Results for the six months ended 30 September 2025

About this update from Babcock International Group Plc

[{"type":"text","content":"\n \n Babcock International Group PLC Half year results for the six months ended 30 September 2025 \n This announcement contains inside information \n 21 November 2025 \n Consistent delivery underpins growth and margin expansion \n \n \n \n \n Statutory results \n \n \n 30 September \n 2025 \n \n \n 30 September \n 2024 \n \n \n \n \n Revenue \n \n \n £2,538.6m \n \n \n £2,408.9m \n \n \n \n \n Operating profit \n \n \n £234.3m \n \n \n £183.8m \n \n \n \n \n Basic earnings per share \n \n \n 33.7p \n \n \n 25.7p \n \n \n \n \n Interim dividend per share \n \n \n 2.5p \n \n \n 2.0p \n \n \n \n \n Cash generated from operations \n \n \n £226.9m \n \n \n £181.3m \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n Underlying results 1 \n \n \n 30 September \n 2025 \n \n \n 30 September \n 2024 \n \n \n \n \n Contract backlog \n \n \n £9.9bn \n \n \n £9.5bn \n \n \n \n \n Underlying operating profit \n \n \n £201.1m \n \n \n £168.8m \n \n \n \n \n Underlying operating margin \n \n \n 7.9% \n \n \n 7.0% \n \n \n \n \n Underlying basic earnings per share \n \n \n 28.5p \n \n \n 23.5p \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Underlying free cash flow \n \n \n £140.6m \n \n \n £94.7m \n \n \n \n \n Net debt \n \n \n £(351.1)m \n \n \n £(385.6)m \n \n \n \n \n Net debt excluding leases \n \n \n £(55.8)m \n \n \n £(145.8)m \n \n \n \n \n Net debt/EBITDA (covenant basis) \n \n \n 0.2x \n \n \n 0.6x \n \n \n \n \n David Lockwood, Chief Executive Officer, said: \n \"Thanks to the skills and dedication of our people, Babcock continued its track record of profitable growth with a strong performance in the first half. Good momentum was underpinned by consistent delivery for our customers against a background of supportive market dynamics. \n \"We are on track to achieve our expectations for the full year and are pursuing exciting opportunities for sustainable growth and margin expansion, both in the UK and internationally.\" \n Good performance in first half, full year expectations unchanged \n •      Contract backlog : £9.9 billion, reflecting significant Land and Aviation orders in 2H25 (FY25: £10.4 billion) \n •      Revenue : 7% organic growth driven by Nuclear, with lower volumes in Land Civil businesses \n •      Statutory operating profit : up 27%, including derivative revaluation and recovery of loan granted on disposal \n •      Underlying operating profit : up 19%, driven by strong performance in Nuclear and Marine \n •      Underlying operating margin : up 90 basis points to 7.9%, with increases in all sectors \n •      Underlying EPS : up 21% to 28.5p, reflecting higher underling operating profit and lower interest charge \n •      Underlying free cash flow : £141 million, with underlying operating cash conversion of 83% \n •      Net debt excluding leases reduced by £90 million to £56 million, a gearing ratio of 0.2x (FY25: 0.3x) \n •      Interim dividend : up 25% to 2.5 pence per share (HY25: 2.0 pence) \n Consistent delivery driving growth and margin expansion \n •      On track to deliver FY26 target margin of 8% and medium-term target of >9% \n •      The first of five Type 31 frigates completed float-off, while the third ship commenced its assembly phase \n •      Re-opened Devonport's 15 Dock facility, marking the return of twin streaming submarine maintenance capability \n •      Successfully mobilised DSG, the follow-on £1.0 billion, five-year British Army vehicle support contract \n •      Mobilisation of 17-year Mentor 2 military air training contract in France progressing to plan \n Market dynamics supporting growth in UK and Internationally across defence and nuclear   \n •      Secured £114 million three-year contract to prepare for the first nuclear defueling of a decommissioned Trafalgar Class submarine in over 20 years \n •      Signed a teaming agreement with Patria to offer its 6x6 armoured personnel carrier to the UK Armed Forces \n •      Over £50 million in new orders secured for Skynet services \n •      Agreement with Hanwha Ocean to be In-Service Support partner on the Canadian Patrol Submarine Project  \n •      MOU with HII to deliver autonomous launch and recovery of unmanned underwater vehicles  \n •      Secured a first ever defence contract in South Africa, for submarine support \n •      Awarded new 10-year contract alongside Airbus Helicopters to deliver in-service support to 46 new H145 helicopters for the French Government \n Strong balance sheet and consistent cash generation underpins disciplined capital allocation with active pipeline of organic and inorganic opportunities \n •      Ongoing buyback of £200 million in train - £49 million completed in the first half \n •      Organic investment opportunities including further investment in our advanced manufacturing capabilities and shipbuilding capacity at our Rosyth facility \n •      Assessing pipeline of inorganic investment opportunities in line with our disciplined M&A strategy \n FY26 outlook \n •      Our expectations for FY26 are unchanged. We expect to achieve an underlying operating margin of 8%, with good progress to towards the medium-term guidance we set in June 2025: average revenue growth of mid-single digit, underlying margin of at least 9%, and average underlying operating cash conversion of at least 80%. \n   \n See page 14 for segmental analysis \n   \n Notes to statutory and underlying results on page 1 \n 1.    Alternative Performance Measures (APMs): \n The Group provides alternative performance measures (APMs), including underlying operating profit, underlying margin, underlying earnings per share, underlying operating cash flow, underlying free cash flow, net debt, net debt excluding leases and contract backlog, to enable users to have a more consistent view of the performance and earnings trends of the Group. These measures are considered to provide a consistent measure of business performance from year to year. They are used by management to assess operating performance and as a basis for forecasting and decision-making, as well as the planning and allocation of capital resources. They are also understood to be used by investors in analysing business performance. \n The Group's APMs are not defined by IFRS and are therefore considered to be non-GAAP measures. The measures may not be comparable to similar measures used by other companies, and they are not intended to be a substitute for, or superior to, measures defined under IFRS. The Group's APMs are consistent with those for the year ended 31 March 2025. The Group has defined and outlined the purpose of its APMs in the Financial Glossary on page 25. \n   \n The person responsible for arranging for the release of this announcement on behalf of the Company is Jack Borrett, the Corporate Secretary, Babcock International \n Results presentation: \n A presentation for investors and analysts will be held on 21 November at 09:00 am (BST). The presentation will be webcast live and will be available on demand at www.babcockinternational.com/investors/results-and-presentations . A transcript of the presentation and Q&A will also be made available on our website. \n For further information: \n \n \n \n \n Andrew Gollan, Director of Investor Relations \n \n \n +44 (0)7850 978 741 \n \n \n \n \n Kate Hill, Group Head of Financial Communications \n \n \n +44 (0)20 7355 5312 \n \n \n \n \n Harry Cameron/Camilla Cunningham, Teneo \n \n \n +44 (0)20 7353 4200 \n \n \n \n \n \n \n CEO review \n Introduction \n The first half of FY26 saw good growth, higher margins and strong cash generation, with the Group on track to meet full year expectations. This was driven by successful delivery for our customers through the period, against a background of significant developments in our core defence and security markets. \n Our specialist capabilities continue to be highly relevant in the current uncertain geopolitical environment. With a clear strategy and a disciplined approach to capital allocation, we are positioning for opportunities that will sustain profitable growth over the long term. \n Good performance in HY26 underpins FY expectations \n Babcock delivered another good performance in HY26 in line with expectations, with year-on-year increases across our key financial measures, including organic revenue, margin and cash generation. \n Group revenue increased organically 1 7% with Nuclear, our largest division, the standout contributor. Underlying operating profit 1 increased 19%, resulting in a 90 basis points increase in underlying operating margin 1 to 7.9% with all sectors contributing to the increase: good progress towards our FY26 target of 8% and medium-term target of at least 9%. \n Cash conversion 1 of 83% remained in line with our medium-term target. This, together with lower pension deficit payments following the long-term funding arrangements reached in FY25, drove a 48% increase in underlying free cash flow 1 to £141 million. We executed £49 million of the £200 million share buyback programme by 30 September. \n We have maintained a strong balance sheet, ending the period with net debt including leases 1 of £351 million (FY25: £373 million) and a gearing ratio (net debt to EBITDA 1 ) of 0.2x (FY25: 0.3x) on a covenant basis. \n Consistent delivery driving growth and margin expansion \n Consistent delivery for our customers is central to our strategic ambitions. The period saw organic revenue growth in line with our guidance, and margin improvement in all four divisions. \n In Marine, 6% organic revenue growth 1 was driven by our LGE business following record order wins in FY25 and further growth in the Skynet contract. As a result, divisional margin improved 160 basis points to 6.7%. \n We achieved high output levels in our advanced manufacturing operations at our facilities in Bristol and Rosyth with the commencement of continuous production of integrated missile tube assemblies and handling systems for the US Columbia Class and the UK Dreadnought Class submarine programmes. \n Nuclear's performance was particularly strong, delivering 14% organic revenue growth 1 , continuing the positive trends across the sector. In defence nuclear, growth from higher submarine support volumes more than offset the anticipated decline in major infrastructure programme (MIP) revenue. In civil nuclear, our higher margin Cavendish Nuclear business grew 25%, benefitting from further strong growth in clean energy, primarily from the ramp up of major project work at Hinkley Point C. Through this combination of growth, mix and execution, Nuclear is the first division to reach our medium-term Group margin target of at least 9%. \n We continue to execute the UK Government's multi-year, multi-billion investment in upgrading nuclear submarine infrastructure through the MIP. This investment programme, which will improve submarine availability, has enabled us to make good progress on the first Astute Class Base Maintenance Period and the Deep Maintenance Period contract to life-extend the second nuclear deterrent submarine HMS Victorious. \n Our Land underlying operating margin 1 increased 20 basis points to 7.9% despite lower revenues in our Rail and Africa civil businesses. We mobilised the follow-on £1.0 billion, five-year DSG vehicle support contract in the period, cementing our position as a Strategic Partner to the British Army. We also completed the first tranche of the Jackal 3 High Mobility Transporter programme and commenced production of tranche 2, comprising 53 six-wheeled 'Extenda' variants. \n Finally, Aviation delivered 26% organic revenue growth 1 . This was driven by the rapid ramp up of major new international contracts - Mentor 2 and MCO 145-C2 in France and BC HEMS in Canada - as well as scope growth in existing UK military aviation contracts. These drove a 240 basis point improvement in underlying operating margin, to 7.2%. \n Overall, we have made considerable progress towards our full year underlying operating margin 1 target of 8.0%. We remain focused on driving margin to at least 9% over the medium term, through growth from higher quality business and continued efficiencies from ongoing productivity and investment initiatives. \n Market dynamics supporting growth \n Governments across our markets continue to focus on defence and security as geopolitical uncertainty continues. There is a clear recognition of the need for investment in defence capabilities, energy security, increased sovereignty and industrial resilience. However, this commitment to defence is against a backdrop of fiscal strain, which increases the relevance of Babcock's focus on affordability, availability and capability. As a long-standing, strategic partner to the UK and other governments, and with growing partnerships and relationships across the supply chain, Babcock is well positioned to deliver not only sovereign defence solutions but to contribute to wider economic growth. \n After setting out its defence and security priorities in the Strategic Defence Review in June 2025, the UK Government published its Defence Industrial Strategy (DIS) in September. Babcock welcomed initiatives including: publication of five-year procurement pipelines which offer greater visibility and predictability of upcoming MOD capability needs, an increase in funding for skills, and the announcement of a Defence Growth Deal for Plymouth, where Babcock plays a key anchoring role in the local economy through our Devonport dockyard. \n Our work at Devonport is an example of where we are critical to both national security and regional prosperity. Focused activity has culminated in the creation of 'Team Plymouth', a partnership between defence, industry, academia and local and national government, with Plymouth set to benefit from a share of £250 million to support regeneration as one of five key growth areas identified in the strategy. In June, we published a blueprint for regional regeneration which included our plan to relocate 2,000 employees from Devonport support functions to create a new capability hub in Plymouth city centre. \n By reinforcing sovereign capability and fostering strategic industry-government alignment, the DIS creates a more stable and attractive environment for UK's defence industry to invest for the long-term, creating significant opportunities for growth. \n Strategic progress and longer-term growth \n Our contract backlog stood at £9.9 billion at 30 September, slightly down compared to the start of the year (FY25: £10.4 billion), reflecting the large order intake in the 2H25 - DSG and Mentor 2. We continue to address an expanding longer-term opportunity set, and to secure partnerships and collaborations with leading global industry players across our portfolio, to drive future growth in both our domestic and international markets. \n In Marine, we signed an agreement with South Korea's Hanwha Ocean to be its exclusive in-service support partner for the new Canadian Patrol Submarine Project (CPSP). This follows Hanwha Ocean's selection as one of two qualified suppliers by the Government of Canada. We also signed a partnership agreement with US defence prime HII to deliver autonomous launch and recovery of Unmanned Underwater Vehicles via our leading submarine weapons launch handling system. \n We are bidding for several new multi-billion-pound international shipbuilding opportunities, as well as working with existing Government customers such as Indonesia and Poland, and strategic partners on additional naval programme and marine support opportunities. \n In Nuclear, we progressed our nuclear submarine disposal work following award of a £114 million, three-year contract to support the first defueling of a decommissioned British nuclear submarine in over 20 years. Under the contract we will work collaboratively with the UK Defence Nuclear Enterprise and industry partners to prepare for the defuel of four decommissioned submarines at our Devonport facility from 2026. \n We continue to make good progress on commercial discussions on the follow-on to our largest contract, Future Maritime Support Programme (FMSP) to support the UK nuclear submarine fleet, which completes at the end of FY26. In Australia, our joint venture with HII signed an MOU with the Victorian Government to build a skilled workforce and strengthen the supply chain for the AUKUS programme. \n In the civil nuclear market, notable developments in the first half, including the UK Government's commitment to full funding for the new nuclear Sizewell C power station, should lead to opportunities across our Cavendish Nuclear business. In the small modular reactor (SMR) sector, Great British Energy-Nuclear (GBE-N) has launched its wider procurement programme, and we are now tendering to provide engineering services. In addition, following the announcement of X-energy and Centrica's Joint Development Agreement to deploy X-energy's Xe-100 Advanced Modular Reactors (AMRs) in the UK, we are in dialogue concerning further support building on our work co-funded by the UK Government's Future Nuclear Enabling Fund. In fuels, our support to the UK front-end nuclear fuel cycle continues to grow through engineering design projects with Westinghouse and Urenco. \n In Land, our product strategy is gaining momentum. We signed a teaming agreement with Finnish company Patria to be the build partner for its armoured personnel carrier in the UK. Now that the UK MOD has joined the European Common Armoured Vehicle System (CAVS) programme, this paves the way for us to expand our footprint within the Plymouth and South Devon Freeport to satisfy the full UK build requirement for the 6×6 vehicle and support the British Army's export ambitions as part of the Land Industrial Strategy. \n After the period end, we secured our first ever defence contract in South Africa, in submarine support. While small in the context of the Group, it is an important development, with defence now a strategic focus for our long-established South African business. This success was achieved through the combination of our strong local presence and specialist capabilities in the support of complex naval vessels. \n Disciplined capital allocation - delivering both growth and returns \n We have a clear and consistent capital allocation framework that is focused on maximising shareholder value. With a strong balance sheet, we have the financial capacity to invest in the growing opportunity set and make returns to shareholders. \n Investment for growth : organic investment remains our first capital allocation priority, and we see a significant number of attractive opportunities to sustain long-term shareholder value creation. In addition to ongoing investment in the business to further improve overall quality and delivery, we are assessing several material capex opportunities across the portfolio. \n These include further investment in our advanced manufacturing capabilities and increased shipbuilding capacity at our Rosyth facility to address emerging naval programme opportunities. We are also investigating a number of innovative proposals that would see us investing alongside our government customers, for example in infrastructure or 'build and operate' models, to drive their defence agendas and deliver the capabilities they require at an acceptable value. We will update the market at the appropriate time as and when such opportunities mature. \n Inorganic investment : We continue to be active in assessing inorganic investment opportunities in line with our disciplined M&A strategy, targeting bolt-on complementary businesses to support future organic growth potential. \n Shareholder returns : Paying a regular and progressive dividend to our shareholders remains a capital allocation priority. The Board has recommended an interim dividend of 2.5 pence per share, a 25% increase on HY25. We expect to complete the £200 million share buyback programme by the year end, having repurchased approximately c.£49 million shares as at 30 September. We continually assess our capital allocation requirements and will consider additional shareholder returns should we determine that we have surplus capital, after considering our investment priorities. \n Outlook \n Our expectations for FY26 are unchanged. We expect to achieve an underlying operating margin of 8%, with good progress to towards the medium-term guidance we set in June 2025: average revenue growth of mid-single digit, underlying margin of at least 9%, and average underlying operating cash conversion of at least 80% . \n   \n David Lockwood \n Chief Executive \n   \n   \n   \n Other information \n Dividend \n An interim dividend of 2.5 pence per ordinary share (HY25: 2.0 pence per share) is payable on 16 January 2026 to shareholders whose names appear on the register at the close of business on 5 December 2025. Shareholders may participate in the dividend re-investment plan and elections must be made by 23 December 2025. Details of the dividend re-investment plan can be found, and shareholders can make elections, at www.babcock-shares.com. \n Notes to CEO Stateme nt \n 1.   A defined Alternative Performance Measure (APM) as set out on page 2 and in the Financial Glossary on page 25. \n   \n Financial review \n The Group provides alternative performance measures (APMs), including underlying operating profit, underlying margin, underlying earnings per share, underlying operating cash flow, underlying free cash flow, net debt and net debt excluding leases, to enable users to have a more consistent view of the performance and earnings trends of the Group. These measures are considered to provide a consistent measure of business performance from year to year. They are used by management to assess operating performance and as a basis for forecasting and decision-making, as well as the planning and allocation of capital resources. They are also understood to be used by investors in analysing business performance. \n The Group's APMs are not defined by IFRS and are therefore considered to be non-GAAP measures. The measures may not be comparable to similar measures used by other companies, and they are not intended to be a substitute for, or superior to, measures defined under IFRS. The Group's APMs are consistent with the year ended 31 March 2025. The Group has defined and outlined the purpose of its APMs in the Financial Glossary on page 25. \n The reconciliation from the IFRS statutory income statement to the underlying income statement is shown below. \n Income statement \n \n \n \n \n   \n \n \n 30 September 2025 \n \n \n 30 September 2024 \n \n \n \n \n Underlying \n£m \n \n \n Specific adjusting items \n£m \n \n \n Statutory \n£m \n \n \n Underlying \n£m \n \n \n Specific adjusting items \n£m \n \n \n Statutory \n£m \n \n \n \n \n Revenue \n \n \n 2,538.6 \n \n \n - \n \n \n 2,538.6 \n \n \n 2,408.9 \n \n \n - \n \n \n 2,408.9 \n \n \n \n \n Operating profit \n \n \n 201.1 \n \n \n 33.2 \n \n \n 234.3 \n \n \n 168.8 \n \n \n 15.0 \n \n \n 183.8 \n \n \n \n \n Operating margin \n \n \n 7.9% \n \n \n \n \n \n 9.2% \n \n \n 7.0% \n \n \n   \n \n \n 7.6% \n \n \n \n \n Share of results of joint ventures and associates \n \n \n 4.2 \n \n \n - \n \n \n 4.2 \n \n \n 5.1 \n \n \n - \n \n \n 5.1 \n \n \n \n \n Net finance costs \n \n \n (13.5) \n \n \n 1.3 \n \n \n (12.2) \n \n \n (16.8) \n \n \n (0.1) \n \n \n (16.9) \n \n \n \n \n Profit before tax \n \n \n 191.8 \n \n \n 34.5 \n \n \n 226.3 \n \n \n 157.1 \n \n \n 14.9 \n \n \n 172.0 \n \n \n \n \n Income tax (expense) \n \n \n (49.3) \n \n \n (8.5) \n \n \n (57.8) \n \n \n (38.4) \n \n \n (3.6) \n \n \n (42.0) \n \n \n \n \n Profit after tax \n \n \n 142.5 \n \n \n 26.0 \n \n \n 168.5 \n \n \n 118.7 \n \n \n 11.3 \n \n \n 130.0 \n \n \n \n \n Non-controlling interest \n \n \n (0.8) \n \n \n - \n \n \n (0.8) \n \n \n 0.7 \n \n \n - \n \n \n 0.7 \n \n \n \n \n Profit attributable to the owners of the parent \n \n \n 143.3 \n \n \n 26.0 \n \n \n 169.3 \n \n \n 118.0 \n \n \n 11.3 \n \n \n 129.3 \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 Basic EPS \n \n \n 28.5p \n \n \n 5.2p \n \n \n 33.7p \n \n \n 23.5p \n \n \n 2.2p \n \n \n 25.7p \n \n \n \n \n Diluted EPS \n \n \n 28.0p \n \n \n 5.0p \n \n \n 33.0p \n \n \n 23.0p \n \n \n 2.2p \n \n \n 25.2p \n \n \n \n \n A full statutory income statement can be found on page 35. \n As described on page 2, statutory operating profit includes specific adjusting items (SAIs) that are not included in underlying operating profit, which is a key APM for the Group. A reconciliation of statutory operating profit to underlying operating profit is shown in the table below and in note 2 of the interim financial statements. \n Revenue of £2,539 million grew 7% organically offset by a (1)% currency translation effect. The increase was driven by strong growth in Nuclear followed by Aviation and Marine, while Land was down year on year due to our Civil businesses. See segmental tables on page 14: \n •      Marine revenue increased 6% (at constant FX) to £823 million due to higher volumes in our LGE business and growth of the Skynet programme, offset by lower ship support volumes in the UK. \n •      Nuclear revenue increased 14% (at constant FX) to £989 million as submarine support activity grew strongly under the Future Maritime Support Programme (FMSP) programme and Civil Nuclear grew 25% as new projects ramped up, more than offsetting a reduction from the timing of Major Infrastructure Programme (MIP) revenue across the year. \n •      Land revenue decreased 10% (at constant FX) to £526 million due to lower volumes in our Civil businesses, particularly Rail following the completion of a number of delivery projects, and Africa where mining equipment sales have reduced. \n •      Aviation revenue increased 26% (at constant FX) to £201 million due to scope increases in UK military support contracts, the ramp up of the Mentor 2 programme in France and the start of the British Colombia HEMS contract in Canada. \n Underlying operating profit increased by 19% to £201.1 million driven by strong performance in Nuclear and Marine . As a result, underlying operating margin increased to 7.9% (HY25: 7.0%). See segmental tables on page 14: \n •      Marine underlying operating profit increased 38% to £55.3 million due to growth in LGE and Skynet and the completion of certain support activities. As a result, underlying operating margin increased to 6.7% (HY25: 5.1%). \n •      Nuclear underlying operating profit increased 18% to £89.7 million due to the revenue growth as well as some contract changes and risk retirement on project milestones. As a result, underlying operating margin increased to 9.1% (HY25: 8.7%). \n •      Land underlying operating profit decreased 8% to £41.6 million due to the lower volumes in Rail and Africa and some contract recoveries in the prior period. Despite this, underlying operating margin increased slightly to 7.9% (HY25: 7.7%). \n •      Aviation underlying operating profit increased 88% to £14.5 million, reflecting mix, improved project profitability, programme timing and contract renegotiations, including price. As a result, underlying operating margin increased to 7.2% (HY25: 4.8%). \n Further analysis of financial performance is included in each sector's operational review starting on page 15 . \n Statutory operating profit increased to £234.3 million (HY25: £183.8 million) due to the increase in underlying operating profit, the revaluation of derivatives and the final recovery of loan receivables originating from the disposal of the Civil Training business in FY23. As a result, statutory operating margin increased to 9.2% (HY25: 7.6%). \n Reconciliation of statutory to underlying operating profit \n \n \n \n \n   \n \n \n 30 September 2025 \n£m \n \n \n 30 September 2024 \n£m \n \n \n \n \n Statutory operating profit \n \n \n 234.3 \n \n \n 183.8 \n \n \n \n \n Amortisation of acquired intangibles \n \n \n 5.7 \n \n \n 4.4 \n \n \n \n \n Business acquisition, merger and divestment related items \n \n \n (8.5) \n \n \n - \n \n \n \n \n Curtailment gain on pension scheme closure \n \n \n - \n \n \n (0.3) \n \n \n \n \n Exceptional items \n \n \n (2.1) \n \n \n - \n \n \n \n \n Fair value movement on derivatives \n \n \n (28.3) \n \n \n (19.1) \n \n \n \n \n Specific adjusting items impacting operating profit \n \n \n (33.2) \n \n \n (15.0) \n \n \n \n \n Underlying operating profit \n \n \n 201.1 \n \n \n 168.8 \n \n \n \n \n Share of joint ventures and associates on a statutory basis was a profit of £4.2 million (HY25: profit of £5.1 million). \n Net finance costs \n •      Underlying net finance costs decreased to £13.5 million (HY25: £16.8 million) due to higher interest earned on surplus cash balances and lower interest cost on pension liabilities, offset by the additional interest charge on new lease liabilities. \n •      Statutory net finance costs decreased to £12.2 million (HY25: £16.9 million), reflecting the items above and the fair value movement of derivatives which hedge interest cost. \n Income tax expense \n •      Underlying income tax expense increased to £49.3 million (HY25: £38.4 million) due to higher underlying operating profit and lower underlying net finance costs. This represents an effective underlying tax rate of 26.3% (HY25: 25.3%), calculated using underlying profit before tax excluding the share of income from joint ventures and associates (which is a post-tax number). The Group's effective underlying tax rate is expected to remain broadly stable over the medium term depending on country profit mix. \n •      Statutory income tax expense increased to £57.8 million (HY25: £42.0 million), higher than underlying income tax expense due to the tax impact of the specific adjusting items outlined above. \n Basic earnings per share \n •      Underlying basic earnings per share increased 21% to 28.5 pence (HY25: 23.5 pence), reflecting higher underlying operating profit and lower underlying net finance costs. \n •      Basic earnings per share on a statutory basis increased 31% to 33.7 pence (HY25: 25.7 pence) due to the improvement in underlying earnings per share and the post tax impact of the specific adjusting items outlined above. \n   \n Reconciliation of statutory profit and basic EPS to underlying profit and basic EPS \n \n \n \n \n   \n \n \n 30 September 2025 \n \n \n 30 September 2024 \n \n \n \n \n   \n \n \n £m \n \n \n Basic EPS \n \n \n £m \n \n \n Basic EPS \n \n \n \n \n Statutory profit after tax for the year \n \n \n 168.5 \n \n \n 33.7p \n \n \n 130.0 \n \n \n 25.7p \n \n \n \n \n Specific adjusting items, net of tax \n \n \n (26.0) \n \n \n (5.2)p \n \n \n (11.3) \n \n \n (2.2)p \n \n \n \n \n Underlying profit after tax for the year \n \n \n 142.5 \n \n \n 28.5p \n \n \n 118.7 \n \n \n 23.5p \n \n \n \n \n   \n Dividend per share \n The Board has recommended an interim dividend of 2.5 pence per ordinary share (HY25: 2.0 pence), a 25% increase. \n Exchange rates \n The translation impact of foreign currency movements resulted in a decrease in revenue of £23 million and a decrease in underlying operating profit of £1 million. The main currencies that have impacted our results are the Australian Dollar, Canadian Dollar, Euro, New Zealand Dollar and South African Rand. The currencies with the greatest potential to impact results are the South African Rand, the Australian Dollar, the Euro and the Canadian Dollar: \n •      A 10% movement in the South African Rand against Sterling would affect revenue by around £34 million and underlying operating profit by around £ 3 million per annum \n •      A 10% movement in the Australian Dollar against Sterling would affect revenue by around £29 million and underlying operating profit by around £ 1 million per annum \n •      A 10% movement in the Euro against Sterling would affect revenue by around £ 16 million and underlying operating profit by around £ 1 million per annum \n •      A 10% movement in the Canadian Dollar against Sterling would affect revenue by around £18 million and underlying operating profit by around £ 2 million per annum \n Cash flow and net debt \n Underlying cash flow and net debt \n Underlying cash flows are used by the Group to measure operating performance as they provide a more consistent measure of business performance from year to year. \n \n \n \n \n   \n \n \n 30 September 2025 \n \n \n 30 September 2024 \n \n \n \n \n   \n \n \n £m \n \n \n £m \n \n \n \n \n Statutory operating profit \n \n \n 234.3 \n \n \n 183.8 \n \n \n \n \n Add back: specific adjusting items (see table on page 6) \n \n \n (33.2) \n \n \n (15.0) \n \n \n \n \n Underlying operating profit \n \n \n 201.1 \n \n \n 168.8 \n \n \n \n \n Right of use asset depreciation & impairment \n \n \n 25.0 \n \n \n 19.3 \n \n \n \n \n Other depreciation & amortisation \n \n \n 39.2 \n \n \n 34.8 \n \n \n \n \n Non-cash items \n \n \n 6.3 \n \n \n 10.0 \n \n \n \n \n Working capital movements \n \n \n (31.8) \n \n \n (13.4) \n \n \n \n \n Provisions \n \n \n (5.4) \n \n \n (14.3) \n \n \n \n \n Net capital expenditure \n \n \n (45.5) \n \n \n (47.5) \n \n \n \n \n Lease principal payments \n \n \n (22.8) \n \n \n (22.8) \n \n \n \n \n Underlying operating cash flow \n \n \n 166.1 \n \n \n 134.9 \n \n \n \n \n Underlying operating cash conversion (%) \n \n \n 83% \n \n \n 80% \n \n \n \n \n Pension contributions in excess of income statement \n \n \n (7.4) \n \n \n (23.9) \n \n \n \n \n Interest paid (net) \n \n \n (12.8) \n \n \n (11.9) \n \n \n \n \n Tax paid \n \n \n (12.4) \n \n \n (16.2) \n \n \n \n \n Dividends from joint ventures and associates \n \n \n 7.1 \n \n \n 11.8 \n \n \n \n \n Underlying free cash flow \n \n \n 140.6 \n \n \n 94.7 \n \n \n \n \n Net acquisitions and disposals of subsidiaries \n \n \n 8.5 \n \n \n - \n \n \n \n \n Dividends paid (including non-controlling interests) \n \n \n (23.0) \n \n \n (16.6) \n \n \n \n \n Purchase of own shares \n \n \n (65.1) \n \n \n (13.3) \n \n \n \n \n Purchase of other investments \n \n \n (2.1) \n \n \n - \n \n \n \n \n Lease principal payments \n \n \n 22.8 \n \n \n 22.8 \n \n \n \n \n Net new lease arrangements \n \n \n (55.4) \n \n \n (38.2) \n \n \n \n \n Other non-cash debt movements \n \n \n (2.4) \n \n \n (1.2) \n \n \n \n \n Fair value movement in debt and related derivatives \n \n \n 5.6 \n \n \n (5.9) \n \n \n \n \n Exchange movements \n \n \n (7.3) \n \n \n 7.5 \n \n \n \n \n Movement in net debt \n \n \n 22.2 \n \n \n 49.8 \n \n \n \n \n Opening net debt \n \n \n (373.3) \n \n \n (435.4) \n \n \n \n \n Closing net debt \n \n \n (351.1) \n \n \n (385.6) \n \n \n \n \n Add back: leases \n \n \n 295.3 \n \n \n 239.8 \n \n \n \n \n Closing net debt excluding leases \n \n \n (55.8) \n \n \n (145.8) \n \n \n \n \n A full statutory cash flow statement can be found on page 38 and a reconciliation to net debt on page 11 . \n Underlying operating cash flow increased 23% to £166.1 million (HY25: £134.9 million) largely due to the increase in underlying operating profit. The conversion ratio of underlying operating cash to underlying operating profit was 83% (HY25: 80%), reflecting an increase in working capital due to slightly increased inventory and the timing of indirect tax payment cycles. Gross capex of £71.1 million (HY25: £50.6 million) represents continued investment in our operations and systems, particularly in Devonport, and c.£20 million of payments for aircraft which were offset by a broadly similar amount of aircraft disposal proceeds. Net capex of £45.5 million (HY25: £47.5 million) was slightly ahead of depreciation. Capital expenditure is reconciled in the financial glossary on page 25. \n Underlying free cash flow increased to £140.6 million (HY25: £94.7 million), reflecting higher underlying operating cash flow and lower pension deficit repair contributions following the agreement of long-term funding arrangements for our three main schemes. Most of our pension, interest and tax payments are made in the second half of the year. \n Acquisitions and disposals \n Cash receipts and related fair value gains of £8.5 million arose on the final settlement of loan receivables originating from the disposal of the Civil Training business in FY23. These are not included within underlying operating profit or underlying free cash flow. \n New lease arrangements \n In addition to net capital expenditure, and not included in underlying free cash flow, £55.4 million (HY25: £38.2 million) of net new lease arrangements were entered into in the period, primarily relating to aircraft to support new contracts in Canada and Australia. These new lease arrangements are therefore included in net debt, but do not involve any cash outflows at inception. \n   \n Reconciliation of underlying operating cash flow to statutory net cash flows from operating activities \n \n \n \n \n   \n \n \n 30 September 2025 \n£m \n \n \n 30 September 2024 \n£m \n \n \n \n \n Underlying operating cash flow \n \n \n 166.1 \n \n \n 134.9 \n \n \n \n \n Add: net capital expenditure \n \n \n 45.5 \n \n \n 47.5 \n \n \n \n \n Add: lease principal payments \n \n \n 22.8 \n \n \n 22.8 \n \n \n \n \n Less: pension contributions in excess of income statement \n \n \n (7.4) \n \n \n (23.9) \n \n \n \n \n Less: Non-operating cash items (excluded from underlying cash flow) \n \n \n (0.1) \n \n \n - \n \n \n \n \n Cash generated from operations \n \n \n 226.9 \n \n \n 181.3 \n \n \n \n \n Tax paid \n \n \n (12.3) \n \n \n (16.2) \n \n \n \n \n Net interest paid \n \n \n (12.8) \n \n \n (11.9) \n \n \n \n \n Net cash flows from operating activities \n \n \n 201.8 \n \n \n 153.2 \n \n \n \n \n   \n Statutory cash flow summary \n \n \n \n \n   \n \n \n 30 September 2025 \n£m \n \n \n 30 September 2024 \n£m \n \n \n \n \n Net cash flow from operating activities \n \n \n 201.8 \n \n \n 153.2 \n \n \n \n \n Net cash flow from investing activities \n \n \n (31.7) \n \n \n (35.6) \n \n \n \n \n Net cash flow from financing activities \n \n \n (113.6) \n \n \n (53.0) \n \n \n \n \n Net increase in cash, cash equivalents and bank overdrafts \n \n \n 56.5 \n \n \n 64.6 \n \n \n \n \n Net cash flow from operating activities increased to £201.8 million (HY25: £153.2 million) due to higher underlying operating cash flow and lower pension deficit payments. \n Net cash flow from investing activities was an outflow of £31.7 million (HY25: outflow of £35.6 million). The decrease relates to the final settlement of loan receivables originating from the disposal of the Civil Training business, offset by higher net capex. \n Net cash flow from financing activities was an outflow of £113.6 million (HY25: outflow of £53.0 million), including £22.8 million lease principal payments (HY25: £22.8 million), £23.0 million dividends paid (HY25: £16.6 million) and £65.1 million purchase of own shares (HY25: £13.3 million). \n   \n Movement in net debt - reconciliation of statutory cash flows to net debt \n \n \n \n \n   \n \n \n 30 September 2025 \n£m \n \n \n 30 September 2024 \n£m \n \n \n \n \n Net increase in cash, cash equivalents and bank overdrafts \n \n \n 56.5 \n \n \n 64.6 \n \n \n \n \n Cash flow from the decrease in debt \n \n \n (3.8) \n \n \n 15.4 \n \n \n \n \n Change in net funds resulting from cash flows \n \n \n 52.7 \n \n \n 80.0 \n \n \n \n \n Additional lease obligations \n \n \n (45.7) \n \n \n (39.5) \n \n \n \n \n New lease receivables granted \n \n \n 19.3 \n \n \n 8.9 \n \n \n \n \n Other non-cash movements and changes in fair value \n \n \n 3.2 \n \n \n (7.1) \n \n \n \n \n Foreign currency translation differences \n \n \n (7.3) \n \n \n 7.5 \n \n \n \n \n Movement in net debt in the period \n \n \n 22.2 \n \n \n 49.8 \n \n \n \n \n Opening net debt \n \n \n (373.3) \n \n \n (435.4) \n \n \n \n \n Closing net debt \n \n \n (351.1) \n \n \n (385.6) \n \n \n \n \n   \n Net debt \n Net debt at 30 September 2025 was £351.1 million, a reduction of £22.2 million from the position at the start of the year driven by underlying free cash flow offset by dividend payments of £23.0 million, £65.1 million to purchase own shares and net new leases of £26.4 million. Net debt excluding leases was £55.8 million. \n   \n Components of net debt \n \n \n \n \n   \n \n \n 30 September 2025 \n£m \n \n \n 31 March 2025 \n£m \n \n \n \n \n Cash and cash equivalents \n \n \n 704.7 \n \n \n 646.5 \n \n \n \n \n Current liabilities - bank debt and other loans \n \n \n (299.4) \n \n \n (0.5) \n \n \n \n \n Non-current liabilities - bank debt and other loans \n \n \n (473.7) \n \n \n (750.7) \n \n \n \n \n Other debt instruments (includes loans to JVs) \n \n \n (21.1) \n \n \n (38.6) \n \n \n \n \n Net finance leases \n \n \n 33.7 \n \n \n 42.1 \n \n \n \n \n Closing net debt excluding leases \n \n \n (55.8) \n \n \n (101.2) \n \n \n \n \n Include leases \n \n \n (295.3) \n \n \n (272.1) \n \n \n \n \n Closing net debt \n \n \n (351.1) \n \n \n (373.3) \n \n \n \n \n   \n Summarised balance sheet \n \n \n \n \n   \n \n \n 30 September 2025 \n£m \n \n \n 31 March 2025 \n£m \n \n \n \n \n Intangible assets \n \n \n 916.4 \n \n \n 920.6 \n \n \n \n \n Property, plant and equipment and right of use assets \n \n \n 826.3 \n \n \n 787.7 \n \n \n \n \n Investment in joint ventures, associates and other investments \n \n \n 43.2 \n \n \n 43.5 \n \n \n \n \n Assets held for sale \n \n \n 3.0 \n \n \n - \n \n \n \n \n Working capital \n \n \n (657.3) \n \n \n (694.2) \n \n \n \n \n Provisions \n \n \n (134.4) \n \n \n (138.3) \n \n \n \n \n Net retirement benefit surplus/(deficit) \n \n \n 31.5 \n \n \n (8.4) \n \n \n \n \n Net tax assets \n \n \n 29.9 \n \n \n 76.1 \n \n \n \n \n Net other financial assets and liabilities \n \n \n 33.1 \n \n \n 8.1 \n \n \n \n \n Leases \n \n \n (295.3) \n \n \n (272.1) \n \n \n \n \n Net debt excluding leases \n \n \n (55.8) \n \n \n (101.2) \n \n \n \n \n Net assets \n \n \n 740.6 \n \n \n 621.8 \n \n \n \n \n   \n Property, plant and equipment (PP&E) and right of use assets were £826.3 million, an increase of £38.6 million from the position at the start of the year. PP&E increased by £16.6 million to £575.5 million, including gross capital expenditure of £73.4 million, disposals of net book value of £24.0 million and depreciation of £30.2 million. Right of use assets increased by £22.0 million to £250.8 million including net new leases of £47.9 million and depreciation and impairment of £25.0 million. \n Working capital increased by £36.9 million from the position at the start of the year to £(657.3) million due to an increase in inventory and the timing of indirect tax payment cycles. \n Funding and liquidity \n As of 30 September 2025, the Group had access to a total of £ 1.4 billion of borrowings and facilities. These comprised: \n •      £600 million RCF, refinanced on 17 July 2025, maturing on 17 July 2030 with two option years and accordion expansion facility for a further uncommitted £200 million for the duration of the agreement. \n •      £300 million bond maturing on 5 October 2026 \n •      €550 million bond, hedged at £493 million, maturing on 13 September 2027 \n •      An overdraft facility of £50 million \n At 30 September 2025, the Group's net cash (cash and cash equivalents less overdrafts) balance was £ 704.7 million. This, combined with the undrawn amounts under our committed RCFs and overdraft facilities, gave us liquidity of around £ 1.4 billion. \n Pensions \n The Group has a number of defined benefit pension schemes. The principal defined benefit pension schemes in the UK are the Devonport Royal Dockyard Pension Scheme (DRDPS), the Babcock International Group Pension Scheme (BIGPS) and the Royal Dockyard Pension Scheme (RRDPS) - the principal schemes. \n IAS 19 \n At 30 September 2025, the IAS 19 valuation for accounting purposes was a net surplus of £31.5 million (FY25: net deficit of £8.4 million). The change in net accounting position is driven by change in actuarial financial assumptions and the deficit recovery contributions paid by the Group. The fair value of plan assets (including longevity swap value) of £2,815.7 million decreased by £15.3 million, driven by the impact of IFRIC 14 asset ceilings and asset returns being lower than the IAS 19 expected return on plan assets. The present value of pension benefit obligations of £2,784.2 million decreased by £55.2 million driven by a slight increase in the discount rate and a fall in market implied inflation expectations. The fair value of the assets and liabilities of the Group pension schemes at 30 September 2025 and the key assumptions used in the IAS 19 valuation of our schemes are set out in note 13 on page 54. \n \n \n \n \n \n \n \n 30 September 2025 \n£m \n \n \n 31 March 2025 \n£m \n \n \n \n \n Fair value of plan assets (note 13) \n \n \n 2,815. 7 \n \n \n 2,831.0 \n \n \n \n \n Present value of benefit obligations (note 13) \n \n \n (2,784.2) \n \n \n (2,839.4) \n \n \n \n \n Net surplus / (deficit) at period end \n \n \n 31.5 \n \n \n (8.4) \n \n \n \n \n Income statement charge \n The charge included within underlying operating profit in HY26 for defined benefit pension schemes was £ 4.2 million (HY25: £10.5 million), of which £ 1.7 million related to service costs (HY25: £7. 1 million), £ 2.5 million related to expenses (HY25: £3.4 million). In addition to this, there was a net interest charge of £nil (HY25: charge of £2.0 million). The reduction follows the closure of defined benefit schemes to future accrual and is broadly offset by an increase in the charge for defined contribution schemes. \n Technical provision \n An estimate of the aggregate actuarial deficits of the Group's defined benefit pension schemes (excluding those in surplus), including all longevity swap funding gaps, calculated using each scheme's technical provisions basis, as at HY26 was approximately £95 million (FY25: c.£125 million, HY25: c.£160m). Such valuations use discount rates based on UK gilts - which differs from the corporate bond approach of IAS 19. This technical provision estimate reflects the assumptions used within the latest agreed valuation prior to 30 September 2025 for each of the principal schemes. \n Actuarial valuations are carried out every three years to determine the Group's cash contributions to the schemes. The valuation of the three largest schemes is set so only one scheme is undertaking its valuation in any one year, to spread the financial impact of market conditions. The valuation of the DRDPS as at 31 March 2023 was completed in FY24, the valuation of the RRDPS as at 31 March 2024 was finalised in April 2025, and work is currently ongoing on the valuation of the BIGPS at 31 March 2025. \n We expect annual deficit repair payments to be c.£20 million per annum for the next five years. \n Cash contributions \n Group cash contributions made into the defined benefit pension schemes, excluding expenses and salary sacrifice contributions were as follows: \n \n \n \n \n \n \n \n 30 September 2025 \n£m \n \n \n 30 September 2024 \n£m \n \n \n \n \n Current service contributions \n \n \n 2.5 \n \n \n 8.7 \n \n \n \n \n Deficit recovery \n \n \n 5.1 \n \n \n 13.2 \n \n \n \n \n Longevity swap \n \n \n 0.9 \n \n \n 5.8 \n \n \n \n \n Total cash contributions - employer \n \n \n 8.5 \n \n \n 27.7 \n \n \n \n \n   \n Segmental analysis \n The Group reports its performance through four reporting sectors. \n \n \n \n \n 30 September 2025 \n \n \n  Marine \n£m \n \n \n  Nuclear \n£m \n \n \n  Land \n£m \n \n \n  Aviation \n£m \n \n \n  Total \n£m \n \n \n \n \n Contract backlog \n \n \n 2,820 \n \n \n 1,762 \n \n \n 3,321 \n \n \n 2,015 \n \n \n 9,918 \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 Revenue \n \n \n 822.5 \n \n \n 989.1 \n \n \n 525.6 \n \n \n 201.4 \n \n \n 2,538.6 \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 Statutory operating profit \n \n \n 77.0 \n \n \n 89.7 \n \n \n 50.1 \n \n \n 17.5 \n \n \n 234.3 \n \n \n \n \n Statutory operating margin \n \n \n 9.4% \n \n \n 9.1% \n \n \n 9.5% \n \n \n 8.7% \n \n \n 9.2% \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 Underlying operating profit \n \n \n 55.3 \n \n \n 89.7 \n \n \n 41.6 \n \n \n 14.5 \n \n \n 201.1 \n \n \n \n \n Underlying operating margin \n \n \n 6.7% \n \n \n 9.1% \n \n \n 7.9% \n \n \n 7.2% \n \n \n 7.9% \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 30 September 2024 \n \n \n  Marine \n£m \n \n \n  Nuclear \n£m \n \n \n  Land \n£m \n \n \n  Aviation \n£m \n \n \n  Total \n£m \n \n \n \n \n Contract backlog \n \n \n 2,991 \n \n \n 2,461 \n \n \n 2,410 \n \n \n 1,655 \n \n \n 9,517 \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 Revenue \n \n \n 789.8 \n \n \n 865.7 \n \n \n 591.3 \n \n \n 162.1 \n \n \n 2,408.9 \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 Statutory operating profit \n \n \n 56.5 \n \n \n 75.8 \n \n \n 45.5 \n \n \n 6.0 \n \n \n 183.8 \n \n \n \n \n Statutory operating profit margin \n \n \n 7.2% \n \n \n 8.8% \n \n \n 7.7% \n \n \n 3.7% \n \n \n 7.6% \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 Underlying operating profit \n \n \n 40.0 \n \n \n 75.7 \n \n \n 45.4 \n \n \n 7.7 \n \n \n 168.8 \n \n \n \n \n Underlying operating margin \n \n \n 5.1% \n \n \n 8.7% \n \n \n 7.7% \n \n \n 4.8% \n \n \n 7.0% \n \n \n \n \n   \n Operational reviews \n Marine \n Our c. 7,500 employees design, develop, build, manufacture and integrate specialist systems, and deliver technical through-life support for complex platforms in the marine sector. Over 75 % of Marine's revenue is derived from defence, with the remainder largely comprising our Liquid Gas Equipment (LGE) business. \n Operational highlights \n •      In June 2025, HMS Venturer, the first of five Type 31 frigates completed float-off and returned to dry dock for fit-out and commissioning, while the third frigate, HMS Formidable, commenced its assembly phase \n •      Over £50 million in new orders secured for Skynet services \n •      Expanded scope of work delivered in Australia in our Regional Maintenance Provider - West contract \n •      Secured initial LGE contracts for ammonia-based fuel gas supply systems using Babcock IP technology \n   \n Financial review \n \n \n \n \n   \n \n \n 30 September 2025 \n£m \n \n \n 30 September 2024 \n£m \n \n \n \n \n Contract backlog* \n \n \n 2,820 \n \n \n 2,991 \n \n \n \n \n Revenue \n \n \n 822.5 \n \n \n 789.8 \n \n \n \n \n Underlying operating profit* \n \n \n 55.3 \n \n \n 40.0 \n \n \n \n \n Underlying operating margin* \n \n \n 6.7% \n \n \n 5.1% \n \n \n \n \n *   Alternative Performance Measures are defined in the Financial Glossary on page 25. \n Contract backlog reduced to £2,820 million, reflecting delivery of the record LGE order intake in FY25 and revenue recognised on the Type 31 contract, partially offset by orders for the manufacturing of missile tubes and the RMP West support contract in Australia. \n Revenue increased 6% (at constant FX) to £823 million due to higher volumes in our LGE business and growth of the Skynet programme, offset by lower ship support volumes in the UK. \n Underlying operating profit increased 38% to £55.3 million due to growth in LGE and Skynet and the completion of certain support activities. As a result, underlying operating margin increased to 6.7% (HY25: 5.1%). \n Operational review \n Defence \n UK defence (50% of Marine revenue) \n The Type 31 Inspiration Class five-frigate programme being built for the Royal Navy at Babcock's facility in Rosyth has made steady progress. HMS Venturer, left the assembly hall in June and is now docked, creating space in the Venturer build hall facility for the third frigate. Ship 2, HMS Active, continues to progress towards float-off in 2026 and ship 3, HMS Formidable, moved to the Venturer build hall to commence the assembly phase. Ship 3 is benefitting from an enhanced build strategy, accelerating early outfitting. Thales successfully completed all factory acceptance testing on equipment and software for the Mission System. \n Advanced manufacturing operations have maintained high output levels, notably with the delivery of nine missile tubes over nine months to General Dynamics Electric Boat for the US Columbia Class submarine programme. Continuous production of integrated tube handling has started at our facilities in Bristol and Rosyth, streamlining and automating the management of missile tube manufacture and assembly within the Common Mission Compartment for both UK Dreadnought and US Columbia Class submarines. Babcock continues to engage with US partners to secure further opportunities. \n Innovation remains integral to Babcock's manufacturing strategy. Developments include the use of automated painting systems on the frigates, virtual reality for facility design, drone training for site operations, and the implementation of Automated Welding Equipment System Inspection and Monitoring (AWESIM) in collaboration with the University of Strathclyde. AWESIM enables real-time, non-destructive testing for missile tube applications. \n Babcock met all contractual key performance indicators under the surface ship element of the Future Maritime Support Programme (FMSP) for the Royal Navy. This included the completion of upgrade and maintenance activities for Type 23 vessels HMS Kent, planning for HMS Portland and preparation for works on other vessels, as well as the provision of fleet time support to operational platforms both domestically and internationally. Deployed support was delivered for HMS Richmond in South Korea, in collaboration with Hanwha Ocean, ensuring high availability for the Carrier Strike Group. We have completed preparations for the docking of HMS Iron Duke in November. \n Aircraft carrier HMS Queen Elizabeth successfully docked in Rosyth, with work progressing in line with expectations. \n As the Type 23 fleet is phased out, Babcock is transitioning its support focus to the new Type 26 platforms, with lessons learned from current programmes informing future support strategies. Our Class Output Management team is expanding to manage capability insertion and fleet time engineering for Type 26, delivered from Devonport. The management of class managed equipment will become increasingly critical as these vessels enter service. \n Progress continues on securing an extension for FMSP and the follow-on long-term Naval Support Integrated Global Network (NSIGN) contract for future surface ship support. A key development during the period was the UK Ministry of Defence's decision to contract directly with Babcock for elements of NSIGN. \n In our Mission Systems business, delivery of Skynet communication services remains stable across all UK Ministry of Defence and Government users. The business secured over £50 million in new orders during the period, with scope increases including a major contract for the Maritime Network Evolution project. Additional international customers have also been onboarded for Space services. \n August saw a significant milestone with the delivery of the Dreadnought Class - Boat 1 Weapon Stowage Module, enabling the customer to integrate into the first vessel of the UK's future Continuous At Sea Deterrent nuclear submarine. \n In September, Babcock launched NOMAD™- its first fully AI-powered product designed to clean, transcribe, translate, and analyse voice and text data in real time, including in communications-denied environments. NOMAD™ exemplifies Babcock's commitment to rapid innovation and mission-focused capability, combining advanced technologies with deep customer insight to deliver operational advantage. \n International defence (28% of Marine revenue) \n In Australia, we continue to play a critical role as the Royal Australian Navy's surface ship sustainment provider in Western Australia. Babcock strengthened its operational scope as Regional Maintenance Provider - West (RMP-West), expanding its sustainment portfolio to include Arafura Class offshore patrol vessels and the Supply Class auxiliary oiler replenishment ship HMAS Stalwart, servicing four ship classes in parallel. \n Our contract as alliance partner in the Warship Asset Management Agreement (WAMA) is beginning to wind down, as the sustainment of the ANZAC Class ships transitions to RMP-West by 2026. Babcock acted as principal contractor on a six-month project to recover critical military equipment from decommissioned frigate ex-HMAS Anzac, reintegrating these assets into navy inventory to support the operational readiness of the class. \n Under the contract with BAE Systems, Babcock has completed the Critical Design Review for the Hunter Class frigate Air Weapons Handing System (AWHS). Babcock is tasked with designing, assembling, testing and overseeing the installation of the AWHS on the frigates, based on our modified design for the UK's Type 26 frigates. \n Babcock submitted a bid for the future sustainment of the Anzac Class Design Support contract, responsible for the design function once vessels transition from acquisition to in-service and disposal. Contract award is expected in 2026. \n In New Zealand , our engagement with local suppliers and service providers continues to be a critical part of our role as the Strategic Maritime Partner to the New Zealand Defence Force. Under the seven-year Maritime Fleet Sustainment Services (MFSS) contract, Babcock engaged over 120 local suppliers to support the successful delivery of scheduled maintenance of HMNZS Te Mana. Partnering with Seatrium, Babcock supported the completion of deployed critical maintenance work on the Royal New Zealand Navy ship HMNZS Aotearoa in Singapore and commenced the delivery of critical rejuvenation and maintenance work on HMNZS Otago. \n In Canada , our team continues to deliver HMCS Victoria's Extended Docking Work Period (EDWP) as part of the Victoria In-Service Support Contract (VISSC) for support of the Victoria Class submarine fleet. We also received a contract amendment aligning HMCS Victoria's EDWP with the current VISSC contract end date in 2027. We continue to support Fleet Maintenance Facility Cape Scott with HMCS Windsor's EDWP in Halifax, Nova Scotia. \n As Canada continues its programme to acquire the next generation of conventionally powered submarines, Babcock Canada signed a teaming agreement with Hanwha Ocean, one of two short-listed suppliers for the Canadian Patrol Submarine Project. Through this agreement, Babcock becomes the exclusive in-service support partner for Hanwha Ocean on the programme. \n In Sweden , we continue our extensive engagement with the Luleå Class surface combatant programme, with a decision expected in 2026. Working closely with Saab, we have successfully completed all preliminary design review deliverables and are now focused on the critical design review due in early 2026. \n In Denmark, we continue to engage on potential opportunities as we maintain our collaboration with OMT to support the basic design phase for the Danish Arctic Patrol Ships through the DFS consortium, reinforcing our presence in Northern European markets. \n In Ukraine , having completed the regeneration of UK Sandown Class Mine Counter Measure Vessels (MCMVs) prior to their sale to the Ukrainian Navy, we were awarded a three-year contract for maintenance and support. We have successful delivered the first two support periods for the vessels, with the next due in December, and assisted with repairs as requested by the UK Royal Navy. \n In Romania , we facilitated the transfer of title for the former MCMV, HMS Pembroke, to Romania. The Romanian vessel has now departed the UK and is on passage back to Romania.  \n In Poland, Babcock signed a strategic cooperation agreement with PGZ SA to strengthen collaboration across the maritime and aerospace domains. The agreement supports joint initiatives in the design, construction, maintenance, and servicing of naval assets, as well as the sustainment of military aircraft and the co-development of strategic asset management solutions for the Polish armed forces. \n Additionally, the third Arrowhead User Group Conference was held in Gdansk, bringing together stakeholders involved in the Arrowhead frigate design. \n In Brazil , we are extending our current support contract on NAM Atlantico (formerly UK landing platform dock, HMS Ocean), which ends in March 2026. We are looking to establish a similar support contract for HMS Bulwark, soon to operate as 'NDM Oiapoque', once she departs the UK in Summer 2026. \n In Indonesia , we continue to work closely with the Government, with our maritime partnership programme exploring ways in which the UK can support Indonesia in areas of maritime defence, maritime security and maritime modernisation. \n Civil (22% of Marine revenue) \n Our LGE business performed well in the period, successfully delivering sixteen projects featuring its cargo handling systems for LPG, LNG, and Ethane liquefied gas carriers, including its first project with Samsung Heavy Industries for a European shipowner. To enhance service delivery, LGE established a new entity in Singapore dedicated to drydock operations for ecoSMRT® systems. The business completed nine drydock service operations globally to support its patented ecoSMRT® LNG reliquefaction systems. \n The company also secured its first contracts for the design and supply of Ammonia Fuel Gas Supply Systems using its ecoFGSS-FLEX® technology, supporting the transition to ammonia as a zero-carbon marine fuel. Babcock was recognised by HD Hyundai Heavy Industries as Partner of the Year 2025. \n The National Environmental Research Council requested the extension of our current contract for the remaining two scientific research vessels, RRS Discovery and RRS James Cook, by one year to enable both ships to dock at Rosyth in 2026. \n Nuclear \n Our c. 11,100 employees provide complex through-life engineering support to the entirety of the UK's nuclear submarine fleet. We own and manage critical national infrastructure and provide engineering integration support to AWE. We operate across UK civil nuclear, including new build, generation support and decommissioning. \n Operational highlights \n •      Re-opened Devonport's 15 Dock facility, marking the return of twin streaming submarine maintenance capability \n •      Secured £114 million three-year contract to prepare for the first nuclear defueling of a decommissioned Trafalgar Class submarine in over 20 years \n •      Fin removal marked a milestone for the Swiftsure Submarine Dismantling Demonstrator Project in Rosyth \n •      Announced transformative plans to locate more than 2,000 workers from Devonport into Plymouth city centre \n •      Cavendish Nuclear and Amentum awarded next phase of contract to support Japan's Monju Reactor Decommissioning involving construction of sodium treatment facility \n   \n Financial review \n \n \n \n \n   \n \n \n 30 September 2025 \n£m \n \n \n 30 September 2024 \n£m \n \n \n \n \n Contract backlog* \n \n \n 1,762 \n \n \n 2,461 \n \n \n \n \n Revenue \n \n \n 989.1 \n \n \n 865.7 \n \n \n \n \n Underlying operating profit* \n \n \n 89.7 \n \n \n 75.7 \n \n \n \n \n Underlying operating margin* \n \n \n 9.1% \n \n \n 8.7% \n \n \n \n \n *   Alternative Performance Measures are defined in the Financial Glossary on page 25. \n Contract backlog decreased to £1,762 million, primarily reflecting trading on our multi-year FMSP submarine support contract which is in its final year (expected to be replaced by a new contract by the end of FY26) and the HMS Victorious Deep Maintenance Programme (£560 million recognised in backlog FY24), as well as MIP contract maturity (£750 million recognised in backlog in FY24). \n Revenue increased 14% (at constant FX) to £989 million as submarine support activity grew strongly under the Future Maritime Support Programme (FMSP) programme and Civil Nuclear grew 25% as new projects ramped up, more than offsetting a reduction from the timing of Major Infrastructure Programme (MIP) revenue across the year. \n Underlying operating profit increased 18% to £89.7 million due to the revenue growth as well as some contract changes and risk retirement on project milestones. As a result, underlying operating margin increased to 9.1% (HY25: 8.7%). \n Operational review \n Defence \n UK defence (86% of Nuclear revenue) \n In May, we marked the return of the capability to maintain two nuclear-powered submarines at Devonport with the formal opening of 15 Dock, following the completion of major infrastructure upgrades. We continue to make good progress on the first Astute Class Base Maintenance Period in 15 Dock, with around three-quarters of the project scope now complete. \n Following the reopening of 9 Dock in September 2024, HMS Victorious' maintenance programme is progressing as planned and to schedule, while opportunities for acceleration are being explored. \n Our Major Nuclear Capital Programmes business (managing the Major Infrastructure Programme (MIP)) continues to focus on delivering the modernisation of facilities and substantial upgrades to existing critical infrastructure required to meet the evolving needs of the Royal Navy. We are focused on enabling a faster, more efficient return of platforms to sea through world-class infrastructure delivery. \n As part of this programme, the ongoing redevelopment of Devonport's 10 Dock has achieved several major milestones in the period. In April 2025, the project achieved more than three million hours without a Lost Time Incident, reflecting the highest standards of safety and delivery performance. Once complete, 10 Dock will provide a new dock, berth, logistics and production support facilities, critical for Astute Class Deep Maintenance Periods and future submarine capability. \n We have commenced mobilisation of key preparatory activities to support the first defuel of a decommissioned Trafalgar Class submarine in more than two decades, following the award of a £114 million contract in June 2025. The work, under a three-year programme delivered in partnership with the wider Defence Nuclear Enterprise, will enable the eventual defueling of four submarines. \n We continue to progress commercial discussions with the MOD on an extension to FMSP along with a longer-term partnering arrangement to sustain our support for the Royal Navy nuclear submarine fleet, ahead of the conclusion of the FMSP contract on 31 March 2026. \n Our work at Devonport is critical to both national security and the region's prosperity. Focused activity and partnerships in Plymouth and the wider region have culminated in the announcement of 'Team Plymouth', a partnership between defence, industry, academia, and local and national government. As one of five key growth areas identified in the UK Defence Industrial Strategy, Plymouth is set to benefit from a share of £250 million Government defence fund to support regeneration. \n In June 2025, as part of the programme of regeneration, we published Babcock Delivering Defence Dividend: Blueprint for Regional Regeneration, which included our plan to relocate 2,000 support functions employees from Devonport to create a new central capability hub in Plymouth city centre. \n At HMNB Clyde in Scotland, we continue to play a vital role in supporting the sustainment of the Royal Navy's operational submarine capability and the site's role in delivering the UK's Continuous at Sea Deterrent (CASD). \n In the period, the UK Government announced an initial £250 million investment under the Clyde 2070 programme, the first phase of a multi decade, multi-billion-pound plan to transform the site. As a key industry partner, we are ideally positioned to support plans to modernise facilities, enhance sustainability, and secure HMNB Clyde's role in the UK's submarine enterprise for generations to come. \n This period also saw the introduction of an Alternative Working Week within our operations at HMNB Clyde. By consolidating the traditional five-day week into four days, we have been able to deliver better flexibility and surge capacity outside of a core working week, whilst enabling a better work-life balance for our workforce. \n Our Rosyth facility marked a milestone in June 2025 with the completion of work to remove the fin from the decommissioned submarine Swiftsure. Using a world-first dismantling methodology, the project will enable approximately 90% of materials to be reused or recycled, setting a new standard for sustainable submarine recycling. The programme is due to be completed by the end of 2026. \n Additionally, Rosyth Dockyard has been designated by the MOD to host a contingent docking facility (CDF) supporting sea trials for the future HMS Dreadnought Cass submarines in the early 2030s. This is part of wider UK Government investment in infrastructure upgrades at Rosyth which will also support submarine dismantling activity. \n At AWE Aldermaston, work continues on the design, installation and commissioning of complex plant and engineering equipment in support of CASD. \n International defence \n In Australia, our joint venture with HII, H&B Defence, secured its first contract to enhance supply chain capabilities for the global AUKUS enterprise through the Australian Submarine Supplier Qualification pilot programme (AUSSQ), Australia's gateway into the US submarine supply chain. In August, the first Australian supplier received an RFQ for the US Virginia submarine programme following successful qualification through AUSSQ. H&B Defence is developing a syllabus to advance nuclear knowledge amongst Western Australian businesses after securing a state government grant to deliver a series of new defence industry training courses. \n Civil \n UK Civil (14% of Nuclear revenue) \n In Clean Energy, Cavendish Nuclear's contribution to the MEH Alliance at Hinkley Point C has grown to 800 people, with further growth anticipated as MEH activity increases. Building on this success, the MEH Alliance approach is being evolved for Sizewell C, with intelligent replication of proven Hinkley strategies to drive efficiency and productivity. \n During the period, the UK Government announced full funding for Sizewell C to be Britain's next nuclear power station. As part of the Sizewell C consortium and alliance partnership, we are coordinating the supply of materials and equipment to enhance installation efficiency, creating jobs and apprenticeships, and support our role in delivering a nationally significant project and clean energy future for the UK. \n In the small modular reactor (SMR) sector, we are actively developing manufacturing opportunities, following our preparatory design work to build the UK's first SMRs. This follows a milestone announcement by Great British Energy-Nuclear (GBE-N), in selecting a preferred bidder to build SMRs. Subsequently GBE-N have now launched their wider SMR procurement programme, with a series contracts totalling over £1.5 billion being placed over the next two years. Cavendish Nuclear has recently submitted a tender as part of this wider programme to provide owner's engineering services, valued at £300 million, with the result expected in early 2026. \n Building on detailed assessments with the US company, X-energy, co-funded by the UK Government's Future Nuclear Enabling fund, we continue to support supply chain development for future UK nuclear projects. Alongside the announcement of the Atlantic Partnership for Advanced Nuclear Energy and the joint development agreement to deploy X-energy's Xe-100 reactors, with a preferred first project at Hartlepool, we are in active dialogue regarding our future role. The partnership marks a once-in-a-generation opportunity to strengthen UK energy security and build on the nation's advanced gas reactor heritage. \n Our support to the UK front-end nuclear fuel cycle continues to grow through projects with Westinghouse and Urenco. We are supporting Westinghouse in the design and build of a facility to process reprocessed uranium to enable its future enrichment and use as a nuclear fuel. We are also supporting Urenco in the design of an expansion to the tails management facility, which will convert depleted uranium hexafluoride to the lower hazard uranium oxide material for long term storage. Urenco achieved their governance approval to enter the next phase of the project, and we have now started the front-end engineering design which will complete in 2027. \n In Decommissioning, we are currently bidding for several major frameworks to support Sellafield. In October 2025, our joint venture, Nuclear Decommissioning Solutions (NDS), was awarded a contract under the £4.6 billion Sellafield Ltd Decommissioning and Nuclear Waste Partnership framework to support retrievals work, as part of the site's high hazard risk reduction programmes. \n We have also signed contracts for the provision of radiometric and environmental analysis support which secures our position as a critical service supplier to Sellafield over the next four years. \n International Civil \n In the USA, Cavendish Nuclear, as part of the Southern Ohio Cleanup Company (SOCCo) joint venture, has transitioned into the site management and operations phase of the decommissioning and dismantling contract with the US Department of Energy to lead the environmental cleanup at the former Portsmouth Gaseous Diffusion Plant in Piketon, Ohio. \n This long-term 10-year contract, with a potential five-year extension, represents a major step forward in the safe and sustainable decommissioning of a complex and legacy nuclear power plant facility. SOCCo will leverage decades of UK and global nuclear decommissioning experience to safely demolish ageing facilities and deploy innovative technologies to support water treatment and soil improvement works. \n In Japan, we were awarded the next phase of work by the Japan Atomic Energy Agency to support the decommissioning of the Monju Prototype Fast Reactor, in Fukui Prefecture. \n Alkali Metal Processing Limited, a joint venture between Cavendish Nuclear and Amentum, will construct, commission, and secure regulatory permissions for a new facility in the UK which will treat the sodium coolant removed from the Japanese reactor to be safely converted into sodium hydroxide for general industrial reuse. The joint venture will now move forward with construction, installation of process equipment and preparations for operation, working closely with locally based supply chain partners. \n We also signed an MOU with Lucideon to address complex decommissioning challenges and advance nuclear waste management. The partnership will bring together our engineering and project delivery expertise and with Lucideon's MIDAR ® geopolymer technology, providing a framework to jointly explore global decommissioning challenges, with an initial focus on the Japanese market. \n In Sweden, Cavendish Nuclear is exploring opportunities to support the roll-out and deployment of SMRs. Vattenfall is in the final stage of its technology selection process, having down selected Rolls Royce SMR or General Electric Vernova to build three SMRs adjacent to the existing nuclear power plant. Cavendish Nuclear has supported both suppliers in the UK and is well positioned to support their deployment in Sweden, and across Europe. \n Land \n Our c. 5,800 employees provide essential services to our customers through three core capabilities: build, support and train. We do this through the delivery of through-life engineering support and systems integration for military vehicles and equipment. We provide individual and collective training for customers with critical missions and deliver engineering services in power generation and transport networks and through-life support of mining equipment. \n Operational highlights \n •      Successfully mobilised the £1 billion five-year British Army strategic support partner DSG follow-on \n •      Completed first tranche of the High Mobility Transporter Jackal 3 programme for the British Army \n •      Signed a teaming agreement with Patria to offer its 6x6 armoured personnel carrier to the UK Armed Forces \n •      Demonstrated a new application integrating light mortars with in-service UK tactical communications systems \n •      Unveiled new Australian facility to support the Defence High Frequency Communications System programme \n   \n Financial review \n \n \n \n \n   \n \n \n 30 September 2025 \n£m \n \n \n 30 September 2024 \n£m \n \n \n \n \n Contract backlog* \n \n \n 3,321 \n \n \n 2,410 \n \n \n \n \n Revenue \n \n \n 525.6 \n \n \n 591.3 \n \n \n \n \n Underlying operating profit* \n \n \n 41.6 \n \n \n 45.4 \n \n \n \n \n Underlying operating margin* \n \n \n 7.9% \n \n \n 7.7% \n \n \n \n \n *   Alternative Performance Measures are defined in the Financial Glossary on page 25. \n Contract backlog increased to £3,321 million due to the award of the new DSG vehicle support contract (announced as 'Reframe') in FY25 worth c.£1 billion with remaining order intake offset by delivery on long-term contracts. \n Revenue decreased 10% (at constant FX) to £526 million due to lower volumes in our Civil businesses, particularly Rail following the completion of a number of key delivery projects, and Africa where mining equipment sales have reduced. \n Underlying operating profit decreased 8% to £41.6 million due to the lower volumes in Rail and Africa and some contract recoveries in the prior period. Despite this, underlying operating margin increased slightly to 7.9% (HY25: 7.7%). \n Operational review \n Defence \n UK defence (40% of Land revenue) \n Mobilisation of the £1 billion five-year DSG follow-on contract extension for the maintenance, repair and asset management of British Army vehicles and equipment is well underway. This will see Babcock maximise the availability of critical equipment through improved readiness, regeneration and asset management services, cementing our position as a strategic partner to the British Army. \n METIS, our strategic asset management platform developed in partnership with Palantir Technologies, was formally unveiled in September 2025 and is currently being introduced across the business. The platform uses the equipment support enterprises digital footprint to derive the optimal balance of cost, risk and performance for assets throughout their lifecycle. \n Working with Supacat and the UK MOD, we completed the first tranche of the High Mobility Transporter Jackal 3 programme for the British Army. Production of tranche two, which consists of 53 six-wheeled 'Extenda' variants, known as the Jackal 3 (E), is now underway. \n In a UK first, in September 2025, we successfully demonstrated a new application which seamlessly integrates the light 120mm mortar with in-service UK tactical communications systems, providing a 'ready-now' digital capability for the British Army. Developed in collaboration with General Dynamics - Mission Systems UK, the Babcock Advanced Ballistic Engagement Layer allows the mortar system to communicate with the Bowman ComBAT Infrastructure and Platform Battlefield Information System Application, enabling first-of-its-kind networked firepower from sensor to effector. We have partnered with ST Engineering to offer the UK an integrated, end-to-end solution to enhance British mortar capability, as part of the MOD's 120mm mortar procurement. \n In September 2025, we signed a teaming agreement with Patria to be the build partner for its armoured personnel carrier in the UK. The agreement coincided with confirmation that the UK had signed a technical arrangement to join the Common Armoured Vehicles (CAVs) programme which encompasses a growing number of nations across the Joint Expeditionary Force. \n We signed a MOU with Ultra PCS, a company providing electronics for military platforms, to develop a generic vehicle architecture solution for the British Army based on the mature UltraEAK (Electronic Architecture Kit) product which implements mission systems on new and legacy military land vehicles. This collaboration will deliver a modular and scalable software solution that supports current customer requirements while enabling affordable capability developments to meet future needs. \n We continue to support the UK Government in providing critical support to Ukraine's Armed Forces, delivering personnel training and the refurbishment and renewal of equipment through our Project HECTOR contract. In addition, we continue to support Operation Interflex, the British-led multinational military operation to train and support the Armed Forces of Ukraine. Following contract award by the UK MOD in March 2025, we have commenced a proof-of-concept which will enable Ukraine's armed forces to use innovative technology to 3D print military equipment, demonstrating our ability to deliver defence support capability whenever and wherever it is required \n Our defence training business was awarded a one-year extension to deliver individual electromechanical training to the British Armed Forces at MOD Lyneham, worth £22 million. \n In September, we launched a new Marine variant of the Babcock Immersive Training Experience (BITE) to international navies. BITE uses innovative and future-proof technology to replicate the physical, sensory and cognitive challenges of operating in a high stress environment, reducing the need to rely on platform availability for training. In May 2025 we launched the Land variant in Canada. \n International defence (11% of Land revenue) \n In Australia, we unveiled the expansion of our new warehousing assembly hall, further expanding our footprint in South Australia. The expanded production and test facility will support Babcock's upgrade and enhancement of Australia's Defence High Frequency Communications System (JP9101) programme. \n In April, we highlighted the growth of the asset portfolio and workforce for the Australian Defence Force's Ground Support Equipment contract where managed assets have increased from 4,000 to 11,000 assets across 250 fleet types since the start of the contract in 2017. \n Babcock's C-CBRNE programme won Land Programme of the Year at the 2025 Australian Defence Industry Awards, recognising our integration of cutting-edge counter-chemical, biological, radiological, nuclear and explosive (C-CBNRE) technologies for the ADF. \n We finalised our bid for the Land 4140 contract which is seeking a programme integration partner to deliver an evolving Land Command, Control, Communications and Computer (LC4) System to build and maintain the Australian Army's new battlefield communications network. This contract also includes the development of a panel of technology and service providers known as the LC4 Enterprise. Contract award is expected mid-2026. \n In New Zealand , we continue to work closely with the New Zealand Ministry of Defence on the Fixed High Frequency Radio Refresh programme. In October we successfully completed the first system acceptance testing milestone. \n In France, we continue to progress airbase equipment support contracts, with a number of activities expanding scope. \n Work on dedicated facilities at the Lanvéoc and Lann-Bihoué naval bases is underway, with delivery expected in the first half of 2026. The completion of these two infrastructure projects will mark key milestones in the strengthening our operational presence in France. \n In Poland, in June our training business signed an MOU with the Polish Air Force University to conduct joint research and development for the armed forces that will provide experiential aviation scenarios within BITE, our state-of-the-art product for speeding up mission readiness. The agreement leverages our expertise in training needs analysis and experience in delivering military training. \n Civil \n UK Civil (14% of Land revenue) \n Our Rail business experienced lower volumes year on year, driven by our Translink frameworks with the flagship Belfast Grand Central Station project having completed last year. Volumes in the Rail Systems Alliance Scotland (Babcock, in partnership with Network Rail and Arcadis) were delivered as expected in Year 2 of Control Period 7, with a seamless transition to the new Network Rail National Plant Framework which commenced in April 2025. \n International Civil (35% of Land revenue) \n In Africa, the Equipment business which supplies mining industry vehicles, was impacted by the lower coal prices affecting activity levels. Volumes are expected to increase in the second half of FY26, driven by increased commodity demands. In addition, some power projects shifted to H2 FY26 in the Power Generation business. We also successfully completed both the Lethabo ESP and Sasol low Nox contracts, and are one of seven bidders down-selected for the commercial phase of the Eskom Boiler contract, which is expected to be awarded in 2026. \n Aviation \n Our c. 2,600 employees deliver military pilot training support for the two largest Air Forces in Europe (France and UK), through-life support to operational military flying assets and critical air operations for government customers. \n Operational highlights \n •    Mobilisation of 17-year Mentor 2 military air training contract in France progressing to plan \n •    Awarded new 10-year contract alongside Airbus Helicopters to deliver in-service support to 46 new H145-D3 helicopters for the French Government \n •    Secured £70 million contract to deliver new infrastructure facilities for Ascent UK Military Flying. \n •    Signed contract with Uplift360 to explore repurposing composite materials from Typhoon class aircraft \n •    Awarded new 8-year A$250 million contract with Australian Border Force for helicopter services \n   \n Financial review \n \n \n \n \n   \n \n \n 30 September 2025 \n£m \n \n \n 30 September 2024 \n£m \n \n \n \n \n Contract backlog* \n \n \n 2,015 \n \n \n 1,655 \n \n \n \n \n Revenue \n \n \n 201.4 \n \n \n 162.1 \n \n \n \n \n Underlying operating profit* \n \n \n 14.5 \n \n \n 7.7 \n \n \n \n \n Underlying operating margin* \n \n \n 7.2% \n \n \n 4.8% \n \n \n \n \n *   Alternative Performance Measures are defined in the Financial Glossary on page 25. \n Contract backlog increased to £2,015 million with the award of the Mentor 2 contract (c.£300 million order intake in 2H 25) and the A$250 million Australian Border Force contract, offset by delivery on long-term contracts. \n Revenue increased 26% (at constant FX) to £201 million due to scope increases in UK military support contracts, the ramp up of the Mentor 2 programme and growth in helicopter support activity in France and the start of the British Colombia HEMS contract in Canada. \n Underlying operating profit increased 89% to £14.5 million, reflecting improved project profitability, programme timing and contract renegotiations, including price. As a result, underlying operating margin increased to 7.2% (HY25: 4.8%). \n Operational review \n Defence \n UK defence (38% of Aviation revenue) \n Performance remains strong on the HADES contract to deliver essential critical services to the RAF, Joint Aviation Command and Strategic Command at 16 stations across the UK. \n In May, we were awarded a £70 million contract to deliver new infrastructure facilities as part of a £300 million Military Flying Training System contract secured by Ascent, our 50/50 joint venture with Lockheed Martin. Ascent will deliver the Future ISTAR (Intelligence, Surveillance, Target Acquisition and Reconnaissance) and Rear Crew Training System (FIRCTS) programmes. \n Our operations on the RAF Light Aircraft Flying Task (LAFT) continue to deliver high levels of aircraft availability, recently completing 750,000 flying hours. Support also continues for fast jet lead-in training for the Ukrainian Pilot Force as pilots prepare to fly F-16s. \n Our contract to support the RAF fleet of 28 Hawk T2 jets continues to perform well. We welcomed our 10th cohort of aerospace apprentices to RAF Valley in the period, bringing the total number of apprentices who've been through the scheme to over 60. The scheme continues to strengthen technical capability and workforce resilience, while supporting regional economic growth. \n Additionally, we have signed a MOU with Uplift360 to explore how composite materials from Typhoon aircraft can be broken down and repurposed, and how this process could be applied more widely across additional defence platforms.  \n International defence (27% of Aviation revenue) \n In France , we have begun the ramp up phase of our 17-year contract to deliver military air training solutions for the French Air and Space Force, and Navy (Mentor 2). Recruitment and infrastructure expansion are underway, and our teams are already fully operational at the Salon-de-Provence Air Base, working in close collaboration with the École de l'Air to ensure a smooth and coordinated implementation of the program's initial components. \n We continue to deliver the Mentor 1 and FOMEDEC contracts, with activity levels reaching over 7,400 flight hours and around 4,500 synthetic training hours over the period. We are proud to have achieved 70,000 flight hours on our PC-21 aircraft, alongside 45,000 hours of synthetic training. We supported airspace surveillance during both the Bastille Day military parade and the Paris Air Show, mobilizing 14 engineers to ensure seamless operational execution. \n As part of our contract with the French MOD, the H160 helicopter fleet has now successfully completed over 300 rescue missions. In addition, we have carried out the world's first 900-hour periodic maintenance on an H160 helicopter at our dedicated facility in France. \n In May, we were awarded a new 10-year contract to support the French Government's fleet of Airbus H145-D3 helicopters by the French Ministry of Armed Forces's Directorate of Aeronautical Maintenance. In parallel, under our existing 12-year contract with the Sécurité Civile and the French Gendarmerie Nationale, we have delivered major maintenance to four EC145-C2 helicopters, with three other maintenance visits underway. Babcock France is now supporting over 85 French Government helicopters every day. \n In the period, we marked another milestone with the rental of a L-39 fighter jet to support the training of test pilots for the French Direction Générale de l'Armement , reinforcing our position in the pilot training market. \n We have signed an MOU with French aircraft manufacturer AURA AERO, to jointly offer and promote INTEGRAL, the new-generation electric training aircraft with aerobatic capabilities, along with a complete packaged service. \n In Australia , Babcock and US-based autonomous aircraft pioneer PteroDynamics Inc, delivered a demonstration to the Australian Defence Force of their vertical take-off and landing (VTOL) unmanned aerial system technology following a signed MOU in support of the military's growing pursuit of autonomous platforms. \n In Poland , we signed a MOU with Airbus and CAE to offer a comprehensive package of military helicopters and associated training services to the Polish Air Force. The partnership of three world-class service providers will leverage their unique combined expertise on a proposal to provide Poland with powerful new defence capabilities as part of the ongoing modernisation of Polish helicopter aviation. \n Civil \n UK Civil (8% of Aviation revenue) \n In September, we secured a four-year contract extension with Hampshire and Isle of Wight Air Ambulance, reinforcing our long-standing partnership and commitment to delivering life-saving services across the region. \n We delivered Scotland's most advanced air ambulance as part of our 10-year contract with Scotland's Charity Air Ambulance in the period. The helicopter is equipped with state-of-the-art technology, including night vision imaging systems enabling the extension of flying hours. \n We enabled Police Scotland's air support unit to be the first police force in the UK to operate with drop-in sustainable aviation fuel. \n International Civil (27% of Aviation revenue) \n In France , as part of the Helicopter Emergency Medical Services (HEMS) project, we expanded our Angers base to pilot a full 24/7 operational cycle and enhanced annual activity at La Roche-sur-Yon with a mixed fleet of H135 and EC145 helicopters. We continue to seek to integrate night vision imaging system capability into the Babcock fleet. \n   \n In Australia, we were awarded a new A$250 million 8-year contract with the Australian Border Force, continuing a 30-year partnership. The service provides multi-agency capability for a range of maritime security threats. As part of the contract Babcock has delivered two cutting-edge Airbus H145-D3 helicopters. \n In April, we welcomed the second 'dragonfly' emergency helicopter for the new Lagaw Kuyup Rescue Service. We introduced three upgraded static winch trainers into our Victorian aviation operations to allow aircrew and paramedics to refine their winch rescue skills. This upgrade forms part of our five-year A$370 million contract extension with Ambulance Victoria. \n In Canada, we continue to support delivery of rotary-wing air ambulance services in British Columbia as part of our 10-year contract with Ascent Helicopters Ltd. All five operating bases in British Columbia are now operational, as are all seven Leonardo AW169s provisioned by Babcock. \n 2025 saw Canada's second worst wildfire season on record. As a result, our teams logged over 850 flying hours in May, a 263% increase on the anticipated hours. Throughout this demanding season, we continued to successfully deliver aerial wildfire suppression services for the Government of Manitoba, achieving a consistent aircraft availability rate of 98%. We also completed an out-of-province deployment in Halifax, Nova Scotia. \n Financial glossary - Alternative Performance Measures (APMs) \n The Group provides alternative performance measures (APMs), including underlying operating profit, underlying margin, underlying earnings per share, underlying operating cash flow, underlying free cash flow, net debt and net debt excluding leases to enable users to have a more consistent view of the performance and earnings trends of the Group. These measures are considered to provide a consistent measure of business performance from year to year. They are used by management to assess operating performance and as a basis for forecasting and decision-making, as well as the planning and allocation of capital resources. They are also understood to be used by investors in analysing business performance. \n The Group's APMs are not defined by IFRS and are therefore considered to be non-GAAP measures. The measures may not be comparable to similar measures used by other companies, and they are not intended to be a substitute for, or superior to, measures defined under IFRS. The Group's APMs are consistent with the year ended 31 March 2025. Measures, definitions and reconciliations to relevant IFRS measures are included below, where appropriate. \n Organic revenue growth - Group KPI \n Closest equivalent IFRS measure: Revenue growth year on year \n Definition: Growth excluding the impact of foreign exchange (FX) and contribution from acquisitions and disposals in the year of, and following, completion. \n Purpose: A good indicator of business growth. \n \n \n \n \n   \n \n \n 30 September 2025 \n£m \n \n \n 30 September 2024 \n£m \n \n \n \n \n Prior period revenue \n \n \n 2,408.9 \n \n \n 2,177.0 \n \n \n \n \n FX \n \n \n (23.2) \n \n \n (8.4) \n \n \n \n \n (Disposals) \n \n \n (2.5) \n \n \n - \n \n \n \n \n Prior year revenue adjusted for FX and disposals (b) \n \n \n 2,383.2 \n \n \n 2,168.6 \n \n \n \n \n Revenue growth (a) \n \n \n 155.4 \n \n \n 240.3 \n \n \n \n \n Current year revenue \n \n \n 2,538.6 \n \n \n 2,408.9 \n \n \n \n \n Organic revenue growth (a)/(b) \n \n \n 7% \n \n \n 11% \n \n \n \n \n Contract backlog \n Closest equivalent IFRS measure: No direct equivalent \n Definition: The remaining transaction price on contracts with customers that has been allocated to unsatisfied or partially satisfied performance obligations, excluding the impact of termination for convenience clauses and excluding orders not yet secured on framework agreements. \n Purpose: Contract backlog is used to support future years' sales performance. \n \n \n \n \n   \n \n \n 30 September 2025 \n£m \n \n \n 30 September 2024 \n£m \n \n \n \n \n Contract backlog \n \n \n 9,918 \n \n \n 9,517 \n \n \n \n \n Underlying operating profit \n Closest equivalent IFRS measure: Operating profit \n Definition: Operating profit before the impact of specific adjusting items (see below). \n Purpose: Underlying operating profit is a key measure of the Group's performance. \n \n \n \n \n   \n \n \n 30 September 2025 \n£m \n \n \n 30 September 2024 \n£m \n \n \n \n \n Underlying operating profit \n \n \n 201.1 \n \n \n 168.8 \n \n \n \n \n Specific adjusting items \n \n \n 33.2 \n \n \n 15.0 \n \n \n \n \n Operating profit (note 2) \n \n \n 234.3 \n \n \n 183.8 \n \n \n \n \n   \n Specific adjusting items (note 2) \n \n \n \n \n   \n \n \n 30 September 2025 \n£m \n \n \n 30 September 2024 \n£m \n \n \n \n \n Amortisation of acquired intangibles \n \n \n (5.7) \n \n \n (4.4) \n \n \n \n \n Business acquisition, merger and divestment related items \n \n \n 8.5 \n \n \n - \n \n \n \n \n Profit or loss from amendment, curtailment, settlement or equalisation of Group pension schemes \n \n \n - \n \...

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