Half-year Report

Charles Woodburn, Chief Executive, said "Our teams have delivered another strong operational and financial performance in the first half of the year, giving us the confidence to upgrade our guidance. In this heightened global threat environment, we continue to deliver mission critical capabilities to armed forces around the world and invest in our people, technologies and facilities to drive the improved efficiency, capacity and agility needed to meet the increasing demand for our highly relevant products and services. The breadth and depth of our geographic and product portfolio, together with our trusted track record of delivery, strengthen our confidence in the positive momentum of our business."

Financial highlights

As defined by the Group

As derived from IFRS

Delivering for our customers

Our focus on operational performance and contracting discipline enables our consistent delivery of critical capabilities and technologies for our customers. In the first half of the year, we secured £13.2bn of orders and made good progress executing on our long-term major programmes.

Highlights in the period included the following:

Investing to support future growth

We continue to invest in our technologies, facilities and people to boost efficiency, capacity and innovation, deliver on our programmes and respond to the emerging threats our government customers are facing:

Capital deployment

2025 Upgraded Group guidance1

Given the strong operational performance in the first half, we are upgrading our sales and underlying EBIT guidance for the full year by 100bps each. Sales are now expected to increase in the range of 8% to 10% whilst underlying EBIT is expected to increase in the range of 9% to 11%. The share price increase since the start of the year is expected to result in fewer shares being repurchased which, along with a marginally higher tax rate, means our guidance for EPS growth remains unchanged between 8% to 10%. Our free cash flow target remains >£1.1bn.

Guidance is provided on a constant currency basis using an exchange rate of $1.28:£1, which is in line with the actual 2024 exchange rate.

Sensitivity to foreign exchange rates: the Group operates in a number of currencies, the most significant of which is the US dollar. As a guide, 
a 5 cent movement in the £/$ exchange rate will impact sales by c.£525m, underlying EBIT by c.£75m and underlying earnings per share 
by c.1.4p.

For further information please contact:

Analyst and investor presentation

A presentation, for analysts and investors, of the Group's half year results for 2025 will be available via webcast at 09.30am today (30 July 2025).

Details can be found on investors.baesystems.com, together with presentation slides and a copy of this report. A recording of the webcast will be available for replay later in the day.

About BAE Systems

We provide some of the world's most advanced, technology-led defence, aerospace and security solutions, helping customers stay ahead of evolving threats across land, sea, cyber and space. We are a skilled workforce of 109,7001 people, working with customers and local partners in more than 40 countries to deliver military capability, protect national security and keep critical information and infrastructure secure.

Shareholder information

Registered office

BAE Systems plc
6 Carlton Gardens
London
SW1Y 5AD
United Kingdom

Registered in England and Wales, No. 01470151

Interim management report

Half-year overview

We delivered a strong set of half-year results, building on the performance of recent years. In the first half of 2025, we have:

Our order backlog and programme incumbencies underscore our confidence in our long-term, value-compounding model. Our global presence and diverse portfolio of products and services provide high visibility for top-line growth and cash generation in the coming years.

Delivering for our customers

Our overall operational performance was strong across all sectors in the first half of the year, as our highly skilled employees continued to deliver mission critical capabilities to our customers to help them stay ahead of evolving threats.

Typhoon continues to play a visible and critical role in supporting defence and security objectives of our government customers. In the UK, in recent months, our teams have stepped up to support the Royal Air Force's heightened response posture and ensure aircraft availability. This readiness to respond enables us to work closely with our customers to understand and anticipate their critical needs in challenging times.

We delivered extensive warship support and simulated training to the Royal Navy in preparation for its eight-month Carrier Strike Group deployment to the Indo-Pacific. The Royal Navy selected our all-electric Malloy T-150 UAS to transport vital supplies between the ships during its ongoing deployment to the Indo-Pacific, marking the first time it has used drones in this way on such a deployment. Our teams are also embedded with armed forces personnel to provide ongoing support and training to the aircraft, ships and crews throughout this important mission.

Meanwhile, we continued to execute on complex, long-term programmes like Dreadnought and Astute Class submarines, Type 26 and Hunter Class frigates, Typhoon and F-35 jets, electronic warfare systems, combat vehicles and many other programmes across our business.

We also maintained momentum on key strategic international collaborations. Together with our industry partners in Italy and Japan, we launched our new joint venture, Edgewing, to design and develop next-generation combat aircraft under GCAP.

Working alongside our partner, ASC Pty Ltd, we started initial mobilisation activities to support the delivery of the SSN-AUKUS fleet of conventionally armed, nuclear-powered submarines for the Royal Australian Navy.

Our 2025 half-year financial performance

We have delivered a strong set of half-year results with increases across a number of our key financial measures including sales, underlying EBIT, underlying EPS and dividend per share. This underpins confidence in our upgraded guidance for the full year.

On a constant currency basis, we grew sales by 11% and underlying EBIT by 13%, pushing the Group's return on sales to 10.6%. Underlying EPS, which reflects the Group's earnings after accounting for underlying net finance costs and tax in the period, increased 12% to 34.7p.

Our order intake for the period was £13.2bn and we closed the half year with an order backlog of £75.4bn. Further details of awards in the period are included in the segmental reviews from page 11.

Our free cash flow for the period was an outflow of £368m. Free cash flow reflects cash generated by the Group's operations, after servicing debt and tax obligations, and is inclusive of movements on customer advances. During the period, we saw a net free cash outflow as advances from customers flowed out to the supply chain against the absence of any new material advances received.

We ended the period with a strong balance sheet, featuring a cash position of £2,153m and net debt (excluding lease liabilities) of £5,566m, after increasing returns to shareholders in the period, through share buybacks and dividends, to £849m. The Group's pension position, on 
an IAS 19 basis, remains in an accounting surplus.

Further details of the Group's financial performance in the period can be found in the Group financial review on page 7.

Market backdrop of increased defence spending

The regions where we operate are poised for higher defence spending. We expect this to provide significant opportunities across all our sectors.

In response to the increased global security challenges, at the NATO Summit in June, member countries committed to investing 5% of GDP in defence - including 3.5% on core defence requirements and 1.5% on defence- and security-related investments like infrastructure and industry. This represents a significant increase from the previous benchmark of 2% of GDP. We have a strong, established position in Europe and NATO and our range of products and services aligns well to the capability requirements of these nations. These include combat aircraft, combat vehicles, air defence, missile systems, artillery, munitions, drones, electronic warfare and sensor technology.

In June, the UK Government published its National Security Strategy (NSS), bringing together various strands of work that have been underway since the 2024 general election, including the Strategic Defence Review and the Industrial Strategy. The NSS states the UK is entering a period in which it is likely to face indirect and potentially direct confrontation with adversaries and the country must adapt its national security approach in response. The three pillars of the new strategic framework to address the increased threats - security at home, strength abroad and increased sovereignty and asymmetric capabilities - align well to our capabilities and provide commitment to our long-term programmes. In conjunction with the NSS, the Government pledged to meet the aforementioned NATO spending commitment and set a target date of 2035 for achieving the 5% level with an interim target of at least 4.1% expected to be spent in 2027.

The US Department of Defense has submitted its fiscal year 2026 budget request to Congress totalling $961bn. This includes a base request of $848bn and reconciliation funding of $113bn, representing a 13% increase from the enacted fiscal year 2025 budget . While details on the 2027 budget have not been disclosed, residual defence reconciliation funds will be available in 2027 to help bolster FY27 defence spending, 
and the Administration has said it intends to ensure the United States has unmatched military strength for years to come. Our portfolio aligns with the key priorities of US and international defence and intelligence customers, focusing on capabilities such as electronic warfare, precision strike munitions, space systems, tactical missile systems, counter-UAS, critical submarine components and combat vehicles. Our expertise in space-based capabilities and electronic and sensor technologies mean we are well positioned to contribute to the US Government's Golden Dome project.

Our key markets in the Asia-Pacific and the Middle East are also expected to increase spending and we will continue to support our government customers in these regions with leading products and services.

Defence spending in the Kingdom of Saudi Arabia is around 7% of GDP per year and the 2025 military budget is expected to increase by 5%. Areas of longer-term focus for the Kingdom align well with our portfolio and include combat aircraft, missile defence systems, naval vessels and further increasing the localisation of its defence spend.

Australia's inaugural 2024 National Defence Strategy reintroduced the measure of defence spending as a percentage of GDP with a promise to increase defence investment from 1.9% to 2.4% by 2033 to 2034. The AUKUS security pact, which will provide Australia with conventionally-armed nuclear-powered submarines, is a key programme that is expected to see substantial increases in spending from 2027.

In 2022, in response to the increased threat environment, the Japanese Government made significant changes to its security strategy. It pledged to double defence spending from 1% of GDP, a cap first put in place in 1976, to 2% by 2027. Increased investment is expected across multiple areas as the country fundamentally reinforces its defence capabilities. We have partnered with Japan and Italy to design and develop next-generation fighter jets under GCAP, with the aircraft due to come into service in 2035. Through GCAP, we continue to deepen our links with Japan.

Investing to support future growth

We continue to invest in our technologies, facilities and people to drive efficiencies and ensure our business has the capacity and agility to deliver on our programmes, as well as anticipate and respond to higher defence spending and the emerging threats our government customers are facing.

In 2024, we invested a record amount in R&D and capital expenditure, and we continue to invest to support future growth. Our investment in self-funded R&D is focused on key technology areas including electronic warfare, autonomy, laser-guided weapons, uncrewed systems, synthetic training, electrification applications and space solutions.

Through a combination of self-funded R&D and acquisitions, we have established ourselves as one of Europe's leading producers of drone capabilities and through research hubs embedded across our business, we continued to explore transformational technologies that will further advance our state-of-the-art capabilities in defence systems.

We are building on more than £1bn of capital expenditure in 2024, as we increase capacity for the future and develop and modernise our systems and facilities. This includes a new shipbuild assembly hall in Glasgow, UK, and a modern shiplift and land-level repair complex in Florida, US, both of which have already become operational. In the UK, a new artillery factory in Sheffield and explosives filling facility in South Wales are on track to become operational later in the year.

We continue to hire and train people to enable us to deliver for our customers. We have grown our global workforce by more than 20,000 people over the past five years and, in the UK alone, we intend to recruit more than 2,400 apprentice, undergraduate and graduate roles this year.

Our market differentiation

Our business has a unique combination of a diverse geographic footprint and multi-domain capabilities. We believe our technologies, deep domain expertise and global reach position BAE Systems as a leader in our industry and enable us to support our customers to meet the elevated threat environment of today and tomorrow. This breadth continues to be a real strength and a differentiator.

Looking ahead, our key growth drivers are spread across major markets and include huge multi-national endeavours, including GCAP and AUKUS, which are significant for the Group in the medium and long term and highlight the global reach, scale and longevity of our business.

Responsible business

We support our government customers to fulfil their primary obligation to keep their citizens safe, while contributing to the economic and social development of the communities and nations where we operate, helping to build a stronger and more secure future.

Our people are the heart of everything we do, and it is critical that we attract and retain the best talent so that we can support our customers' requirements and our own long-term growth. We are fully committed to fostering a workplace culture and environment where everyone feels they belong and can contribute fully to our mission, which includes investing in our people's skills development from early careers through to lifelong learning.

The safety, health and wellbeing of our people is an enduring priority. We are committed to strengthening our safety management programme to improve our performance in 2025 and beyond.

We continue to focus on resource efficiency, developing energy and infrastructure strategies to reduce our greenhouse gas emissions across our operations, while supporting our business growth.

We do all of this while maintaining a robust governance structure and high standards. This includes continuing to operate under tight regulation and complying fully with applicable trade controls and sanctions.

Outlook

We have a strong track record of delivering financial returns for investors and, through the careful long-term sustainable management and governance of our business, we are well placed to continue to generate good returns. This is supported by our seven key advantages:

Group financial review

Group income statement

Reconciliation of underlying EBIT to operating profit

As defined by the Group

Sales for the period were £14.6bn (2024 £13.4bn) representing growth, on a constant currency basis3, of 11%. On an organic basis, sales grew 9% on a constant currency basis. All sectors delivered growth in the period as detailed below.

Electronic Systems recorded sales of £3.6bn (2024 £3.4bn), equating to growth of 9% on a constant currency basis, which included the full 
six-month benefit of our Space & Mission Systems (SMS) business and increased demand in the Electronic Combat and Precision Strike & Sensing businesses.

Our Platforms & Services sector posted sales of £2.5bn (2024 £2.1bn), with growth of 21% on a constant currency basis, as the sector works to deliver on the recent increased demand for combat vehicles both in the US, through our Combat Mission Systems business which was up 27%, and, in Europe, through our Hägglunds and Bofors businesses which were up 25% and 39% respectively.

Our Air sector recorded sales of £4.3bn (2024 £4.0bn), representing growth of 9% on a constant currency basis. The period saw an increase in design and development activities on our Future Combat Air System programme, as well as 18% sales growth in MBDA. The acquisitions in FalconWorks® in the first half of 2024, which expanded our capabilities in UAS, also contributed additional sales in the period. The sector recorded organic growth of 8% on a constant currency basis.

Maritime recorded sales of £3.2bn (2024 £2.9bn), which was an increase of 12% on a constant currency basis, with increased activities across the sector. In Submarines, design work has continued on SSN-AUKUS and, in Naval Ships, construction continued across the Type 26 programme. In our UK Munitions business, sales have grown following additional investment to meet increased demand.

Sales in the Cyber & Intelligence sector increased by 2% on a constant currency basis, to £1.2bn (2024 £1.2bn), with growth from the prior year acquisitions in the Digital Intelligence business.

Underlying EBIT was up 13% on a constant currency basis, to £1,550m (2024 £1,393m), resulting in an increased return on sales for the period of 10.6% (2024 10.4%). On an organic basis, underlying EBIT grew 10% on a constant currency basis.

Our Electronic Systems sector grew underlying EBIT to £541m (2024 £473m), an increase of 17% on a constant currency basis, and generated a return on sales of 15.0% (2024 14.0%). The growth in underlying EBIT benefitted from both the sales growth in the period and a full six months of SMS. On an organic basis, the sector saw an increase in underlying EBIT of 12% on a constant currency basis.

Platforms & Services reported underlying EBIT of £292m (2024 £216m), an increase of 37% on a constant currency basis, with the return on sales increasing to 11.8% (2024 10.4%). The growth reflects the demand for combat vehicles as production ramps up to deliver increased volumes across Bradley, CV90 and AMPV, which is operating at full-rate production.

Our Air sector reported underlying EBIT of £500m (2024 £446m), an increase of 13% on a constant currency basis, with a strong return on sales of 11.5% (2024 11.1%) reflecting good operational performance.

The Maritime sector reported underlying EBIT of £220m (2024 £228m), a decrease of 2% on a constant currency basis. The return on sales of 6.8% (2024 7.8%) reflected the timing of milestones in our Submarines business and contract-related trade-ups posted on the Hunter Class programme in the prior year.

Adjusting items totalled a net cost of £14m (2024 net gain of £46m) of which £11m relates to the ongoing integration of Ball Aerospace, which was acquired in 2024, and the remaining £3m to other historic acquisitions. The prior period gain of £46m reflected a profit on the sale of a partial shareholding in Air Astana of £75m and a settlement gain of £13m on a US pension buy-out, offset by £42m of acquisition and integration-related costs, primarily in relation to Ball Aerospace.

Underlying net finance costs were £203m (2024 £180m), an increase of £23m. Of this, net costs of £234m (2024 £207m) related to the Group and net income of £31m (2024 £27m) related to the Group's share of equity accounted investments. The Group's underlying net finance costs increased as interest income on cash and other financial instruments fell in the period from £63m to £39m.

As derived from IFRS

Revenue was £13.6bn (2024 £12.5bn). Growth during the period of 9%, on a reported currency basis, reflected the same drivers behind the increase in sales for the period excluding the impact of MBDA in the Air sector and other equity accounted investments.

Operating profit increased 2%, to £1,327m (2024 £1,296m), on a reported currency basis. On an operating sector basis, this reflected the same drivers as underlying EBIT, however, operating profit was impacted by additional costs from amortisation of programme, customer-related and other intangible assets, and impairment of intangible assets which increased by £53m to £196m in the six month period ended 30 June 2025. The comparative period also reflected a net income from adjusting items of £46m (as detailed above) with the current period adjusting items being a cost of £14m as the Group continued integration activities from acquisitions in the prior year.

Net finance costs were £138m (2024 £133m), consisting of finance income of £65m (2024 £69m) and finance costs of £203m (2024 £202m).

Orders

As defined by the Group

Order intake of £13.2bn remained high across all sectors:

Further details of awards in the period are covered in the segmental reviews starting on page 11.

Earnings per share (EPS)

As defined by the Group

Underlying EPS increased to 34.7p (2024 31.4p), 12% on a constant currency basis. This is largely driven by the increase in the Group's profitability in the period, as shown in the table below.

As derived from IFRS

Basic EPS increased 3% on a reported currency basis, to 32.3p (2024 31.4p), with the gain in underlying profit being offset by amortisation on the intangibles acquired in the six month period to 30 June 2024 and the prior period further benefitting from the one-off gain on the Group's partial disposal of Air Astana.

Net debt (excluding lease liabilities)

Cash and cash equivalents of £2,153m (31 December 2024 £3,378m) are held primarily for management of working capital as well as the repayment of debt securities, pension funding when required and committed shareholder returns. During the period, the Group paid £849m (2024 £812m) to shareholders, through dividends and share buybacks, which accounted for the majority of the cash movement.

The Group's net debt (excluding lease liabilities) at 30 June was £5,566m (31 December 2024 £4,945m), a net increase of £621m from the position at the start of the year. During the period, there was a decrease in the carrying amount of the Group's outstanding loans of £718m reflective of foreign exchange movements on the Group's US Dollar denominated borrowings, offset by their associated derivatives. No loan repayments were made during the period.

Cash flow

As defined by the Group

Free cash flow was an outflow of £368m (2024 inflow of £219m). Free cash flow reflects cash generated by the Group's operations, after servicing debt and tax obligations.

Operating business cash flow was an outflow of £8m (2024 inflow of £474m) after investing a net £400m (2024 £396m) in capital expenditure in the period.

Both cash measures reflect movements on customer advances which have now begun to flow to our supply chain as the Group works to deliver against these contracts. No material advances were received in the first half of the year.

As derived from IFRS

Net cash flow from operating activities was an inflow of £74m (2024 £757m), a decrease of £683m on the prior period. Although the Group saw increased profitability in the six months ended 30 June 2025, working capital movements in the period reflected timing of programmes and the outflow of customer advances to the supply chain. The comparative period included a number of large customer advances received immediately prior to the period end. No material advances were received in the first half of the year.

Net cash flow from investing activities was an outflow of £73m (2024 £4,569m) as net capital expenditure of £400m (2024 £396m) was partially offset by dividends received from the Group's equity accounted investments of £287m (2024 £145m). In the comparative period, the acquisition of subsidiaries, including Ball Aerospace, accounted for a net cash outflow of £4,536m. This was offset by cash proceeds of £166m from the partial sale of the Group's shareholding in Air Astana. There were no M&A transactions in the current period.

Net cash flow from financing activities was an outflow of £1,160m (2024 inflow of £2,583m). Cash returns to shareholders, through dividends and share buybacks, accounted for £849m (2024 £812m) of the outflow in the period combined with interest paid on the Group's borrowings and other liabilities of £267m (2024 £222m). The inflow in the prior period further reflected cash proceeds from debt financing raised of £3,765m primarily to fund the Ball Aerospace acquisition. The Group has not raised any cash from external debt funding in the current period.

Foreign exchange translation primarily arises in respect of the Group's US dollar-denominated cash holdings.

Exchange rates

Segmental review

Segmental performance: Electronic Systems

Electronic Systems, with 22,600¹ employees, comprises the Group's US- and UK-based Electronic Systems business and the US-based 
Space & Mission Systems (SMS) business.

Financial performance

Operational performance

Demand was strong across our customer base in the first half of 2025, as evidenced by our order intake. We supported customers on key electronic warfare and precision-guided-munition programmes, while pursuing and maturing new opportunities.

With the integration of our SMS business essentially complete, we continue to realise benefits from focused cross-segment collaboration, identifying new opportunities to unlock synergies and deliver growth. SMS core programmes in defence remain aligned with US Government key priorities, and we are also leveraging our proven capabilities in tactical systems to diversify our market presence.

In our commercial businesses, airline traffic has exceeded pre-pandemic levels and is growing globally, resulting in stronger demand for our original equipment manufacturer deliveries and aftermarket services.

Key operational points for the period

Strategic and order highlights

Looking forward

Segmental performance: Platforms & Services

Platforms & Services, with 11,8001 employees and operations in the US, Sweden and the UK, manufactures and upgrades combat vehicles, weapons and munitions, and delivers services and sustainment activities, including US naval ship repair and the management and operation of two government-owned, contractor-operated ammunition plants.

Financial performance

Operational performance

Across our Platforms & Services sector, we remain focused on delivering on our commitments while diversifying and growing our portfolio in the US and international markets across combat vehicles, munitions, artillery systems and submarines. These actions position us to address our customers' priorities for modernisation and advanced technologies, including missile defence and autonomous weapons.

As the US vehicle market evolves, our Combat Mission Systems team continues to work closely with military services to remain a trusted partner to deliver our leading combat vehicles and other capabilities, while pursuing international opportunities.

We continue to support the broader defence industrial base to ensure we have the technology and capacity needed to equip our armed forces customers. We have upgraded our welding, machining and heavy-lift capacity to further support building submarines and continued to invest in infrastructure to support customer needs, such as our Sterling Heights, Michigan, next-generation technology hub called the Virtual Proving Ground where we can collaborate with customers and industry partners using digital engineering. In Sweden, we are expanding our operations to further enhance our capabilities to meet the needs of international customers. In the UK, we began work on a new facility in Sheffield to expand capacity for our artillery and defence capabilities.

We are also monitoring Europe's increased defence spending and working to understand and anticipate NATO's capability gaps, recognising our strengths as a leading provider of proven combat vehicles and air-defence solutions to enhance the region's readiness for the future.

Key operational points for the period

Strategic and order highlights

Looking forward

Segmental performance: Air

Air, with 29,100¹ employees, comprises the Group's UK‑based air build and support activities for European and international markets, US programmes, development of our Future Combat Air System (FCAS) and FalconWorks®, alongside our business in the Kingdom of Saudi Arabia and interests in our European joint ventures: Eurofighter and MBDA.

Financial performance

Operational performance

We continue to work with our UK and international customers to support their existing platforms and provide new enhanced capabilities. Our US Programmes division remains focused on delivery execution across all production lines. Our FCAS and FalconWorks® organisations continue to invest in our people, facilities and cutting-edge technologies.

Key operational points for the period

Strategic and order highlights

Looking forward

Segmental performance: Maritime

Maritime, with 30,800¹ employees, comprises the Group's UK‑based maritime and land activities, including ship build and support activities, major submarine build programmes, as well as our Australian business.

Financial performance

Operational performance

Our major Maritime platforms continue to progress through their long-term programmes. We have delivered five of the seven Astute Class submarines to the Royal Navy and continue construction on the first three of four Dreadnought Class submarines. Construction of the initial five UK Type 26 frigates and the first Australian Hunter Class frigate are also underway. We also continue to deliver on customer requirements in both munitions and services. Ongoing investments in our facilities and our people support our current and future delivery. Our investment and high levels of customer demand mean the sector is well positioned for growth.

Key operational points for the period

Strategic and order highlights

Looking forward

Segmental performance: Cyber & Intelligence

Cyber & Intelligence, with 10,8001 employees, comprises the US‑based Intelligence & Security business and UK‑headquartered Digital Intelligence business, which covers the Group's cyber security activities for national security, central government and government enterprises.

Financial performance

Operational performance

Intelligence & Security demonstrated solid performance despite revenue headwinds due to shifting US Government priorities and delays 
in new solicitations and awards. We continue to work on maintaining a strong pipeline of qualified opportunities to deliver mission-critical integration capabilities aligned with evolving customer needs and national security priorities. Our Intelligence & Security business continues to strategically position itself in key technology domains critical to driving faster, more impactful outcomes for our customers, including automation, artificial intelligence and autonomy.

In our Digital Intelligence business, we continue to work collaboratively to collect, connect and understand complex data for governments, nation states, armed forces and commercial businesses in both the UK and international markets. Our services, solutions and products span customers in Law Enforcement, National Security, Central Government, Critical National Infrastructure, Telecommunications, Defence and Space. In the first half of 2025, the integration of Kirintec, which was acquired in 2024, and demand in the security market and rigorous cost control is helping to compensate for delays in the defence business.

Key operational points for the period

Strategic and order highlights

Looking forward

Principal risks and uncertainties

Having considered recent geopolitical and macroeconomic events, the Group believes the principal risks and uncertainties we face for the remainder of the year are included in, and are therefore unchanged from, those reported in the Annual Report 2024.

The Group's principal risks and uncertainties at 31 December 2024 were detailed on pages 58 to 65 of the Annual Report 2024 and related to the following areas: government customers, defence spending and terms of trade; contract risk, execution and supply chain; security (including cyber security); international markets; people; safety; acquisitions; business interruption; climate transition and environmental factors; and legal risk.

Responsibility statement of the directors in respect of the Half-yearly Financial Report

Each of the directors (as detailed below) confirms that to the best of his/her knowledge:

For and on behalf of the directors:

Cressida Hogg
Chair
29 July 2025

Directors

Independent review report to BAE Systems plc

Conclusion

We have been engaged by the Company to review the condensed set of financial statements in the Half-yearly Financial Report for the six months ended 30 June 2025 which comprises the Condensed consolidated income statement, the Condensed consolidated statement of comprehensive income, the Condensed consolidated statement of changes in equity, the Condensed consolidated balance sheet, the Condensed consolidated cash flow statement and related notes 1 to 13.

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the Half-yearly Financial Report for the six months ended 30 June 2025 is not prepared, in all material respects, in accordance with United Kingdom adopted International Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Basis for conclusion

We conducted our review in accordance with International Standard on Review Engagements (UK) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council for use in the United Kingdom 
(ISRE (UK) 2410). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with United Kingdom adopted international accounting standards. The condensed set of financial statements included in this Half-yearly Financial Report has been prepared in accordance with United Kingdom adopted International Accounting Standard 34, "Interim Financial Reporting".

Conclusion relating to going concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for Conclusion section of this Report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed.

This Conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410; however future events or conditions may cause the entity to cease to continue as a going concern.

Responsibilities of the directors

The directors are responsible for preparing the Half-yearly Financial Report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

In preparing the Half-yearly Financial Report, the directors are responsible for assessing the group's ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the review of the financial information

In reviewing the Half-yearly Financial Report, we are responsible for expressing to the Company a conclusion on the condensed set of financial statements in the Half-yearly Financial Report. Our conclusion, including our conclusion relating to going concern, are based on procedures that are less extensive than audit procedures, as described in the basis for conclusion paragraph of this report.

This report is made solely to the Company in accordance with ISRE (UK) 2410. Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.

Deloitte LLP
Statutory Auditor
London
United Kingdom

29 July 2025

Condensed consolidated income statement (unaudited)

Condensed consolidated statement of comprehensive income (unaudited)