt (excluding lease liabilities) at 30 June was £5,566m (31 December 2024 £4,945m), a net increase of £621m from the position at the start of the year. During the period, there was a decrease in the carrying amount of the Group's outstanding loans of £718m reflective of foreign exchange movements on the Group's US Dollar denominated borrowings, offset by their associated derivatives. No loan repayments were made during the period. \n \n \n \n \n \n \n \n Movement in net debt (excluding lease liabilities) \n \n \n \n \n \n \n £m \n \n \n \n \n As at 1 January \n \n \n \n \n \n \n \n \n \n \n \n \n (4,945) \n \n \n \n \n \n \n \n \n \n Operating business cash flow \n \n \n \n \n \n \n \n \n \n \n \n \n (8) \n \n \n \n \n \n \n \n \n \n Interest and tax \n \n \n \n \n \n \n \n \n \n \n \n \n (360) \n \n \n \n \n \n \n \n \n \n \n Free cash flow \n \n \n \n \n \n \n \n \n \n \n \n \n \n (368) \n \n \n \n \n \n \n \n \n \n Shareholder returns \n \n \n \n \n \n \n \n \n \n \n \n \n (849) \n \n \n \n \n \n \n \n \n \n Foreign exchange and other movements \n \n \n \n \n \n \n \n \n \n \n \n \n 596 \n \n \n \n \n \n \n \n \n \n As at 30 June \n \n \n   \n \n \n \n \n \n \n \n \n \n (5,566) \n \n \n \n \n \n \n \n \n \n \n \n Cash flow \n \n \n \n \n \n \n \n As defined by the Group 1 \n \n \n \n Six months ended 30 June 2025 \n \n \n Six months ended 30 June 2024 \n \n \n \n \n £m \n \n \n £m \n \n \n \n \n \n Free cash flow \n \n \n \n \n \n \n \n \n \n \n (368) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 219 \n \n \n \n \n \n \n \n \n \n \n Operating business cash flow \n \n \n \n \n \n \n \n \n \n \n (8) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 474 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n As derived from IFRS \n \n \n Six months ended 30 June 2025 \n \n \n Six months ended 30 June 2024 \n \n \n \n \n £m \n \n \n £m \n \n \n \n \n Net cash flow from operating activities \n \n \n \n \n \n \n \n \n \n 74 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 757 \n \n \n \n \n \n \n \n \n \n Net cash flow from investing activities \n \n \n \n \n \n \n \n \n \n (73) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (4,569) \n \n \n \n \n \n \n \n \n \n Net cash flow from financing activities \n \n \n \n \n \n \n \n \n \n (1,160) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 2,583 \n \n \n \n \n \n \n \n \n \n Net decrease in cash and cash equivalents \n \n \n \n \n \n \n \n \n \n (1,159) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (1,229) \n \n \n \n \n \n \n \n \n \n Cash and cash equivalents at 1 January \n \n \n \n \n \n \n \n \n \n 3,378 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 4,067 \n \n \n \n \n \n \n \n \n \n Effect of foreign exchange rate changes on cash and cash equivalents \n \n \n \n \n \n \n \n \n \n (66) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (7) \n \n \n \n \n \n \n \n \n \n Cash and cash equivalents at 30 June \n \n \n \n \n \n \n   \n \n \n 2,153 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 2,831 \n \n \n \n \n \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 38. \n \n   \n \n \n As defined by the Group \n \n \n Free cash flow was an outflow of £368m (2024 inflow of £219m). Free cash flow reflects cash generated by the Group's operations, after servicing debt and tax obligations. \n \n \n Operating business cash flow was an outflow of £8m (2024 inflow of £474m) after investing a net £400m (2024 £396m) in capital expenditure in the period. \n \n \n Both cash measures reflect movements on customer advances which have now begun to flow to our supply chain as the Group works to deliver against these contracts. No material advances were received in the first half of the year. \n \n \n As derived from IFRS \n \n \n Net cash flow from operating activities was an inflow of £74m (2024 £757m), a decrease of £683m on the prior period. Although the Group saw increased profitability in the six months ended 30 June 2025, working capital movements in the period reflected timing of programmes and the outflow of customer advances to the supply chain. The comparative period included a number of large customer advances received immediately prior to the period end. No material advances were received in the first half of the year. \n \n \n Net cash flow from investing activities was an outflow of £73m (2024 £4,569m) as net capital expenditure of £400m (2024 £396m) was partially offset by dividends received from the Group's equity accounted investments of £287m (2024 £145m). In the comparative period, the acquisition of subsidiaries, including Ball Aerospace, accounted for a net cash outflow of £4,536m. This was offset by cash proceeds of £166m from the partial sale of the Group's shareholding in Air Astana. There were no M&A transactions in the current period. \n \n \n Net cash flow from financing activities was an outflow of £1,160m (2024 inflow of £2,583m). Cash returns to shareholders, through dividends and share buybacks, accounted for £849m (2024 £812m) of the outflow in the period combined with interest paid on the Group's borrowings and other liabilities of £267m (2024 £222m). The inflow in the prior period further reflected cash proceeds from debt financing raised of £3,765m primarily to fund the Ball Aerospace acquisition. The Group has not raised any cash from external debt funding in the current period. \n \n \n Foreign exchange translation primarily arises in respect of the Group's US dollar-denominated cash holdings. \n \n \n   \n \n \n Exchange rates \n \n \n \n \n \n \n \n \n \n Average \n \n \n Period end \n \n \n Year end \n \n \n \n \n   \n \n \n Six months ended 30 June 2025 \n \n \n Six months ended 30 June 2024 \n \n \n 30 June 2025 \n \n \n 30 June 2024 \n \n \n 31 December 2024 \n \n \n \n \n £/$ \n \n \n \n \n \n \n \n \n \n 1.298 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 1.265 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 1.370 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 1.264 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 1.253 \n \n \n \n \n \n \n \n \n \n £/€ \n \n \n \n \n \n \n \n \n \n 1.187 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 1.170 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 1.167 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 1.180 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 1.210 \n \n \n \n \n \n \n \n \n \n £/A$ \n \n \n \n \n \n \n \n \n \n 2.046 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 1.921 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 2.091 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 1.893 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 2.023 \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \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 Six months ended 30 June 2025 \n \n \n \n Sales \n \n \n \n \n Underlying EBIT \n \n \n \n \n Return on sales \n \n \n \n \n Operating business cash flow 2 \n \n \n \n \n Order intake \n \n \n \n \n Order backlog \n \n \n \n \n \n £m \n \n \n £m \n \n \n % \n \n \n £m \n \n \n £bn \n \n \n £bn \n \n \n \n \n Electronic Systems \n \n \n \n \n \n \n \n \n \n 3,599 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 541 \n \n \n \n \n \n \n \n \n \n \n \n 15.0 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 298 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 3.8 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 12.1 \n \n \n \n \n \n \n \n \n \n Platforms & Services \n \n \n \n \n \n \n \n \n \n 2,478 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 292 \n \n \n \n \n \n \n \n \n \n \n \n 11.8 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (252) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 2.4 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 14.2 \n \n \n \n \n \n \n \n \n \n Air \n \n \n \n \n \n \n \n \n \n 4,343 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 500 \n \n \n \n \n \n \n \n \n \n \n \n 11.5 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 214 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 3.8 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 26.5 \n \n \n \n \n \n \n \n \n \n Maritime \n \n \n \n \n \n \n \n \n \n 3,233 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 220 \n \n \n \n \n \n \n \n \n \n \n \n 6.8 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (150) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 2.0 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 21.7 \n \n \n \n \n \n \n \n \n \n Cyber & Intelligence \n \n \n \n \n \n \n \n \n \n 1,186 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 96 \n \n \n \n \n \n \n \n \n \n \n \n 8.1 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (23) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 1.4 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 1.8 \n \n \n \n \n \n \n \n \n \n \n HQ 3 \n \n \n \n \n \n \n \n \n \n \n 98 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (99) \n \n \n \n \n \n \n \n - \n \n \n \n \n \n \n \n \n \n (95) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 0.1 \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 Deduct: Intra-group \n \n \n \n \n \n \n \n \n \n (316) \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 \n \n - \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (0.3) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (0.9) \n \n \n \n \n \n \n \n \n \n Total \n \n \n \n \n \n \n   \n \n \n 14,621 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 1,550 \n \n \n \n \n \n \n \n \n \n \n \n 10.6 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (8) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 13.2 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 75.4 \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 Six months ended 30 June 2025 \n \n \n \n Revenue \n \n \n \n \n Operating profit/(loss) \n \n \n \n \n Return on revenue \n \n \n \n Net cash flow from operating activities \n \n \n \n \n \n Order book \n \n \n \n \n £m \n \n \n £m \n \n \n % \n \n \n £m \n \n \n \n \n \n £bn \n \n \n \n \n Electronic Systems \n \n \n \n \n \n \n \n \n \n 3,592 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 357 \n \n \n \n \n \n \n \n \n \n \n \n 9.9 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 374 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 8.1 \n \n \n \n \n \n \n \n \n \n Platforms & Services \n \n \n \n \n \n \n \n \n \n 2,470 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 292 \n \n \n \n \n \n \n \n \n \n \n \n 11.8 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (146) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 13.3 \n \n \n \n \n \n \n \n \n \n Air \n \n \n \n \n \n \n \n \n \n 3,470 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 487 \n \n \n \n \n \n \n \n \n \n \n \n 14.0 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 37 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 14.5 \n \n \n \n \n \n \n \n \n \n Maritime \n \n \n \n \n \n \n \n \n \n 3,132 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 218 \n \n \n \n \n \n \n \n \n \n \n \n 7.0 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (8) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 20.8 \n \n \n \n \n \n \n \n \n \n Cyber & Intelligence \n \n \n \n \n \n \n \n \n \n 1,186 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 78 \n \n \n \n \n \n \n \n \n \n \n \n 6.6 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 12 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 1.4 \n \n \n \n \n \n \n \n \n \n \n HQ 3 \n \n \n \n \n \n \n \n \n \n \n 19 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (105) \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 (61) \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 Deduct: Intra-group \n \n \n \n \n \n \n \n \n \n (298) \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 \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 \n (1.1) \n \n \n \n \n \n \n \n \n \n \n Deduct: Tax 4 \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 \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 (134) \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 Total \n \n \n \n \n \n \n   \n \n \n 13,571 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 1,327 \n \n \n \n \n \n \n \n \n \n \n \n 9.8 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 74 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 57.0 \n \n \n \n \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 38. \n 2.         At a Group level, the key cash flow metric is free cash flow (see the Alternative performance measures section on page 38). In the six month period to 30 June 2025, free cash flow was an outflow of £368m (2024 inflow of £219m). \n 3.         HQ comprises the Group's head office activities, together with a 17% interest in Air Astana. \n 4.         Tax is managed on a Group-wide basis. \n \n Segmental performance: Electronic Systems \n \n \n Electronic Systems, with 22,600¹ employees, comprises the Group's US- and UK-based Electronic Systems business and the US-based Space & Mission Systems (SMS) business. \n \n \n Financial performance \n \n \n \n \n \n \n \n Financial performance measures defined by the Group 2 \n \n \n \n \n \n \n Financial performance measures derived from IFRS \n \n \n \n \n   \n \n \n Six months ended 30 June 2025 \n \n \n Six months ended 30 June 2024 \n \n \n \n Variance 3 \n \n \n \n \n \n \n \n \n \n Six months ended 30 June 2025 \n \n \n Six months ended 30 June 2024 \n \n \n \n Variance 3 \n \n \n \n \n \n \n Sales \n \n \n \n £3,599m \n \n \n £3,383m \n \n \n \n \n \n \n +9 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n Revenue \n \n \n \n £3,592m \n \n \n £3,394m \n \n \n \n \n \n \n +6 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n Underlying EBIT \n \n \n \n £541m \n \n \n £473m \n \n \n \n \n \n \n +17 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n Operating profit \n \n \n \n £357m \n \n \n £301m \n \n \n \n \n \n \n +19 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n Return on sales \n \n \n \n \n \n \n \n 15.0 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n 14.0 \n \n \n % \n \n \n \n \n \n \n \n +100 bps \n \n \n \n \n \n \n Return on revenue \n \n \n \n \n \n \n \n 9.9 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n 8.9 \n \n \n % \n \n \n \n \n \n \n \n +100 bps \n \n \n \n \n \n Operating business cash flow \n \n \n \n £298m \n \n \n £184m \n \n \n £114m \n \n \n \n \n \n \n Net cash flow from operating activities \n \n \n \n £374m \n \n \n £264m \n \n \n £110m \n \n \n \n \n \n Order intake \n \n \n \n £3.8bn \n \n \n £3.2bn \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 \n \n \n As at 30 June 2025 \n \n \n As at 31 December 2024 \n \n \n \n Variance \n \n \n \n \n \n \n \n \n \n As at 30 June 2025 \n \n \n As at 31 December 2024 \n \n \n \n Variance \n \n \n \n \n \n \n Order backlog \n \n \n \n £12.1bn \n \n \n £12.7bn \n \n \n £(0.6)bn \n \n \n \n \n \n \n Order book \n \n \n \n £8.1bn \n \n \n £8.6bn \n \n \n £(0.5)bn \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 38. \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 \n Operational performance \n \n \n Demand was strong across our customer base in the first half of 2025, as evidenced by our order intake. We supported customers on key electronic warfare and precision-guided-munition programmes, while pursuing and maturing new opportunities. \n \n \n With the integration of our SMS business essentially complete, we continue to realise benefits from focused cross-segment collaboration, identifying new opportunities to unlock synergies and deliver growth. SMS core programmes in defence remain aligned with US Government key priorities, and we are also leveraging our proven capabilities in tactical systems to diversify our market presence. \n \n \n In our commercial businesses, airline traffic has exceeded pre-pandemic levels and is growing globally, resulting in stronger demand for our original equipment manufacturer deliveries and aftermarket services. \n \n \n Key operational points for the period \n \n -         We celebrated the successful launch of NASA's Spectro-Photometer for the History of the Universe, Epoch of Reionization and Ices Explorer (SPHEREx) Observatory, equipped with the BAE Systems built spacecraft bus, telescope and RAD750® single board computer and prepared by our leading observatory integration and environmental testing. \n -         We introduced our new Elevation TM spacecraft product line designed for multi-launch or rideshare missions, featuring common system components and defined configurations for enhanced affordability and rapid deployment. \n -         The US Space Force formally operationally accepted the Weather System Follow-on-Microwave (WSF-M) satellite. As the mission prime, we built the spacecraft bus and microwave imager. We continue to perform mission operations to support WSF-M ' s critical space-based, time-sensitive data to enhance the safety and success of military mission planning and operations around the globe. \n -         Under the Future Operationally Resilient Ground Evolution Command and Control contract, worth $151m (£116m), we are developing a next-generation ground system for US Space Force missile-warning satellites. \n -         We are building the spacecraft bus for National Oceanic and Atmospheric Administration's (NOAA) upcoming Space Weather Next L1 Series mission under a $230m (£177m) contract to continue providing valuable data to NOAA's Space Weather Prediction Center. \n -         We are under contract to deliver 13 Network Tactical Common Data Link production systems to support US Navy requirements for real-time intelligence, surveillance, reconnaissance and command and control and have begun deliveries. \n -         Our Controls & Avionics team remains focused on supporting Boeing's aircraft deliveries and is progressing the development of the integrated flight control electronics and remote electronic units for the new Boeing 777X aircraft, with the flight control system performing as expected during flight-testing. \n -         Our EA-37B programme team is executing contracts, including international support, valued at more than $1.3bn (£1.0bn). We are focused on cross-decking the prime mission equipment as part of Baseline 3 and have delivered five aircraft for formal testing and training, while continuing to sustain the EC-130H. Future baselines are in development to continually evolve the electromagnetic attack capability for the US Air Force. \n -         The Eagle Passive Active Warning Survivability System (EPAWSS) was successfully fielded in the first quarter of 2025, with two F-15Es delivered to RAF Lakenheath in the UK, and we are under contract through full-rate production (FRP) Lot 5. \n -         The F-35 Lightning II programme is on track to deliver around 200 electronic warfare suites to Lockheed Martin in 2025, including 70 of the new Block 4 configuration. \n -         Production continues on the APKWS® laser-guidance kit programme under an Indefinite Delivery, Indefinite Quantity contract. We continue to demonstrate counter-UAS capability, recently in conjunction with the Group's Malloy platforms. \n \n   \n \n \n Strategic and order highlights \n \n -         Our SMS team was awarded a $1.2bn (£0.9bn) US Space Systems Command contract for the Resilient Missile Warning & Tracking - Medium Earth Orbit Epoch 2 (RMWT-MEO E2) programme to build the next-generation RMWT satellite system for the Department of Defense. As the prime contractor for the mission, we will develop and integrate multiple satellite buses and payloads, as well as be responsible for ground command and control and mission operations. \n -         Our Navigation & Sensor Systems team continues development on the next generation M-code technologies under the Space Force Miniature Serial Interface Increment 2 programme. \n -         We secured a low-rate initial production contract worth $41m (£32m) from the US Navy's Naval Air Systems Command for the production of three units of the Advanced Survivability Pod for the P-8 Poseidon aircraft. \n -         The Air Force Research Laboratory awarded the Force Optimization through Rapid-prototyping, Gear Enhancements & Innovative Technology (FORGE-IT) contract worth $34m (£26m) to continue development and deployment of the Battlefield Assisted Trauma Distributed Operations Kit (BATDOK). Together, BATDOK and FORGE-IT will improve and modernise service members' capabilities to provide medical care on the battlefield and during transition to other facilities. \n -         We are taking a leadership position in the emerging market for energy storage and power management solutions to support more-electric and hybrid-electric aircraft and announced a state-of-the-art facility expansion in Endicott, New York, to enhance energy storage systems production, engineering and manufacturing capacity for aircraft electrification. \n \n Looking forward \n \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. We 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 and 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 power 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 drive future growth by leveraging synergies across sectors and identifying areas where our businesses can partner to pursue and capture new and adjacent revenue opportunities for the US Intelligence Community, Department of Defense and civilian space agencies. \n \n Segmental performance: Platforms & Services \n \n \n Platforms & Services, with 11,800 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 \n \n Financial performance \n \n \n \n \n \n \n \n Financial performance measures defined by the Group 2 \n \n \n \n \n \n \n Financial performance measures derived from IFRS \n \n \n \n \n   \n \n \n Six months ended 30 June 2025 \n \n \n Six months ended 30 June 2024 \n \n \n \n Variance 3 \n \n \n \n \n \n \n \n \n \n Six months ended 30 June 2025 \n \n \n Six months ended 30 June 2024 \n \n \n \n Variance 3 \n \n \n \n \n \n \n Sales \n \n \n \n £2,478m \n \n \n £2,085m \n \n \n \n \n \n \n +21 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n Revenue \n \n \n \n £2,470m \n \n \n £2,061m \n \n \n \n \n \n \n +20 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n Underlying EBIT \n \n \n \n £292m \n \n \n £216m \n \n \n \n \n \n \n +37 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n Operating profit \n \n \n \n £292m \n \n \n £215m \n \n \n \n \n \n \n +36 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n Return on sales \n \n \n \n \n \n \n \n 11.8 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n 10.4 \n \n \n % \n \n \n \n \n \n \n \n +140 bps \n \n \n \n \n \n \n Return on revenue \n \n \n \n \n \n \n \n 11.8 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n 10.4 \n \n \n % \n \n \n \n \n \n \n \n +140 bps \n \n \n \n \n \n Operating business cash flow \n \n \n \n £(252)m \n \n \n £(13)m \n \n \n £(239)m \n \n \n \n \n \n \n Net cash flow from operating activities \n \n \n \n £(146)m \n \n \n £83m \n \n \n £(229)m \n \n \n \n \n \n Order intake \n \n \n \n £2.4bn \n \n \n £2.8bn \n \n \n £(0.4)bn \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n As at 30 June 2025 \n \n \n As at 31 December 2024 \n \n \n \n Variance \n \n \n \n \n \n \n \n \n \n As at 30 June 2025 \n \n \n As at 31 December 2024 \n \n \n \n Variance \n \n \n \n \n \n \n Order backlog \n \n \n \n £14.2bn \n \n \n £14.3bn \n \n \n £(0.1)bn \n \n \n \n \n \n \n Order book \n \n \n \n £13.3bn \n \n \n £13.6bn \n \n \n £(0.3)bn \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 38. \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 \n Operational performance \n \n \n Across our Platforms & Services sector, we remain focused on delivering on our commitments while diversifying and growing our portfolio in the US and international markets across combat vehicles, munitions, artillery systems and submarines. These actions position us to address our customers' priorities for modernisation and advanced technologies, including missile defence and autonomous weapons. \n \n \n As the US vehicle market evolves, our Combat Mission Systems team continues to work closely with military services to remain a trusted partner to deliver our leading combat vehicles and other capabilities, while pursuing international opportunities. \n \n \n We continue to support the broader defence industrial base to ensure we have the technology and capacity needed to equip our armed forces customers. We have upgraded our welding, machining and heavy-lift capacity to further support building submarines and continued to invest in infrastructure to support customer needs, such as our Sterling Heights, Michigan, next-generation technology hub called the Virtual Proving Ground where we can collaborate with customers and industry partners using digital engineering. In Sweden, we are expanding our operations to further enhance our capabilities to meet the needs of international customers. In the UK, we began work on a new facility in Sheffield to expand capacity for our artillery and defence capabilities. \n \n \n We are also monitoring Europe's increased defence spending and working to understand and anticipate NATO's capability gaps, recognising our strengths as a leading provider of proven combat vehicles and air-defence solutions to enhance the region's readiness for the future. \n \n \n Key operational points for the period \n \n -         Our AMPV celebrated its 500 th delivery milestone and is on track, in full-rate production, to meet the US Army's plan to field nearly 3,000 AMPVs in its Armored Brigade Combat Team formations. \n -         Our Hägglunds business is further expanding its production capacity with a new production hall and test and verification facilities, while also securing production partnerships in customer nations to accommodate the significant vehicle orders received. \n -         Our Ordnance Systems Inc. business is in the final stages of completing a new nitrocellulose facility in Radford, Virginia, which will provide significantly enhanced capacity, quality and levels of automation to reduce risk in the process. \n -         Our Combat Mission Systems has entered into an agreement with Wojskowe Zakłady Motoryzacyjne S.A. to support the Polish Land Forces' M88 Armored Recovery Vehicle fleet operational readiness. \n -         At our Jacksonville, Florida, shipyard we continued fabrication work under an order from a prime US contractor in relation to Virginia- and Columbia-class submarines. In June, the shipyard also commenced operations of its $250m (£190m) shiplift and land-level repair facility. This investment has increased the shipyard's repair capacity by 300%. \n \n Strategic and order highlights \n \n -         Our UK Weapon Systems business was awarded a contract worth over $81m (£62m) by the UK Ministry of Defence to deliver 150 artillery barrels. The team was also awarded a $162m (£125m) contract from the US Army for new M777 structures, the first of which will be produced at our new multi-million-pound artillery development and production facility in Sheffield, UK, as well as within the US supply chain. \n -         We received a $357m (£275m) order to procure long-lead material for additional AMPVs for the US Army, continuing the programme's full-rate production. The business also received a $214m (£165m) award for the US Army's M109A7 Paladin Self-Propelled Howitzer programme. \n -         Our Combat Mission Systems business was awarded a $70m (£54m) contract from General Dynamics for the production of Virginia Payload Module missile tubes for Block VI Virginia-class submarines. \n -         The Swedish Government announced a support package worth nearly $300m (£231m) in total, including 18 ARCHERs, further TRIDON Mk2 Ground Based Air Defence systems and additional medium calibre ammunition. \n -         The US Marine Corps placed two orders for Amphibious Combat Vehicles (ACVs) totalling more than $360m (£277m) for full-rate production of 60 ACV-30mm vehicles, which includes fielding support, spares and test equipment. The contract includes a series of options to produce up to 150 vehicles. \n -         In May, our Ship Repair business secured a nearly $109m (£84m) contract from the US Navy for the dry-docking maintenance of the guided missile destroyer, USS The Sullivans, with work scheduled to begin in the second half of the year. \n \n Looking forward \n \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 have seen renewed interest in the M777 artillery capability. 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 Fighting Vehicles in Ukraine, we are working with the US Army to develop the most advanced Bradley configurations to date, the M2A4 and the M2A4E1, which both feature enhanced 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 infrastructure and facilities in key home ports. \n \n   \n \n \n Segmental performance: Air \n \n \n Air, with 29,100¹ 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 (FCAS) and FalconWorks®, alongside our business in the Kingdom of Saudi Arabia and interests in our European joint ventures: Eurofighter and MBDA. \n \n \n Financial performance \n \n \n \n \n \n \n \n Financial performance measures defined by the Group 2 \n \n \n \n \n \n \n Financial performance measures derived from IFRS \n \n \n \n \n   \n \n \n Six months ended 30 June 2025 \n \n \n Six months ended 30 June 2024 \n \n \n \n Variance 3 \n \n \n \n \n \n \n \n \n \n Six months ended 30 June 2025 \n \n \n Six months ended 30 June 2024 \n \n \n \n Variance 3 \n \n \n \n \n \n \n Sales \n \n \n \n £4,343m \n \n \n £4,009m \n \n \n \n \n \n \n +9 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n Revenue \n \n \n \n £3,470m \n \n \n £3,252m \n \n \n \n \n \n \n +7 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n Underlying EBIT \n \n \n \n £500m \n \n \n £446m \n \n \n \n \n \n \n +13 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n Operating profit \n \n \n \n £487m \n \n \n £456m \n \n \n \n \n \n \n +7 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n Return on sales \n \n \n \n \n \n \n \n 11.5 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n 11.1 \n \n \n % \n \n \n \n \n \n \n \n +40 bps \n \n \n \n \n \n \n Return on revenue \n \n \n \n \n \n \n \n 14.0 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n 14.0 \n \n \n % \n \n \n \n \n \n \n \n - bps \n \n \n \n \n \n Operating business cash flow \n \n \n \n £214m \n \n \n £724m \n \n \n £(510)m \n \n \n \n \n \n \n Net cash flow from operating activities \n \n \n \n £37m \n \n \n £697m \n \n \n £(660)m \n \n \n \n \n \n Order intake \n \n \n \n £3.8bn \n \n \n £2.3bn \n \n \n £1.5bn \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n As at 30 June 2025 \n \n \n As at 31 December 2024 \n \n \n Variance \n \n \n \n \n \n \n \n \n As at 30 June 2025 \n \n \n As at 31 December 2024 \n \n \n Variance \n \n \n \n \n \n Order backlog \n \n \n \n £26.5bn \n \n \n £26.8bn \n \n \n £(0.3)bn \n \n \n \n \n \n \n Order book \n \n \n \n £14.5bn \n \n \n £15.6bn \n \n \n £(1.1)bn \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 38. \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 \n Operational performance \n \n \n We continue to work with our UK and international customers to support their existing platforms and provide new enhanced capabilities. Our US Programmes division remains focused on delivery execution across all production lines. Our FCAS and FalconWorks® organisations continue to invest in our people, facilities and cutting-edge technologies. \n \n \n Key operational points for the period \n \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 and the Royal Saudi Naval Force's Hunter mine warfare vessels. \n -         Activity on our Qatar Typhoon and Hawk programmes continues, with 22 of the 24 Typhoon aircraft in service to date with the Qatar Emiri Air Force. \n -         We continue to deliver Typhoon major units in support of core European customer orders, with five delivered in the first half of the year. \n -         We continue to progress construction of the UK's Flying Combat Air Demonstrator, which will test 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, by 2035. In July, alongside our industry partners and the Ministry of Defence, we revealed the design as the aircraft reached a major milestone, with two thirds of its structural weight now in manufacturing. \n -         Our US Programmes business completed 74 F-35 aft fuselages in the first half of the year. The current Production Lots 18/19 support the continuation of production deliveries at Samlesbury, UK, through to Q1 2027. Negotiations are ongoing with Lockheed Martin for Lots 20-22 which will continue production to 2030. \n -         The Royal Navy selected our all-electric Malloy T-150 UAS to transport vital supplies between UK Carrier Strike Group ships for the first time during its ongoing deployment to the Indo-Pacific this year. \n \n Strategic and order highlights \n \n -         We launched Edgewing, a joint venture with our international partners, Leonardo (Italy) and Japan Aircraft Industrial Enhancement Co. Ltd. (Japan), on GCAP. The new company, based in Reading, UK, will be accountable for the design and development of the next generation combat aircraft and will remain the design authority for the life of the product, which is expected to go out beyond 2070. \n -         Concept and assessment work on GCAP continues with our international industry partners in all three nations under their respective national contracts. We received a further £1.0bn of funding on the UK assessment phase contract in the first half of the year. \n -         We secured a further £97m of funding for the phase 4 enhancements programme to continue the development of Typhoon capability. In addition, we achieved £205m of funding in support of the mobilisation of the Radar Mk2 production contract. \n -         In July, the Republic of Türkiye and the UK Government signed a Memorandum of Understanding relating to the potential purchase of Typhoon aircraft and we are working closely with the two governments to formalise an agreement for procurement of the aircraft and associated supplies. \n -         MBDA has continued to secure significant orders in the first half of 2025. Orders received include: French Air Force, Italian Air Force and Army and UK Royal Navy further production orders for ASTER 15 & 30 Block 1 missile; Indian Navy Rafale weapon package order for the Meteor Beyond Visual Range Air-to-Air Missile (BVRAAM), MICA, SCALP and Exocet AM39; and, a South Korean production order for the Meteor BVRAAM which will enable the Air Force to benefit from a common stockpile for both KF-21 and F-35. \n   \n \n Looking forward \n \n -         GCAP is a strategically important partnership that will not only drive innovation and technological advancement but also promote significant economic activity in the UK, Japan and Italy, with the aim of securing the future of their respective combat air industries for decades. \n -         We will continue to focus on ensuring that deliveries of Typhoon aircraft and support are made in line with customer expectations. Future Typhoon production and support sales are underpinned by existing contracts. We continue to pursue future sales of Typhoon in Europe and the Middle East. \n -         We expect production of the rear fuselage assemblies for the F-35 to be sustained at current levels of approximately 150 aft fuselages. We continue to play a significant role in the F-35 sustainment programme in support of Lockheed Martin. \n -         In the Kingdom of Saudi Arabia, the In-Kingdom Industrial Participation programme continues to make good progress consistent with our long-term strategy, while supporting the Kingdom's National Transformation Plan and Vision 2030. \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 is well placed to benefit from increased defence spending in Europe and internationally. The business has a strong order backlog and development programmes continue to enhance the long-term capabilities of the business in air, land and sea domains. \n \n   \n \n \n Segmental performance: Maritime \n \n \n Maritime, with 30,800¹ 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 \n \n Financial performance \n \n \n \n \n \n \n \n Financial performance measures defined by the Group 2 \n \n \n \n \n \n \n Financial performance measures derived from IFRS \n \n \n \n \n   \n \n \n Six months ended 30 June 2025 \n \n \n Six months ended 30 June 2024 \n \n \n \n Variance 3 \n \n \n \n \n \n \n \n \n \n Six months ended 30 June 2025 \n \n \n Six months ended 30 June 2024 \n \n \n \n Variance 3 \n \n \n \n \n \n \n Sales \n \n \n \n £3,233m \n \n \n £2,929m \n \n \n \n \n \n \n +12 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n Revenue \n \n \n \n £3,132m \n \n \n £2,845m \n \n \n \n \n \n \n +10 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n Underlying EBIT \n \n \n \n £220m \n \n \n £228m \n \n \n \n \n \n \n -2 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n Operating profit \n \n \n \n £218m \n \n \n £226m \n \n \n \n \n \n \n -4 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n Return on sales \n \n \n \n \n \n \n \n 6.8 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n 7.8 \n \n \n % \n \n \n \n \n \n \n \n -100 bps \n \n \n \n \n \n \n Return on revenue \n \n \n \n \n \n \n \n 7.0 \n \n \n % \n \n \n \n \n \n \n \n \n \n \n \n 7.9 \n \n \n % \n \n \n \n \n \n \n \n -90 bps \n \n \n \n \n \n Operating business cash flow \n \n \n \n £(150)m \n \n \n £(247)m \n \n \n £97m \n \n \n \n \n \n \n Net cash flow from operating activities \n \n \n \n £(8)m \n \n \n £(91)m \n \n \n £83m \n \n \n \n \n \n Order intake \n \n \n \n £2.0bn \n \n \n £5.7bn \n \n \n £(3.7)bn \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n As at 30 June 2025 \n \n \n As at 31 December 2024 \n \n \n \n Variance \n \n \n \n \n \n \n \n \n \n As at 30 June 2025 \n \n \n As at 31 December 2024 \n \n \n \n Variance \n \n \n \n \n \n \n Order backlog \n \n \n \n £21.7bn \n \n \n £23.2bn \n \n \n £(1.5)bn \n \n \n \n \n \n \n Order book \n \n \n \n £20.8bn \n \n \n £22.3bn \n \n \n £(1.5)bn \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 38. \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 \n Operational performance \n \n \n Our major Maritime platforms continue to progress through their long-term programmes. We have delivered five of the seven Astute Class submarines to the Royal Navy and continue construction on the first three of four Dreadnought Class submarines. Construction of the initial five UK Type 26 frigates and the first Australian Hunter Class frigate are also underway. We also continue to deliver on customer requirements in both munitions and services. Ongoing investments in our facilities and our people support our current and future delivery. Our investment and high levels of customer demand mean the sector is well positioned for growth. \n \n \n Key operational points for the period \n \n -         The sixth Astute Class submarine, Agamemnon, is in its in-water phase, whilst we continue construction on the final vessel in the class. \n -         We continue 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 -         The Devonshire Dock Hall at Barrow-in-Furness, UK, has been working at full operational capacity during the period, following the fire in 2024. \n -         In the UK, the Type 26 frigate programme of eight ships is progressing. Investment continues both internally and through the supply chain to support delivery, with the transition from design to production an ongoing area of focus. We have five ships in build during 2025; HMS Glasgow and HMS Cardiff have both entered the water and are progressing through final outfit at our Scotstoun shipyard, with HMS Glasgow undergoing system testing and commissioning. Unit construction and block integration of HMS Belfast, HMS Birmingham and HMS Sheffield continues at our Govan shipyard. \n -         In Australia, construction of the Hunter Class frigate is progressing with 32 of the 78 units of the first ship in production. \n -         Alongside this, the final Anzac Class frigate, HMAS Parramatta, was returned to water at the Henderson shipyard, with completion of the upgrade programme expected before the end of the year. \n -         The upgrade programme for the Royal Australian Air Force's Hawk Aircraft is approaching finalisation with installation of 28 of the 33 engines completed. \n -         Our specialist teams have played a critical role in the national endeavour to generate, support and sustain the Portsmouth-based ships which deployed as part of the UK's Carrier Strike Group 2025. \n -         Our investment in munitions continues at pace, including a new explosive filling facility at Glascoed, UK, enabling a sixteen-fold increase in production capacity of 155mm artillery shells. \n -         In RBSL, the Challenger 3 programme has delivered a total of four prototype tanks, with another four in build, marking significant progress. The Boxer programme is expected to move to full-rate production in 2025. To date, a total of five UK-built vehicles have been delivered and are currently undergoing planned reliability trials. \n \n Strategic and order highlights \n \n -         It was announced that the Canadian Government will be working with Australia to establish an Arctic Over The Horizon Radar (A-OTHR) capability. As the enterprise partner for Australia's over the horizon radar system, JORN, we will support the government in this important agreement. \n -         We secured an order of £284m for the Combat System upgrade of the first of the three Hobart Class Air Warfare Destroyers. \n -         Following the cancellation of the TransCAP element of the Anzac Class frigate upgrade programme, we have continued to work with the Commonwealth of Australia to determine the appropriate use of our Henderson facility in Western Australia. \n -         The initial mobilisation phase of the SSN-AUKUS programme in Australia has commenced to support the delivery of the SSN-AUKUS fleet of conventionally armed, nuclear-powered submarines for the Royal Australian Navy. \n -         We signed a contract with Canada's Irving Shipbuilding Inc., marking the start of the next major phase on the River Class destroyer programme. The ship is based on the Type 26 platform with specified design changes to meet the Royal Canadian Navy's requirements. Under this new contract, we will provide support and consultancy services throughout the build phase. \n -         The formal naming of HMS Glasgow by her Sponsor, Her Royal Highness The Princess of Wales, took place in May. \n -         In the UK, Her Royal Highness The Princess Royal officially opened our Applied Shipbuilding Academy in Glasgow and our new Ship Build Assembly Hall was officially named as the Janet Harvey Hall and opened by the Lord Provost of Glasgow at an event at our Govan shipyard. \n \n Looking forward \n \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 programmes. \n -         We will continue to work alongside ASC Pty Ltd to deliver initial mobilisation activities to support Australia's SSN-AUKUS programme. \n -         Preparations for the commencement of the construction of the sixth Type 26 frigate, HMS Newcastle, are well underway with long-lead equipment items already in progress . \n -         In Australia, we are a key partner to the Commonwealth in the delivery of its National Defence Strategy, 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 this. \n -         Our Defence Solutions business has exported the second Commander SL radar to an international customer. We have a number of exciting technology programmes in development, including our Next Generation Explosives, fusing and adaptable ammunition. \n \n   \n \n \n Segmental performance: Cyber & Intelligence \n \n \n Cyber & Intelligence, with 10,800 1 employees, comprises the US‑based Intelligence & Security business and UK‑headquartered Digital Intelligence business, which covers the Group's cyber security activities for national security, central government and government enterprises. \n \n \n Financial performance \n \n \n \n \n \n \n \n Financial performance measures defined by the Group 2 \n \n \n \n \n \n \n Financial performance measures derived from IFR...

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