Thanks for joining us for our 2026 half year results. I'm Jim Fairbairn, the CEO, and with me is our CFO, Ben Fidler.

I'd like to do some brief introductory remarks. I'll set the context and give some highlights, and then I'll pass to Ben to go deeper into the financials.

I'll then come back and talk about how we're continuing to make progress in executing the strategy, and then I'll end with a comment on the outlook. To start with the highlights.

We are pleased with our good performance in the first half. We are on track and on plan.

We've reported core organic revenue growth of just under 10%. We've seen strong demand in aerospace and defense and also IGT.

Medical has also returned to growth. All of this has more than offset continued softness in automotive.

As we said we would, we have delivered margin improvement on the back of volume growth and our successful Optimize repositioning and restructuring. I'll talk later about the pace of progress on Optimize and how we intend to go further.

In summary, we are on track and pleased with progress in the first half, and we are happy to reconfirm our expectations for the full year. Let's look at the growth and also the momentum across the group.

Across our total core markets, revenue grew 9.6%, and this was made up as follows. Aerospace and defense revenues grew almost 25%, reflecting the strong demand across OE and also aftermarket, and this was particularly led by surface treatment on commercial engines.

Industrial markets grew slightly as expected, but remains fragile. At the same time, we have continued to see softness in automotive.

It was down 4.4% with weakness across most areas of our portfolio and especially Western Europe. Then energy, which was up 4.7%, and within that, IGT revenues were up over 10%.

Our oil and gas business has stabilized after significant contract wins in 2024. Then we also saw strong revenue growth in consumer, medical, and other.

It was up 14.8%, driven by semiconductor demand and a return to growth in medical. In overall terms, you can see the strong performance of some of our end markets more than offsetting the softness in automotive, and the good sequential growth notwithstanding the softer prior year comparator.

This then gives us the confidence that we are on track for 2026. I'll talk more about this later.

With that, I'll pass to Ben.

Thank you, Jim, and just to add my welcome to all of you. Thanks for what I understand is a reasonably busy morning this morning, good to have you with us.

I'm now going to step through in a little bit more detail just some of the key elements of our financial performance for the first half. Then I'll also touch on some of the more detailed aspects of our technical guidance as to what you should expect for the full year 2026.

Let's start, as you can see here, with the key highlights: overall, a good performance in the first half that was in line with our expectations. I think the highlights were: good levels of organic revenue growth; core margins that were up despite some cost headwinds we incurred in the period; strong EPS growth; good level of cash conversion and a balance sheet that remains in good shape; and a good level of capital return to shareholders through a combination of the dividend and the ongoing £18 million share buyback.

Now let's dive into the numbers on the next slide in a little bit more detail. Firstly, in the top table here, you can see focusing on the ongoing core business, core revenues were up 9.6% organically, reflecting strong growth, as you heard from Jim, across aerospace, defense, industrial gas turbines, and medical markets.

Core operating profit rose 11% organically to £60.4 million with core margins up 30 basis points to 16.2%. Although underlying core margins progressed much more strongly than this, that was impacted in the first half by variable pay, which normalized after an unusually low level in 2025, as well as the cost drag on some of the new program investments that are ramping up as we've opened a number of new sites and are transferring work to those.

Each of those elements, the variable pay piece and the new investment ramp-up, had about a 100 basis point impact on the margin in the first half. Secondly, and in the lower table, you can see the numbers looked at through the group lens, which includes our non-core business, the non-core activities that we're exiting from.

Revenues at that level were up 6.5% organically to £381.2 million. Group operating profit, £61 million with margins of 16%, up 110 basis points on the prior year.

That reflected the benefits from the Optimize program, as well as the reduced revenue scale of our low-margin non-core activities. Adjusted EPS, as you can see here, rose a strong 18.3% to 25.2p.

The interim dividend was increased by 4%, providing an increase to shareholders whilst also helping us to rebuild dividend cover. Now I want to look at some of the key drivers of the group's operating profit performance.

I'm going to cover the details behind the divisions in a moment, but as you can see here, divisional profit rose by a combined £7 million from our two core divisions, reflecting that strong top-line growth in Specialist Technologies of 16%, as well as a good growth in Precision Heat Treatment of 8%. The benefits from Optimize ramped up further in line with our expectations with around a £2 million further profit improvement delivered in the first half of the year.

You can see those Optimize benefits land in both the Precision Heat Treatment division as well as in central costs. Non-core profit, as you can see here, reduced by a million pounds on a £23 million reduction in non-core revenues, reflecting the execution on site closures and disposals.

Overall, we're pleased with what we are achieving and delivering on the Optimize program, all of which is turning Bodycote into more of a right-sized, better-utilized, and more efficient group. The first half numbers, as you can see here, I think show this quite clearly.

Group revenues up 3% in total and up 6.5% organically, with that leaner and more efficient cost base enabling us to deliver that top-line growth while at the same time having 1% reduced labor cost on 4% lower headcount, and 2% reduced utility costs with a 10%, over a 10% improvement in energy intensity. All of which combined has enabled us to deliver that group margin improvement of 110 basis points year-over-year.

Now let's turn to look at the performance of our two core divisions in a little bit more detail. Firstly, with Specialist Technologies, you can see here, which delivered a strong performance: revenues up 16.7% and profit up almost 17% organically, very much led by the 37% growth in aerospace and defense revenues, which is now 50% of this division's revenue base.

We renewed two important long-term agreements with customers in the period with two sizeable US Tier 1s. Although energy overall as a market was up only 2% in terms of revenue, that masked a much stronger 17% growth in industrial gas turbines, which largely offset the 15% decline we experienced in oil and gas markets.

Those oil and gas declines are now easing as we work our way through the difficult prior-year comps. Medical, which you also may remember was softer last year, now back to growth, up 15% in Specialist Technologies in the first half.

Industrial and automotive, you can see here smaller parts of this division, representing only 20% of combined divisional revenues, but these markets remained challenging in the year. Margins overall for the division healthy at 26.1%, up 10 basis points.

Next, turning to Precision Heat Treatment. On an organic basis, revenues up just over 6%, led again by the strong growth in aerospace and defense, which was 16% in this division.

Operating profit rose just over 5% organically with margins stable at 15%. Industrial, which represents about 25% of Precision Heat Treatment divisional revenues, was up 3.6%.

That was effectively stable on an underlying basis, which was then boosted by the Optimize revenue transfers. Automotive, 26% of our Precision Heat Treatment division, remained challenging.

Here, even with the benefit of some of those Optimize revenue transfers from non-core into core, the organic revenue decline here was 4%, reflecting the ongoing structural challenges that a number of our automotive markets face, particularly in Western Europe. Let's turn to cash flow.

The group delivered a good level of cash performance in the first half: operating cash flow of £41.6 million, up almost £4 million over the prior year. That reflected the high level of EBITDA year-on-year, some temporary phasing effects on capex, which saw capex actually modestly lower in the first half, and a working capital outflow that reflected the strong organic revenue growth.

Operating cash conversion overall was stable at 68% versus the prior year. Restructuring spend, as you can see here, increased to £9.5 million as we'd expected, reflecting further execution and delivery on the Optimize program.

Cash tax was up £5 million versus the prior year. That reflected a lower level of tax refunds that we had benefited from in the first half of 2025.

We expect a much more balanced H1-H2 pattern to cash tax this year. Overall, left free cash flow at £14.5 million, about £3.5 million lower than the prior year.

Now let's turn to look at capital allocation. We ended the period with net debt of £135.2 million, leverage still low at 0.7 times.

We very much maintained and will maintain our balanced approach to capital allocation. In the first half, that saw us deploy £33.5 million on capital expenditure, close to £28 million on dividends to shareholders, and close to £18 million on the share buyback, with just over £12 million deployed on the new £18 million buyback that we launched in March.

On M&A, we closed one transaction in the first half, not a huge acquisition at £5.5 million, but Spectrum Thermal Processing is a very nice business, a nice quality addition to our US aerospace footprint and capability, and it's performing very well. We continue to build the M&A pipeline, as Jim will touch on a little bit later.

Finally, an update on some of the more detailed technical guidance points for 2026. I'm not going to step through all of these, but just to flag the two or three that have changed since we last presented this to you in March.

Firstly, capex: continue to expect it to be higher year-over-year with a ramp-up in the second half reflecting project phasing. For the full year, we now expect capex to be at or towards the lower end of our £80 million to £90 million previous guidance range.

Secondly, finance cost: small item and a small change, but around about £10 million, a little bit lower than we previously guided. Finally, tax rate: expect it to remain in line with the first half 23.5 percentage points, thus, which is about 100 basis points lower than we'd originally flagged in March.

As a reminder, as you model margins for the second half, do bear in mind those two headwinds which will maintain: variable pay as well as the new investment ramp-up costs. At the same time, we expect further volume leverage and further Optimize improvements to come through in the second half of the year.

With that, I'll hand back to Jim to update more on strategy and on outlook.

Thank you, Ben. We've continued to make further good progress executing on our strategy.

As it's focused on three key areas: Optimize, where we have been successfully carrying out a major portfolio rationalization and are now looking to go further; Perform, where we are driving margin improvement through the deployment of lean, our lighthouse operational excellence sites are now up and running and we are very much in the rollout phase; and Grow, which is all about being smart with our capability and capital, and a focus on commercial wins and M&A. Let's look more closely at the benefits we're getting from the Optimize program.

The program delivery is on track. We expect the majority of the planned footprint actions, that's 29 out of 31 sites, to be completed by the end of the year.

We're really pleased with the results. The financial cost saving benefits last year was around £4 million, and we expect the same again this year, with a full run rate benefit of at least £15 million by the middle of 2027.

With the sale of the French sites, the net cash costs will be around £10 to £15 million. We've now a successful playbook for this activity, including ensuring that we retain the revenues that we want.

A lot has been done, and some of the more straightforward and obvious consolidations where there were clean or clear opportunities have been done. We are exploring potential options to expand the program and go even further.

This is focused on the parts of our auto business that remain in structural decline, and we'll have more to say in due course. Then on to Perform, I am also very happy with the early successes that we're seeing, and in particular from our lighthouse sites.

These are four sites that we've set up to act as intense training hubs. We've launched our EDGE lean system and are fully deploying it in our showcase sites.

People around the group can visit these sites, see what excellence looks like, absorb the key learnings, and carry best practice into the rest of the organization. Let's look at one example in lighthouse site number one.

It's a very large site. It's a US HIP site.

We've set ambitious two-year targets in areas such as turnaround time and also margins. After three week-long kaizen events, already we've achieved a 30% reduction in new product introduction lead time.

We have four of these lighthouse sites: two in the US and two in Europe. From there, we're rolling out processes to other sites.

Of course, this kind of implementation leads directly to better customer experience, better productivity, more capacity, and ultimately better margins. We're continuing to execute on the strategy, and I'm very happy with the recent progress.

Obviously, driving these efficiencies and margin improvement is a good foundation for future growth. At the core of our strategy is our drive to improve the quality of the portfolio.

We've already made significant progress over the last two years. We have prioritized the areas where we see higher growth and exited lower grade, more commoditized segments, plus we have integrated two quality acquisitions.

As our target end markets comprise aerospace and defense, IGT, medical, and also electronics. These now account for 48% of group revenues and are seeing good growth.

Two years ago, they were only 35% of group revenues. We're not finished yet, and a key priority is to go further to improve portfolio quality, setting us up for strong underlying growth with organic acceleration plus investment, supplemented by more M&A, together with driving further on the Optimize program.

Lastly, to cover outlook, we are mindful of the geopolitical and macroeconomic situation, but our full year outlook remains unchanged. We expect to deliver core organic revenue growth led by aerospace, defense, IGT, and also medical.

The pace of growth will moderate in the second half due to the comparators. We also expect to increase our group operating margins as we see increasing benefits from our Optimize program.

This success on Optimize and our focus on Perform and Grow also mean that we remain confident in the delivery of our medium-term financial targets. With that, I'll say thank you, and then open up to questions.

We'll start with Andy, and then Jonathan.

Thank you for the presentation, gents. Three questions, please.

Can we start with Optimize? Clearly, we're making good progress, but you've tempted us with a opportunity for maybe some more Optimize.

Can you just give us a flavor for maybe the scope of what you're thinking about for the next leg of what may come within that Optimize expansion, and maybe timing and just basically how you're thinking about it, just a bit more detail? Second question is on the M&A pipeline.

Clearly, Spectrum was a nice little deal. We've had activity in the market with Kittyhawk recently going, I was just wondering your pipeline apparently is building quite nicely, but just broader market activities, just really a bit of a flavor for how you're seeing the M&A backdrop.

Then lastly, is one for Ben. We've got some variable costs coming back into the business, as you guys have discussed in '26.

How does that flow through to '27 and '28? I'm assuming that you still have a bit more in '27 and then it all kind of disappears by '28, or should we not get too excited about '27 and '28 because there'll be more greenfields, more investment in Specialist Tech?

I just want to make sure that we're not getting too carried away, or maybe we should. Thank you.

I'll take the first two, and then Ben can take the third one. In terms of Optimize, we're still doing the work and an analysis.

I think we're a month or two before we really decide where we're going to go with that. Two things I would say.

I think the first thing is that we're responding to markets that remain structurally challenged, and I think that's a good thing. I don't think we anticipated previously the depth of that structural challenge, I think the fact that we're responding is actually positive.

The other thing I would say is that we've more conviction on being able to execute on Optimize. As in my prepared remarks, you'll have heard that we said that we're on track.

We put a lot of program management and focus and team focus around being able to execute that. The model just isn't closing site, it's also about retaining revenues.

We also said previously that we would remain agile, and I think that's a very important point. I think the last point I'd make is that, as Ben alluded to, with a lot of the low-hanging fruit within the organization, especially within AGI, has all been done.

As we look out for potential further restructuring, consolidations, then it will be a bit more difficult, you shouldn't necessarily expect the same returns, but at some point Ben can update on that. On acquisitions, we continue to build our pipeline.

Our preference always is not to be part of a process and build the relationships through time, through family-owned enterprises, and that's what we're doing. In fact, the man sitting next to your left is now responsible for M&A, and he's doing a good job about building these relationships.

It is our aim every year to do several acquisitions. As it's dependent on negotiations.

Sometimes these are opportunistic. I think what you'd want to know is that we have a funnel, we've got an active funnel.

All of us in the leadership team are tasked with looking at new opportunities and building these relationships, making business cases, and that is all actually happening. It needs to be aligned to the strategy as well.

Acquisitions are very much part of the strategy going forward. It's a big focus within the company, within the board, and I'm confident in the short to medium term we'll do more.

Couldn't be happier with the integration of Spectrum and Lake City. I think both of these are actually outperforming, which is actually true, and I think that's testament to the team who've actually taken over and also the process that we build behind them, and it's the same rigorous process in identifying and nurturing the pipeline.

I'm confident that we'll do more at some point.

Should I pick up the one on the new project investment costs? Your question on that, if I've understood it correctly.

Firstly, just quick context, remember what's behind those. If you wind back to the slides that we shared in March, you've got new site in Mexico, S3P greenfield in South Korea, you've got some A&D site expansions and replacement of legacy sites in the US, and also some additional HIP capacity that we're putting in: two sites in the US and one site in Europe.

There's quite a bit on our plate at the moment around some of these things, which is necessary for lots of good reasons because we want to drive more growth in the business. At the same time, we've also got to be mindful that financial alchemy is not entirely possible, and it means in the early years as you carry out those investments and those new sites start getting up and running, there is a cost to doing that.

As we alluded, it's probably around about 100 basis points to margin headwind in the first half, stays at about that level in the second half. That clearly starts to abate as you go through '27 and '28.

It won't all go away in '27. Chunk of it does, chunk of it goes away in 2028.

It then does depend on the second half to your question: is there more new investment coming thereafter? There will be a bit more, but at the same time, as you go through '27 and '28, you've got the building elements of the drivers coming from more savings on Optimize, Perform starting to deliver, and hopefully some ongoing volume growth in the underlying markets.

I'd think of it in that way.

Clear. So 2026 is a bit of a hump for that investment?

It probably is. It's the combination of a hump in those investments and the variable pay rebalancing.

Now

that variable pay piece, that doesn't unwind in '27, it's back to its normal base level, and therefore, that doesn't unwind, but it just hopefully doesn't get worse.

Great. Good morning, guys.

Three questions for me as well, please. Firstly, can I just come back to Optimize and obviously increasing the scope there?

You're going to focus on the areas that are structurally challenged within industrial and also automotive. Can you just break out how much of industrial you think is structurally challenged, and also how much of automotive is structurally challenged as well?

Like you say, in terms of the payback, it is going to be lower, but can you just give us a feel for what kind of levels of payback we could get on the next round? That was the first one.

The second one was just in terms of North America industrial. Obviously, it's lagged the PMIs, that isn't really picking up, I think.

We would have expected that to be better. I know there's a mix effect there.

Can you tell us what parts of industrial and US are really sort of holding you back there, and obviously the views into the second half? Then the third question, just in terms of one of your smaller end markets, but semi-con obviously growing really well.

Can you just give us a flavor for the growth of that business in H1, and what can you do to really expand your exposure to semi-con within Bodycote? Thanks.

Let me take the first one, then Ben. In terms of Optimize, we're very much seeing that structurally challenged area of the business is actually automotive.

Let me put some color to that, Jonathan. We're down 4.4% as we say, but it is a different picture in some regions, and hopefully this will give you some color and kind of point you to what we're thinking.

North America, Eastern Europe, and Turkey showed actually modest growth during the period. Western Europe was actually down high single digit.

That leads us to where I'd say that one of the focus areas that we are and will be looking at going forward. China was also down.

Light vehicle production was actually down 5%. We were down slightly more than that, but if you look at P5 and P6, there's a bit of a recovery in China, I think we're not really seeing in industrial.

We're really focusing on auto. Ben can come back about the payback in a second.

I'll take North American industrial. If we look at it on a global basis, by sub-market, then 50% of our industrial markets is in machinery and machinery manufacturing.

That was just flat to slightly down, whereas tooling and tool steel and also construction and agriculture were actually slightly up. That's where we are as a total industrial market.

Actually in America, if we look kind of regional, Europe was actually slightly up. North America was actually down.

Our kind of key weak spot in North America was actually heavy truck and bus equipment. That's really the industrial supply chain to that.

That's really where we saw the weakness. Do you want to take the payback question?

Yeah. Semis as well.

Semi, yeah. Yeah.

Look, on the payback, as you saw on the slide that we shared on screen earlier, the payback on this program has been actually very good, I think, with around about a one-for-one in terms of the net cash cost to achieve and the expected profit benefit that we're still ramping up to deliver, but confident that we will deliver that at least £15 million improvement by the middle of 2027. Of course, with the initial program scope, that was also helped from a net cash cost perspective by the fact we were able to package off and sell those French sites, which brought in around £19 million of proceeds and would have been far more expensive had we closed those.

I think in terms of orders of magnitude, it's hard to be too precise because, at the moment, the scope of the program is still being worked out, it'd be premature for me to sit here and come out with a number on payback. However, as Jim mentioned, it won't surprise you that the lowest hanging fruit was achieved and delivered in the first stage of the program.

That's not to say it won't be attractive. If it's not attractive, we wouldn't be doing it.

It's probably more likely to be somewhere in that, arguably, two to three times range between cash cost to benefit. Still gives an attractive payback, but just not as low-hangingly attractive as the first stage.

Give us time to work it through. We need to do more work to precisely define the scope of it, precisely define the reach of it, and the execution mechanism as to how we do it, which through closures, potential disposals, combination of those.

As Jim mentioned, we'll come back to you later in the year when we've done that work and when we're ready to give you some more concrete numbers on that. On semis, your question on that, Jonathan, look, it's growing nicely, not surprisingly.

I think it was up about 25% or something in the first half. It is a relatively small part of the group.

It's about 2% of revenues today in semis, and with some very niche exposures that we have there in the chip manufacturing supply chain process for equipment, capital equipment that goes into chip manufacturing, through two or three different parts of processes: a bit in S3P, a little bit in Precision Heat Treatment, and a little bit in hot isostatic pressing. It is hard to grow dramatically organically in that, but it's probably more likely through if there are selective M&A opportunities.

There is one early stage in that area, it's very small, but that we're looking at. The likelihood is, if it is M&A in that, it will be through pretty small bolt-ons.

There is one in the pipeline at the moment that we'll see where that one gets to, that would further enhance our reach into some of the electronic components and semis with more of an aerospace and defense bias to it.

Okay. Thanks, Jonathan.

Hi,

it's Harry Philips of Peel Hunt. Just a couple of questions, please.

Just thinking about the M&A environment and you've got two sort of well-known competitors who've set out very clear agendas to expand in similar markets and what have you. Just wondering, against that backdrop, you've got a whole list of companies in the States, I was actually looking at the list the other day, I think eight of the top 15 are family-owned still and what have you.

I'm sure they're also wining and dining all the same people. What's the Bodycote proposition, apart from cash, to get those family businesses into your portfolio rather than other people's?

When you look around capital allocation, and you've got these competitors wanting to grow at a real rate, just sort of do you feel you need to sort of reappraise how you sort of execute there? Then secondly, just looking at the chart which you very nicely sum up, Jim, where I think it was 48% of revenue come from those high-growth markets.

Let's say those high-growth markets can do you mid-high single digit, that should mean core Bodycote grows three, four, with no growth in industrial, auto under pressure, etc., etc. If you go back to the capital markets day in December '24, that sort of puts the capital markets sort of proposition almost at a low case, if you like, given if you've got short 50% of sales in higher growth markets.

Is that too simplistic, or what negative headwind am I missing in that, please? Okay.

Thanks, Harry. Let me take the two of them, and Ben can comment on the second one as well.

I think in terms of M&A, we're very selective. Kittyhawk got a mention earlier.

We knew the owners of Kittyhawk. We spoke to them.

We decided actually not to bid for it for different reasons. We're not going to go in there.

We're building every relationship that you would expect us to build, okay, with all these family-owned companies. Then we, as a team, take our ideas to the board, we have a big debate, and it's how it should be.

I think what family companies I think like from Bodycote is that we're the market leader. We take a real interest in the longevity of actually their asset.

We talk to them, always ask the question, 'Why are we the best buyer?' Therefore, we actually articulate that to the family company.

We have some good opportunities in the medium to long term of actually working with family-owned companies because we put a lot of currency on people, talent, development, how we think operationally, service levels, make sure that we serve the customer. We spend a lot of time actually doing that.

I think building that relationship is actually very important. The one thing that I've learned, been doing this for 25 years, is that you can never tell a family company when they have to sell.

They'll decide. That's actually why someone early on in my career said, 'You've got to wear out shoe leather.'

Barış, who's sitting there, that's what we do. We all do trips, Ben, everyone, to build these relationships.

I think the proposition for us is actually definitely around being the market leader, our values, our people, and being able to articulate the reason why we're the best buyer. Maybe Ben kind of could add to that in a second.

Your second question around pretty much we said at the capital markets day mid single-digit growth through the cycle. One way to get there is exactly what you're saying: half the business is in higher growth markets, and through time, that will increase.

You're not missing anything. I think we will continue to pivot the portfolio through time, to increase that percentage, and that's a reasonable proposition.

If you want to add anything to any of these two questions?

I think just on the medium-term growth mid single-digit point, the only dimension I would add, and I can't fault your math, as much as I'd love to, on if half the business is serving markets that are growing 6, 7, 8% per annum long term, let's also remember aerospace, brilliant growth; IGT, very strong growth, but if you look out five years plus, you can't extrapolate the first half performance forever, but nonetheless, they will still be significantly higher growth in a number of the other end markets that it gets you to maybe that 3 to 4% you talked about. The other dimensions just to throw into the mix is that auto, is it really going to grow?

Certainly, this is where the Optimize expansion program, that does mean you maybe need to feed into your overall mix the fact that potentially the scale of our core revenues may have a little bit of a further reduction as we put more businesses into non-core in the event of an expanded Optimize program. Now that doesn't diminish the future rate of growth, but it just depends on your revenue start point when you're working out where your CAGR is, that you maybe need to lower it before you then have more of that confidence around mid single-digit, maybe even slightly higher than mid single-digit growth in the longer term if you had a portfolio that was even more biased towards aerospace, IGT, medical, semis, etc.

Excuse me, but the flip side to that, I guess, is if, let's just use auto as the example, you start to take some revenue out of that and if M&A is sort of driven by the very sort of factors outside directly your control, do things like buybacks sort of get accelerated as a consequence of that because if you raise funds through focus and concentration, leverage is obviously undemanding where you are, etc., etc. The balancing item of capital allocation, does a drop in auto come with a rejig to broader capital allocation?

I think it fundamentally depends upon how we can execute an expansion of the Optimize program. Your question inherently assumes it will be through disposals that release capital.

I hope it might be, but, as you can imagine, you're looking at selling some of these businesses with an end market mix that may not be quite as favorable from a disposal perspective as your question might allude. That doesn't mean we're not going to try damn hard, but it depends how you execute the program: whether it's through disposals or whether it's through closures and consolidations.

In reality, it may be a mix of the two.

Okay.

Hi, guys. Tom Elgar from Deutsche Numis.

I think three sort of areas I just want to ask a question on. I think starting on A&D, clearly very strong growth to start the year.

I think it'd be great if you could touch on the pricing contribution as part of that and whether you can disaggregate the volume into the two parts of that. Then I guess secondly on A&D, thinking about any additional color you can provide on market share within the first half.

Obviously, very strong momentum in the business and obviously the changes that you've made, Jim, in terms of the sort of go-to-market strategy in A&D, it'd be great to sort of get an update on that. I'll pause there and come back.

Okay. I'll take the second part of that, Ben.

In terms of market share, what we've done in the last 18 months is actually really strengthened our aerospace and defense team. We brought in a new president.

She has changed probably 75% of her team. Part of that was to bring in a head of commercial that works with all her front line, really bringing new process and talent into looking at our commercial organization and go-to-market strategy, and also how we win business.

The aerospace and defense business had been suffering a little bit from some service level issues. They have all been resolved now, and Ben reference to major renegotiations of LTAs, both very much in our favor, and that will bring us market share.

I'm very confident that we have the rigor in terms of commercial focus just around the aerospace and defense team, and it's obviously showing within the numbers. Now, obviously, the majority of that is actually market growth.

If you think of the beginning of actually last year, there was congestion in the supply chain. Four months earlier, we had the Boeing strike.

We didn't have an easy first three or four months last year, and I think aerospace and defense during the half year last year grew 3%, yep. Obviously, the second half we're going to moderate as you would expect, but we've actually professionalized that whole team, but clearly, the majority of that is as we're rising with the market.

Yeah. Want to talk about pricing, Ben?

I think it's some of the similar themes in in in the volume versus price. I wouldn't have said there is anything particularly out of the ordinary in aerospace pricing in the first half of the year.

It's in line with the normal sort of price trends you'd expect from our business, which is sort of in that low single-digit percentage, low- to mid-single-digit percentage type of level. It was predominantly volume, and particularly some very strong volume growth in from from customers like GE, where we do a lot of the surface treatment work there, our surface treatment, surface technology business in aerospace saw very, very strong growth, a lot of which was boosted by GE activity on blade throughput on programs like LEAP, which was up more than 50% in terms of GE LEAP, GEnx blade volumes.

Thanks, guys. Just moving on to the IGT side, obviously really nice to see the acceleration there.

Just I guess asking more broadly in terms of what's driving the acceleration in terms of are we seeing a greater alignment towards the higher rates of growth within OE within the mix of the work that you do in IGT, or is this obviously the pressure we're seeing within the industry given the rates of growth in the end customer demand that we're seeing that there is more outsourcing demand, and therefore that trend is continuing as the new sort of greenfields/excess capacity, that debate. You guys obviously are well positioned to help your customers through with that, I guess just trying to unpack that trend within IGT.

We're obviously very, very happy with our IGT growth. It's growing with the demand.

There has been, primarily in the US, but not all, there has been some, especially second half of last year and slightly into the beginning of this year, a challenge in the supply chain. We believe that with some of our customers, household name customers, that they had problems getting castings and a whole lot of things.

That has now moderated, and obviously going into the second half, we expect to continue to see really good growth, especially in some of the larger IGT models that we service in the US. I think there's also a lot of experimentation and change around additive manufacturing that we're also seeing in some of our sites, especially in Greenville, where we do both.

It's our site really, apart from Derby, we've got a site with a combination of technologies, and we're expanding the amount of stages that we can actually work with in the customers. I think we see this as one of the most exciting areas of the business.

Growth isn't 50%, it's just over double-digit. That kind of thing I think would be a reasonable outlook for the next 6 to 18 months,

yeah. Then just lastly, touching on maybe a market we don't talk about very much, but nuclear, obviously we've seen the end markets there improve.

I know it's a small market for you guys, but I guess just could you remind us of your sort of go-to-market, your opportunity here? I guess looking at the pipeline, has that changed?

I know this is very high margin work, if you were to do some new greenfield activity would be reasonably contributing in terms of

As you say, nuclear's very small. We work with some of the household defense nuclear people.

We manage our pipeline through the commercial organization, and

I think on the nuclear power side, you're right. We do have exposure, and doing a reasonable chunk of work on nuclear power plants used in naval applications.

That's nice business, we serve out of the US. I think your question is probably more about the commercial nuclear and maybe some of the growth in small modular nuclear reactors.

It's potentially very interesting long term. We're working and the teams are working hard to build inroads into the developing supply chains of things like the Rolls-Royce SMR.

We work with Rolls-Royce very closely. We are accredited with Rolls-Royce's submarine business, which does the nuclear power plants on the UK Navy submarine vessels, we're a logical partner for them to use.

The reality is I don't think your forecast model probably goes far enough out to capture the revenue potential on that, not being cynical or skeptical about it, but the rate of ramp-up in that is very exciting on a 10-year view, probably very, very limited on a 1- to 2-year view, and marginal on a sort of 5-year view. It'll be there, but it will take time to build, but we are actively pursuing it, but you've got to recognize it's long lead-time stuff.

Just for a quick clarification, you would say that refurb work, for example in civil nuclear, is something we probably shouldn't expect? Because obviously we've seen a significant change in refurb volumes.

We benefit a little bit of that. We have some unique assets that service Framatome work in France on that as an example, but is it a big part of the business?

It's not a huge part of the business today. It's a nice part of the business, it's nice high margin, we've got some quite unique assets that do that.

We operate under a long-term agreement for some of that stuff, but, yeah, is it enough to really move the needle? Probably not.

Max Ryssen from Old Mutual Asset Management. In your outlook, you mentioned you're expecting to deliver group margin improvement.

Would you commit also to core margin improvement for the full

year? Should I take that one up?

Please, Ben.

Look, the outlook comments are clear: core revenues will grow organically; group margins will expand. We don't guide explicitly to core margins.

You saw what happened to core margins in the first half. I would assume the level of improvement will continue to be far greater in group margins for the full year than it will in core margins.

Thank you.

Hey guys, Jamie Murray from Bank of America. Just on aerospace and defense, clearly, it's grown really well, and you've provided some good color.

Just looking ahead, how do you see that growth evolving into H2 and in 2027? Then secondly, as part of the Optimize program, is it possible for you to convert automotive sites into aerospace and defense sites, and if so, what are the costs associated with that?

I'll take the second question, Ben, and you can follow on with the growth. The answers to the second part of your question, can you convert sites, and the answer is actually yes.

Now, it's not always as easy as rolling up and becoming an aerospace and defense site, and that's a good thing. We as a company can do it.

We understand the accreditations, the processes, and stuff. We are actually in the process of taking a site in Georgia in Athens, Georgia, which was an automotive site that was part of the Optimize, and converting it to an aerospace site so that we can serve the sort of Huntsville, Alabama space area in supply chain around that.

Now that's a 12 to 18 month program. It's a completely new set of assets, mainly vacuum furnaces.

You have to get industry accreditation, you've got to get customer accreditation. I think it's quite an involved process.

You've got to make an investment. The team, the aerospace and defense team are actually really excited about that because they see the potential.

We've also done that in other sites over the years of bringing in aerospace work, like for example, Barış in Turkey has actually pivoted one of the sites in Gebze to be able to take aerospace work, but that takes a lot of know-how and process know-how and knowing how to get the accreditations, which is all about quality, traceability, reliability, being able to heat treat within parameters that traditionally automotive and general industrial heat treaters can't do. We're in the process of actually doing that.

Now extending that to include Specialist Technologies like, for example, HIP is even a step above that. I think we do have a natural moat around our aerospace and defense business, okay, which we're very happy with, and is actually working today.

Look, let me pick up on the aerospace and defense question or commercial aerospace question. First half growth, 25%.

It was against a comp base that was a little low last year, particularly Q1 last year, where you had a lot of supply chain ingestion, aerospace have been up about 3% in the first half of last year. The comps do get significantly tougher, just mathematically, that means I wouldn't expect that level of 25% growth to continue in aerospace through the second half.

It will moderate a fair bit, but still remain good, but moderate a fair bit. Look, it's too early for us to guide in detail to anything around 2027, but you can look at the same numbers that we look at around the improvement and increase further in OE build rates with probably somewhere between an 8% to 10% increase in build rates for narrowbody and widebody programs in 2027 at Airbus and Boeing, as well as ongoing growth in aftermarket, maybe at a slightly lower level, but somewhere in the sort of mid to high single-digit percentage level, which is where aerospace then sort of hits a cadence for '27 and '28 at that sort of level.

Anyone else? No, well, thanks everyone.

Thanks for coming. I appreciate your being here.

Thank you.

Thanks.