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02 Aug 12. Results from continuing operations

6 mths to 30/6/12 6 mths to 30/6/11 Year to 31/12/11

Sales1 £8,334m £9,229m £19,154m

EBITA2 £939m £968m £2,025m

profit £786m £757m £1,580m

Underlying earnings3 per share4:
– including R&D tax benefit

18.8p 18.6p 45.6p
– excluding R&D tax benefit

18.8p 18.6p 39.7p

Basic earnings per share5

14.5p 14.5p 37.0p

Order backlog1,6
£40.0bn £39.1bn
Other results including discontinued operations

6 mths to 30/6/12 6 mths to 30/6/11 Year to 31/12/11

Dividend per share

7.8p 7.5p 18.8p

Operating business cash flow7

£742m £11m £634m

Net debt (as defined by the Group)8

£(1,230)m £(1,122)m £(1,439)m


– Sales1 reduced by 10%

– Underlying EBITA2 reduced by 3%

– Underlying earnings3 per share4 increased by 1%

– Order backlog1,6 increased to £40.0bn

– Non-US and UK order intake1 increased to £4.3bn

– Interim dividend increased by 4% to 7.8p per share

– Operating business cash inflow7 increased to £742m


In line with previous guidance, modest growth in underlying earnings3 per share4 is anticipated, assuming a satisfactory conclusion to the Salam pricing negotiations in 2012 and excluding the benefit in 2011 of the Research & Development tax settlement. A higher level of operating business cash inflow7 is planned in 2012 including the anticipated benefit of cash receipts related to the Salam programme.

1 Including share of equity accounted investments.

2 Earnings before amortisation and impairment of intangible assets, finance costs and taxation expense (EBITA) excluding non-recurring
items (see below).

3 Earnings excluding amortisation and impairment of intangible assets, non-cash finance movements on pensions and financial
derivatives, and non-recurring items (see note 5).

4 Restated for the six months ended 30 June 2011 to exclude the add back of £28m of pre-tax charges that would have been incurred in
future years and, therefore, remain within underlying earnings.

5 Basic earnings per share in accordance with International Accounting Standard 33, Earnings per Share.

6 Order backlog comprises funded and unfunded unexecuted customer orders, and is stated after the elimination of intra-group orders.

7 Net cash inflow from operating activities after capital expenditure (net) and financial investment, dividends from equity accounted
investments, and assets contributed to Trust.

8 See definition below.


The Group outlook for 2012 is unchanged. In line with forecast, there is a greater bias to the second half trading from the existing order book. The performance of the Group in the first half of 2012 reflects the anticipated further reduction in volume within the Group’s land activities and that contractual deliveries under the Typhoon Salam programme do not recommence until 2013. The planned conclusion of negotiations relating to the formalisation of price escalation on the Salam programme is expected to contribute to the Group’s second half performance.

The outlook for defence spending in the UK has stabilised. The Group welcomed the UK government’s confirmation, as part of the PR12 planning round, that the defence budgets were now in balance with the equipment plan.

In the US, the approval of the Department of Defense Fiscal Year 2012 budget in December 2011 has resulted in less disruption to the award of defence contracts compared with the corresponding period for 2011, when the US government was operating under a Continuing Resolution. However, with US government debt reducti

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